Whilst the transportation sector this year will see the impact of the EURO 4 standard implementation coming into play in July in Sri Lankan, Sri Lanka’s Ashok Leyland Chief Executive Officer (CEO) Umesh Gautam in his annual review points out that higher initial investment in purchase of the vehicles and use of cheaper fuels in vehicles will be replaced by super diesel as required by EURO 4 engines will adversely impact the running costs and profitability of the sector.

In the lately released annual report of the company he however, commend the government in its efforts to go green, but stresses that commercially, transportation business models run on very thin margins and are cost sensitive.

“While we expect demand from key customer segments such as construction to pick up, external shocks such as weather and variables such as exchange rate volatility and high interest rates will drive our costs and dampen our outlook” he notes. According to him the switch in the duty structure will work in favor of their light commercial vehicle offering which boasts the best-in-class safety features and driving comfort in the segment and has faced sluggish sales due to cheaper alternatives in the past.

He further notes that Lanka Ashok Leyland will continue to explore innovative partnerships to bolster their turnover while their strategy to expand other revenue verticals such as spare parts, workshop repair segments and business of hiring of buses will continue to build steam in 2018 giving them a lot to look forward to.

“We remain cautiously optimistic for the year ahead” he adds in his review.

- Reporting by Devendra Francis