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Sunday, July 01, 2012

India truckmaker sees small as big | The Journal Gazette | Fort Wayne, IN

India truckmaker sees small as big | The Journal Gazette | Fort Wayne, IN



India truckmaker sees small as big

 – Ashok Leyland, India’s second-biggest truckmaker, is adding small goods carriers and expanding overseas to claw back market share lost to Eicher Motors and Tata Motors.

Nissan’s Indian partner, which reported its smallest gain in sales in three years in the 12 months ended March 31, plans to add 25 models in the year that began April 1, Vinod Dasari, the company’s managing director said in an emailed response to questions. The company last year began selling the small carrier Dost, which means friend in Hindi.

“We have a three-month waiting period,” for the Dost, Dasari said. “By entering the light-commercial vehicle market with Nissan, we have filled a very critical gap in our product range.”

Ashok Leyland is betting more products in India’s fastest growing automotive category will help it regain lost market share. Partnering with Japan’s second-biggest automaker will help the Chennai company accelerate development of cargo vehicles of maximum weight of 7.5 tons after lagging behind Tata Motors and Mahindra & Mahindra in entering the market.

“Light-commercial vehicles will be the growth driver in the commercial vehicle space,” said Abhishek Banerjee, an analyst at Asian Markets Securities in Mumbai. “Had Ashok Leyland not come up with the Dost, it would have been in a tough spot.” He has a sell recommendation on the stock.

Ashok Leyland, which has hired Mahendra Singh Dhoni, captain of India’s cricket team, to endorse its products, has risen 9 percent this year, lagging behind a 38 percent gain in Tata Motors.

India’s light-commercial goods carrier segment grew 30 percent in the year ended March 31, led by Tata Motors’ Ace. Ashok Leyland sold 7,593 units of its 2.5-ton Dost vehicle in the period, after starting sales last year, while Mahindra sold 127,029 units.

Nissan and Ashok Leyland’s equal venture plans to spend $203 million to introduce three small trucks, the first of which was the Dost, in India to tap demand for smaller vehicles used for deliveries within cities and for rural transportation, Andy Palmer, Nissan’s senior vice president said in March 2011. The venture will have a capacity to produce 150,000 vehicles a year by March 2014, Palmer said.

Light goods carriers have become popular as a second year of record food grain harvest and unprecedented government prices for crops boosts rural income and demand.

“LCVs have replaced 3-wheelers and pickup trucks for the last mile connectivity,” said Mahantesh Sabarad, an analyst at Fortune Equity Brokers India Ltd. in Mumbai. “It’s much more economical to use an LCV over a pickup as the fuel economy is better.”

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