M&M hits it big, or does it?

To form an opinion based on a business news, it’s critical to consider it from various angles.

Last week we read that M&M’s new car – Scorpio N got 100,000 bookings in 30 minutes. Surely good news? To understand the magnitude of this news, just look at the following data

– Maruti got about 70K bookings for Vitara Brezza over a few days
Maruti sold 3 lakh UVs in the entire FY22
– India sells about 2.5 lakh cars per month. Half of this is SUV.

So looks like good news. If you have a good model, the market will reward you with market share. We have seen the same with Tata Motors as well, whose PV market share has gone up from 4% in FY20 to 12% in FY22, led mainly by Nexon and Punch.

But is it all good news? These bookings, done at Rs 15-25K per unit, are usually cancellable with some booking charges (10% of booking amount in many cases). As per some estimates, M&M will deliver these cars over 2 years. How many people do you know who wait for a car for 2 years? So unless M&M is able to ramp up production quickly, many of these bookings might get cancelled.

For this news to be positive for M&M, they need to ramp up capacity quickly. Without that, it is unlikely to see these numbers fructify.

When we read a news in business media, we tend to use it to confirm our own point of view. It is important to look at news in a unbiased manner, to judge whether there is an actual economic impact in the longer run.

 

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Till next week!