Interview: Vinod Dasari, MD & CEO of Ashok Leyland
In the CV segment and especially in the M&HCV category, we have seen Ashok Leyland consistently gaining market share despite the lulls of the market. Please talk about your journey during these difficult times?
Ashok Leyland has been gaining M&HCV share consistently over the past 4-5 years.
The Indian M&HCV customer is extremely price conscious and the decision of buying a truck is not taken based on a one-time acquisition cost, but after evaluating the overall lifetime cost of the trucks and the resale value as well. This makes the after sales service and network critical for the truck buyer. The reason why Ashok Leyland gained share in heavy duty truck segments is largely due to its in-depth understanding of the local markets, value-for-money products, and after sales service and network. We have always been futuristic in our approach and anticipated what will work for the market. There are many segments within M&HCV, which were created by us.
Of late, you were seen aggressively pursuing the LCV segment with new launches. How do you plan to capitalise on the momentum in the segment triggered by GST, e-commerce and rural demand?
How will your vehicles stand out in the market and what is your target in terms of market share in the segment?
We are aware that our core offering of M&HCVs has a characteristic of being cyclical. And any organisation that is part of a cyclical market, will always have a challenge when the downturn or the phase of less demand hits. To offset this scenario, we have consciously tried to find business opportunities which are not cyclical and which will help us secure a revenue stream irrespective of M&HCVs’ demand. Our broad strategy includes focus on the defence, aftermarket, export and LCV business.
The LCV business is more stable in terms of demand and we intend to substantially increase our market share in LCVs over the next two-three years. We are working toward beefing up the portfolio in the LCV segment from the existing three products to over six to eight products in the next two to three years. Post GST rollout, LCV demand is picking up strongly owing to consolidation of warehouses (hub and spoke model). Moreover, improved rural demand coupled with boom in e-commerce will also drive LCV demand.
There is a strong focus on export markets as well. We have plans to start producing left-hand driven LCVs to cater to a larger set of export markets. Our target markets include Africa, Gulf and West Asia.
Ashok Leyland wants to be one of the top 10 truck manufacturers in the world. Where do you stand now and what would be the initiatives that will put you in the global top-10 list?
Our vision statement is to be in the global top 10 in M& HCVs (above 7.5T) and the global top five in buses (8 metres and above) in volumes. Today, we are much closer to this vision as our global ranking has risen from 17 to 13 in M&HCVs in three years while our bus ranking has improved from 6th to 4th position.
Driven by our brand philosophy of ‘AapkiJeet, HamariJeet’, we are focusing on customer profitability and ease of operations through our innovations. And our customers have rewarded us by giving us more business. Only if a customer is able to make good margins by investing in Ashok Leyland products, will she/he buy more from us. At the center of everything is the innovation that we bring to the table and that will drive the numbers and expand our family of customers globally.
We have already seen the results of our efforts in domestic market share. Our goal is to export one truck for every two trucks sold in India. Exports will play an important role in achieving this vision and we are on track to expand our overseas market while continuing the momentum in India.
The new vehicle scrappage policy for CVs above 15 years is expected to trigger demand for commercial vehicles. How will you ride on this demand? Will the prices of commercial vehicles go up and why?
The policy is expected to be implemented alongside the BS-VI implementation in April 2020. And yes, the price of a BS-VI vehicle will be higher as it will have more components, electronics, etc. and the additional cost will have to passed on to the customers.
The introduction of the scrappage policy would have a very positive impact on the commercial vehicle industry. It should serve as a huge incentive for medium and large fleet operators to replace their depreciating fleet. In terms of demand resulting from the policy, it is difficult to put a number.
But it would be safe to estimate that we can expect an incremental volume of 600,000 to 700,000 heavy-duty trucks and buses over the next two to three years after the scheme takes effect.
Tell us more about the tie-ups and new technology initiatives that you have brought in, including building of infrastructure, for electric vehicles?
Some of the tieups and technology initiatives are - first electric bus with the swappable battery technology – Ashok Leyland launched battery swappable electric bus named Circuit-S at the 2018 Auto Expo. Ashok Leyland and Sun Mobility had announced their collaboration last year. Designed for Indian conditions with a seating capacity of 25-35 seats, the electric bus runs on easily swappable, smart batteries that are small and one-fourth the weight of a regular lithium-ion battery. We showcased the vehicle refueling process in the electric buses in which the battery is separated from the bus. The electric buses get swapped in 2.28 minutes, much faster than conventional refueling, along with the swapping of bus drivers and conductors at a depot. By separating the battery from the vehicle, you only pay for the energy used, similar to the current diesel fuel system.
Ashok Leyland, signed a Letter of Intent (LoI) with Phinergy of Israel for
providing varying energy management solutions to the customers, Ashok Leyland and Phinergy are working towards the adaptation of unique, competitive, and sustainable solutions for high-energy applications in the commercial vehicles space.
Ashok Leyland and Hino Motors (Japan) renewed partnership for Euro VI Engines –a Mutual Cooperation Agreement (MCA) where Ashok Leyland will utilize Hino’s engine technology for Ashok Leyland’s EURO-VI development and will support in development of Hino’s engine parts purchasing in India for global operation. Ashok Leyland is enhancing its competitiveness by jointly developing engines for BS-VI compliance in India through the engine technology of Hino Motors.
How are you positioned in the transition we are witnessing from diesel to electric in the automobile industry? Do you want to restrict yourself to your key segments during this transition or enter newer segments that would catch up with this transition faster?
We are currently working on electrification in the bus segment and are providing three different options –
The first a long range battery, which is a NMC type of battery, which charge up over a couple of hours and are ideal for providing upto 200 kms of uninterrupted operations throughout the day.
Secondly, for more frequent trips and round the clock operations, a battery swapping technology that allows depleted batteries to be replaced with charged ones.
And thirdly for daily operations that require frequent stops and lesser stop times, Ashok Leyland offers special LTO type batteries paired to ultra-fast chargers that charge up the vehicle in a flash!
The operators can either directly purchase the buses and chargers as a one-time investment or, they can go for Ashok Leyland’s convenient eMaaS program without any upfront investments. As a part of the uniquely designed eMaaS program, the operator can completely focus on their primary
objective of moving passengers safely and efficiently, while Ashok Leyland takes up the complete cost of ownership for the electric vehicle, only for a minimal fee per kilometer.
When will we see Ashok Leyland becoming the top commercial vehicle manufacturer in India?
At Ashok Leyland we believe in profitable growth. We are driven by our brand philosophy, ‘AapkiJeet, HamariJeet’, which also translates into us not buying market share by giving discounts or selling something which is not good or apt for our customers. Our family of customers has expanded because we are giving them quality products and services owing to which they are able to make their operations more efficient and as a result increase their profits. Our focus has always been and will be to make the customer more profitable. Market share will happen automatically.