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Mahindra hopeful worst over for chip crisis

Mumbai-headquartered SUV and tractor major Mahindra & Mahindra’s MD & CEO, Dr Anish Shah believes that the “semiconductor shortage is now largely abetted” and the long waiting time for vehicles is due to unprecedented demand.

Mahindra hopeful worst over for chip crisis

Mumbai-headquartered SUV and tractor major Mahindra & Mahindra’s MD & CEO, Dr Anish Shah believes that the “semiconductor shortage is now largely abetted” and the long waiting time for vehicles is due to unprecedented demand.

Shah made the remarks during Mahindra’s Q1 FY2023 financial results.

The Covid-19-led pandemic had weighed heavy on the automotive industry, especially with supply chain disruption, semiconductor shortage, and container challenges. But it has now started seeing signs of easing up. In fact, it allowed OEMs to plan and streamline their product portfolio and manufacturing plans.

Mahindra on its part is witnessing a mixed bag of situations. On one hand, it has got overwhelming success in form of customer demand for its recent launches – XUV300, Thar, XUV700 and Scorpio-N – with waiting periods ranging from a few months to up to 24 months for the XUV700. The long waiting period is not a “crisis” from the OEM’s perspective, says Rajesh Jejurikar, ED – Auto & Farms Sector, Mahindra & Mahindra.

“While it is a crisis from the customer’s perspective. The customer wants to book the vehicle despite the 22-month waiting period. We have put out our Capex requirement and revised it last quarter to expand capacity and meet the increased demand. We will soon start seeing improvement on a quarter-on-quarter basis. At present, we are producing close to our capacity to begin with for example the XUV300. For the Thar and Scorpio too we will ramp up production,” says Jejurikar.

It is important to note that Mahindra as on August 1, is sitting on closed to 1.4 lakh vehicle bookings for its XUV300, XUV700, Thar, Bolero (incl Neo) and Scorpio. The numbers are excluding bookings for the new Scorpio-N.

Referring to the demand for the Scorpio-N which saw more than 1 lakh bookings translating to a value of $2.3 billion (Rs 18,147 crore) in under 30 minutes, the company says “it is a world record of a sort” and it is “verifying it with external agencies.”

Responding to a query on being able to meet the 25,000 delivery commitment for the Scorpio-N this year, Jejurikar said that the company is ramping up production with prioritising the top 2 trim variants. And it will begin with the production of 6,000 Scorpio-N per month on an ongoing basis and gradually ramp it up. 

Also read: Mahindra reports profit of Rs 2,196 crore in Q1 FY2023

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