SWOT Analysis of Ashok Leyland: Commercial Vehicle Leader

The last time we guided you on the business model of Tata, in this blog, we will do a detailed SWOT analysis of Ashok Leyland.

Ashok Leyland is the 2nd highest manufacturer of commercial vehicles in India. A footprint that extends across 50 countries has 9 manufacturing plants across the globe and launched India’s first electric bus.

The company so far is doing great because of its effective and strong marketing tactics. In today’s world marketing and its digital aspect is essential for the growth of a company. If you want to learn more about digital marketing, do check out Free Digital Marketing Masterclass by Karan Shah the founder and CEO of IIDE.

In this blog, we will look at the SWOT analysis of Ashok Leyland but first, let’s know more about the company before starting with the SWOT analysis of Ashok Leyland. 

Products of Ashok Leyland 

• Trucks
• Buses
• Light Vehicles
• Power Solutions
• Defence Vehicles 
• Spares 

Competitor of Ashok Leyland

• Tata Motors
• Eicher Motors
• Mitsubishi 
• Volvo
• Mahindra 

Since we have a wider perspective about the organization’s key products & market, let’s go ahead and observe the SWOT Analysis of Ashok Leyland.

SWOT Analysis of Ashok Leyland 

Ashok Leyland has been a Dominant pillar in the Indian economy. We shall do a thorough SWOT Analysis of Ashok Leyland Company to gain insights into the company’s strengths, weaknesses, opportunities and threats.

Now, from the SWOT Analysis of Ashok Leyland, let us first begin by exploring the strengths of Ashok Leyland.

Strengths of Ashok Leyland 

• Spare Parts: Ashok Leyland provides services like spare parts, which ensure their customers have additional benefits for their vehicle maintenance, which increases the company’s sales.
• Bus Segment: Ashok Leyland for bus sales globally comes under 3rd position. Company buses sales most part comes from State Transport Undertakings biddings because of this reason there is good growth in the company’s bus business.
• Persistent Product Portfolio: The company’s significant revenue comes from medium and heavy commercial vehicles like trucks, light commercial vehicles, and buses from export. Other than these segments, the company supplies defensive vehicles to the Indian Army.
• Strong Manufacturing Capability: The strong manufacturing facilities of Ashok Leyland have spread all over India. It also has amenities in the UK, Czech Republic, and the UAE. It helps the company to maintain economies of scale.

Weakness of Ashok Leyland 

• Interest Rates on Loans: Ashok Leyland has its subsidiary ‘Hinduja Leyland Finance’ provide loans to their customers. High interest rates lower commercial vehicle sales because people avoid buying big commercial vehicles. 
• Financial Analysis: Company borrowings have seen a significant increase from the financial year 2019 to 2020. Company EBITDA faced a downfall due to a decrease in sales from 2019 to 2020 causing net profit to decrease.
• Market Share: Ashok Leyland strategy is straightforward. They stick to the same plan and do it very well, but Ashok Leyland’s problem is that their market share is not as substantial as TATA Motors, so they need to improve their market share. That is the first big thing.

Opportunities for Ashok Leyland 

• Economic Condition: Good economic conditions will increase the demand for goods and commercial vehicles because commercial vehicles are used for transportation. Thus, Ashok Leyland has opportunities to increase its sales.
• Capital Incentives: Ashok Leyland is a capital intensive company. They have to spend so much wealth for expansion. Ten years forward, the company’s situation can become very strong.
• International Markets: Ashok Leyland must capture the global markets adequately. They do not have solid international markets near borders. Once they start making their demands or making their needs strong at this pace, their sales will increase rapidly.
• Electric Vehicles: Ashok Leyland company should start focussing on manufacturing electric vehicles because Delhi Government has observed that in the next 6-7 years, public transports will be electric vehicles. If this happens, Ashok Leyland will take a significant advantage because they are Delhi’s top-selling commercial and shared vehicles. And that is how they will improve their books.

Threats for Ashok Leyland 

• Economic Condition: The rise in diesel prices and lockdown due to Covid 19 affected India’s economy, which led to a decrease in demand for goods and commercial vehicles and hence a decline in the growth of the retail sector.
• Government Norms Affecting Sales: In the financial year, 2020, a 54% drop in domestic sales was observed because of an adverse effect due to changes in standards by the government, e.g. vehicles can increase load capacity, so it also affects sales.
• Government Rules: According to government rules, companies need to follow BS6 emission norms which lead Ashok Leyland to sell all their old BS4 vehicle inventories. Ashok Leyland offered significant discounts to sell their BS4 stocks. 
• Competitors: Tata motors has outstanding market shares in the truck, LCV and Bus segments in the domestic market. Because of which the company Tata Motors give tough competition to Ashok Leyland.

This ends our detailed SWOT analysis of Ashok Leyland. Let us conclude our learnings below.

To Conclude

Ashok Leyland is a leading company in automotive manufacturing and has a well-diversified portfolio across the automobile industry. If the company lowers their interest rates, it will result in higher commercial vehicle sales hence beneficial for the company and their shareholders.

The company has a bright future ahead in the commercial vehicle industry and this company has already made plans according to future requirements and demands of the customers. They are also creating new models and designs according to a new trend that will prevail over the markets across the world.

Digital marketing is an area where the company can improve itself which will help it improve its market share and visibility. If you are willing to learn more about the various types of digital marketing techniques & concepts, check out IIDE’s 3 Month Advanced Online Digital Marketing Course and get started on your path.

For more extensive digital presence evaluations on other companies, you can go through our IIDE Knowledge portal.

We hope you found this blog on the SWOT analysis of Ashok Leyland to be interesting and useful! Do share your thoughts and views within the comment section below.