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Informist, Thursday, Sept. 11, 2025

 

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--M&M Gollagunta: Shraddh period affecting car bookings; walk-ins encouraging 
--CONTEXT: Comments by M&M Automotive CEO Gollagunta on auto event sidelines 
--M&M Gollagunta: Have rare earth magnet inventory for at least next 2 qtrs 
--M&M Gollagunta: Dealer inventory at expected levels, well below 45 days 
--M&M Gollagunta: Expect to sell electric cars in UK in 18-24 months 
--M&M Gollagunta: Drafting advisory for customers on ethanol-blended fuel use 
--M&M Gollagunta: EV bookings extremely strong in south, especially Kerala 
--M&M Gollagunta: Compensation cess issue not small, has to be solved together
 

 

By Anand JC

 

NEW DELHI – The build-up in locked-up goods and services tax compensation cess credit with automobile dealers is a serious issue and has to be solved collectively by all involved, Nalinikanth Gollagunta, chief executive officer of Mahindra & Mahindra Ltd.'s automotive division, said on Thursday. 

 

"We have pulled a couple of levers from our end so far (to reduce inventory with dealers)," Gollagunta said

on the sidelines of Society of Indian Automobile Manufacturers' (SIAM) 65th Annual Convention on Thursday. 

The company reduced wholesale billings in the latter part of August and introduced a price cut equivalent to the newly announced goods and services tax on bigger cars till Sept. 22, when the new rates take effect.

 

"We are hoping this will help solve most of the problems at this point in time. But beyond that, it's not a small problem for one single OEM (original equipment manufacturer) to go take care of. It has to be solved collectively," Gollagunta said.

 

Automotive dealers, especially those selling bigger cars, have been in flux ever since Prime Minister Narendra Modi announced that GST rates would be cut across a host of products. Bigger cars attract a levy of 28% in addition to compensation cess ranging between 17-22% currently, which will be replaced by a flat rate of 40% from Sept. 22. Lack of a mechanism to use the locked up cess credit on transition to the new tax regime means that dealerships are staring at a potential loss of INR 25 billion, as per dealers' estimates.

 

M&M held back inventory supply to dealers after the GST rate rejig was announced. However, inventory remains at expected levels, and well below 45 days. Gollagunta said that bookings are happening for its cars despite the inauspicious Shraddh period followed in certain parts of the country. While it is a little slow, walk-ins and enquiries have been "exciting", he said.

 

ETHANOL WORRIES

Recently, customers have raised concerns about the use of ethanol-blended fuel in their cars, specifically how increased usage can affect mileage and increase maintenance costs. Gollagunta said that M&M's cars are safe when used with E10 and E20-grade fuel. The company will be issuing an advisory late this week or early next week to allay customers' worries, Gollagunta said.

 

M&M's vehicles were first calibrated for E10 fuel in April 2023. All cars sold since April this year have been calibrated for E20-grade fuel. Using cars not calibrated for either of these fuel grades will affect performance to an extent, Gollagunta said.

 

"It's hard to put a number to it, but you will definitely see a performance hit to that extent because it's not calibrated. So, you will see either an acceleration degradation or you could see a fuel efficiency degradation," he said.

 

EV PLANS

M&M does not expect the recently announced reduction in GST rates of fossil fuel-run cars to significantly affect sales of electric vehicles, which continue to be taxed at 5%. "The price disparity is a bit of a myth, if I may call it that. You should do the math and see," he said. 

 

According to the company's calculations, nearly 60% of the market is already seeing price parity between internal combustion engine vehicles and electric vehicles on a cost-to-customer level. The electric vehicle market in India has recently been disrupted by a shortage of rare earth magnets. However, M&M has enough stock for the next two quarters at least. 

 

Gollagunta said that the company has plans to take its electric vehicle lineup of BE 6 and XE 9e overseas. "We absolutely are going to take it outside. Our sense is that while South Africa and Australia are core markets, we will probably take them there at some point. The UK is definitely a core market of focus for us on the horizon," he said. 

 

M&M is hoping to benefit from the recently signed free trade agreement with the UK. The company plans to sell India-made electric cars in the UK in around 18-24 months, Gollagunta said.

 

In India, the demand for electric vehicles has been particularly high in southern India, especially in Kerala. "Kerala has been very strong for us. Which, in the past, has been a relatively weak market from a Mahindra perspective. It's a very, very traditional market in that sense," Gollagunta said.  End

 

Edited by Saji George Titus

 

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