With the Indian automotive market appearing to have emerged from a slowdown that lasted more than two financial years, domestic passenger vehicle sales for the month of April rose by 15.8% compared with the depressed levels seen in April 2014. According to figures published by the Society of Indian Automobile Manufacturers (SIAM), passenger cars accounted for 159,548 units (+18.1%), while utility vehicle sales improved 7% up to 43,526 units.
Van sales posted the biggest year-on-year improvement in April, rising by 19.7% to reach 14,875 units, SIAM figures reveal. Economic activity in India has been improving and this is indicated by the increase in commercial vehicle sales in the country. Last month, a total of 45,872 CVs were sold in the domestic market, which was 6.8% more than the sales recorded in April 2014.
One Indian automotive manufacturer which has a presence in both commercial and passenger vehicle segments is Ashok Leyland. The OEM’s total sales last month stood at 8,435 units, up 43% from 5,897 a year ago, when the country’s automotive industry was at its worst. Ashok Leyland’s medium & heavy CV sales rose by 45% to 6,549, while its light CV numbers were up 37% at 1,886 units.
Despite these strong figures, Ashok Leyland’s first venture into the passenger vehicle segment has more or less ended. Poor sales have forced the OEM to suspend production of the vehicle, an MPV called the Stile, a few months ago. The vehicle is essentially a rebadged version of the Nissan Evalia, which Ashok Leyland and Nissan produce as a result of their joint venture in India.
Carlos Ghosn, the Chief Executive Officer of the Renault-Nissan Alliance, first confirmed talks between the two companies with regard to a passenger vehicle project five years ago. Ashok Leyland, which specialises in commercial vehicles, has in the past maintained that its decision to enter the Indian passenger vehicle segment was not a conscious one. Nevertheless, the Stile was seen to mark the boundary for Ashok Leyland in the passenger vehicle segment.
“We are absolutely clear in our mind that we have to be there where we can add value. We have been in the commercial vehicle segment for the last 65-66 years, and we understand the industry, and the customers, and can add value there,” Dheeraj Hinduja, Chairman, Ashok Leyland told Automotive World earlier. “The Stile had a lot of commonality with what we had done and this can go as a taxi or have applications in rural areas. But this is where we end as far as passenger business is concerned. We have no intention to go any further, and will be focussed on the commercial vehicle segment where we want to enhance our market share further.”
Through the Stile, a seven-to-eight-seater, Ashok Leyland targeted large families, BPOs, the airport limousine segment, hotel charters, etc – in effect, the light commercial vehicle segment. However, while the Nissan Evalia is primarily aimed at personal users, the Ashok Leyland-badged Stile has been aimed at commercial users.
Now, with Stile sales short of expectations, Ashok Leyland has decided to exit the MPV segment. However, Vinod Dasari, the company’s Managing Director, has said that it may re-enter this segment if conditions are right. One of the obvious concerns about the Stile was whether it would eat into sales of the Evalia, and vice versa. Although vehicle manufacturers globally have started consolidating platforms and see the need for platform variants and derivatives, two vehicles as similar as the Evalia and Stile tend to overlap.
In any case, these concerns have now been justified, as poor sales have ended production of the Stile. In fact, Ashok Leyland has written down its investment in the joint venture by Rs2.14bn (US$33.48m). The OEM’s total investment in this JV was around Rs5bn. This will enable the OEM to focus on its core strengths, the medium & heavy CV segment.
In this regard, the OEM is considering setting up bus assembly plants in Africa, the Middle East and in India. Each of these could cost the OEM up to Rs200m, and would assemble buses from kits shipped from India.