Strong competition and weak rural sentiment dragged down Mahindra & Mahindra's passenger vehicle sales. The famous utility vehicle maker reported a 13.12 per cent decline in its passenger vehicle sales in February 2017 at 20,605 units compared to 23,718 units in the same month last year.
This is the fourth straight month M&M has reported a decline in its passenger vehicle sales.
Sales of Mahindra's passenger vehicle, which includes Scorpio, XUV500, Xylo, Bolero and Verito, were down 33 per cent to 13,217 units in November 2016 as compared to 19,662 units in the same month of the 2015. In December 2016 its sales further declined by 8 per cent at 16,698 units while sales were down by 9 per cent at 20,096 units in January.
Contrary to this, utility vehicle sales grew at strong double digit with good volumes.
According to a report by India Ratings and Research (Ind-Ra), during the April to December 2016 period of current fiscal, utility vehicle volumes grew by 33 per cent as compared with a mere 2.5 per cent for cars, while the overall growth rate for passenger vehicles stood at 8.6 per cent.
Mahindra could only manage to clock a modest 4.4 per cent growth in utility vehicle sales in the nine-month period. M&M does not have significant presence in the car segment.
On the other hand, Maruti Suzuki, reported a 124 per cent year-on-year growth in utility vehicle sales on the back of Vitara Brezza. The sub-compact SUV has crossed cumulative sales milestone of one lakh units in the domestic market since its launch in March 2016. Like Maruti, Hyundai also reported a whopping 70.5 per cent growth in volumes in UV sales in the April to December, 2016 period.
"Considering that the rural-centric Bolero model has traditionally accounted for over 30 per cent of Mahindra's UV volumes, the company's sales was impacted due to demonetisation," the report said.
Abdul Majeed, partner and automotive expert at PwC said, “When compact SUV came in the big frame, there was a little delay from Mahindra’s end.”
However, good news came in for M&M from its commercial vehicle unit. Commercial vehicle sales were up 18.17 per cent at 16,383 units in February against 13,864 units in the year-ago period.
M&M Chief Executive (auto division) Pravin Shah said, "The auto industry is seeing some positive trends emerging over the last two months. With rural sentiments improving, we believe there will be a turnaround in demand over the next few months for small commercial vehicles space."
BW Reporters
The author is Senior Correspondent with BW Businessworld
