Small commercial vehicle market is holding well: Arun Malhotra, M&M

ET Now: What about the MCVs and the LCV segment because that has continued to be in excess of 30% for you? Are you hopeful that this sort of a trend trajectory will continue for next 3 to 4 quarters as well?

Arun Malhotra: If you look at the auto sector, we have grown by 26% this December versus last year and cumulative our growth has also around the same percentage for the first 9 months of the financial year. The small commercial vehicle is a component of M&M and in that segment this month we have grown in the small commercial 4 wheeler by approximately 45%. So, the small commercial vehicle market’s 4 wheelers are holding well and we hope we should continue the progress in the coming months also.

ET Now: You have hiked the XUV500 prices by about Rs 55000 per unit. Are the cost pressures still not easing despite the softness in commodity prices or is the depreciating rupee the culprit in this particular case?

Arun Malhotra: I will take it in 2 parts. One is the XUV500. When we had launched it in the first week of October, they were introductory price and we had said that this is for very short duration. So, one was that reason and the second has been that although it may look internationally raw material costs are somewhat stabilizing, but at the ground level, still the last few months they have increased. We are hopeful that in the coming year, there should be some stabilisation of raw material prices and the rupee depreciation, devaluation has also worked in favour of the cost increase. So, these are 2-3 factors for it.

ET Now: So until you mitigate these cost pressures, can we see other price hikes as well?

Arun Malhotra: There are 2 ways of looking at it. One is last year in spite of the auto industry being going on very slow path, we have still performed very well. We had growth by 26%. The second part is in the coming year since the retail financing rates had gone up in the last one year, they have gone up by 2.5% to 3%. We are hopeful there are reports in the market that there will be some stability or there will be a reduction in the interest rates also. So that would augur well, that will build the momentum. As far as raw material prices are concerned, since it is the lag impact in terms of what happens in international market what actually consumption pattern, if the commodity prices do decrease in the coming year, then it will have a more favourable impact, but seeing in auto industry. One very important part is the volumes and if you are able to maintain your volume whether in terms of better penetration or more retail financing, it helps you. So, that has been a factor which has helped us in the last few months.

ET Now: What is it that you would indicate in terms of a pricing trajectory? Would you be looking at considering obviously monitoring the factors that you just talked about? Is there any price hike decision that would be underway as is the case with your other peers?

Arun Malhotra: Yes, we had announced already in December. We had announced the exact price of XUV increase which will become applicable from this month onwards and so other products also we have announced the price increase. It should come out in a day or 2, but that increase in the other products will be in the range of within 1.5-2%.

ET Now: M&M had also indicated that Ssangyong is likely to miss the sales target for 2011. What is the revised sales guidance that you have set out?

Arun Malhotra: I will not be able to comment on this.

ET Now: There have also been reports that M&M is eying bankrupt automaker Saab. Can you confirm or deny this particular news?

Arun Malhotra: No, I have no comments to make on that.