India’s major auto manufacturer, Mahindra & Mahindra (M&M), faced several headwinds in Q1 FY2022 (April-June), including high commodity prices. High hot-rolled steel prices up by 77pc in a year and copper up almost 86pc are global issues confronting the auto industry. Besides a short supply of semiconductors and higher freight costs, cited M&M in a company release.
The company is building inventory for the festive season, which augers well for the domestic metals and other raw materials industries.
Supply chain issues continue to haunt automakers, specifically the shortage of semiconductors. Another potent issue during the past quarter was the increase in freight costs which lifted prices of imported components.
On the sales side, approximately 50pc of M&M’s auto dealers were working in Q2, and 75pc of the farm segment dealerships were open. However, in mid-May, 90pc of the dealerships that sell auto products were closed while 65pc of the farm segment dealers remained shut, hurting sales.
Domestic auto sales volumes increased to 79,320 units in Q1FY22, up by 188pc from a year ago. In Q1 FY2021, auto sales reeled under the impacts of the first wave of COVID-19. Tractor sales rose by 46pc to 95,085 units in the June quarter from the prior year.
M&M reported consolidated net profits at Rs4.23bn ($56.98mn) for Q1 FY2022 against a loss of Rs489mn in Q1FY21. Total income rose to Rs193.6bn, up by 60pc from a year ago.
($1=Rs74.23)