Government stimulus package to revive auto sector yet to make any buying momentum: M&M

Homegrown auto major Mahindra & Mahindra (M&M) on Thursday said measures by the Narendra Modi government to revive auto sector yet to make any buying momentum.

In an interview to CNBC-TV18, Pawan Goenka, managing director, said, "Reopening the Goods and Services Tax chapter, which was more or less closed, is raising expectation for the potential buyers and there is a fear that there would be an impact on demand in the intervening period."

Talking about inventory level, Goenka said, “According to FADA report, passenger vehicles is below 30 days, which is roughly where we want to be. For two-wheelers and commercial vehicles, it’s higher and Mahindra is in the thick of it. It is not like we are extreme on one end or the other."

"We are not shying away from shutting down our plants if we do not see demand for that number. We hope that in September, we will not shut down the plant. However, if the need arises, we will shut down the plant during the festive season. So that’s matching manufacturing with the projected demand that we will see in the festive season," he added.

“As far as schemes are concerned, right now we are not going overboard. The discount is as little as 1.5-2 percent to as high as 6 percent for Mahindra products," Goenka said.

On the scrappage policy front, he said, It’s in the works for 5-6 years. Everybody is in an agreement that scrappage ticks many boxes. It ticks the box of cleaner vehicle, less fuel consumption and generating demand for new vehicles.”