Mahindra Halts Production of SUVs

As you all know, the automobile industry in India has been going through a massive slowdown since the past few months. To reverse this trend, several car manufacturers have come out with big discount schemes on their range of products to attract buyers. An estimate suggests that the total passenger vehicle sales in the country reduced by nearly 17 percent in April, making it the worst monthly fall in around eight years. This has led to rise in inventory while the demand remains low. To counter this, Indian carmaker Mahindra has now decided to shut production at its manufacturing plants for 13 days. What this could mean is that models such as the XUV300, XUV500, Scorpio, and Bolero will not be manufactured for the said time period.

Mahindra issued a notification on the Bombay Stock Exchange (BSE) saying,

“The Company at its Automotive Sector and Farm Equipment Sector, and Mahindra Vehicle Manufacturers Limited, a wholly owned subsidiary of the Company (‘MVML’), as part of aligning its production with sales requirements, would be observing ”No Production Days” ranging between 5 – 13 days in various plants of the Company and MVML during the first quarter of the Financial Year 2019-2020. The Management does not envisage any adverse impact on the availability of vehicles in the market due to the adequacy of vehicle stocks to serve the market requirements.”

If we take a look at figures, Mahindra managed to sell 43,721 vehicles in April 2019 compared to 48,097 vehicles during the same period in 2018. This marks a decline of around 9 percent which is massive by any standard. It is not just Mahindra, India's largest carmaker Maruti Suzuki also reduced production for the fourth consecutive month in May. Such is the state of auto market that even popular models such as Bolero, Scorpio, and XUV500 have not been doing very well lately. The XUV500 has faced massive challenge from the Tata Harrier in recent times further weakening its position. Same is the case with Bolero that has been hurt by lowering demands across all segments.

On the other hand, XUV300 and Marazzo MPV have performed well in their segments and are among top sellers. The XUV300 held the second-best seller rank in sub-4 meter SUV segment a month after its launch. Mahindra is working on new generation models of Thar, Scorpio, and XUV500. The Thar and Scorpio have been caught testing on Indian roads and are due for launch in 2020. All three vehicles will comply with the new government safety standards and emission control norms but will be priced higher than the outgoing models. Mahindra will also launch the automatic transmission versions of XUV300 and Marazzo in the coming months that could lead to an increase in sales as automatic cars are gaining popularity these days.

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