Ashok Leyland, Tata Motors to witness growth in demand for FVBs

Organized players like Ashok Leyland and Tata motors expect the demand for fully built vehicles to grow post implementation of mandatory regulations.
 
The legislation mandates manufacturers to build safer commercial vehicles (including safer cabins for drivers). The current proportion of FBVs sold by manufacturers stands at 20% which is all set to grow to about 40% as OEM-fitted FBVs will be the most sought-after trend in the market.
 
With the emergence of norms like the new Bus Body Code and ABS becoming mandatory, the unorganized local players will find it difficult to comply with. This will result in customers shifting to OEM-based FBVs, further being driven to an OEM for complete trucking solutions, rather than spending time building one on their own. 
 
A greater consolidation of warehouses is expected post-GST, leading to increased demand for specialized trucks.
 
 
On the performance front, Ashok Leyland posted a profit of Rs 1,223.08 crore in FY17, compared to a profit of Rs 389.60 crore in the previous fiscal and Tata Motors posted a loss of Rs. 2479 crore. 
 
While writing the report, the BSE AUTO index stood at 24151.11, up by 0.54 per cent, whereas, Ashok Lelyand is trading at 93.80, a 0.11% rise intra-day, Tata Motor is trading at 452.80, a 0.98% drop intra-day. The top gainer of the index was M&M, trading at Rs 1398.95, up by 0.99 per cent.