New Delhi: Ashok Leyland Ltd, which has so far restricted the majority of its operations to south India, plans to step up its presence in the north.
On Thursday, the company inaugurated a new facility at Pantnagar in Uttarakhand capable of producing 75,000 medium and heavy commercial vehicles every year at a total investment of Rs110 crore.
Graphic: Yogesh Kumar / Mint
The company joins the growing list of automakers that have chosen Uttarakhand as a manufacturing base. These include rival Tata Motors Ltd, which manufactures the Ace and the Nano in Pantnagar, Mahindra and Mahindra Ltd, Bajaj Auto Ltd and Hero Honda Motors Ltd.
Auto makers are granted exemption from central excise duty for 10 years by the state government besides an income tax holiday for the first five years and a 30% discount for the next five.
“We will save between Rs30,000 and Rs50,000 on each truck we make in Pantnagar,” said R. Seshasayee, managing director of Ashok Leyland.
The firm plans to pass these savings on to customers. This and a significant dealer expansion should help the company boost its market share in the north, which stands at 17%. The company has a 45.5% market share in the south and a 23% national share.
Separately, Seshasayee also said the company would hike prices by 3-4% from 1 April when more stringent emission norms come into force.
A recent hike in excise rates could also hurt demand, but for the time being, he says, there is enough growth to sustain demand for trucks. “Undoubtedly, any increase has an impact, but the market sentiment is good and so these kind of things get negated,” he said.