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Mahindra & Mahindra (M&M) expects vehicle sales to be muted in the third and fourth quarters even if tractor sales come to the company’s rescue.
“I think tractor sales will definitely help us… I don’t expect a turnaround in the next two quarters,” said Pawan Goenka, Executive Director and President (automotive and farm equipment business).
On Wednesday, M&M posted an estimate-beating 9.7 per cent rise in net profit in the seasonally weak second quarter, aided largely by lower material costs.
The industry has been witnessing a slowdown for many quarters, with medium and heavy commercial vehicles (MHCV) down for the past 16 quarters, utility vehicles for four quarters and cars for the last three quarters.
M&M’s Chief Financial Officer V. S. Parthasarathy said, “The economic scenario continues to be uncertain and the interest rate hike has impacted the auto and finance sectors.”
The company expects sales from the farm equipment sector to fall below 25 per cent in the second half of the fiscal year, though good monsoons helped the tractor industry register a 20 per cent increase in the first half.
“It will be a big surprise if we see 25 per cent growth happening in the next five months of this fiscal, most industry players are expecting 10 per cent growth,” said Goenka.
The truck business still remains a cause of concern, he added.
“The truck industry is in for a long haul. This is the longest slowdown I have seen.”
M&M plans to go global with its electric cars, with its Bangalore-based subsidiary Mahindra Reva set to roll out variants of the E2O, small-truck Gio, Maximo and sedan Verito within a year.
ELECTRIC CARS
“If there is a subsidy, we will launch these vehicles in India. Otherwise, we will launch them only in other markets,” said Goenka.
M&M launched the E2O in Nepal and Sri Lanka and a new generation four-seater E2O in April. However, sales did not take off as expected.
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