M&M Expects SUV Segment To Grow More Than Industry Growth Of Over 10% In FY24
M&M expects its sports utility vehicle segment to grow more than 10%, better than the industry growth in fiscal 2024.
Mahindra and Mahindra Ltd.'s sports utility vehicle segment will grow faster than the expected industry growth of more than 10% in fiscal 2024, according to Chief Executive Officer (Auto and Farm) Rajesh Jejurikar.
However, the company is facing challenges with respect to lower volumes due to a semiconductor shortage, Jejurikar, who is also the executive director, told BQ Prime's Sajeet Manghat. "We expect roughly a risk of 10-15% on semiconductors from time to time," he said. This means the company will produce 10-15% lower volumes.
The automaker's vehicles are becoming more and more 'tech- savvy,' which is leading to the company witnessing a much greater demand for semiconductor chips, he said, adding that the company had lost about 10,000 SUV units last quarter due to the semiconductor shortage.
To address this, the automaker has been undertaking multiple derisking activities, including alternate suppliers, and in the process has ramped up its overall volumes very effectively amid the chip crunch.
The company increased its volume 'very well' in the 32,000–35,000 unit range per month, Jejurikar said, adding that the company has also set up a capacity of 39,000 units, which is in play.
Commodity prices have been seeing some correction from their high peaks; however, they are nowhere near the FY19 levels, Jejurikar said. In fiscal 2019, commodity prices were relatively low.
The softening of commodity prices helps M&M expand its margin, he said.
Entry Into Light Weight Tractor Segment
The Mahindra group company plans to comprehensively address the light-weight tractor segment, where it currently holds a share below the industry average.
It will launch its Swaraj Lightweight Tractor Platform on May 2 and its OJA Global Tractor Platform on Aug. 15.
"Market share in this light-weight segment is below our national market share. We hope to pick up market share in this segment, pushing our national share up," he said.
However, the overall tractor industry is expected to grow in the low single digits in fiscal 2024 due to the high base of fiscal 2023, Jejurikar said.
The company remains cautious and wants to slow down while ramping up its electric vehicle segment, he said. "There is very good interest in the EV segment."
The conversion and adoption of the EV segment will require an effort to explain the category to its customers as they overcome resistance and barriers to moving into the segment, Jejurikar said.
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