Ashok Leyland Anticipates SCV Sales Recovery Soon, Positive on CV Industry Growth

Ashok Leyland Ltd expects its small commercial vehicle volume and market share to normalise in the next two quarters, after seeing a contraction in the December quarter, the company's chief financial officer, KM Balaji, said today. It is also optimistic about the growth in commercial vehicle industry sales on account of favourable macroeconomic factors in India.

Currently, Ashok Leyland sells eight SCVs in India, and companies such as Tata Motors, Mahindra and Mahindra and Maruti Suzuki are its direct competitors. Between April-December, the company sold a total of 45,321 SCVs, down 4% on year.

In the broader picture, Ashok Leyland's total commercial vehicle sales for the first 10 months of financial year 2025 reached 153,134 units, showing a 1% decline year-on-year. While its medium and heavy vehicle sales remained flat at 97,507 units, light commercial vehicle dispatches decreased by 1% to 55,627 units. The company maintains a substantial presence with over 1,000 MHCV touchpoints and 800 LCV touchpoints nationwide.

The company sees encouraging signs in the MHCV segment, noting significant revival in Q3 compared to Q2. "The MHCV market improved notably in Q3, driven by increased consumption during the festive season and improved government capex flow in the second half of the quarter," Shenu Agarwal, chief executive officer and managing director, said during a media call discussing the company's Q3 performance.

The positive momentum has continued into January, with the MHCV industry growing by 4-5%. The company maintains its 30% market share in the MHCV segment and aims to reach 35% in the medium term.

In the first six months of FY25, the demand for commercial vehicles in India was impacted due to a slowdown in infrastructure projects, sluggish spending by the government, reduced mining activity, heavy monsoons, and a general economic slowdown. However, in the third quarter, the consumption in the country improved with the arrival of the festive season, and resumption of government capex.

On the exports front, Ashok Leyland reported 33% year-on-year growth in sales in the December quarter, and 26% on year growth in April-January period, due to good traction in the Gulf Cooperation Council, the South Asian Association for Regional Cooperation and Africa regions. 

When asked about whether the company expects any impact from US President Donald Trump's tariffs, Agarwal said, "Nothing immediately. Our industry does not depend too much on US net imports. Even the industry isn't exporting much to the US. So, there is no direct impact on the CV industry as such. But there could be other triggers which could impact. We do not think that anything will happen short term."

For the third quarter of FY25, Ashok Leyland reported a net profit of Rs. 762 crore, representing a 31% increase. Revenue rose to Rs. 9,479 crore, compared to Rs. 9,273 crore in the same quarter last year. EBITDA margins improved to 12.8% from 12.0% year-over-year, continuing the company's trend of double-digit EBITDA performance for the eighth consecutive quarter.