Ashok Leyland has posted 53% appreciation in commercial vehicle M/HCV sales in October 1999, while arch-rival TELCO has clocked 66% rise in sales. This was reported by a leading financial daily.
Ashok Leyland (ALL) is the second largest manufacturer of medium/heavy commercial vehicles (M/HCVs) with 34% market share in September 1999.
Tata Engineering & Locomotive Co. (TELCO) is India's largest medium/heavy commercial vehicles (M/HCV) (65% market share in September 1999) and light commercial vehicles (LCV) (63% market share) manufacturer. It also manufactures utility vehicles (28% market share) and passenger cars (7% market share).
ALL has posted sales of 2,688 units in October 1999 (1,753 units in October 1998). Over the period April-October 1999, the company sold 18,138 vehicles, up 38% over April-October 1998.
TELCO sold 7,000 M/HCVs in October (6,800 in September 1999). Cumulative sales over the period April-October 1999 have appreciated 66% to 35,200 units.
Improved M/HCV sales of both the companies can be attributed to the sustained economic upturn. A rise in transportation of agricultural produce, higher cement despatches and increased offtake of consumer products continues to have a positive bearing on sales. However a lower FY99 base is also partially responsible for the higher sales growth percentages posted by these companies.
What makes these figures even more impressive is the 40% diesel price hike, which did not result in a demand slump. This seems to indicate that rise in demand is a long term phenomenon and not a short sales burst.
As there are no signs of a letup in cement and consumer products demand, these two companies look set to sustain the rise in M/HCV sales.
Ashok Leyland's encouraging sales growth in 1HFY2000, after a period of slowdown over the past two years has infused confidence among analysts who have flagged it as a 'BUY'.
Analysts have flagged a 'LONG TERM BUY' on the company due to its disappointing 2QFY2000 results. Analysts are bullish on the company's improved CV performance and expect it to pull the company into the black in FY2000.