Mahindra & Mahindra (M&M) has reported sales of 13,217 passenger vehicles ((which includes UVs, cars and vans) in November 2016, down by 32.78 percent year on year (November 2015: 19,662).
The company’s sales performance clearly has taken a beating because of the government’as demonetisation move which came into effect from November 8. Demand from the rural India market, which accounts for a sizeable number of Mahindra vehicle sales every month, has sharply dropped.
Commenting on the November numbers, Pravin Shah, president and chief executive (Automotive), M&M, said: “While we expected an improved auto industry performance on the back of the festive season and other positive parameters such as rural demand and interest rates softening, the sudden announcement of demonetisation has brought in an immediate disruption and uncertainty. While it is a good and welcome step in the mid- to long-term, this has dampened overall sentiments leading to postponed buying and resulting in a major drop in volumes during November. This is significant as the automotive industry had just started experiencing stability after a long and tough period of uncertainty.”
He added, "We at Mahindra are working with our network partners and customers by extending necessary help and support to minimise the challenges currently being experienced.”
M&M is the third automaker today to have delated its November sales numbers. Earlier today, both Maruti Suzuki India and Toyota Kirloskar Motors revealed their sales. While Maruti Suzuki sold 126,325 units in the domestic market (+14.2%), TKM sold 11,309 units (+11%).
According to Abdul Majeed, partner, Price Waterhouse, "Demonetisation will have significant negative impact at least in the next two to three months across the board in the automotive sector, especially two-wheelers, SUVs, luxury vehicles and commercial vehicles. What measures the government will take next to push economic growth will be the key for the automotive sector’s growth. November 2016 wholesale numbers will not reflect on-ground retail sales; OEMs who have a waiting period for successful models will not be impacted significantly in the short term.”
Related: Rural demand drives Mahindra’s Q2 profit up 27%