Hinduja Group chief Ashok Leyland expects the commercial vehicle industry to grow at a faster pace in the coming quarters, with a pick-up in economic activity and demand, according to a senior company official.
The Chennai-based company, the second largest player in the commercial vehicle segment, expects both its domestic sales and overseas shipments to remain strong for the remainder of the fiscal.
Gopal Mahadevan, whole-time director and CFO of Ashok Leyland, told PTI, “I believe this is because the pandemic and some uncertainties are behind us at the global level. There is no reason for the commercial vehicle industry to grow.” ,
He was responding to a question whether the worst is behind the commercial vehicle industry, which has seen sales decline in the past few years due to regulatory changes and low offtake during the pandemic period.
“The commercial industry will grow with the expectation of good performance of trucks and buses…Truck sales will improve as many industries will require more units as they are running at full capacity,” Mahadevan said.
Besides, reduction in the impact of COVID and opening of schools, colleges and offices will lead to increase in intercity and intracity travel, which will help in sales of buses, he added.
“So, bus sales should increase as well. At the same time, light commercial vehicles will also grow because there has been a disruptive change in behavior and consumer patterns. E-commerce has increased… So, what is happening is that e-commerce has become a reality. There will be a bigger driver, and last-mile delivery will become very important,” Mahadevan said.
On the export outlook, he said the company expects dispatches to increase in the current fiscal as compared to FY22, thereby improving the demand scenario in the markets.
The company shipped around 11,000 units in the last financial year and the tally is expected to improve in the current financial year.
“So, we are positive. We have some challenges in Sri Lanka, which hopefully will get sorted out. But the rest of the SAARC market is slowly warming up. And we are expecting our experts to be definitely compared to last year. Will export to grow more,” Mahadevan said.
The company, which mainly exports to SAARC, Middle East and Africa, also expects better dispatch this year due to better product range which is suitable for the requirements of customers outside the country, he said.
Mahadevan noted that the company is “efficiently managing” the chip shortage issue to minimize the impact on production and meet the increased demand.
“Even now, it presents a challenge, and construction teams are working round the clock to manage it,” he said.
Mahadevan said that the supply has definitely improved but is yet to reach the normal level.
“Hopefully in the next few years we will see a lot of capacity building up, which will be helpful for the industry,” he added.
Asked about the prospects of electric mobility, Mahadevan said: “Certainly this is the focus area for the future… the adoption of electric vehicles is faster than we thought”.
It will be rapidly adopted in the LCV and bus segments, while the heavy commercial vehicle vertical will take longer to incorporate the change, he added.
“India is usually a very rapid adopter of technology… So, we will see the same adoption but as a country, we have to look at the overall infrastructure for charging. You know, because to say it. It doesn’t make sense that we would have an electric cell, which, you know, would be charged with electricity generated from coal,” Mahadevan said.
Therefore, more green energy should be available to charge these electric vehicles.
In addition, there is a need for some uniformity with regard to charging stations, Mahadevan said.
“So all this work can be done. It’s not too difficult,” he said.
Elaborating on the company’s strategy, Mahadevan said that it has received strong orders for electric buses from various states.
“We are not going to take orders randomly for this. You know, orders have to be sensible, they have to be executable. They have to be profitable. So, we are making sure that we do business in a very systematic way. are,” he mentioned.
Buoyed on the future of green mobility, Ashok Leyland plans to invest Rs 500 crore to develop powertrains based on alternative fuels such as CNG, hydrogen and electric for its commercial vehicle range.
The company has already announced an investment of $200 million (about Rs 1,500 crore) for electric mobility through its UK-based arm Switch Mobility.
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