Ashok Leyland targets 40% ICV sales from CNG variants

Ashok Leyland targets 40% ICV sales from CNG variants

NEW DELHI : Truck maker Ashok Leyland Ltd plans to steadily expand its compressed natural gas (CNG) range to draw in up to 40% of sales in the intermediate commercial vehicle (ICV) segment from this fuel variant, a company official said.

The move follows the truck maker losing market share in the ICV market, the biggest volume generator in the commercial vehicle space, after it deferred a CNG launch.

At the same time, Leyland continues to develop its electric vehicle (EV) and E-Mobility-as-a-service (E-MaaS) portfolio under its electric mobility arm Switch Mobility, which aims to raise $200 million-$300 million in an ongoing funding round, with an outlook for more rounds in the future.

“Our competition came in fast when the intermediate truck market started shifting to CNG. They could quickly switch to CNG based on their bus engines, but we wanted to create engines specifically for trucks,” said Sanjeev Kumar, head, medium and heavy commercial vehicles (M&HCVs), Ashok Leyland.

“We have come out with an engine that has the highest horsepower and torque in this segment and will be a big differentiator for Leyland. So, we did take time, but the idea was to create a fully baked product,” Kumar said.

Ashok Leyland has announced the launch of 14- and 16-tonne CNG trucks, with plans to extend its range to an 11 tonne truck in the next two months and eventually also to multi-axle vehicles, he said.

The launch comes at a time the commercial vehicle market is seeing a rebound after a three-year slump.

“We are seeing positive signals from many applications. E-commerce and steel are doing very well, and cement has picked up, too. A lot of contracts are being awarded for many infra projects. Over the last six months, we’ve seen big action on coal and iron ore, which are big demand generators. With the budget that the government has presented, we’re going to see a lot of action on capex,” Kumar said.

In the intermediate and light commercial vehicle market, fleet operators favour CNG over diesel as the former offers significantly lower running costs. The rapidly increasing number of CNG fuelling stations and a green tax on diesel CVs are also accelerating adoption.

CNG already accounts for 35%-40% of the ICV market and more than 10% of the entire commercial vehicle market at present.

There is a shortage of trucks with fleet operators, which is spurring demand, according to Kumar.

Leyland is also developing alternate fuel technologies such as liquefied natural gas (LNG) as a possible substitute for diesel-run M&HCVs. The idea, according to Kumar, is to be able to offer these technologies to the market when the ecosystem essential to their adoption matures.

In the meantime, Switch Mobility plans to start E-MaaS in India soon and is in talks with private equity investors to raise $200 million to $300 million, according to Gopal Mahadevan, chief financial officer, Ashok Leyland.

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