Ashok Leyland is banking on its modular platform strategy to stay ahead of competition with multiple variants of commercial vehicles.
Shenu Agarwal, Managing Director & CEO, said the modular vehicle concept taken up a few years ago was “actually giving us a lot of strength” especially in the rapidly changing fuel dynamics scenario when manufacturers are looking at cleaner options.
“If we want to fit in a CNG or hydrogen tank, it is not a problem since all this was factored in during the modularity concept which allows for such customisation,” he added. The biggest benefit is that it can be done with minimal effort, cost, and complexity.
In the case of electrification, “we can remove the engine and put in a battery pack with very little change.” From Leyland’s point of view, its rivals cannot use the same platform for the battery pack which gives it the first mover advantage as in the case of its hydrogen fuel cell bus which was showcased at its recent 75th anniversary celebration. The vehicle has been developed in collaboration with Reliance Industries for use by National Thermal Power Corporation.
Ashok Leyland also plans to focus on increasing its market share in the northern and eastern regions. FY 23 already saw the company grow its presence in the north for its medium and heavy duty range from 19% to 24% with a target of 30% on its radar.
Agarwal said Leyland has a plant and feeder unit apiece in the south and north. In the case of the former, the equation is working well between Ennore and Hosur and the same model was conceived in the north.
Road Ahead For Switch
“Pantnagar, our main plant, is already out of capacity and additional volumes will happen in Alwar. To that extent, we have no worries serving the north and east,” he explained. Any capacity expansion will only happen for vehicles operating on alternative fuels.
As for its electric arm, Switch Mobility, the manufacturing footprint will be common with Ashok Leyland. “We make our diesel LCVs in Hosur and the same line will cater to Switch electric vehicles. We are working out the final modalities where the whole vehicle will be made in Ashok Leyland's facility and taken over by Switch,” said Agarwal.
The electric arm was intended to act like a startup within the Leyland ecosystem and carve out its own identity. In the process, it would bring about a different mindset especially in terms of being more agile. 'We created Switch keeping in mind priorities like speed, momentum and a new thought process. When it comes to the new and vibrant technology, Switch is the go-to brand,” he said.
The electric arm will focus on light commercial vehicles and buses given that all the change is happening here. The consumer market for LCVs and buses will be under Switch and the rest handled by Ashok Leyland. “The core will lie with the parent while Switch will be the platform for consumer markets that will change first,' explained Agarwal.
According to him, the company is in a sweet spot now in the overall mobility space having created its first hybrid bus over a decade ago with electric underway right from the small carriers all the way to 55 tonne. “We already have a CNG portfolio and carried out great work with the likes of Indian Oil on ethanol. In hydrogen, we have the option of hydrogen ICE as well as fuel cells where our partnership with NTPC is going strong,” elaborated Agarwal.
CNG Price Bait
He said there should be a price differential of INR 20-22 between diesel and CNG for customers to switch over to the latter. With more outlets now scheduled to be commissioned across the country, CNG will play a bigger role in CVs.
Beyond this, the right business structures are in place for Switch Mobility and OHM Global Mobility which it acquired in August. “We have done a good job creating these smaller companies within the ecosystem that can work like startups. Their speed can help create new technologies, markets and customers,” said Agarwal.
Most investments will go towards alternative fuels and technologies like autonomous driving. Right now, there is huge pent-up demand for buses from the private and public sectors. While the overall MHCV segment is growing at 8%-9% in the first five months of this fiscal, buses have registered a threefold jump because of the lag of the pandemic.
STUs Change Focus
Initially, State Transport Undertakings (STUs) would buy buses based on the lowest price but are now “getting smarter” and looking at the entire operation cost for the next ten years. This has helped Ashok Leyland grow its footprint in this space with customers like the Andhra Pradesh STU placing an order based on the total cost of ownership especially for BS6 vehicles. The mileage calculation here is easier due to sensors and other devices like iALERT.
Ashok Leyland is also focusing on buses in the intermediate, smaller, and medium segments that can cater to school and staff transportation. From about 15% market share, it is now aiming for 25%-30% in this space which will do wonders from the viewpoint of brand recall.
In terms of applications, Agarwal said the Indian CV market has not kept pace with the US and Europe which have 30% more to offer. “It is necessary to move from one type of truck that fits everybody’s needs to multiple applications…this will also help grow the industry,” he added.
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