Mahindra & Mahindra Ltd. surpassed analyst expectations with 16% growth in overall sales during September. This is in stark contrast to the 4-5% sales growth industry watchers had penciled for the period under review. Passenger vehicle segment led the outperformance in sales during last month, with 23% growth on the back of higher production and success of new launches like sports utility vehicle 3XO.
Passenger Vehicles Continues To Outperform Industry
Sectoral underperformance underpinned the stellar show put on last month by the Scorpio maker, bolstered by efforts to expand capacity. For the last six months, Mahindra has grown 21% on annual basis, while Maruti has been mostly flat and Tata Motors has actually degrown.
The Mahindra 3XO, launched in May, was widely popular and led to strong volume growth. According to brokerage firm Emkay Global, the 32-week waiting period for entry level 3XO variant—priced Rs 7.49 lakh—has showing customer acceptance.
Volumes have doubled between fiscals ending March 2022 and March 2024 on the back of new launches, as well as improved production capacity of 49,000 vehicles per month. The company plants to further increase this to 72,000 units a month by the next fiscal. This would increase their total capacity to 8.64 lakh units.
The company has also launched the Tharr Roxx and bookings for the same will start from Oct. 3.
Farm Equipment Business Shines
Even as tractor industry grappled with subdued growth, Mahindra led outgrowth in the industry. Two key reasons drove the outperformance—strong presence in western India and success of its Oja series of tractors.
Tractor industry goes through cycles, with specific regions and agricultural crops in focus. Western India, with states like Maharashtra and Karnataka, has been strong with good sugarcane and soybean crops harvests. This has also helped tractor makers, especially Mahindra and Swaraj, a company they own 50% stake in to control roughly half the market.
The next contribution factor has been the success of the Oja series. Mahindra invested roughly Rs 1200 crore in developing the platform, which was launched in August 2023. Since then, it has seen wide acceptance by customers and has been key to their exports growth as well. Developed to cater to India and global markets, the new Oja platform is versatile, capable of spawning over 40 tractor models.
Going Forward
Mahindra has guided for mid-teen growth for passenger vehicle business. This is much higher than what players like Tata Motors are expecting with 4-5% growth. While Maruti expects to grow this year, the first six months of current fiscal have been slow for them with only 1% growth.
For tractor segment the company has guided for 5% growth in sales. In the first two quarters alone, its up 4.7%, while rival Escorts has shown degrowth of 1%.
New launches in both segments will be key. Mahindra will also its lean on its new electric mobility platform, with launches expected by December. They have raised external funding for this venture that will support and drive further growth via launches.
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