Mahindra & Mahindra weighs SUV price hike amid rising commodity costs

Mahindra & Mahindra is weighing another price increase across its SUV portfolio amid recent commodity price increases, with a decision expected in the next couple of weeks, CEO, Automotive Division, Mahindra Group, Nalinikanth Gollagunta said.

In an interview with PTI, Gollagunta said the company has already taken three price increases this year -- in January, April and July, with the July increase being about 2.7 per cent on sports utility vehicles (SUVs).

“We’re watching it very closely. As you know, we’ve already taken three increases – one in January, one in April, and a fairly significant one in July, about 2.7 per cent on SUVs. That said, it’s something that can be very dynamic, so we continue to watch it,” he said.

Elaborating further, Gollagunta said, “We’ll probably take a call in the next couple of weeks on whether we need a price increase... I can’t say we will or we won’t, but it’s something we’re looking at closely, given the recent price increases on commodities”.

He said recent price increases across the auto industry have not affected customer inquiries or bookings, with vehicles still priced below pre-GST levels.

“No, primarily for a couple of reasons – we’re still well below pre-GST prices, so demand continues to be quite intact and robust at this point,” Gollagunta said.

On the festive season, he said demand should be strong for Mahindra as well as across the industry, helped by prices remaining below pre-GST (Goods and Services Tax) levels and a refreshed product portfolio.

“Festive should be very good for us, and across the industry, for a couple of reasons. We’ve had inflationary pressures, but the reality is the GST price cuts from last year are holding us all well below pre-GST prices, even with the inflationary price increases we’ve made over the past year or so,” he said. On hybrid technology, Gollagunta said Mahindra remains focused on electric vehicles and would adapt if the regulatory environment changes.

“We’re very clear in our minds -- EV is the end state the country is heading towards, and that’s also what the government has made clear to the industry. If you look at the CAFE (Corporate Average Fuel Efficiency) norms, there’s a very clear differentiation between the benefits given to an EV versus a hybrid.

So our focus is on EVs to that extent. If the regulatory environment changes, we have the ability to adapt, but at this point our focus is primarily on EVs,” he shared.

On capacity, Gollagunta said Mahindra currently has about 60,000 units of monthly ICE (internal combustion engine) capacity and about 8,000 units of EV (electric vehicle) capacity, and is largely delivering to those levels.

“The next set of capacity increases will happen at the end of March, early April – the 60,000 ICE capacity will go to 70,000, and the EV capacity of 8,000 will go to 12,000. So, where we are now, we’re at 68,000, and we’ll go to 84,000 in about six months,” he said.

Gollagunta also said the company has several product refreshes and two major launches lined up over the next two quarters.

“We’ll have a set of refreshes coming – some of this we’ve already talked about. We have about 5 (product) refreshes; a few have already happened, and two or three more are coming up. Other than that, we have two major launches coming within the next couple of quarters -- that’s also why we’ve added the capacity. We’ll have one major launch on the ICE side and one major launch on the EV side, both happening within the next two quarters,” he said.