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GST will boost demand for both light and heavy commercial vehicles in the country, according to Nitin Seth, President, LCV, Ashok Leyland.
Consolidation of warehouses is a reality under the new tax regime and this brings about an architectural change in the country’s logistics sector, Seth said.
India witnessed multiplicity of warehouses with FMCG and auto companies maintaining at least one warehouse per State. In comparison, the entire Europe and the US is catered to by six to seven warehouses.
The one tax regime or GST has done away with multiple State taxes, thereby paving the way for companies to explore larger centrally-located warehouses. This has also triggered changes in the transport sector with bigger trucks and LCVs gaining demand.
Zonal warehouses“Post GST there could be one large zonal warehouse catering to all eastern States. This would push up demand for HCVs (40 tonnes and above) on one hand for faster movement, while LCVs would be required for faster movement of goods from the zonal warehouses,” Seth told BusinessLine on the sidelines of the launch of its new LCV, Dost Plus.
Ashok Leyland, one of the largest commercial vehicle makers, has sold 4,000-odd HCVs (having capacities of 40 tonnes and above) in December. LCV demand too has improved.
According to Seth, LCV sales have grown 25 per cent while medium and heavy commercial vehicle sales have seen a 30 per cent growth.
“The focus will slowly shift to LCVs and HCVs rather than on MCVs only,” he said adding that the company was already gearing up for increased demand.
The company will invest ₹400 crore towards capex and product development (LCVs) at its Hosur plant (in Tamil Nadu). The plant has an annual capacity of 50,000 vehicles with an 80 per cent (40,000 units) capacity utilisation. Apart from ramping up capacity to 100,000 over the next two years, Ashok Leyland will also look at having new platforms for roll-out of LCVs. It currently has three existing models, all of which were rolled out during its partnership with Nissan. (Ashok Leyland exited the joint venture with Nissan in September 2016.)
“We intend to rollout one new model every six months,” Seth said. The company also intends to double its market share in LCVs to 30 per cent over the next two-three years.
Export marketsThe company will also look to tap export markets like West Asia, Russia, Ukraine and West Africa with left-hand drive vehicles. “We will start rolling out left hand drive vehicles from June,” he said.
Currently, exports — primarily to SAARC nations — account for 5 per cent of its LCV sales volume and the aim is to take it to 25 per cent by 2020.
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