The prospects of the auto industry in terms of consumer demand would improve after the general elections, Mahindra Group chairman and managing director Anand Mahindra said on Wednesday. Interacting with journalists at the M&M pavilion at the Auto Expo, Mahindra said his outlook on the auto sector is optimistic as there?s ?enormous demand? in the country as consumers are saying ?we are going to wait a little?.
He said that as investors are waiting for the election results before investing in India, the consumers are holding back. ?Even the fleet owners are saying we are going to wait,? he said.
Mahindra buttressed his thesis by pointing to the fact that the used cars market is doing very well. ?This is the reason that sales at Mahindra First (the company?s used car outlet) is up 50%.?
The current fiscal has seen a slowdown in the demand for passenger vehicles with sales during the April-December period down 5.72% to 18.28 lakh units on a year-on-year basis.
Asked whether the reducing gap between diesel and petrol prices would affect his company which derives a bulk of its sales through sports utility vehicle (SUVs), Mahindra answered in the negative. ?As a principle we have always advocated parity between diesel and petrol prices. Once that happens we will adapt to that scenario and adaptability is our core competence. Further, consumers do not buy M&M SUVs only because they have diesel engines and diesel prices are cheaper than petrol. They buy our products because they are strong brands,? he said.
He said that whenever a new product by a rival, MNC firm enters the market, ?M&M?s death is predicted but sales prove that our brands outsells those by our rivals?.
On the competitive scenario in the auto sector with a plethora of brands available in the market, Mahindra acknowledged that the market has become very competitive and the question of survival does arise. He said that only those companies which master technology, urbanisation and brands (TUB) would survive.
Elaborating, he said that with the prices of electronics coming down, the scope of using technology in auto products has increased immensely. On urbanisation, he said that auto companies would have to provide solutions to transportation.
?For instance, small cars are required for intra-city transportation than for recreation. However, products like SUVs are apt for recreation and inter-city travel,? he said.
Stating that only strong brands would survive, Mahindra said that there would be polarisation between the premium brands and the rest. Coming to M&M, he said that the company has three very strong brands in its stable ? Bolero, Scorpio and XUV ? and going forward the company would constantly innovate and upgrade its brands while coming out with new ones.
