Ashok Leyland, India’s second biggest commercial vehicle manufacturer, has halted plans to build a new factory to produce light commercial vehicles for its JV with Nissan Motor because the partners currently have spare capacity at existing facilities.

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Instead it will use its existing factory in Hosur, Tamil Nadu state, and the Renault-Nissan facility in Oragadam, company CFO K Sridharan told just-auto.


Hosur has capacity for 65,000 units annually and currently builds medium and heavy-duty commercial vehicles.


Ashok Leyland parent Hinduja Group signed three JVs with Nissan Motor in October 2007 and planned to spend INR23bn on LCV manufacturing, engine manufacturing and technology development facilities.


“We are not looking to build a ‘green field’ facility right now, as both Ashok Leyland and Nissan have capacity to spare,” Sridharan said.

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Truck sales were down 67% year on year in May leaving Ashok Leyland with inventory of 8,200 trucks and production has been reduced to four days a week.


The company said it lost 4% of market share to competitor Tata Motors in the medium and heavy-duty-vehicle segment (retaining 20%) – Tata holds 66%.


“We plan to reduce the unsold inventory to around 4,000 units by September,” Sridharan said, attributing the drop in sales to reduced mining and construction in India.


Indian commercial vehicle sales overall have fallen 22% to around 400,000 units this year with Ashok Leyland selling 100,415 units since January.


“We plan to launch a commercial vehicle finance arm within the next two months as around 90% of commercial vehicles are bought on credit and it should help push up sales,” Sridharan added.


Kevin Jacobs