No new product launch till 2016.
By R. Chandrasekaran
CHENNAI: Utility vehicles maker Mahindra & Mahindra Ltd. is going to set up a new auto plant as part of its plan to invest Rs.100 billion in the next three years. However, the company indicated that there will not be launching any new products at least until the fiscal year 2016.
The latest comments at the company’s annual general meeting on investments suggests that the company may invest in upgrading the existing models along with new fuel options to push sales in a sluggish economy.
One of the biggest utility vehicle manufacturers in India disclosed that it has exhausted its launch of products in the last two years and was ahead of the industry. Its president for automotive and farm equipment sector Pawan Goenka indicated, “This year we don’t have any new product launches, we do have variants for launch. Absolute new products will be launched only in fiscal year 2016.”
The company is also willing to take few risks at a time when the auto sector is facing tough market conditions since the economy is on a slower trajectory. Its chairman and managing director Anand Mahindra believes that investing during the slow-down provides opportunity for the company to reap benefits when the market turns upbeat.
He told investors, “We are bullish about our future and will continue on our path of investing in that future.” Mahindra added, “Our past experience suggests this will pay dividends. In 2008, when the economy was slowing down, M&M was one of the few companies that continued to invest; and that investment is one of the major reasons why we significantly outperformed the industry over the last two financial years.”
The company also disclosed that despite the difficult market conditions, it continues to invest in Research and Development besides capacity building. He exuded confidence when he said that the company is geared up very well to face the challenging environment.
While the significant drop in Indian currency will benefit exports, including automobile sector, M&M chairman said it is a big macroeconomic concern.
Its rivals such as Maruti Suzuki, Nissan and Honda, on the other hand, are readying themselves to unveil new products especially in the utility vehicle segment, where M&M has Scorpio; the company has launched new models such as Quanto, E2o, XUV500, Verito Vibe and Xylo apart from Sangyong Rexton in the last few years.
Now that the Indian government is slowly bringing in the diesel price to match global prices by reducing the subsidies in a phased manner, the consumers’ choice of diesel variant is also losing its charm. This could very well force auto makers to shift its gear towards petrol variant. Therefore, it will not be a surprise if M&M chooses to change to petrol variant to satisfy consumers.
To contact the author, email to rchandrasekaran@americanbazaaronline.com