ASHOK LEYLAND-SHATTERED

DREAMS-TRANSFORMATION FOR
SURVIVAL
Group-8
Harsha Gupta
Lakshay Agrawal
Rohit Pant
Lavish Arora
Harshit Guleria
 Introduction to the Company
◦ Ashok Leyland is an Indian automobile manufacturing company based in Chennai, India.
◦ Founded and incorporated by late Mr. Raghunandan Saran on 07th September 1948 with set up in
collaboration with Austin Motor Company, England for the assembly of Austin Cars.
◦ 4th largest manufacturer of buses in the world and 16th largest manufacturer of trucks globally.
◦ Operating six plants, Ashok Leyland also makes spare parts and engines for industrial and marine
applications. It sells about 60,000 vehicles and about 7,000 engines annually. 
◦  It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle
(M&HCV) segment with a market share of 28%
Global Expansion & Growth of AL
◦ AL started manufacturing the automobile spare parts and vehicles for defense and special applications.
◦ AL focused on strengthening its research and development base over the time.
◦ Building on its collaborations, partnerships and joint ventures with global leaders too.
◦ AL expanded beyond its Ennore unit by establishing several manufacturing units all over the country,
setting up state of the art technology units in Hosur, Tamil Nadu
◦ AL expanded also started exports activities in Asia, Eastern Europe, Middle East and Africa
◦ Acquired the truck business unit of Prague based AVIA( later named AVIA Ashok Leyland Motors) in
order to target the Eastern European market.
◦ By 2007, AL was the World’s sixth largest manufacturer of MHCV buses and 17 th largest manufacturer of
MHCV trucks.
Products of Ashok Leyland
 Industry Global Overview
◦ The commercial industry constitute two segments based upon the gross vehicle weight (GVW)
1. Light Commercial vehicles (LCVs)
2. Medium and Heavy Commercial vehicles(MHCVs)

◦ The Medium & heavy-duty commercial vehicles (MHCVs) include vehicles with a gross vehicle weight rating
greater than 16 metric ton, such as heavy trucks and buses.
◦ Trucks having the load of less than 7.5 tons makes the LCV segment
◦ The global CV industry formed a substantial part of the global automobile.
◦ CV constitutes around 27% of the World’s production of automobiles.
◦ Logistics, mining and construction firms are the ones who are in need of MHCVs most while the LCVs are used in
the small scale industries.
◦ Product development lead time for CVs was between 18-36 months.
Global outlook
◦ As mentioned in the case study, following are the facts for the global outlook
◦ With the economies on the rise, the production of the heavy and medium vehicles saw a rise of about 5%
from 2006 to 2007.
◦ China was emerging as the Asian leader in the production of CVs with a share of 60% of the sales.
◦ In 2007, the Indian industry started to grow and was twice of that of Japan and South Korea combined.
◦ By 2005, Asia held the CV production market well, Ashok Leyland ranked 17 th with market share of
about 1.9% of units sold
◦ In 2005, 8 of the top global bus producers were from Asia with Tata motors holding 2 nd position with
12.9% share, and Ashok Leyland ranked 6th with a share of 7.1%
Current Scenario
◦ The global commercial vehicle market is expected to grow from $791.1 billion in 2019 to $815.3 billion
in 2020 at a compound annual growth rate (CAGR) of 3.1%.
◦ The low growth is mainly due to economic slowdown across countries owing to the COVID-19 outbreak
and the measures to contain it.
◦ The market is then expected to recover and grow at a CAGR of 12% from 2021 and reach $1,122 billion
in 2023 (according to the reports of Business Wire)
◦ North America was the largest region in the global commercial vehicle market, accounting for 65% of
the market in 2019.
◦ Asia-Pacific was the second largest region accounting for 20% of the global commercial vehicle market.
Current Scenario
◦ Truck manufacturing companies are now using alternative drive systems to produce environmentally
friendly low carbon emission trucks.
◦ Alternative drive systems are hydrogen-powered, electric or hybrid vehicles.
◦ They have significantly low carbon emissions, make use of renewable fuels and lower fuel costs by up to
50%.
◦ For example, Mercedes-Benz manufactures trucks with alternative drive systems using biogas as fuel,
thus making them sustainable, inexpensive and CO2 neutral. Daimler has the world's largest truck fleet
with hybrid drives. Hybrid trucks are being commercially used in North America, Europe and Japan.
Challenges Faced
◦ Continuous pressure to lower down the carbon emission and improve safety of the vehicles
◦ Adaption of the extensive technology is quite expensive and had to spread over large volumes to recover
costs.
◦ Different vehicle standards in different countries
Indian Market Scenario
◦ The elimination of restriction from the foreign collaboration played an important role in the growth of
the CV market in India.
◦ As mentioned in the case, the production doubled up between the period of 2001-2007.
◦ Although, the MHCV segment is more lucrative than the LCV segment due to which enjoyed larger
revenue base and higher profitability.
◦ LCV segment was primarily more competitive with players like Tata motors, Mahinda & Mahindra and
Eicher motors etc
◦ MHCVs segment enjoyed a duopoly in India, widely dominated by Tata motors and Ashok Leyland
Economic Downturn
◦ In 2013, the total industry volume of MHCV trucks fell by 26% and was expected to fall further by 29%
in 2014
◦ AL was deeply affected by this change in demand, witnessing a decline in their MHCV segment as well.
◦ As the capacity utilization fell and unsold stocks increases, competitors started to give heavy discounts,
creating more problems for AL.
◦ AL’s overall truck sales fell by 14% and buses by 8%