Ashok Leyland targets 40% ICV sales from CNG variants

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

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

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

"Our competition quickly appeared when the intermediate truck market started to switch to CNG. They could quickly switch to CNG based on their bus engines, but we wanted to create a quick transition to CNG," said Sanjeev Kumar, Head of Medium & Heavy Commercial Vehicles (M & HCVs), Ashok Leyland Truck Engines.

"We came up with an engine with the highest horsepower and torque in this segment and it would be a huge differentiator for Leyland. So it took time, but the idea was to create a complete baked product," said Kumar.

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

The launch comes at a time when the commercial vehicle market is recovering from a three-year slump.

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“We are seeing positive signs from many applications. E-commerce and steel are doing well, cement is also making a comeback. Many contracts are being awarded for many infrastructure projects. In the last six months, we have seen significant action in coal. and iron ore, which are two big sources of demand. With the budget provided by the government, we will see a lot of action on capital spending," Kumar said.

In the intermediate and light commercial vehicle market, fleet operators prefer CNG over diesel because the former offers much lower operating costs. The rapid growth in the number of CNG filling stations and the green tax on diesel CVs are also accelerating its adoption.

CNG represents 35%-40% of the ICV market and more than 10% of the entire commercial vehicle market today.

According to Kumar, there is a shortage of trucks working with fleet operators, which is stimulating demand.

Leyland is also developing alternative fuel technologies such as liquefied natural gas (LNG) as a potential alternative to diesel-powered M&HCVs. The idea, according to Kumar, is to be able to bring these technologies to market when the ecosystem necessary for their adoption has matured.

Meanwhile, Switch Mobility plans to launch 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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