Swot analysis of Ashok Leyland

Strengths

 Domestic market leader- The company has a market share of around 57.5% in 35.2
tonne and above vehicles. Starting from southern India, Ashok Leyland has gradually
expanded its network and reaches in whole of India. This strong market leadership has
given the company an advantage to rapidly scale new products in the market.
 Diversified product portfolio- Ashok Leyland has diversified into various segments
with its main product line providing buses ( double decker, CNG, Vestibule bus
variants), tractors trailers and multi axel trucks, diesel engines (for Gen set, industrial
and Marine applications) and logistic vehicles to Indian army. This diversification
helps in stabilizing sales and profits and also gives investors’ confidence in
company’s long term growth prospects.
 Manufacturing Capabilities- Ashok Leyland has its manufacturing facilities spread all
over the country as well as abroad in Czech Republic, UAE and UK. With this it
became the 10th largest manufacture of trucks in the world. The spread out of these
facilities also helps in maintaining economies of scale.
 First mover advantage- In an increasingly crowded market, Ashok Leyland has
always been aggressively pushing forward with new product launch. It is continuously
adopting new technology and innovation building better products than its competitors.

Weakness

 Dependent heavily on domestic market- 86.3% of Ashok Leyland’s revenue comes

from domestic market. This high dependency makes it susceptible to any socio –
political change in the country. Its competitors like Tata Motors are gaining
competitive advantage by diversifying geographically.
 End of Joint venture with Nisan motors- Ashok Leyland and Nisan Motors terminated
their 8 year old relationship in 2016. Both the company’s filed lawsuit against each
other which tarnished their reputation in the market.
 Additional cost of building supply chain network - Artificial Intelligence has
altogether adjusted the plan of action in the Consumer Cyclical industry and given the
diminishing centrality of the dealer network Ashok Leyland needs to assemble strong
 supply chain network. This will need high additional cost which could affect the
financials of the company.

Opportunities

 Collaboration with local players- A tie-up with local players can likewise provide
chances of development to the Ashok Leyland in worldwide markets. These players
have local expertise while Ashok Leyland can bring global procedures and technology
creating a synergy.
 Government regulations- stringent rules are being formulated by the government for
the Auto and Truck manufacturer industry making it difficult for the unorganised
players to operate in the market. This give Ashok Leyland an opportunity to expand
its customer base.
 Export- the global automobile industry has indicated consistent development in the
past years and subsequently created opportunities for Ashok Leyland to expand
geographically. The organization should concentrate on tapping these opportunities
made in the worldwide market, particularly in the developing nations to exploit the
development in the business and with it grow its impression over the globe. This will
also reduce its dependency on domestic market.

Threats

 Political environment- political environment has been changing drastically in the last
few years. Political instability in UAE, Britain leaving European Union, US China
trade war all the factors are collectively impacting the company’s domestic and
international market share.
 Saturation in market- one of the challenges that the commercial automotive industry is
facing is that rural markets are stagnant and urban markets have saturated. Due to lack
of infrastructure and massive distance in rural markets it is expensive to cater to the
population there which is also slow in adopting new technology.
 Competitors’ growth- Both local and international competitors like Tata Motors,
Eicher Motors, Mahindra and Mahindra are catching up in terms of technology and
taking up market share. Coupled with the government allowing 100% foreign equity
ownership in vehicle manufacturing sector these competitors pose a major threat for
Ashok Leyland.