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Ashok Leyland bets on fully built trucks to boost top line

Company estimates share of fully built vehicles to rise to 50% from current 20% in next 5 yrs

Sohini Das  |  Ahmedabad 

Ashok Leyland bets on fully built trucks to boost topline

As the battle for market share in the medium and heavy commercial vehicles (MHCV) gains momentum, players like Ltd (ALL) are enhancing focus on fully built units (FBUs) in the segment. From a current share of 20 per cent, aims to take the share of in its overall sales to 50 per cent within the next two to three years.

are basically ready-to-use customised for the type of good to be transported. The company is in talks with its supplier partners to develop more

Anuj Kathuria, president, global trucks, said, "We plan to offer more and more ready to use vehicles to our customers. We are already working with our supplier partners on the same. This would help improve the as the ticket size would increase."

At present, account for nearly 20 per cent of its truck sales, and in the next two to three years plans to take this up to 50% of its vehicle sales, Kathuria informed. has a manufacturing capacity of about 160,000 units per annum for MHCV, and around 70,000 units per annum for light commercial vehicles (LCVs). It is currently utilising around 60-70 per cent of its capacity and sold 84,255 last year.

The chassis of a truck is usually sold to a customer who then makes an additional investment to customise the body to suit his requirement. This typically requires an investment of 20-25 per cent of the value of the vehicle, sometimes higher. plans to make dry containers, reefers (refrigerated vehicles), LPG bullet trucks, bulkers among others.

Some of the key truck body building firms include CEBBCO, Jaico, Azad Body Builders etc.

Kathuria explained that most major commercial vehicle original equipment manufacturers (OEMs) have traditionally focussed on selling chassis and customers need to coordinate with different entities like body builders, financiers to ensure the FBU is on road in time. "has decided to offer complete transport solutions through FBU offering. We anticipate the ticket size to have sizeable growth factoring the following benefits to customers," he said.

Subrata Ray, senior group vice-president, felt that making might not be very high margin, but the greater degree of value addition is likely to ensure better demand. "Also, with more focus on safety parameters, through FBUs, an OEM can ensure better control over quality," he said.

feels that as these fully built would come with OEM warranty and would be ready to use from Day 1 thereby saving body building time and, in turn, money, there would be good traction for these vehicles.

segment is the key segment for It accounts for 70-71 per cent of its revenues. In the space, it currently has 30% market share (as on May) which is a 2.5 per cent gain over last year first two months of FY18.

As per ICRA, in the goods segment, market leader Tata Motors had 47.6% market share as on Q4FY17, while had 36.3 per cent share. While Tata Motors share has slipped from 53.9 per cent in Q4FY16, share has gained from 31.6 per cent.

On the whole, has closed FY17 with good numbers. With 7 per cent growth in revenues (Rs 21,332 crore) and a massive 214 per cent rise in net profits (Rs 1,223 crore up from Rs 390 crore in FY16).

Ray felt that while the volumes of specialised like reefers etc might not be very high at the moment, it is expected to go up. "Post-GST, there would be the greater consolidation of warehouses, leading to demand specialised trucks," he said.

As such categories like the refrigeration transportation market is expected to grow at a compounded annual growth rate of 17 per cent in the next five years. Reefer trucks, for example, are expected to clock the robust growth rate of 85 per cent or so in volumes over the next three to five years.

First Published: Tue, June 20 2017. 20:01 IST