It seems that homegrown auto manufacturer is feeling the heat of the auto sector slowdown. Mahindra and Mahindra Ltd reported a staggering 26.5 % drop in their quarterly net profit as the company struggled to sell cars, trucks, and tractors amid a slowdown in India’s auto sector.
The auto manufacturing industry is facing serious issues of credit crunch, higher insurance costs and a shift towards ride-hailing services.
The unit sales of the popular Sports utility vehicle like Scorpio and Thar dropped by 21% for the quarter. This news has raised eyebrows and added to the worries of the auto manufacturer. However the situation is same for all auto manufacturers. The biggest carmaker of India, Maruti Suzuki Ltd. reported a 30.2% slide in the unit sales for the September quarter. The reduced sales have made a hole in the profits of the company.
In the year 2018, Mahindra & Mahindra’s net profit after tax for the quarter ending on Sep 30 came at Rs. 16.49 billion. While for the current year, the net profit after tax for the quarter ended on September 30 came out at Rs. 12.13 billion.
As per the study conducted by Refinitiv data, the country’s passenger vehicle sales shrank by 23.7%in September making it the 11th consecutive month of decline!
The shrink has led the auto manufacturing companies to think about cutting down the size of the labor force if the sales did not pick up soon.
In fact, Mahindra & Mahindra had earlier cut 1500 jobs or approx. 5% of its workforce has warned of more such cuts if the slowdown lingers on. The revenue from operations was pegged at Rs. 11.08 billion, a dip by 14.7 %.