M&M To Raise Output Of SUVs As Demand Swells

The company said on Friday that it had 260,000 unfulfilled SUV orders in the beginning of November. Out of these, the XUV700 accounts for 80,000 orders and 130,000 units of the Scorpio-N, the new variant of its iconic nameplate Scorpio, totalling 210,000 pending orders.

Every month, M&M is getting 10,000- 15,000 new orders for each of the two models, against its monthly production capacity of just 6,000 units, each. This translates into waiting periods of several months for the SUVs. By the end of FY24, production will be ramped up to 10,000 units a month for each model, matching supply to demand much more efficiently, company executives said in a post-earnings conference call.

The company will expand capacities for other top products such as the Thar and XUV300 also in the next 12-15 months. The XUV300 and the XUV400 EV will see a combined monthly production of 9500 units by Q4FY24. M&M said it will firm up its specific manufacturing plans for the XUV400 EV next year.

Mahindra expects that by FY27, it will derive 20-30% of its total SUV sales from electric variants, which would mean monthly wholesale despatches of 12,000-17,000 EVs. However, the company said that capacities between internal combustion engine (ICE) models and EVs are fungible to an extent and will see some overlap.

However, the company is still cautious about the availability of electronic chips, something that has been plaguing the auto industry for the last two years. “We are not out of the woods yet in terms of semiconductor shortages and supplies will have to be watched. It is likely that the situation will continue like this for the next few quarters," Rajesh Jejurikar, executive director, auto and farm sectors, M&M said.

Mahindra & Mahindra on Friday reported a 46% year-on-year increase in standalone profit after tax (PAT) after exceptional items to ₹2,090 crore in the second quarter of the ongoing fiscal, while revenue grew 57% to ₹20,839 crore during the same period. Auto sector volumes in the September quarter jumped 75% to 174,000 units on the back of new product launches, while the farm sector (tractor) market share remained robust and volumes inched up 5% to 92,590 units. Despite robust sales and a higher-than-expected financial performance for the quarter, M&M shares closed 0.83% lower at ₹1,287 on the Bombay Stock Exchange after the quarterly results announcement.

Mahindra & Mahindra on Thursday said it will sell its 80% stake in its French subsidiary Peugeot Motorcycles to German private equity firm Mutares Holding at an investment of €7 million in exchange for 50% equity shares in Peugeot. This is part of M&M’s strategy to exit or restructure loss-making international subsidiaries with no clear path to profitability that it had put under review.

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“We will not put any more capital in Peugeot Motorcycles, but we’ve kept a 20% stake because we see upside in the business and can get some benefit from this upside which can be beneficial for our shareholders", Anish Shah, group managing director & CEO, M&M said. The deal is expected to close by the first quarter of 2023, the company said in a press release. M&M will continue to support Peugeot in future product launches.

M&M’s auto sector margins improved in the quarter under consideration as it comes out of the introductory pricing on its Thar & XUV700 variants and into a “free pricing", helped by cost savings program and softening commodity prices. Ebitda margins saw an increase of of 50% year-on-year to ₹2,496 crore in Q2FY23.