Dec 04, 2012 09:16 AM IST | Source: CNBC-TV18

Sentiments not good for auto industry, says M&M

Pravin Shah, chief executive of automotive division at M&M says the sentiments are not good for the industry. "Traditionally, the month of December always is a slow month. It is a challenging month for the industry," he adds.

Mahindra and Mahindra's total sales in November rose 18 percent year-on-year to 48,143 units, but that fell 9.9 percent on month-on-month basis. The company had recorded its highest ever auto monthly sales at 53,438 units in October.

In an interview to CNBC-TV18, Pravin Shah, chief executive of automotive division at M&M says the sentiments are not good for the industry. "Traditionally, the month of December always is a slow month. It is a challenging month for the industry," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Gautam Broker and Latha Venkatesh.

Q: What is the outlook looking like? On a month-on-month basis, numbers have gone down, but perhaps that would be natural given the festive difference. How are you seeing December? Are you expecting it to stabilise here or could there be a down tick?

A: After having 15 percent growth during October, in the domestic market, we have grown by 23 percent. Overall, we have grown 18 percent, over 29 percent growth during the month of October. Surely, both these months have had festive season, compared to the last year, when the festive season was in the month of September. Overall, the sentiments are not good for the industry. Traditionally, the month of December always is a slow month. There are no new infrastructure projects, interest rate continuous to be harder. December may not see the type of growth what the industry has seen. Traditionally, December month is a challenging month for the industry.

Q: If you can call it the disappointment with M&M comes after a long time because your September, October months were very good numbers. For the first time, probably in many months, we saw a fall in the month-on-month output. You were doing 53,000 odd sales in October and you did 48,143 units for the month of November. What do you think could be the half year average? If you were to take the October-March period, would it be lower than the previous year’s October-March? What is the ballpark you are expecting to achieve?

A: If you look at Mahindra, surely our growth percentages are far better. As of the end of November, we have cumulatively grown 21 percent in domestic market and around the same percentage for the full of auto sector. In the passenger vehicle segment, we had grown around 32 percent for this seven months period.

Two segments are growing higher. The utility vehicle (UV) segment has grown, at the end of November, by around 64 percent. The small truck, 2-3.5 tonne, has also grown by around 76 percent. The reasons for growth in both these segments are mainly on account of the current products doing well and addition of new products into these segments.

Q: What will be the average growth for the year? Do you drop from over 20 percent to something like 15 percent for all vehicles? Like wise for specific categories like SUVs, what might your moderation be?

A: I would like to say that the two segments, in which Mahindra is a leader, have been growing unprecedentedly at a high percentage. We expect that the growth should continue not of this high percentage, but it will be higher. If you see the last four months, it has grown more than 50 percent. We expect this growth to be continued, unless something extraordinary happens in the future months.

Q: Is it would be fair to say that in terms of the growth rates we have seen the best behind us now. You have to catch up with very high base and also some competitive pressures. In that, you try and maintain the growth rate. It is difficult to beat you have already done in this year?

A: No. We have added a couple of new products into our portfolio like Quanto, in the two months of the launch, we are seeing more than 12,000 bookings. The booking for the sports utility vehicle (SUV) continues to be strong. So, with a strong product portfolio, we will have a growth momentum continuing, though competition is increasing. We also have robust product portfolio for us to continue to be a leader.

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