Pawan Goenka, the Managing Director of Mahindra & Mahindra (M&M), spoke to CNBC-TV18 about the company's quarterly performance and the recently released SIAM data.
"Last year’s Q1 was one of the best quarter that we had in a long time. Therefore, some of the negative growth that we are seeing is an effect of a very high base of last year quarter," Goenka said on Thursday.
“With the price increase that will happen for the safety norms that are coming in on October 1, 2019 and the BS-VI norms coming from April 1, 2020 will have a significant increase in the prices of the vehicles and that will have a downward pressure on demand again,” he added.
Talking about the tractor sales, he said, “We had said 5 percent at the beginning of the year and we have seen degrowth of 15 percent in the first quarter. In our internal estimate the Q1 was supposed to be small degrowth, maybe 5 percent degrowth but not 15 percent.”
“Looking at the next 9 months, the 5 percent growth will require 10 percent growth for the next 9 months to get 5 percent for the whole year and 10 percent appears very unlikely. Therefore, we will have to slightly downward revise our estimate,” added Goenka.
SIAM data for the month of June indicated a 24 percent year-on-year fall in passenger car sales while two-wheeler sales were down 12 percent. SIAM said auto sector de-growth, if not addressed, may lead to job losses.
On the SIAM data, Goenka said, “It’s hard to predict what will happen in the next 2-3 months. However, we certainly hope this will not last very long.”
“If we do all the right things, India has a resilience, the industry has the resilience to recover quickly from a very sharp drop that has happened and we have proven it 2-3 times in the history,” he said.
“Therefore, we need some improvement in the market sentiment; certain things that the automakers do and unfortunately stimuli from the government are needed to come out of this very difficult situation that the industry is facing,” Goenka added.