MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2021-22

The softening of demand in the last three years is a result of tapering of GDP growth, shortage of semiconductors, loss of income due to COVID-19 in F20-21, increasing cost of ownership due to addition of multiple safety features and implementation of stricter emission norms during the last few years. The Indian auto industry is aware of the need for reducing dependence on imported oil, improving safety on the roads andmost importantly, the need for clean air. Over the years, the industry has made signicant investments in indigenisation of technologies in the conventional vehicles space e.g. meeting BS-VI in 3 years is an example. Government has notied Electric vehicle technology and Hydrogen fuel cell technology as advanced automotive technology under PLI (Production Linked Incentive) scheme. Furthermore, with the objective of maximising local value addition and building competitiveness of the Indian industry, the Government has announced the Phased Manufacturing Plan (PMP). The Indian auto industry is making the necessary investments and is focussed on building capabilities in the EV space. As a result, the industry volume of Commercial Vehicles are showing slower recovery and are still down to F17 levels. Passenger Vehicle segment has shown the fastest recovery led by highest ever Utility Vehicle sales. 8.1% 10.1% 8.3% 7.3% 8.9% -3.1% -10.7% -7.3% -5.1% -2.6% PV (Domestic sales) CV (Domestic Sales) Domestic Sales (Excl. 2W) PV (Export) CV (Export) Segment CAGR F09-F19 CAGR F19-F22 The Government has announced the PLI (Production Linked Incentive) scheme for AAT (Advance Automotive Technologies) like battery electric vehicles and hydrogen fuel cell vehicles. Auto Industry in FY 2022 In Financial Year 2021-22, Indian auto industry sales (excluding two-wheelers) have shown signs of recovery compared to F21. Industry is still down from F19 volumes by 20%. Partial recovery of Auto Industry was principally a result of: Pandemic impact in Q1F22. Shortage of supply of semiconductors. Price increase of vehicles on account of sharp increase in commodity prices. Over the ten years between F12 and F22, the Utility Vehicle (UV) segment has witnessed a good growth of 15.1% CAGR. UV, as share of PV, has increased from 13.8% in F12 to 48.5% in F22. This growth in UV is driven by increased customer preference for UV-styled vehicles and a shift from compact cars to compact UVs (less than 4m length). In the last two years (F20 - F22), there were 16 new launches in the UV segment, and these accounted for 11% of UV volume in F22. For the year F22, compact UVs accounted for 51% of UV volume. We believe that electric vehicle adoption in India would be led by e-3W; the key drivers being improving operating economies, easy deployment for last/first mile connectivity (including at metro stations) and the growth of start-ups as 3W aggregators. For the year F22, a total of 22,987 e-3W were sold, accounting for 8.8% of the 3W industry. COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS 110