Lockdown caused loss of 87,000 vehicles, 30,000 tractors for Mahindra & Mahindra
Indian passenger and commercial vehicles manufacturer Mahindra and Mahindra has reported a cumulative loss of around 87,000 vehicles and 30,000 tractors in the first quarter of FY 2020-21.
The company issued a statement today saying that the ongoing lockdown due to Covid-19 pandemic has caused this massive loss to the carmaker. Mahindra estimates a loss of around 23,400 vehicles and 14,700 tractors in March alone.
The company also said that it expects to mitigate the impact of the pandemic on sales by reducing variable and fixed costs and absorbing all idle overheads caused by the lockdown.
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However, there is relief for Mahindra and Mahindra as it confirmed that all its suppliers are now operational and that the production at the vendors’ end is resuming gradually. But the company also said that its suppliers are facing issues in terms of working capital, manpower and limited working hours due to compliance of office guidelines as precaution.
"Lockdown phase five effective from June 1 has given additional relaxations, which will enable to ramp up the production, supply chain and distribution," the company said.
All the Mahindra manufacturing facilities and offices were shut down entirely during lockdown period of almost 40 days, starting from March 25 to May 3. The Company had adopted work-from-home policy during this phase.
Mahindra expects recovery is sales will be more in the rural sector than in urban areas. Prediction of a normal monsoon and other factors have kept Mahindra’s hopes alive for improvement in demand for tractors. Mahindra has resumed tractor sales from April 14.
In the statement Mahindra said, “The company's auto sales traditionally come from both rural and urban segments... expect quicker recovery in rural India while urban segment will take little longer time to come back to normalcy."
Recently, Mahindra Group Chairman Anand Mahindra tweeted that the ‘economic recovery will be led’ by the farmers, highlighting the company's dependency on sale of commercial vehicles such as tractors.
Mahindra and Mahindra has reported a steep 79 per cent decline in total sales at 9,560 units in May. In a statement issued by the company, Mahindra said it had sold 45,521 units in the same month last year.
In the domestic market, sales were down 79 per cent to 9,076 units last month compared to 43,056 units in May 2019.
Exports during the period under consideration dropped by 80 per cent to 484 units as against 2,365 units in the year-ago month.
In the passenger vehicles segment -- which includes UVs, cars and vans -- it sold 3,867 vehicles in May, against 20,608 vehicles in the same month last year, down 81 per cent.