Ask Pawan Goenka if he is worried about the road ahead for Mahindra & Mahindra’s truck business.
Prompt comes the reply from the President of the Automotive and Farm Equipment sectors: “You need staying power in the auto business and cannot break into a sweat over monthly sales.”
M&M recently bought out partner, Navistar’s stake in the joint venture which operates out of a facility near Pune.
The American truck-maker is going through a tough period and is prioritising business in the US and Canada. As a result, it has frozen investments in countries such as India.
Goenka, however, does not think that there is any reason to panic. “We have a three-year plan for our trucks and will then take a call to determine the road ahead. We will not look at every quarter to take a decision but stay focused during these three years,” he says.
The President of M&M admits that things would have been different had the split happened three years ago as his company would have been “ill-equipped” to operate trucks on its own.
Today, there is no discontinuity with Navistar continuing to support the business even though it is no longer an equity ally.
Reiterating that “there are no low-hanging fruits anywhere in any segment/sub-segment be it SUVs, bikes or pickups”, Goenka says one needs to take tough calls in business which, at times, could be risky and end in failure. “So far, the results will show that we have succeeded more often as in the case of Club Mahindra, Mahindra Finance, Satyam and Punjab Tractors,” he adds.
In the auto space, the company has a lot of ground to make up in two-wheelers, the (Reva) electric car project, trucks and its recent Korean acquisition, SsangYong Motor.
However, Goenka believes these are still early days in a business model which is essentially long-term and, hence, not worth worrying about.
What is a bigger source of anxiety, though, is the slowdown in heavy commercial vehicles with the market clueless when a turnaround will occur.
Further, the landscape has changed with more players entering the market. An arena which only comprised Tata Motors, Ashok Leyland and Eicher now includes Volvo-Eicher, M&M, AMW, Daimler, MAN and Scania.
As Goenka says, any HCV maker keen on having a meaningful presence should have a market share of at least 7-8 per cent. At present, five players account for a combined 20 per cent against Tatas and Leyland’s 80 per cent plus.
To expect this to double would only be wishful thinking. “The only way out is to consolidate or continue losing money,” he adds.