Chennai: Truck and bus maker Ashok Leyland expects the domestic medium and heavy commercial vehicle (M&HCV) industry to sustain its current momentum through Sept-Oct, before moderating due to a high base in the second half of the year.“Even if you take a conservative outlook for the second half of the year, we still believe that the industry has the potential to grow by high single digits,” Shenu Agarwal, MD & CEO of Ashok Leyland, said.He added that the outlook for light commercial vehicles (LCVs) was “slightly better”.The company reported a marginal increase in standalone profit after tax to Rs 609 crore in Q1FY27 from Rs 594 crore in the year-ago period. Revenue grew 10% to Rs 9,634 crore from Rs 8,725 crore.EBITDA margin was impacted by higher material costs, but remained in double digits at 10.1% in Q1FY27, compared with 11.1% in Q1FY26.“Our M&HCV (truck) volumes grew 15%. LCV domestic Q1 volume grew 21%. LCV volumes at 18,874 units were the highest ever for Q1 and helped improve our retail market share,” said Dheeraj Hinduja, chairman, Ashok Leyland.However, international volumes declined to 2,461 vehicles in Q1FY27 from 3,011 vehicles in Q1FY26, primarily due to the impact of the West Asia crisis.Meanwhile, the company has undertaken a cost-reduction exercise through value engineering and value-enhancement measures, particularly in material costs (which account for 75% of the revenue) and expects to save about Rs 2,000 crore over the next three years.Discussing industry trends, Agarwal said the M&HCV market had staged a sharp recovery in recent months. Industry growth, which was around 12%-13% in April and 1%-2% in May, accelerated to more than 20% in June and remained strong in July.He attributed the turnaround largely to recent changes in the goods and services tax (GST) regime, which have improved the economics of replacing older commercial vehicles.“The CV industry was sitting on a huge potential, largely because of replacement demand and the ageing of the fleet. It was just waiting for a trigger, which happened with GST 2.0 or GST optimisation,” he said.Improved total cost of ownership from buying a new BS6-compliant truck rather than continuing to operate older BS3 or BS4 vehicles is now driving replacement demand, he said. The replacement cycle is expected to remain a key growth driver for several quarters as older trucks gradually exit the fleet.Agarwal said the improvement was also being supported by lower interest rates, better availability of vehicle finance and an uptick in infrastructure activity.Ashok Leyland expects the upcycle to continue despite a tougher comparison from Oct-Nov, when commercial vehicle volumes began growing at around 20%-21% last year.The company’s board has approved investments of up to ₹825 crore in its electric-bus business in the UK and its housing-finance arm. This includes 25 million euros (about Rs 325 crore) in its UK subsidiary, Optare Plc, to repay loans and meet other business requirements, and up to Rs 500 crore in Hinduja Housing Finance to support growth.
