Mahindra & Mahindra expects a flattish growth trajectory in passenger vehicle sales for the second half of this fiscal, said Rajesh Jejurikar, Executive Director (Auto & Farm Sectors).
He made these comments during the company’s second quarter results in Mumbai while reiterating that demand may increase in November due to the festive season. On the subject of high stocks at dealerships, he said this was common during the festive season. The current inventory rate for M&M dealers is around 30 days.
The company has been receiving on an average 51,000 bookings every month in Q2 with Scorpio N leading the race. According to Jejurikar, the easing of the chip crisis has helped the company ramp up SUV volumes to 1.14 lakh units during the quarter. While this has reduced the waiting periods for XUV700 and Scorpio N, the higher end versions of these SUVs are still seeing long waiting periods.
Meanwhile, in the e3W space, M&M reported volumes of 18,600 units during the quarter. It expects to close the year with 74,000 units which will be five times higher than what was achieved in FY23. As for light commercial vehicles, sales in Q2 totalled 27,439 units, an increase of 19.5%. Jejurikar was bullish on electrification prospects in this segment which was already 10.5% during the quarter.
The company reported consolidated revenue of INR 18,869 crore for the auto sector in Q2, up 20%. He said the SUV revenue market share was 19.9% with cost efficiencies going full steam ahead in operations. M&M is also looking at a five-fold revenue growth for its Classic Legends business by 2027, said Anish Shah, Managing Director & CEO, while adding that it would be open to having marquee investors on board.
Farm Sector Woes
M&M’s farm sector has been facing headwinds and its consolidated Q2 revenue fell 4% to INR 8,373 crore. Jejurikar said the marketing spend associated with the launch of the OJA platform as well as the Naya Swaraj and Swaraj Target series had eaten into revenue. Since this was a one-time impact, the forthcoming quarters would see an improvement in revenue driven by demand.
Farm equipment volumes totalled 89,000 units, 3.8% less than the same period last year and this was owing to the fact Q2 of last year marked the beginning of the festive season which has been pushed to Q3 this year. Shah added that the global business for tractors was also not in the best of shape thanks to inflation in Turkey.