Commercial vehicle major Ashok Leyland has invested Rs 500 crore to build a platform that allows customers to configure vehicles based on their financial and business needs.
Known as “modular” platform targeted for medium and heavy vehicles, the company expects that it will bring down its operational cost drastically and results in increase in profits. The commercial vehicle industry is in the doldrums facing decreasing sales for more than one-and-half-years.
The situation is unlikely to improve soon as India’s economic activity is yet to pick up due to less business activity and consumer spending.
According to Ashok Leyland Chief Operating Officer Anuj Kathuria, the new platform will remove complexities from operations of the company and will help offer cost-effective products for the customers.
“The modular range can be customised to customer’s needs — load, terrain, application, and operational requirements,” he said.
In comparison to rivals, Kathuria said, Ashok Leyland would have to migrate all its platforms to BS-VI norms. “The value that we would provide our customers over a period of five to six years would be substantial,” he said.
Benefits of the modular platform for the M&HCV range, Kathuria said the new chassis would help customisation of the product, which in turn will deliver better operational economies to the customers.
In the April to January period of the current fiscal year, sales of such vehicles declined by 36.4 % year on year to 1,98,736 units. Ashok Leyland’s wholesale despatches during the period declined by 39 percent over last year to 63,178 units.
Subdued volumes took a toll on the company’s financial health as revenue for the December quarter declined by more than a third year-on-year to Rs 4,016 crore, while profit after tax declined to a paltry Rs 28 crore from Rs 381 crore in the corresponding quarter.
Kathria doesn’t expect the market situation to change soon. “I don’t see a revival happening till the second half of next fiscal. It will take some time for demand to revive and after that it should remain reasonably strong. However, it would be very difficult to predict a number currently,” he said.