Happy to hold numbers in challenging biz environment: M&M

Mahindra and Mahindra's (M&M) sales figure was up 22% to 45,836 units in August. Its passenger vehicle (PV) sales were up 30% to 21,831 units and four-wheeler commercial vehicle (CV) sales rose 20% to 14,267 units.

Vivek Nayer, Senior Vice President, Marketing, Automotive Division at M&M said they are happy to hold numbers in a challenging business environment. Going ahead, the company is cautiously optimistic about the festive season because generally, this is the season when sales pick up. However, this year with high interest rates customer sentiment remains challenging and Nayer hopes for positive cues to change this mood.
Nayer also informed that M&M is going to launch the compact SUV Quanto in mid-September.  Here is the edited transcript of the interview on CNBC-TV18. Q: While YoY it is a flattering 40% growth nearly 39.5% as far as the Utility Vehicle (UV) segment is concerned, on month on month it’s actually flat. It’s just as what you did last month. Would that be a worry that you may not be able to build on the current numbers?
A: I don't know what figures you are referring to, because our figures are 39% MoM growth for the passenger vehicle segment which includes UVs and Verito and YoY growth is 30% for the passenger vehicle segment. Obviously that’s driven by not just our traditional UVs like Bolero, but also the new products like XUV and more recently the Verito has done very well.
This month we have crossed 2,000 units on Verito and the new look Verito has been accepted very well in the market. We are pretty happy to have delivered these numbers in a challenging environment. Q: The volumes that you have delivered so far are indicating about a 25% YoY growth in UVs and about 20% in LCVs. Do you hope to maintain this run rate?
A: Overall, in this month as a sector we have grown 22% and in a challenging environment 22% growth is pretty good. Even on a YTD basis our sector growth has been 22%.
Going forward, as we come closer to the festival season we are cautiously optimistic, because normally as the festival season comes closer more people start thinking about buying durables like autos and cars. We are cautious because the overall environment still continues to remain quite challenging, interest rates continue to be high and we are hoping for some positive cues so that the customer sentiment starts changing. Q: I have a breakup of your automotive segment. I understand UVs including Verito was 21,831 vehicles compared to 22,000 something in July of this year. So August over July is really flattening out. Likewise, the total automotive domestic production I understand is 43,216 compared to 42,799 which is higher, but it still seems to indicate that MoM the increase is not that rapid. So what I am asking is that whether going forward you will be able to maintain a growing run rate or you kind of stabilize at these levels?
A: Passenger vehicle sales in August were 21,800 and in July it was also 22,000. So we are in that ballpark 22,000.
_PAGEBREAK_ Q: That's exactly what I am asking. Since you don't grow MoM should we assume 21,000 should be about the average run rate?
A: We don't comment about future numbers, but we are cautiously optimistic as we are now approaching the festival season. But we are hoping that there will be some uptake in customer sentiment. We are hearing some news that in the next few months there maybe some good news on interest rates, but we are all hoping for this. Q: Are you finding demand resistance at higher levels? Will you have the elbowroom to push up prices if the need arises, say because of higher taxes on diesel vehicles?
A: You will have to wait and see. As of now all I am saying is 22% growth in a challenging environment is pretty good. We are pretty happy with that. Q: Mini Xylo, Mini Verito, how much do you expect that to prop-up overall volumes?
A: I think you are referring to our compact SUV which we have named the Quanto. That is expected to be launched in the second half of September and the sub-4 meter Verito is expected to come by the end of the financial year and then of course we have Rexton as well as NXR which will be launched in the festive season.
We have a few launches in the pipeline and that has been our strategy to excite the market in the past and that is what we hope to do in the future. Q: Are you getting some relief on raw material prices, are you paying less for steel or other raw materials and will you therefore get some elbowroom improvement in margins?
A: No comments on margins.