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Business Standard
5 days ago
- Automotive
- Business Standard
Ageing truck fleet rekindle commercial vehicle makers' revival hopes
After several sluggish years, India's truck market remains in a challenging phase, with the average fleet age now at a historic high of 9 – 9.5 years — up from the earlier 7–7.5 years. This rise reflects a broader concern — weakening cyclical demand that has delayed fleet renewal across the industry. However, a turnaround may be on the horizon. Industry experts predict mid-single-digit growth in the Medium and Heavy Commercial Vehicle (MHCV) segment in FY26, driven by an expected uptick in replacement demand. Tempering optimism, truck owners, however, strike a note of caution. The transition from BS IV to BS VI standards led to a 50 per cent increase in truck EMIs, along with additional operational expenses and a persistent shortage of skilled drivers in the sector. 'We anticipate growth on the trucks this year, especially after two softer years. The fleet age is at its peak now, which should spur replacements,' said KM Balaji, CFO of Ashok Leyland. He pointed to a robust rebound in the bus segment, where sales rose from 53,000 to 64,000 units in just a year, and projected a similar mid-single-digit growth trajectory for MHCVs. Tata Motors echoes this sentiment. 'We expect single-digit growth across segments, with HCVs and buses slightly outperforming ILMCV and SCV pickups,' said Girish Wagh, executive director and head of commercial vehicles, during the company's Q4 earnings call. Despite the cautious optimism, truck owners remain wary. The transition from BS IV to BS VI norms has substantially raised costs —monthly truck EMIs have surged by 50 per cent, alongside additional operational and maintenance expenses. 'We now pay ₹90,000 in EMI for a 12-wheel truck, up from ₹60,000 before BS VI,' said K Arul, secretary of the Namakkal Taluk Lorry Owners Association. Namakkal is a key logistics hub in South India. The BS VI upgrade requires sophisticated emission control systems, including Diesel Particulate Filters and Selective Catalytic Reduction units — adding to both purchase and running costs. Meanwhile, a shortage of skilled drivers, despite salaries averaging ₹ 40,000 per month, continues to weigh on fleet operations. Another factor holding back demand is the post-Covid slowdown in freight movement. 'Freight hasn't recovered fully, and without that, there's no incentive to buy expensive new trucks,' Arul explained. The policy shifts may offer a glimmer of hope. The Vehicle Scrappage Policy, in effect since April 2022, mandates emissions and fitness tests for commercial vehicles over 15 years old. Non-compliant vehicles face scrapping, nudging operators toward new purchases. 'The average fleet age rose to 9.5 years due to extended use of vehicles by second owners who couldn't afford replacements,' noted Ravi Bhatia, President of JATO Dynamics. 'But this trend may reverse as policy and market pressures drive renewals.' Yet, fleet owners argue that incentives remain insufficient. 'Scrapping only gives us ₹3–4 lakh, while a new truck costs around ₹50 lakh. How can we bridge that gap?' Arul added.
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Business Standard
23-05-2025
- Automotive
- Business Standard
Ashok Leyland earmarks Rs 1,000 crore capex for FY26: CFO Balaji
Hinduja Group flagship Ashok Leyland has earmarked about Rs 1,000 crore towards capital expenditure for the current financial year, a top official said on Friday. The city-headquartered heavy commercial vehicle manufacturer with a strong financial position of Rs 4,242 crore net cash would focus on investing in products and technologies in the current financial year. "The Capital Expenditure in FY25 we incurred was close to Rs 1,000 crore. And we will incur similar kind of capex for the coming year also (FY26)," company Chief Financial Officer K M Balaji told reporters. To a query on the investments that would be made in the subsidiaries during the financial year, he said it would be decided based on the requirement. "As far as investments in FY26, we will decide based on the requirements of the group companies. As of now, the requirements are visible from our Switch Mobility (EV division) and as well as in the Hinduja Leyland Finance. These are all some of the companies where we would invest and we will decide on the quantum as we progress during the financial year," he said. Adding to his point, Ashok Leyland Managing Director and CEO Shenu Agarwal said the company reported a net debt of Rs 89 crore in the previous financial year (FY24) and now it has become net cash surplus of over Rs 4,000 crore. "This means that we can really invest a lot of this cash in the future growth of the company. We are very clear that this future growth will come from the strengths of products and technologies that we offer to the market and also customer experience we offer to customers after the sales. So, in both these fronts we have some aggressive plans." Agarwal said. Ashok Leyland Ltd reported a 33.44 per cent rise in its consolidated net profit to Rs 1,245.92 crore in the