• HCVs (higher tonnage range)     such as tippers are expected to see a further pickup in volumes on the back of infrastructural activities and mining. Fleet utilization has improved to 75–80%. With the resumption of activity – such as work from the office, interstate transport, and the opening up of schools and colleges – bus demand, which currently stands at 25% of normal demand, would pick up. LCV demand would come from the need to fulfill last-mile connectivity.

  • Replacement demand: Recovery is expected on a) the huge transition in technology (from BS3 in Mar’17 to BS6), b) corporates’ increasing focus on environmental sustainability, c) improving confidence among fleet operators, and d) the implementation of the scrappage policy from FY24. The average age of the fleet at 9.5 years in FY21 was at the highest level (v/s 8.7 years in FY19).
  • M&HCV market share eroded further by ~4.6pp QoQ (-710bp YoY) to 22.4% due to a) a further shift from M&HCVs to ICVs by 15pp, b) ICVs shifting to CNG (40–50% of industry volumes), c) continued weakness in Buses, and d) continued weakness in the southern market. LCV market share stands at ~23.3% in the 2–3.5 tonne category (the highest). However, the management is hopeful of recovering market share as a) it launches its CNG variants in ICV in 4QFY22, b) the southern market recovers and its reach expands in the northern and north-eastern markets, c) the HCV segment recovers, led by recovery in infra/construction, and d) the Buses segment revives.

  • Transfer of EV and eMaaS businesses: AL is transferring its EV business to Switch Mobility Automotive Ltd (India) for a cash consideration of INR2.4b. Additionally, it is transferring its EMaaS business to promoter-owned Ohm Global Mobility (Ohm) for INR650m – this would subsequently be transferred to Switch Mobility UK. These transfers are a part of the consolidation of all the EV and eMaaS businesses under Switch Mobility. Switch Mobility UK is 99% owned by Optare, which in turn is 91.8% owned by AL. Both Switch Mobility UK and Ohm are looking to raise funds for their CAPEX plans. The management indicated it would share further details and clarity on these transfers on approval from regulatory authorities.



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