To continue its growth momentum and meet customer demands, Mahindra has lined up an additional investment of Rs 2,900 crore to increase production capacity for the new products. This translates to a total CAPEX of Rs 17,000 crore under its 3-year plan (FY22 – FY24).
For fiscal gone by the company saw its highest-ever standalone revenue for the auto and farm equipment segment; achieved leadership position in the second half of FY2022 in SUV revenue market share; auto business delivered the highest ever quarterly UV volumes in Q4; robust exports including highest tractor exported; and leadership in electric three-wheeler space among others.
From a market share of 2.4 percent in FY2020 to 7.4 percent in FY2022, the company’s success in the industry can be attributed to its new product launches – Thar, XUV700, and new variants in the XUV300 category.
What’s interesting to note is the fact that despite having one of the longest waiting period (18-24 months on certain models) for its SUVs the company has seen “only 10-12 percent cancellations.” At present, the company is producing around 5,000 XUV700 a month and aims to ramp up the production to be able to meet the customer demand. Rajesh Jejurikar, ED, Mahindra & Mahindra gave an example of the XUV700 MX variant which only got 5 percent bookings, while the remaining went for the AX variants, which interestingly has more than 200 semiconductors in it.
Dr Anish Shah, MD and CEO, Mahindra & Mahindra was optimistic that the worst of the semiconductor shortage is now behind the industry and the company is better prepared to meet the customer demand. It has earmarked an initial capacity of 6,000 units for the new products, which is “quite reasonable”.
With the new Scorpio-N launch on June 27, the company is hoping to be better prepared with a better product mix to avoid delays in deliveries. In addition, the company has also worked on its supply chain partners to avoid disruptions and reduce waiting time for deliveries.
Race to electric is not over
Mahindra was amongst the first movers in the electric vehicle space but is yet to launch a product offensive in the market. Shah believes that while some OEMs have introduced and got acceptance in the e-four-wheeler space, the industry is just in the first “5-10 over of a test match. What we had with the Reva was essentially the practice match that happens before the test match. There is a long way to go. We don’t have a series of born electric platforms in India. They will come as it happens. We have a strong range of born electric vehicles that we will bring in.” In fact, the company has also announced the launch of the 4.2-metre XUV300 in the first quarter of CY2023.
What’s more, on May 18, Mahindra signed a strategic partnership with Volkswagen to source EV components. This move will allow it to leverage Volkswagen’s global strength and also be export ready. However, the first preference would be to meet the demand for Indian customers.
The automaker is also a major player in the tractor segment, but it does not see the domestic market moving towards electric tractor anytime soon. On the export front, Mahindra could very well introduce electric tractors.
In terms of the two-wheeler space, while the company is already manufacturing electric scooters for Hero Electric under a strategic partnership, and Peugeot e-scooters for export. It does not plan to enter the space anytime soon but is “not ruling out it for some state in the future”.
