Commercial vehicle (CV) manufacturer Ashok Leyland Ltd has reported total domestic sales of 1,277 units in May, thereby recording a sharp drop of 90% year-on-year, on losing about two weeks last month due to the pandemic-induced lockdown.
After reporting nil sales in April, the company had, on 13 May, notified that it resumed operations across all of its production units after obtaining necessary approvals from the local authorities.
Ashok Leyland had sold 12,778 units in May last year.
The company’s domestic wholesales for the last month included 1,126 units of the light commercial vehicles (LCVs) and 151 units of the medium and heavy trucks or MHCVs. While the LCV volumes were down 73% YoY, MHCVs saw volumes crash 98% for Ashok Leyland.
The medium and heavy commercial vehicles (trucks) are the worst hit segment in the unprecedented slowdown as the category was already reeling due to the axle load norms, which legalized extra load carrying capacity by up to 25%.
While the axle load norms created additional capacity for the fleet operators thereby indirectly impacting the demand for new trucks, gradual slowdown in the economic activities, unavailability of freight followed by the pandemic has only made it worse for the CV manufacturers to recover the peak volumes of FY2019.
The CV companies are now looking at the government to introduce an incentive-based vehicle scrappage policy that can incentivize the transporters with trucks older than 15 years to scrap their vehicles and buy new ones.
Meanwhile, Vipin Sondhi, managing director and chief executive officer at Ashok Leyland last month said, “We will gradually ramp up production across facilities after taking into consideration the Work in Progress (WIP) that were on hold at the time of announcement of lock-down, the supply chain readiness after opening and most importantly the preparedness of the ancillary units to supply us critical components, for sustained production of vehicles."
The board of directors of the company had last month allotted 4000 non-convertible debentures or NCDs having face value of ₹10 lakh each for cash aggregating to ₹400 crore on private placement basis. It said that these NCDs would be listed on the wholesale debt market segment of the NSE.