The demand for cars and SUVs is zooming again and manufacturers are ramping up production to keep up with consumers’ pace but Mahindra has found itself stuck in the slow lane again.
The company launched the Thar, an urban off-roader, with body style reminiscent of the famous Jeep Wrangler, on October 2, 2020. The Thar received an overwhelming response, garnering 20,000 bookings in its first month.
But three months down the road, the wait continues. According to Mahindra & Mahindra (M&M) officials, the waiting period for the off-roader is anywhere between 22 and 40 weeks, or five to 10 months.
M&M admits that it underestimated demand for the Thar. “Initially we had planned for a capacity of about 2,000 vehicles per month and have now ramped up substantially to 3,000 and then 3,500 units per month in two short phases,” Veejay Nakra, CEO, Automotive Division, Mahindra & Mahindra, said to Moneycontrol in an emailed response.
In contrast, launched in the first week of November, the Hyundai i20 got 20,000 bookings in just 20 days, making it one of the best-received cars from the Korean giant in India.
The following 30 days brought another 15,000 bookings, taking the total to 35,000 in less than two months. Only the Hyundai Venue leads in ranking with 50,000 bookings in just eight weeks.
Despite the steep demand, Hyundai managed to bring down the waiting period for the i20 to 8-10 weeks from around 12 weeks seen during the launch month. The Delhi-based company churned out around 9,000 units of the i20 in December and plans to ramp up the output is in the works.
Three months after the Thar’s launch, the waiting period is three times that of the i20, though the Korean heavyweight hatchback is only two months old in the market.
Depending on the variant—convertible or hard top, diesel or gasoline, manual or automatic—a Thar buyer will get the vehicle only by Diwali this year if it is booked now. The Thar is made at the Nasik factory of M&M, one of three plants that makes passenger vehicles.
M&M did not specify the reasons behind the slow ramp up. “I must admit the response has surpassed all our expectations and production capacities. Hence the wait for the Thar has been longer than expected,” Nakra said.
M&M’s component supplying partners and dealers blamed supply hitches for the slow going. “There is no dearth of alternatives in the market today and the consumer’s attention nowadays is very limited. You cannot make the buyer wait for 10 months for his car,” said one of M&M’s oldest dealers from central India.
“Many companies have become lean in planning their stocks; relying on just-in-time inventory. Supply chain (disruption) and capacity issues are the primary reasons for the Thar’s delay but this comes at a time when our other clients are responding swiftly to demand,” said a parts supplier to the SUV.
Kia Motors, for instance, is moving to three-shift production at its plant mainly to ramp up production of Sonet SUV. Likewise for Nissan which, too, is going for three shifts after its Magnite SUV saw more than 32,000 bookings within a month of its launch.
On the slow track
This is not the first time that M&M has found itself in the slow lane. Brought back from the dead, Jawa bikes were launched by Classic Legends, a subsidiary of M&M, in November 2018. Two years later, the brand, which was to rival the Eicher Motors-controlled Royal Enfield range, remains a minuscule player in the two-wheeler industry.
During October and November, the best sales months of the year, Classic Legends clocked total retail sales of less than 5,800 units. During the same two months Royal Enfield sold nearly 95,500 units. Models of both the brands are priced in a similar range.
M&M could not ramp up production of the Jawa bikes in time due to some teething issues at the factory and also with suppliers, leading to the waiting period swelling to 10 months.
The commercial launch of the electric version of the KUV100 is yet to happen. Initially set to go on sale in June 2019, the electric KUV100 was formally launched at the Auto Expo 2020.
The compact SUV, also the cheapest in India at Rs 8.25 lakh, was to reach showrooms in the first quarter of this year. The vehicle will now be available in the current quarter.