M&M banks on product diversity to drive growth

With less than a week to go before the curtains come down on this fiscal, Mahindra & Mahindra is confident of sustaining the momentum in its auto business through 2012-13.

“We are on a growth trajectory and need to keep the excitement going. Our diverse product portfolio gives us the opportunity to balance our business and drive growth,” Mr Pravin Shah, Chief Executive, Automotive Division, told Business Line .

He was quick to caution, though, that the external environment was not ‘in the best of shape' in terms of high interest rates, commodity prices and the overall slowdown in the industry. “We need to be careful while managing strategic plans,” he said.

Year of XUV

This year has been memorable for M&M thanks to the XUV500, which has caught the fancy of the market. Since its launch last September, it has notched up a 36 per cent share in the high-end SUV market. The company hopes to wrap up the order backlog by end-April and enhance monthly production at the Chakan plant near Pune to 5,000 units from August.

While India will be top priority (followed closely by South Africa), Australia, Europe and South/Central America have been identified as the new global destinations for the XUV500 next fiscal. “While we ramp up capacity, we will open up other markets to ensure optimal utilisation at Chakan,” Mr Shah said.

Scorpio and Bolero

And while the XUV500 has hogged the limelight over the last few months, M&M's first flagship product, the Scorpio, is not lagging behind. “Its sales have actually grown post-launch of the XUV500. The Scorpio has now extended its presence to Tier 2 and 3 centres,” he added.

However, in terms of big numbers, the Bolero is the leader of the pack. M&M is hopeful that its sales this fiscal will cross the one-lakh mark. Likewise, it is betting big on the Xylo refresh doing the trick in boosting its presence in the MPV segment.

“Each class of customers has an aspiration to grow and our portfolio of products helps make this a reality. The (product) development process starts and ends with the customer. That is how we understand his needs and aspirations and bring these back to the drawing board,” Mr Shah said.

Asean target

The next big move for M&M is the ASEAN region where it plans to set up a manufacturing base. Indications are that the choice of location will be a tossup between Thailand, Indonesia and Malaysia. Traditionally Thailand has been the favoured destination for Japanese automakers like Toyota and Honda but Indonesia is now rapidly emerging a force to reckon with.

From M&M's point of view, the biggest draw is the growth in Thailand, Indonesia, Malaysia, Vietnam and the Philippines which accounted for sales of 2.4 million units in 2011. “This figure is estimated to grow to 3.7 million vehicles by 2015-16 and is clearly something we cannot ignore. Our products have the potential to do well here,” Mr Shah said.

>gmurali@thehindu.co.in

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