Mahindra & Mahindra Ltd (M&M), which has a backlog of orders for Internal Combustion Engine (ICE)-vehicles such as the XUV700, Scorpio-N and Thar, has just introduced an electric Sports Utility Vehicle (SUV). Rajesh Jejurikar, the company’s Executive Director (Auto & Farm Sector), said in an interview with Moneycontrol on the sidelines of the World Economic Forum (WEF) meetings in Davos that the company wants to maximise its presence in India’s electric passenger vehicle market.
“…we hope that 20 to 30 percent of our portfolio in 2027 will be electric,” he said. He also said that while the government is doing enough to kick-start the economy, some measures to drive consumption in the rural parts of India would be desirable. Edited excerpts:
What's top of mind for Indian CEOs at Davos at a time when their global counterparts are worried about multiple crises converging?
You know, I think at least from our standpoint, we see this as an opportunity to take a global leadership. For us, Davos enables us to collect connect with so many tech leaders, people who bring in new thinking. So we're really here to think of what we need to do to drive growth. (This is) because India is still a strong growth story.
2022 was a banner year for you in terms of how you performed on the auto side, tractor side. What can we expect in 2023? Can we hope for a repeat of 2022? There is an air of caution as people are cutting down on marketing spends, at least if I look at the new economy businesses. But tell us about what you're seeing on the ground.
We're not in a mindset of cutting back on marketing or anything at this stage. We have had some really good launches. We have the (XUV) 400 launch, which is the electric (SUV). We just announced the prices today (January 16). So we are actually launching the (XUV) 400. We will start (taking) orders on January 26, and start deliveries by March. And we have a 34.4 kilowatt hour version of that which is going to be priced at Rs. 15.99 lakh. And for the first 5,000 bookings and deliveries for that will start in the festive season and then a 40 kilowatt hour one, which will start deliveries in March. That's priced at Rs. 18.9 lakh. So they're both very good prices, and hopefully will excite the market. So that's new for us.
But we have a lot to build on out of our current successful launches, which is Thar. We just launched the rear wheel drive (variant), which got a very good response, (so was the) XUV700, Scorpio (N) .I think the entire portfolio is doing well. I won't look at percentage repeat, because that was on a low base and all the new products came in. But we are optimistic about a strong momentum for our SUV business.
Our tractors (business) have seen a good year (which was) better than what we thought. And we'll wait and watch on what the outlook for tractor demand is normally…still early to call out. We wait for some other indicators like monsoons and government spending indications and so on before really forming a view on next year's growth.
What's your visibility as far as rural demand is concerned? Because if you look at the RBI, they've taken a series of steps, which was expected to ease inflation in the first half of 2023. So can you give us a sense of how you see rural demand shaping up this year?
Inflation, especially in the FMCG (Fast Moving Consumer Goods) kind of industries, has impacted rural demand. It hasn't so much in the tractor side where we've seen double-digit growth. We'll have to wait and watch on what happens on the lower end of consumption, which is the daily consumption growth, which impacts FMCG. On the tractor side, a lot will depend on what's happening to the monsoon and so on. So we'll wait and watch a little bit for rural demand. I guess it's too early to call.
You mentioned the new launch today. So tell us about your own plans as far as the EV space is concerned, how do you see it panning out? What kind of a role do you expect M&M to play in this segment? Because there is clearly a lot of excitement about moving away from Internal Combustion to Electric Vehicles. What kind of role can M&M play?
So two key segments we are playing in at the moment --one is the electric three-wheelers, where are we seeing very good penetration compared to the ICE three wheelers, and that's crossed 10 percent. We have a strong presence there -- we have a 60 percent market share with our products. On the SUV side, the penetration of electric is very low. It's in the region of 1 to 2 percent in the B and C segments. And we are launching new products. One which I just told you about and then the Born Electric portfolio, which will come towards the end of 2024 and getting into 2025. So three to five products and we hope that 20 to 30 percent of our portfolio in 2027 will be electric.
What can we look forward to from M&M in 2023 when it comes to launches, investments, capex and so on?
Capex we've already spoken about. So no immediate change right now. And a lot of it is going towards creating our electric portfolio. So no change. We've announced the creation of a new electric SUV company where BII (please expand) is the first investor that got valued at $9 billion, with the initial $250 million coming from BII. So that's one of the key areas. And we are really optimistic about creating a strong electric portfolio.
We just have two weeks to go for the budget. Your one big wishlist or one big reform that you would like to see in the last budget before the election.
We are really not focusing on subsidies and incentives at this point of time. I think creating positive sentiment and the economy driving consumption--that should be the key priority. And I think the government is on track to do that.
And as you said, if we manage to keep rural spends going?
The important thing on the budget is driving consumption. And, you know, the economy gets back into consumption, or high consumption mode. It's been good in the last two, three years… if that momentum sustains, then India will continue as a strong growth story.
