How Leyland clawed back its market share

Increased truck sales, new models push Leyland's share to 34%, from 30.2% in the same quarter a year before.

Among the top three commercial vehicle (CV) makers, only Ashok Leyland gained market share in the medium and heavy (M&HCV) segment during the December quarter. The other two, Tata Motors and Eicher, saw a dip.

Leyland's share rose to 34 per cent, from 30.2 per cent in the same quarter a year before. Tata Motors' dropped to 51.6 per cent, from 54 per cent a year before. Eicher's dropped to 10.2 per cent, from 11.6 per cent, according to Kotak Institutional Equities research, based on data from the Society of Indian Automobile Manufacturers.

Gopal Mahadevan, chief financial officer at Leyland, said the rise was driven by improvement in the truck market share by 4.8 percentage points. Truck volumes saw an increase across zones and product segments. Leyland's introduction of new vehicles in the intermediate CV space, Guru and Sunshine, helped in the growth. And, expansion of its network.

Its capacity utilisation was also best in the industry during 2016; in M&HCV, it was 75 per cent, against the industry average of 54 per cent. Followed by Eicher-Volvo's 60 per cent, Tata Motors at 50 per cent, Swaraj Mazda at 36 per cent and Mahindra & Mahindra-Navistar's 15 per cent.

In 2017, while the industry is expected to see a one percentage point increase, Leyland's capacity utilisation is expected to increase to 77 per cent and Eicher-Volvo's to 66 per cent. Tata Motors expected to remain at 50 per cent, according to Kotak Institutional Equities' estimate.

They think Leyland would deliver nine per cent compound annual growth (CAGR) over 2017-19. By 2019, the volume is expected to touch 152,271 units, from 127,321 in 2016. Of this, trucks for the domestic market are expected to reach 95,257 units by 2019, as compared to 79,223 in 2016.

During the same period, Tata Motors standalone volumes would rise at a 10 per cent CAGR; M&HCV volumes by five per cent, the domestic volume here going to 159,474 units as compared to 157,226 in 2016.

Ravi Pisharody, Executive Director, Commercial Vehicles, Tata Motors, said, "The CV industry has gone through tremendous leaps and bounds in the past few years and manufacturers have upped the ante in their bid to sustain themselves in this intensely competitive market.

"We believe that we have a very important role to play in containing the industry and not chase market share, as we continue to launch new products and services, adding real value to our customers businesses, rather than offering discounts, thereby dragging down the industry and further worsening the situation, he added.

Pisharody claimed that despite an unsteady market, Tata Motors has managed to hold on to a market share in excess of 50 per cent.

Experts anticipate that FY18 would be challenging for M&HCVs, with implementation of the goods and services tax and weaker freight demand.