Ashok Leyland to invest Rs 400 crore in new models

Ashok Leyland exports 5% of its total volumes; these vehicles are primarily exported to Russia and Ukraine

Leading commercial vehicles maker and Hinduja Group flagship Ashok Leyland said it would invest Rs 400 crore over the next two years in developing new products, including left-hand-driving trucks.

"We are coming up with a new product every six months, so the next product would be launched in April or May next year. Ashok Leyland would invest Rs 400 crore on new models in the next two years. The new products are also targeted for export markets", Nitin Seth, president (light commercial vehicles), Ashok Leyland Ltd.

Presently, Ashok Leyland exports five per cent of its total volumes. The vehicles are primarily exported to Russia and Ukraine.

The company is working on left-hand-driving commercial vehicles to tap the potential export markets in Gulf countries and Africa.

"Globally, 80 per cent of the market for commercial vehicles is left-hand-driving. We are eyeing the Gulf Cooperation countries like Saudi Arabia and Qatar as well as Africa for exports of light commercial vehicles (LCVs). The market size for the two regions is estimated at 800,000 units annually and we have already started working on left-hand-driving vehicles to cater to this demand", Seth said.

Ashok Leyland sells around 40,000 LCVs annually. Such vehicles are manufactured at its Hosur facility in Bengaluru which has an annual capacity of 50,000 units.

The company's vehicles are Euro-IV complaint and it expected to upgrade to meet Euro-VI norms by 2020.

But, Seth warned that customers have to pay a very steep price for the upgraded vehicles.

"We feel that prices may go up by 10-15 per cent after roll out of Euro-VI compliant vehicles. The technology for shift to Euro-VI vehicles is expensive. Customers need to pay more as manufacturers would pass on the costs. Also, manufacturers would see some dip in volumes for Euro-VI vehicles. Usually, the transition from Euro-IV to Euro-VI stage takes 10 years but in India, it is being done in only three years", he said.

Seth said the automobile industry had no opposition to GST (Goods & Services Tax) since the effective tax rate is the same as in pre-GST regime. The industry did not protest as GST is very neutral, he added.

He was here to launch DOST+, the new LCV. With the launch of the new, fortified version, Ashok Leyland aims to grab a bigger pie of the market. In Odisha, the company expects its market share to move up from 15 per cent to 25 per cent buoyed by DOST+ and other new product launches.