Veejay Nakra, CEO – Automotive Division, Mahindra & Mahindra Ltd, speaks in an exclusive conversation with Swati Khandelwal, Zee Business, about the response to XUV700, the problem of semiconductor shortages, product launches and the company’s strategy to strengthen the SUV -Portfolios among others. Edited Excerpts:
Q: You recently introduced the Mahindra XUV700, a fantastic product from the company. What response do you expect in terms of sales?
A: As you said, the response is very encouraging. I would like to share a data point with you that in the past one and a half to two months we have put a lot of digital content about this product on digital channels, be it on YouTube or other digital assets. We call it Snackable Content because it’s 20-30 second content, and if I add all of that, we got 200 million views for our digital assets. So the response is good and as I said, the market is waiting for us to finally open bookings and bring the product to market. The preparations for this are going well and we will announce it very soon.
Q: Every car company faces the problem of semiconductor shortages. How will you deal with it and how worried you will be as you expect it to be in great demand?
A: As you rightly said, the semiconductor issue is a global challenge for the industry and we are trying ours Best not to miss this opportunity. We knew when our production schedule was going to start, when we wanted to bring the product to market, so we’re a bit prepared for that. However, the challenge remains in terms of semiconductor supply continuity, which is a tough question at the moment that is difficult to give a straight answer to. It is necessary to understand two or three things. The demand for semiconductors, especially due to lockdown, working from home, has risen sharply in various industries – with the exception of the automotive industry – such as electronics, laptops and cell phones. When the pandemic started, the automotive companies looked at the prices of their products, I speak globally. The nature of the demand forecast resulted in a shift in capacity for these other industries. Now that demand is coming back very, very much, redistributing capacity is a challenge and, as a result, there is a huge demand that the auto companies cannot meet. So I think this challenge will be there and I think it is not a short term problem of two to three months. The industry will see that for some time to come. There is strong demand not only for the XUV 700, but for all of our products. When I look at the July dates even though we are on the last day of August and when I look at the bookings we received this month, the good thing is that despite the second wave of COVID, India is in every part stuck, maybe it’s rural or urban, the demand is very strong and the booking pipeline is very strong.
Q: As you said, the semiconductor problem is not a short term problem but a long term problem for the whole industry. So what will Mahindra & Mahindra’s strategy be to deal with it as we get out of the COVID and it is time to make up for the volume loss? How are you going to proceed to make sure the problem is not severely hampering your business i.e. H. What strategy are you pursuing to mitigate these effects?
A: Not only we, but the entire automotive industry is looking for an alternative solution and is also working on it. Not on Mahindra, but the entire automotive industry is approaching all available options such as different markets, alternative sources, free market, OE purchase. One is the sourcing part and I have said that alternative sources, alternative countries, alternative suppliers and alternative markets are being studied. They would also have seen that not only Mahindra but also other automotive companies are excited to see how we ensure that our product variant strategy – there are variants in the product portfolio where the use of semiconductors is low – makes the offer more attractive for our customers, so that they can consider it to buy this. And we have also seen that customers who have to buy a vehicle are open to looking at other variants in addition to the top variants. So, I think we’re going to do it in any case, maybe it’s a mix of variants of the sourcing strategy, all options are on the table and we’re working on all of them.
Q: What is your product launch pipeline for the next 12? Months or until the end of FY22 in all segments? Also, do you have any plans to get into electric vehicles after what you’ve already put out as a lot of manufacturers come out and keep coming out?
A: In the past 12 months, August last year through August this one Year, despite all the challenges in the supply chain and semiconductor problems, we launched Thar, a very successful product and market launch; we also launched Bolero Neo, earlier this year in the month of May, & June, it is also well received in India. Bolero, which used to be a very strong rural brand, and Bolero Neo is a very different avtaar from Bolero and both will co-exist in the market. Its acceptance, even in the urban market, was very strong. We have now unveiled the XUV700, and its launch and booking dates will be announced shortly. The fourth product that we said at the beginning of the year and we call it ‘Scorpio, Platform Z101’ and all efforts are on-going, and we are doing everything to ensure that it is still in this fiscal year, i.e. in the fourth quarter of this fiscal year we will introduce the Z101. Your second question was about the future of electric vehicles. We have said from the start that we believe that the economic decisions to buy electrical goods will be very cautious now and in the next four to five years – mobility products in which our products such as Trio and Alpha are represented. At Treo we have Auto, Yaari and Zor, a load version, with all these three products we are the market leader in the field of mobility of people and goods over the last mile. We will continue to focus on leadership there. For car SUVs, we’ve already said that the XUV300 platform will be the electrical product we’re going to bring out. About three to four months ago we already made the visibility of our entire portfolio available to the media and analysts that we will first launch an electric version of the XUV300, after which we will deal with the electrification of the internal combustion engine (IC) motor version of the XUV700 as a product. We also talked about developing two Born Electric products between now and 2026-27. So there will be a full range of EVs and we will continue to focus on and dominate the last mile mobility space. And a complete SUV range with the conversion of the IC version to electric and born electric, both, will be brought onto the market in the next four to five years.
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