Three-wheelers are the only trouble: M&M

ALSO READ See latest News about Bajaj Auto See previous management interviews See what other Experts & Brokerages are saying about Bajaj Auto Bajaj Auto BSE | NSE 31/05/12 Are Mutual Funds betting on Bajaj Auto? Other Stocks in this news TVS Motor Company | Mahindra and Mahindra |

The auto pack is today under pressure after the December sales numbers were released. Bajaj Auto has been a major drag on the market, affecting other auto  players such as TVS Motor . While passenger cars have managed to stay afloat, two-wheeler sales and truck sales have been disappointing compared with last year's sales figures.

Check out Bajaj Auto 's standing: See 20% value growth in FY12

In such a tough environment, Mahindra & Mahindra has clocked decent sales figures in December. In fact, the company is doing well across segments, except for the three-wheelers. Vivek Nayer, senior vice president- marketing, automotive division, M&M spoke to CNBC-TV18 about the growth outlook of the company.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: First, if you can tell us about what kind of growth you have seen overall in the month of December - you have done a good growth of 42,761 units this time - do you think you can maintain this kind of run rate in the next couple of months?

A: We are pretty delighted with the performance in December which is a 26% growth. If I split up that for you, passenger vehicles which comprise UVs and Verito grew at 24%, the four-wheeler commercial vehicle which includes passenger grew 35% and exports grew 89%. Those are the key highlights.

Whether this will continue, it is difficult to answer. It all depends on what happens on interest rate, what happens on commodity price increase and what happens to consumer sentiment.

Q: Will you have to sacrifice your margins to see growth because in the month gone by, you have offered some heavy discounts on most of your products like Scorpio, Xylo etc will you continue to do that?

A: That is not unusual because in the month of December, most auto companies actually offer discounts to clear stocks. This happens almost every year.

Q: Tell us about your XUV500 you have reopened bookings but what have you have done so far and what kind of response are you guys getting from the ground?

A: Right now the focus is on speeding up deliveries to customers who are waiting. For that, we are ramping up production pretty fast. Hopefully, in the month of January, we should target about 3000 per month production. As mentioned earlier, we will reopen for bookings some time during the month.

Q: On a year on year basis, the four-wheeler pick up business has done pretty well but on a month on month basis there has been a slight decline - it could be seasonal, but do you think there is a declining trend or will it be largely held?

A: The only concern that you are seeing right now is on the three-wheeler business which is more sensitive to interest rates. Otherwise, across the board, the business has done well.

Q: Given the current situation where the retail demand is slowing down a little bit, do you think this run rate can be maintained, and will you continue to give more discounts on products like Scorpio and Bolero?

A: Let me take the second question first. The discounts happened in December because of the year-end. We do not follow discounting as a policy on an on-going basis. So that won't happen.
We do not mention guidance for future, but I would just say that we are hopeful that interest rates having peaked and in 2012 we will see some softening of interest rates; that can only help the industry.

Also on the commodity price front, we are hopeful there will be some moderation. So that can also be good for industry. If both of these things happen, then I think 2012 will be a better year than 2011.

Q: Given that expectation of a possible softening in commodity prices can we say that price hikes are largely behind and pricing would be stable from hereon?

A: This is the expectation that you generally see around, but we have to wait and see what actually happens.

Q: Where does the market share stand currently overall and in the commercial vehicle segment?

A: November figures on the UV segment, we are about 60% market share. In UV, we had grown about 16.4%. If I look at other segments, on LCV, the 2-3.5 tonne segment, we are going strong at about 70% share and ones below two tonne, we are about 22-23% share. If I look at the mini van segment, we have the both Maxximo and Gio, we are at about 32% share. So the market share is looking good. Verito is about 11% share, which is a jump of almost four share points over the same period last year.