65th SIAM Convention | Focus Is On Achieving 15-20% Growth In Service Network: M&M | CNBC TV18

Summary

At the 65th SAM Convention, Mahindra & Mahindra’s Nalin Kant Golagunta discussed the impact of GST reforms on vehicle affordability and festive season demand. Early schemes starting September 6 aim to benefit customers before the official GST cut, generating strong interest. The company remains optimistic about mid to high teens SUV volume growth, backed by a 22% rise in Q1. Key focuses include expanding the domestic service network, international market growth, and EV leadership. While dealer billing is temporarily paused due to compensation cess uncertainties, strategies are in place to meet festive demand. Additional EV launches are planned for the upcoming months.

Takeaways

• 😀 GST reforms provide an opportunity for Mahindra to offer vehicles at more affordable prices, with early benefits introduced on September 6th.
• 😀 Initial customer response has been positive, with increased walk-ins and queries, though it's too early to predict full impact for the festive season.
• 😀 Mahindra has set an aggressive growth target of mid-to-high teens for SUV volume, with Q1 achieving 22% growth, keeping the forecast intact.
• 😀 The company remains confident in meeting its growth target despite a generally flat industry outlook.
• 😀 Mahindra's capital investments are focused on expanding its **domestic service network**, which has grown 10-15% annually, to support the growing volume.
• 😀 International expansion is a key focus for Mahindra, with strong markets like **South Africa** and **Australia**, and plans to enter the **UK** within 18–24 months.
• 😀 Mahindra holds the **#1 revenue market share in EVs**, which is expected to drive future growth in both domestic and international markets.
• 😀 The GST cut on certain vehicle models enhances the value proposition for the **Bolero** and **Scorpio** models, particularly in rural markets.
• 😀 Dealers are facing operational challenges due to the **uncertainty around the CES (compensation cess)**, leading Mahindra to pause billing for vehicles.
• 😀 Mahindra’s pre-GST schemes aim to reduce pressure on dealers and ensure they can meet festive season demand, even amid the CES issues.
• 😀 Mahindra has several **EV launches** planned for the remainder of this calendar year and the beginning of next year, further strengthening its market position.

Q & A

What is the significance of the GST reforms mentioned in the interview?

The GST reforms are intended to make vehicles more affordable for customers. Mahindra launched schemes ahead of the official GST benefit date to provide early advantages to buyers and stimulate demand during the festive season.

When did Mahindra implement its early GST-related scheme?

Mahindra implemented the early GST-related scheme starting from September 6, ahead of the official September 22 benefit.

How has customer interest responded to the early GST scheme?

Early indicators show increased customer walk-ins and heightened queries, indicating strong interest, although it is too early to predict exact festive season sales.

What growth target has Mahindra set for its SUV portfolio for the fiscal year?

Mahindra is targeting mid to high teens growth in volume for its SUV portfolio for the fiscal year, which is considered an aggressive target given industry expectations.

How did Mahindra perform in the first quarter of the fiscal year?

Mahindra achieved approximately 22% volume growth in the first quarter, indicating strong momentum toward its annual growth targets.

What is Mahindra's focus regarding capital investments domestically?

Domestically, Mahindra is primarily focused on expanding its service network to ensure customer satisfaction and meet growing demand, aiming for 10–15% growth in network capacity annually.

Which international markets are currently a focus for Mahindra's expansion?

Mahindra is focusing on South Africa, Australia, and plans to enter the UK market within an 18–24 month timeframe. Electric vehicles (EVs) are seen as an enabler for this international growth.

What is the status of Mahindra's EV portfolio and customer sentiment?

Mahindra holds the number one revenue market share in the EV space within two quarters, indicating strong demand. GST cuts also enhance the value proposition for other models like Bolero and Scorpio, while rural markets are contributing positively to growth.

How is Mahindra handling the compensation cess (CES) issue at the dealer level?

Billing to dealers has been paused due to CES uncertainty. Mahindra, along with industry associations like SAM and FADA, is engaging with the government to seek clarity. Meanwhile, strategies such as early schemes are in place to ensure festive demand is met.

Are there any upcoming vehicle launches mentioned in the interview?

Yes, Mahindra plans several EV launches later this calendar year and in the early part of the next calendar year.

How does Mahindra plan to mitigate the impact of the CES issue on dealer inventory?

Mahindra has implemented early schemes to encourage customers to buy vehicles before the official GST benefit date, reducing pressure on dealers and ensuring sufficient inventory for the festive season.