Although the Indian automobile market is witnessing a slowdown since past several months, Mahindra & Mahindra is optimistic that it is only a temporary phase. The company is positive about its
prospects in both farm equipment and passenger vehicle segments once the market makes a full recovery.
The company earlier earmarked an investment of Rs 15,000 to augment its operations in the next three years but has decided to increase it by 20%. The company’s chief financial officer VS Parthasarathy stated that the investment is inline with the expectation of the country’s GDP growth which is pegged at 7%.
As per SIAM’s forecast, the passenger vehicle segment is expected to grow by 3-5% while the CV space is set to witness a growth of 10-12%. Mahindra is confident that it can outdo this forecast in both passenger and commercial vehicle segments. The company is also estimating a growth of 5% in the tractor industry.
Of the Rs 18,000 crore, around Rs 4,000 to 5,000 crore will be absorbed by the Chakan plan which is currently undergoing phase 2 development. The company’s largest manufacturing facility will receive an additional press line and paint shop which will have an annual capacity of 3 lakh units. The plant will also receive a new trim chassis final line.
Mahindra, the world’s largest tractor manufacturer, is also betting big on its tractor business. The company vows to invest more money in developing new tractors in the next three years than it did in the last five years.
As far as passenger vehicles are concerned, Mahindra’s prime focus this year will be to ensure smooth transition of its existing portfolio to BS-VI emission standards before the April 1, 2020 deadline. The next financial year will witness several product launch activities.
Mahindra is working on the next generation XUV500 codenamed W601. The C-segment SUV will be manufactured at Chakan alongside its badge engineered sibling for Ford. The all-new Scorpio and Thar have also started testing in public with significant styling changes. Dr. Pawan Goenka, Managing Director, Mahindra & Mahindra, stated that the company is working aggressively on new product launches. We also expect a good portion of this massive investment to go into expanding the company’s electric vehicle business.