MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2022-23

Factors that will signif icantly impact demand for automobiles in F24 are: 127 OUTLOOK - AUTOMOTIVE AND FARM SECTORS Both the Automotive and Farm Sectors strive to sustain prof itable growth, maintain leadership position in the domestic market and at the same t ime, explore global opportuni t ies for growth. Simultaneously, your Company continues its focus on achieving cost leadership through focussed cost optimisation, productivity improvements, value engineering, supply chain management, and exploiting synergies between various group businesses. AUTOMOTIVE BUSINESS In F23, the Indian auto industry has shown double digit growth across all segments. Passenger vehicles have reached new highest ever mark with 3.89 million sales units while commercial vehicles are still below F19 levels by 4.5%. As per the Automotive Mission Plan 2026 (AMP 2026), the mid to long-term outlook for the Indian auto industry is positive. Hon'ble Prime Minister unveiled Indian Auto Industry Vision @ 100 mentioning Auto Industry is the engine of economic growth. Supply shortage of semiconductors in first half of F24 Policies by the Government to boost consumption Aggressive Government push for infrastructure led growth Increase in cost of ownership due to commodity price and fuel price increase TRACTOR AND FARM EQUIPMENT BUSINESS The mid to long-term outlook for the Indian tractor industry is positive. Several initiatives taken by the Government are driving higher rural incomes. Examples being higher diversif ication towards high value crops, agriculture accelerator fund to promote technological advancement in agriculture, expansion of non-farm income opportunities, etc. In addition, increase in allocation of Government budgets on infrastructure and rural development is likely to benef it commercial demand. Further, the demand for mechanisation is also growing as shortage of agricultural labour will lead to increase in labour cost. Several enabling factors supporting industry growth, like, institutional credit, consolidation of farm holdings by FPOs, etc. have shown a positive trend in the last few years. Increase in leasing of land from 10% in early 2000s to 17% in 2018-19 and Government subsidy for mechanisation will support the growth of the sector. An increasing trend of more farmers taking technical advice in agriculture, also reflects the growth of progressive farmers. However, the past trends of the tractor industry depict a picture of strong cyclicality. Every 3-4 years growth in the industry is followed with a drop or slow-down. On an average, in the last 10 years, industry