January-March quarter, riding on robust sales and record revenue. The company had posted a consolidated net profit of Rs 933.69 crore during the corresponding quarter of last financial year. Commenting on the financial performance, Ashok Leyland Ltd Chairman Dheeraj Hinduja said, "Ashok Leyland achieved its highest ever Q4 and revenue, EBITDA, and PAT. This was our fourth consecutive quarter of double digit EBITDA margin. These record performances reflect the resilience of our business and trust of our customers that they have placed in us.", he said. On the exports front, he said, the strategy of going local in overseas business complemented by new products was progressing very well. To a query about the electric vehicle division Switch Mobility, he said, it "has a healthy volume with an order book of over 1,500 buses. We are launching new models in our bus portfolio as well. So, we are looking for a breakeven this financial year and with the restructuring we have done, that (achieving break even) is very much possible." On light commercial vehicle business, Agarwal said, "As we have already always been saying that LCV you know we see huge headroom in expanding our LCV business. "Firstly, you know we are restricted to 2-4 tonnage vehicles of that segment which is 50 per cent of the overall LCV industry. So, first I think the plan is how we can expand our product portfolio to cover 80 per cent of our LCV segment. Lot of effort will go into our R&D to see how we can create an LCV winning product to get that 30 per cent market share.", he said.
Time of India
23-05-2025
- Automotive
- Time of India
Ashok Leyland earmarks Rs 1,000 cr capex for FY26: Official
Hinduja Group flagship Ashok Leyland has earmarked about Rs 1,000 crore towards capital expenditure for the current financial year, a top official said on Friday. The city-headquartered heavy commercial vehicle manufacturer with a strong financial position of Rs 4,242 crore net cash would focus on investing in products and technologies in the current financial year. "The Capital Expenditure in FY25 we incurred was close to Rs 1,000 crore. And we will incur similar kind of capex for the coming year also (FY26)," company Chief Financial Officer K M Balaji told reporters. To a query on the investments that would be made in the subsidiaries during the financial year, he said it would be decided based on the requirement. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like POROSIT TANI +355677168900 | Koha nuk ka qenë kurrë kaq elegante. Reklame nga | Enzo Attini Undo "As far as investments in FY26, we will decide based on the requirements of the group companies. As of now, the requirements are visible from our Switch Mobility (EV division) and as well as in the Hinduja Leyland Finance. These are all some of the companies where we would invest and we will decide on the quantum as we progress during the financial year," he said. Adding to his point, Ashok Leyland Managing Director and CEO Shenu Agarwal said the company reported a net debt of Rs 89 crore in the previous financial year (FY24) and now it has become net cash surplus of over Rs 4,000 crore. Live Events "This means that we can really invest a lot of this cash in the future growth of the company. We are very clear that this future growth will come from the strengths of products and technologies that we offer to the market and also customer experience we offer to customers after the sales. So, in both these fronts we have some aggressive plans." Agarwal said. Ashok Leyland Ltd reported a 33.44 per cent rise in its consolidated net profit to Rs 1,245.92 crore in the January-March quarter, riding on robust sales and record revenue. The company had posted a consolidated net profit of Rs 933.69 crore during the corresponding quarter of last financial year. Commenting on the financial performance, Ashok Leyland Ltd Chairman Dheeraj Hinduja said, "Ashok Leyland achieved its highest ever Q4 and revenue, EBITDA, and PAT. This was our fourth consecutive quarter of double digit EBITDA margin. These record performances reflect the resilience of our business and trust of our customers that they have placed in us.", he said. On the exports front, he said, the strategy of going local in overseas business complemented by new products was progressing very well. To a query about the electric vehicle division Switch Mobility, he said, it "has a healthy volume with an order book of over 1,500 buses. We are launching new models in our bus portfolio as well. So, we are looking for a breakeven this financial year and with the restructuring we have done, that (achieving break even) is very much possible." On light commercial vehicle business, Agarwal said, "As we have already always been saying that LCV you know we see huge headroom in expanding our LCV business. "Firstly, you know we are restricted to 2-4 tonnage vehicles of that segment which is 50 per cent of the overall LCV industry. So, first I think the plan is how we can expand our product portfolio to cover 80 per cent of our LCV segment. Lot of effort will go into our R&D to see how we can create an LCV winning product to get that 30 per cent market share.", he said.
