Ashok Leyland, India’s third-largest commercial vehicle manufacturer, will launch the next-generation light truck platform Phoenix in the September quarter, to address a segment where it was not present.
Top management of the Chennai-based company said on June 16 that the launch of the Phoenix had been impacted by the coronavirus pandemic. But since the model is ready and demand is picking up gradually, the company has decided to go ahead with the launch.
Ashok Leyland MD Vipin Sondhi said, “Within the next three months we will launch the Pheonix. The model itself is ready. It is because of the current situation that we decide to change the timing”.
The Phoenix, which has been in the works for more than a year, will enter the 5-7 tonne segment which has no presence of Ashok Leyland. The company does have the Dost light commercial vehicle which it built in partnership with Nissan catering to the 2-3 tonne segment. Tata Motors and VE Commercial Vehicles control the 5-7 tonne goods and passenger segment, as per SIAM data.
Launch of the Phoenix will the second big launch by the company, which is otherwise known for its buses, and that too in quick succession. Earlier in June, the Hinduja Group flagship launched the AVTR range of modular trucks addressing the segment of 18.5 tonne to 55.5 tonne.
Last year Ashok Leyland claimed to have saved Rs 500 crore on costs which was in addition to cut-back on capital expenditure (capex). As against spends of more than Rs 2,000 crore lined up for FY20, the company ended up incurring capex of Rs 1,227 crore for the year.
For FY21 and FY22, the company has planned to cut back on capex. Though the exact capex amount was not shared by the executives, Chief Financial Officer Gopal Mahadevan indicated that ‘capex for FY21 will be very tight and much lower than FY20’.
“We are coming off a fairly large capex cycle because of the introduction of BS-VI and the AVTR platform. Pheonix, for all practical purposes, is ready. Our major capex cycle is behind us. This year and next year we will be ensuring that the maintenance capex which is significantly lower will remain in positio,n and any strategic capex issue is concerned we will thoughtfully consider and bring that forward,” added Sondhi.
In earlier interactions with analysts, company executives had noted that going forward Ashok Leyland will set aside a much smaller capex which will be mostly on the light commercial vehicle business. This capex will not exceed the given band of Rs 400 to Rs 500 crore for each of the next four to five years.For this year and next year, Ashok Leyland is going back to cost structures that were in place three years ago.