Mahindra & Mahindra believes domestic tractor market to saturate by 2023, plans foray into petrol engines

Kolkata, December 5, 2014

Battling a losing market share, Indian SUV major Mahindra and Mahindra (M&M) is eyeing to regain its hold in the segment and will come up with petrol variant engines for its future launches in the private car segment in India, a company official said Friday.

This will signal a major shift for the company which has so long banked on the diesel segment in India.

The company, which had a 58-59 percent market share in the Sports Utility Vehicles category in financial year 2013, is now left only with 35-36 percent market share in the segment.

The diesel price prevalent in January 2013 was beneficial to companies like M&M as diesel cars saw a better sales performance. However, with oil prices on the deregulatory mode and compact SUVs eating into considerable market share, the car major decided to reconsider its engine variants.

“We are not going to count on fuel price difference as our long term strategy. That means we need to have more petrol vehicles,” company’s executive director Pawan Goenka told media persons here.

In India, the company sells only diesel SUVs, but has petrol-engine powered vehicles outside India.

“In our future product launches, we will always have equal content in terms of variants of diesel and petrol vehicles in the passenger car category”, Goenka added.

Commercial vehicles in India will, however, continue to be powered by diesel engines.

The company already has 1.2, 1.6 and 2.2 litre capacity petrol engines through South Korea- based Ssang Yong, where it has a 70 percent stake.

According to Goenka, one of the primary reasons for the company losing market share was due to its weak performance in the compact SUV category.

M&M has now lined up three major launches in 2015 to regain the market momentum.

Domestic tractor market to saturate by 2023: Mahindra official

Kolkata, December 5, 2014

Considering the momentum in the Indian tractor market, its sales and adoption, automobile major Mahindra and Mahindra is expecting it to reach saturation by 2023 when the component market will take over, a top company official said Friday.

“After 2023, the (tractor) market should saturate and therefore we’ll only see replacement demand and probably growth would come to half of that,” said the company’s executive director Pawan Goenka.

India’s leading tractor maker stated that taking into account the sales of tractors and the market scenario, the company may have a growth between 8-10 percent on a long-term average. However, after 2023, the market will enter its saturation phase and components and replacement market will take over the growth.

“We think that in nine more years, we will have both replacement and new tractor growth, and therefore 8-10 percent growth on a long term average,” Goenka said.

“At a time when our market growth will come down to four to five percent, the fight will be over market share,” he added.

The company now has a 41 percent market share in tractors and is hoping to revive its sales figures.

Domestic sales for the company in November stood at 14,207 units, as against 22,343 units during November 2013 – a fall of 36 percent. Total tractor sales inclusive of domestic and exports during the month were 15,333 units, as against 23,119 units for the same period last year, implying a decrease of 34 percent.

“If we have a good Rabi crop, I think in March 2015 we’ll see a pick-up again,” Goenka added.