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Mahindra and Mahindra Ltd – country’s leading tractor and automobile manufacturer – expects its vehicle sales to drop in the range of 15%-20% in the June quarter of the current fiscal, compared to the preceding one, as a consequence of the second wave of Covid-19 infections which has forced state governments to impose lockdowns. The company also expects revenue and net profit to be impacted in line with the impact on sales and it is taking measures to limit the adverse impact on it businesses.
Manufacturing of automobiles came under pressure from the first week of April when the state government of Maharashtra announced lockdown measures to contain the rising cases of Covid infections. Subsequently other states like Delhi, Haryana, Karnataka, Tamil Nadu and others also followed suit.
Most vehicle manufacturers have either stopped production at their factories or reduced output significantly. Some manufacturers like Tata Motors and Bajaj Auto Ltd have been continuing with production albeit with limited capacity. Due to regional lockdowns showrooms also have to remain shut, impacting sales.
“Further to our communication dated May 3, 2021, we wish to inform you that with the rampant spread of the second wave of COVID-19 and lockdowns enforced in various states and parts of the country coupled with disruption in the supply of oxygen for industrial use, demand and supply for vehicles and tractors is expected to be impacted temporarily,” the company said in a regulatory filing.
It further added that on the supply side, global shortage of micro-processors (semi-conductors) used in Electronic Control Unit (ECUs) fitted in different components and aggregates for vehicles continues to pose challenges to the production schedules of the company.
Mahindra and other vehicle manufacturers have been facing acute shortage of semi-conductor-based parts from key vendors which has impacted supply of vehicles in the market.
“In view of this, the company is carefully reviewing the demand and supply situation and re-calibrating its operations accordingly while protecting the interest of its customers, dealers and suppliers. The endeavour is to ensure optimal level of inventory at plants and dealerships in order to be prepared for a rebound in demand once the situation returns to normalcy,” the company further added.
India is presently tackling an exponential rise in Covid-19 infections with caseload of over 400,000 cases on certain days. Strict lockdowns have been imposed in almost all major states in the country and this has impacted economic activity. With states under lockdown supply of components, supply chain network of most companies has also come under pressure, propelling them to shutdown factories.
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