MM working on petrol XUV for export markets

Mahindra & Mahindra and Navistar International Corporation announced that Mahindra is looking to purchase Navistar group's stake in Mahindra Navistar Automotives . In an interview to CNBC-TV18 Pawan Goenka, President automotive biz, M&M shared the details about this acquisition and the future prospects of the company.

Goenka also said that the breakeven would depend on the way industry performs in the quarters ahead. "It looks like even the fourth quarter will be in struggle. We do need to sell, an order of 700-800 trucks a month to breakeven," he said.

Further, the auto-maker is ready to launch new petrol SUV in six to eight months. The company is working towards launching a petrol variant of XUV 500 for export markets, he added.

Below is an edited transcript of Pawan Goenka's interview on CNBC-TV18.

Q: What made you acquire Navistar group's stake in Mahindra Navistar automotives?

A: Such decisions are never made based on what is happening today. They are always based on how the industry is going forward. It's a 5-15 year bet and not a six month bet that we are taking. We have full confidence that even though the commercial vehicle industry is down right now, it is going to come back because it has to come back and there are no two ways around it.

Whether it will happen in three months, six months, one year that I don't know, but it will come back. Therefore, for Mahindra to not put complete focus on commercial vehicles was never an option. We are here for the long run and will continue to be here.

We acquired Navistar's stake because right now Navistar has decided to rationalise various investments, prioritise the investments they have. They have decided that for them this is not the right time to continue to support this joint venture (JV) because it is losing money.

Q: In 2005 when the joint venture was formed, so as you said that the company is yet to break even. Now with the fact that it has become a 100 percent subsidiary of Mahindra and Mahindra (M&M), what is the road plan going forward? When do you think the company would turnaround, breakeven?

A: Breakeven depends a lot on how the industry behaves in the next year. We were hoping that the fourth quarters of this financial year would be a better year for the commercial vehicle industry, but right now it doesn't look that way. It looks like even the fourth quarter will be in struggle. We do need to sell, an order of 700-800 trucks a month to breakeven. We are far from it right now. It can happen quickly if the industry turns around.

We do export petrol SUVs. So if there is a situation where the diesel SUV becomes unaffordable, we can always launch the petrol SUV not next day, but within six to nine months of something like this happening.

Q: Does that mean you would be ready?

A: We are ready because we are exporting. Today we are exporting petrol Scorpio, we are currently working on a petrol XUV, not ready yet, but will be ready in some time again for export right now.

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