One wonders how well founded is the correlation that one is tempted to draw between India's postindependence history and the evolution of commercial vehicles industry in the country. The rapid growth that marked the commercial automobiles' sector after independence can be, to a great degree, seen as a fruition of Nehru's pregnant visions of an industrialized nation and the subsequent exodus of masses to the cities. Today, India's commercial vehicles sector is one of the rapidly growing industries in the country. The output of commercial vehicles in India has shot up to 2.8 times between the years 1998 to 2004; the figure is significant in the light of the fact that the growth in passenger cars has been only 2.2 times between the same period. One can choose between new and used commercial vehicle, if planning to buy with a number of commercial vehicle insurance options flooding the markets. Ashok Leyland Some of the automobile companies that are operating in the commercial vehicles sector in India areAshok Leyland - One of the first automobile companies in India, Ashok Leyland was born when Mr. Raghunandan Saran responded affirmatively to Nehru overtures to enter the vacant automobile sector in 1948. Since then the company has seen many tie-ups with reputed international companies and built up a formidable reputation in the country. Ashok Leyland dominates the commercial vehicles sector in India with as many as 375,000 vehicles battling on the Indian roads. Bajaj Tempo Bajaj Tempo - Apart from two wheelers, Bajaj also manufactures extremely strong tempos well suited to the Indian roads. These three wheelers help in taking a substantial load off the road and also provide a cheaper alternative to the ubiquitous passengers. Eicher Eicher takes great pride in its commercial vehicles that are touted as low priced as well strong. Eicher has a range of Buses, Truck and Chassis. Tata Motors The first Indian company to come up with an indigenous car, Tata Motors' credentials goes further. In the commercial vehicles sector, Tata Motors manufactures Luxury Buses, Trucks and Tractors. Volvo One of the latest entrant into the commercial vehicles sector in India, Volvo is the largest producers of heavy trucks in the world. Mahindra and Mahindra Manufactures extremely durable buses, trucks, and three wheelers. Mahindra and Mahindra gives a clear priority to vehicles that are meant to survive rugged use.
First.it's balance sheet size was only 3. compared with just 14. just consider the sheer size of the company. Also.9 per cent net return.4 per cent for Ashok Leyland. It is no surprise then that the markets value Tata Motors at almost 13 times the estimated FY05 earnings.46 times. Tata Motors is better placed. compared with 17.
.2 times more than that of Ashok Leyland. For instance. Tata Motors' sales are 1. which are comparable at least in terms of size of operations. This is both because of better profitability and superior asset turnover.99 times in the case of Ashok Leyland. Tata Motors does rule the roost in the four-wheeler space. courtesy its wider product portfolio. As a result. Its net return on investment was 14. based on financial parameters. This partly helps the company in hedging the risk in the commercial vehicles sector.6 per cent). beats Ashok Leyland hands down.98 per cent. Its FY04 sales were almost 4 times that of Ashok Leyland.1 per cent in FY04 was far superior to Ashok Leyland's 11. First. In short. let's look at Maruti's financials.92 per cent in FY04. Besides. which is cyclical in nature. Tata Motors has diversified into passenger vehicles. Again. Maruti does better than Ashok Leyland.4 per cent. the market leader in the commercial vehicles segment. and its net profit is 1. What's more.5 times higher. There are other reasons for the difference in valuation. despite its higher base. and its net profit was 4.5 times more.1 per cent for the Tata Motors. but still falls short of Tata Motors on most parameters. So. at 17.
What's more. Total asset turnover (sales/total assets) for Tata Motors was 2. Tata Motors' commercial vehicles sales grew at a compounded annual growth rate of 24. compared with 1. higher than Ashok Leyland's 5.6 per cent. Its free cash flow as a share of sales was almost double that of Maruti (9. even in the commercial vehicles segment. Between FY01 and FY04. (All earnings-based calculations exclude any exceptional expense/income). the former's net margin stood at 6. unlike Ashok Leyland. But the difference in size makes any comparison between Tata Motors and Ashok Leyland a problem. the Tatas seemed to be a leaner organisation -.Tata Motors is king of the road
Tata Motors. while Ashok Leyland lags far behind with a valuation of a little over 9 times FY05 earnings. Tata Motors scored higher on both profitability and asset turnover.4 times that of Maruti. its commercial vehicles sales have grown at a faster rate. Tata Motors' net return on investment (net profit/total assets).
2009. Makes me wonder why it never was a hit.” it added. On February 24. Finance Minister Pranab Mukherjee had announced a two per cent excise duty cut as part of the interim Budget. “The third stimulus will boost demand for commercial vehicles facing declining sales. I also feel the braking is far superior than a TATA and they had developed an Full Air Brake system much earlier. Comfort has always been better with Leyland which is probably why it is the preferred choice down south for long haul operations. Leylands simply rule in and around Karnataka. In the sense that their buses used proper suspension struts along with the usual leaf springs. Off course Tata scores in refinement but as far as buses are concerned low maintenance cost and greater reliability takes the front seat. The further cut in excise duty will improve the financial position of truck makers who are under severe constraint. Leyland had a proper bus to offer to the customer much before TATA. on an average. KSRTC buys AL and Tata bus chassis in 2:1 proportion. I later discovered they used ZF Automatic Transmission and boy were they good.In the wake of the excise duty cut. to boost a sluggish market. It was quiet.
. “In line with the excise duty reduction from 10 per cent to 8 per cent in respect of trucks and auto components. Eicher Motors chairman S Sandilya said. to over Rs 16. They are a lot slower to accelerate but once speed is built no TATA can come close. the KSRTC depots have only ALs. But in the truck sector. 2008. the market could see a steep cut in the prices of heavy motor trucks and other ferrying automobiles.000 per vehicle.
Point To Be Noted:(postings in the net) Leyland wins hands down. The government also cut tax rates on services to 10 percent from 12 percent. Ashok Leyland said that they will reduce the cost of their units by Rs 16.” “The impact of the duty reduction will work out.” the company said in a statement. I do not know much about BEST in Bombay but had travelled in one of their old fleet of rear engine automatic transmission Ashok Leyland Air Conditioned Buses and I was stunned. In Kerala. Ashok Leyland will pass on the full benefit to its customers. Truck manufacturers have decided to pass on the benefits to their customers. probably due to cost during the time it was launched but they should re launch this bus. Full Air Suspension (Front & Rear) excellent refinement after all the abuse and had superb acceleration. on Feb 23. the most popular vehicle here is Tata semi forward trucks due to their lightweight and low initial cost. The drivers invariably prefer Leyland due to its strong low end torque and driveability and in the ghat sections in Kerala. Tata Motors has reduced the prices of its trucks by 2 per cent. Kerala and Tamil Nadu.000.