Not products, individual brands will drive growth: M&M

Arun Malhotra, senior vice-president, sales & customer care, automotive division, M&M says, from the industry perspective, it will be a challenging year and I am not very positive on the overall market sentiment, in terms of interest rate, hikes, government duties and news of fuel price hike.

“Our UV portfolio is a much diversified portfolio. Ballero, Scorpio, Xylo and XUVs all are doing well and we are expecting a good momentum. Small LCV is also okay. The real challenge is the three wheeler segment which is under tremendous pressure because of financing issues.” said Malhotra. Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video. Q: There has been a perceptible fall in April sales compared to March sales, is it slowing of demand or a seasonal push off?
A: The automobile industry has not performed well in April. But, we have registered a growth of 33% in passenger vehicles and 29% in domestic sales which are better numbers when compared to the entire industry. Overall, three reasons can be attributed for March performance.
One, excise hike was expected, so much of the sales happened in March.
Two, five-six states planned to hike registration and road taxes on April 1 and this news was know in advance. As a result of which, some April sales were pre-poned to March, which added to increased number.
Third, RBI’s new policy with reduced lending rates did not impact at the ground level. These are the factors which are impacting the industry in April. Q: What do you think is the trigger now to drive volumes higher?
A: From the industry perspective, it will be a challenging year. It is for every company to see how it utilise its product portfolio and encash maximum possible. We tried to utilise our product portfolio in April and very much succeeded. I am not very positive on the overall market sentiment, in terms of interest rate, hikes, government duties and news of fuel price hike. Q: Which products will drive growth for M&M?
A: Products can be across the range which can drive growth. More than products, it will be individual brands, which will rake in numbers. In April, some brands be it our models or competitor models stood their ground very strongly. Brand which did not have demand or which were aggressively pushed through promotion schemes have flattened out very badly. Q: What are your FY13 growth projections considering some stiff hike in Diesel price?
A: Our future outlook is positive. With growth in a month, which was a bad month, we expect positive growth. But, whether the growth will be buoyant or not remains to be seen. Q: Is the run rate of 40,000 vehicles maintainable?
A: Yes, it should be maintainable. You can’t predict the future with the way various auto companies have displayed their figures. We have maintained our momentum in this month also. Q: You all have passed on the tax hikes in April itself; will there be a resistance to further price hikes?
A: Although we have taken a price hike in April. We have taken a small price hike of 0.8%-1% which other companies have not taken. State government hike is a bigger bugbear than excise hike.
In Maharashtra, for an Rs 10-lakh vehicle, price has gone up by Rs 30,000 for registration road tax. Similarly, this has been done by five-six states. The government should look at it closely. There is so much deliberation and discussion on excise, but there is no control what gets passed off as registration road tax by the state government.  Q: Can we expect car sales or vehicle sales figure for FY13 at 20%?
A: It is very difficult to project a figure. We definitely like to deliver sales figure of 20%. We have started on the right note, but we have to see the way things pan out. Q: Is raw material pressure easing off, are you expecting any further ease?
A: In terms of ground level deliverables we really haven’t see much decline in input costs. If input costs do decline it will be positive. Q: UV and LCV segment saw a de-growth of 10-11% month on month, but they have held up about 30-35% on a year on year basis. Do, you think in both the categories you will be able to maintain this run rate?
A: Our UV portfolio is a much diversified portfolio. Ballero, Scorpio, Xylo and XUVs all are doing well and we are expecting a good momentum. Small LCV is also okay. The real challenge is the three wheeler segment which is under tremendous pressure because of financing issues.