Mahindra car demand: Mahindra & Mahindra says demand for cars outstripping capacity

said Friday that demand for its cars is outpacing production capacity as people rush to buy the automaker’s popular sport-utility vehicles (SUVs), boosting profits.

The automaker reported a sharp jump in net profit in the first quarter as sales of its passenger cars rose to 149,803, up 74% from a year ago, while it has outstanding bookings for more than 273,000 vehicles.

“We started capacity expansion programs but had not anticipated this type of demand,” said Rajesh Jejurikar, executive director of the company headquartered in Mumbai.

“We are increasing capacity to ensure we can leverage all the demand we have,” he told reporters, but declined to provide further details on how much capacity the company is adding.

Mahindra said it received more than 100,000 orders within 30 minutes of opening books for its Scorpio-N SUV, worth about 180 billion rupees ($2.3 billion) in sales value. It currently has a capacity to produce about 6,000 of these vehicles per month, Jejurikar said.

While demand for cars has been strong, Indian automakers, including Mahindra, say they are also seeing a decrease in the semiconductor shortages that have hampered the industry since the pandemic. Mahindra was hit hard by a shortage of chips, limiting supplies to its vehicles last year.

Jejurikar said the company is sourcing chips from multiple locations and there are no early signs of supply disruption due to the geopolitical situation in Taiwan.

The company reported consolidated net profit of rupees 21.96 billion for the three months ended June 30, compared to rupees 4.24 billion a year earlier. Operating income rose 48% in the quarter to rupees 284.12 billion.

However, the operating margin decreased by 200 basis points to 11.9%.

Shares Mahindra ended the day 2% lower.

($1 = 79.2300 Indian Rupees)

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