M&M's Festive Sales Roar with 60% SUV Growth; Is an EV Revolution Next?

The festive season has kicked off on a high note for Mahindra & Mahindra (M&M), with the auto major reporting a spectacular 60% year-on-year jump in its SUV sales during the recently concluded 10-day Navratri period (CNBC TV 18). This blockbuster performance, driven by overwhelming demand for its flagship models, comes just as a company executive has signaled the launch of a brand-new electric vehicle (EV) slated for November.

This powerful sales surge underscores the brand's current dominance in the highly competitive SUV space and provides a robust start to the third quarter. With blockbuster festive sales providing a powerful tailwind, the key question for the market is: can M&M successfully pivot this momentum into the electric vehicle space and challenge the incumbents? Let’s find out.

What’s Fuelling this Unprecedented SUV Demand?

M&M’s 60% SUV sales spike was a result of a meticulous product strategy execution. The said strategy has effectively captured the Indian consumer’s imagination. Earlier, the Thar and Scorpio-N XUV700 models have been phenomenally successful. However, their popularity has created several months of demand backlog for certain variants. Customers resonate well with these popular models as they look for a strong road presence, sophisticated features and robust performance. They have been largely focussing on these automobile features since the post-pandemic period.

It's a remarkable chapter for a company that began its journey in 1945 (Mahindra Group Official) as Mahindra & Mohammed, a steel trading firm, before venturing into automobile manufacturing by assembling the iconic Willys Jeeps in India. That legacy of building tough, utility vehicles has been cleverly evolved to meet the aspirations of today's urban buyer. This impressive sales performance significantly bolsters M&M's Q3 outlook and sets a positive tone for the entire festive quarter, which includes Dhanteras and Diwali. But will the company be able to ramp up production to meet this sustained demand and reduce frustratingly long waiting times?

Can M&M Electrify its Success Story?

The ICE (Internal Combustion engine) SUV portfolio has indeed been firing on all cylinders. Now, with the recent sales boost, all eyes are turning to M&M’s electric ambitions. Aligned with this is the expected new EV launch confirmation announcement. First of a new generation of vehicles, this upcoming EV is built on the company's dedicated INGLO skateboard platform—moving beyond its current offering, the XUV400.

M&M's approach to the EV market appears to be a calculated, long-term play rather than a knee-jerk reaction to the competition.

The strategy is built on the following main pillars.

• Dedicated Platform - The INGLO architecture can allow for modular designs. These designs can accommodate various battery sizes and body styles. This can provide a flexible and future-proof foundation.
  
• Global Partnerships - To de-risk its EV venture, M&M is leveraging strategic collaborations. For this purpose, it is sourcing critical components like electric motors and battery pack parts from Volkswagen's MEB platform and batteries from Chinese EV giant BYD.
  
• Dual-Brand Strategy: The company plans to launch EVs under two distinct brands – the iconic XUV brand with copper twin-peak logos (XUV.e series) and a new, futuristic "BE" (Born Electric) brand for a new generation of buyers.
  

Therefore, the upcoming EV launch on this dedicated platform can be a bold statement. This statement of intent has signalled M&M’s transition to a formidable EV innovator, from an EV adaptor.

Let’s wait to see - how this move can impact M&M’s market share. It would be especially interesting to learn how it grows in a fiercely competitive EV segment that is currently dominated by Tata Motors.

What Should Investors Watch For?

With the rapidly moving EV space, it is important for investors to keep an eye on the M&M stock trend. A bullish tone already seems underway with the festive sale numbers. However, the company’s delivery execution can define this success's sustainability. Investors can mainly focus on M&M's ability to navigate supply chain complexities and scale up production. Execution on numerous fronts can help clear its massive order book for the existing SUV range. Even a slight improvement in delivery timelines might further boost the market sentiment.

The second, and perhaps more critical, factor is the November EV launch. Key details regarding the vehicle's pricing, features, range, and the overall value proposition will be intensely scrutinised.

Furthermore, M&M could emerge as a giant EV market player with its successful new vehicle launch. As India transitions towards clean energy and EV transportation, the competition seems to be heating up among auto manufacturers. Therefore, there is no space for any strategy or execution misstep in this segment.

The festive season has charged up M&M’s sales story like never before. Now, the real question is - can the company electrify that success in the months ahead?

Source

CNBC TV 18
Mahindra Group Official
Moneycontrol
Scanx.trade
Electric Vehicle Talks