After Trailing behind its Bigger rival Tata Motors in The M&HCV Segment, The Company is now betting Big on The Lower-Tonnage Vehicles to reach out to New Markets and Consumers.
When Raghunandan Saran, the son of a Delhi-based car dealer, set up Ashok Motors in Chennai in 1948, his business suffered trying to sell the Austin cars. The bargain may have gone bad but Saran learnt his lesson well: the real potential lay in selling trucks and buses and not cars. The realisation led him into the arms of commercial vehicles manufacturer British Leyland, and laid the ground for the setting up of Ashok Leyland Limited. Over the years, Ashok Leyland and Tata Motors have become the most prominent faces of the commercial vehicle industry in India. The two of them have a combined market share of about 85% of the medium and heavy commercial vehicle (M&HCV) segment. Tata Motors leads the segment with a 63% share, followed by Ashok Leyland at 22%.
Perhaps inspired by the lesson that its founder had taken to heart many decades ago, Ashok Leyland has now decided to venture into manufacture of LCVs in collaboration with its Japanese partner Nissan. LCVs are compact trucks and vans that are built to have low operating costs, fuel-efficient engines that are still powerful enough to carry a heavy payload, and to be used in intra-city operations. The company has already forged a JV with Nissan to enter the high-volume LCV market and will be investing Rs.25 billion for setting up a factory near Chennai. Initially, the plan is to roll out close to 1 lakh units from Leyland’s Hosur factory, before the new plant goes operational. At the same time, the company has roped in Wolff Olins (part of the Omnicom Group), a management consultancy, to work on the new positioning and branding of the company. The move is aimed at positioning Ashok Leyland as an aggressive and national player and reinvent its image from being a conservative South-India based CV manufacturer. The billion rupee question, literally, is: will Leyland finally be able to shed its legacy and succeed in its LCV venture?
At first sight, the challenges appear too overwhelming to overcome. Tata Motors already has product up and running in the LCV category. It launched the Ace truck in May 2005 for just above Rs.2 lakh. The new vehicle has been a big hit selling about 600,000 ACE’s so far and has over 50% market share in this category.
Perhaps inspired by the lesson that its founder had taken to heart many decades ago, Ashok Leyland has now decided to venture into manufacture of LCVs in collaboration with its Japanese partner Nissan. LCVs are compact trucks and vans that are built to have low operating costs, fuel-efficient engines that are still powerful enough to carry a heavy payload, and to be used in intra-city operations. The company has already forged a JV with Nissan to enter the high-volume LCV market and will be investing Rs.25 billion for setting up a factory near Chennai. Initially, the plan is to roll out close to 1 lakh units from Leyland’s Hosur factory, before the new plant goes operational. At the same time, the company has roped in Wolff Olins (part of the Omnicom Group), a management consultancy, to work on the new positioning and branding of the company. The move is aimed at positioning Ashok Leyland as an aggressive and national player and reinvent its image from being a conservative South-India based CV manufacturer. The billion rupee question, literally, is: will Leyland finally be able to shed its legacy and succeed in its LCV venture?
At first sight, the challenges appear too overwhelming to overcome. Tata Motors already has product up and running in the LCV category. It launched the Ace truck in May 2005 for just above Rs.2 lakh. The new vehicle has been a big hit selling about 600,000 ACE’s so far and has over 50% market share in this category.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
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IIPM: Indian Institute of Planning and Management
