Passenger vehicle sector to see single-digit growth in March qtr - M&M mgmt
This story was originally published at 18:22 IST on 7 February 2025
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--M&M: See tractor industry growing 7% in FY25
--CONTEXT: M&M mgmt comments in post-earnings press conference
--M&M: International demand is weak due to macroeconomic headwinds
--M&M: Both income tax relief, interest rate cut will create demand stimulus
--M&M: Commodity inflation seemed benign only due to low steel prices
--M&M: Prices of other raw materials creeping up
--M&M: Growth rate in rural, urban areas is same for company
--M&M: Have about 30 days of inventory at dealership level
--M&M: Expect passenger vehicle industry to grow in single digit in Jan-Mar
--M&M: Surprised sales of medium-heavy CVs have remained muted this long
--M&M: No new launches of fossil fuel based vehicles in 2025
--M&M: Could launch some fossil fuel based vehicles in 2026
MUMBAI - The passenger vehicle industry will register a single-digit growth in the March quarter, Mahindra & Mahindra Ltd. executives said in a post-earnings media briefing on Friday. As for the commercial vehicles, the company said that while it was hoping for a recovery in the December quarter, it is still too early to say if a recovery could be seen in the final quarter of 2024-25 (Apr-Mar).
Light commercial vehicles weighing lower than 3.5 tonnes could grow in low single-digits in the March quarter, but they are currently not showing signs of a big recovery, the company said.
M&M also expressed its surprise over the lack of a recovery in medium-heavy commercial vehicles so far. It said that volumes in this segment have seen muted demand. The company is currently selling around 12,000 units per annum in this segment, and is hopeful that as infrastructure activity picks up, this segment could gain.
In the passenger vehicle segment, the company recently launched two pure-play electric utility vehicles. M&M will not launch any petrol or diesel-run vehicle in 2025, but may launch a few in the next year.
M&M is hoping to sell around 5,000 units of the two new electric cars in the initial stages. By 2027, it hopes that 20-30% of its overall volumes will be electric cars.
M&M expects the tractor industry to grow over 15% in the March quarter, taking the growth for the full financial year to 7%. This growth will be led by reservoir levels which are at 16% over a long-period average, in addition to 100% rabi area sowing and kharif production of about 5%.
Unlike certain other automobile companies that have lamented the divergence in growth rates between urban and rural markets, M&M said that due to the nature of their product mix, the company is seeing a strong rural and equally strong urban growth. At the dealership level, the inventory is currently at 30 days. In the overall automotive segment, while domestic operations are doing well, the company flagged a weak international market due to macroeconomic headwinds.
The recently announced income tax relief during the Union Budget and a rate cut by the Reserve Bank of India on Friday will create a demand stimulus as it would put more money in the hands of India's middle class, the company said. This in turn could also lead to an upturn in private capital expenditure, which has been lacking of late, M&M said.
For M&M specifically, these policy decisions would mean that their 3XO utility vehicle could see more traction. Demand for products in the INR 1.0 million-2.5 million range could be robust, even as the company continues to offer products in the INR 700,000-INR 3 million range.
Raw material costs in the December quarter were flattish for most automobile companies. M&M said that while it may appear benign on the surface, steel prices are the only reason it seems so, as prices of other input materials have started creeping up, as called by other automobile companies.
Another dynamic to watch out for is the exchange rate differential affecting electric vehicles in particular. With the Indian rupee depreciating against the dollar, M&M expects to work through this volatility through cost efficiencies.
M&M disclosed its December quarter earnings during the market hours. It reported a net profit of INR 29.64 billion on revenues of INR 305.38 billion. On Friday, shares of the company ended the session at INR 3,198.45 on the National Stock Exchange, 1.9% higher than the previous close. End
Reported by Anand JC
Edited by Akul Nishant Akhoury
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