Despite slowdown, Indian auto players' investment on track

Despite economic slowdown affecting the automobile sector, home grown players like Mahindra and Mahindra (M&M) and Tata Motors Wednesday said their respective investment plans are on track.

M&M will invest Rs.10,000 crore on capital expenditure and new products in the next three years, said Pawan Goenka, president, automotive and farm equipment.

Spekaing on the sidelines of Society of Indian Automobile Manufacturers (SIAM) annual summit here, Goenka said that Rs.7,500 crore out of the total investment will go to the company's automotive and farm equipment division while the rest Rs.2,500 crore will be invested in other group companies.

The company is currently scouting locations to set up a new plant and will take a final decision within this fiscal.

The automobile manufacturer is also developing new vehicle platforms and engines in collaboration with its South Korean subsidiary Sangyong.

The other major home grown automobile company, Tata Motors said it will go ahead with its planned investment of Rs.3,000 crore in the current fiscal.

Managing Director Karl Slym said his company will not be waiver from its investment plans due to the current slowdown.

"This kind of environment causes us to make sure that we are not forsaking future for trying to look after today. So, investment plans on new products that were committed by us continue to be like that," he added.

The Indian automobile sector is grappling with high fuel and interest costs in an inflationary economy which is driving away first time customers. Both Mahindra and Tata Motors reported deceleration in August sales.

Tata Motors' sale of passenger vehicles in the domestic market slumped 50 percent to 11,564 units in August. The company's total sale of commercial and passenger vehicles was down 31 percent at 49,611 units.

M&M's off-take last month was down 17 percent at 37,897 units. The passenger vehicles segment sales were down 27.5 percent at 15,821 units.

However, both companies have expressed optimism over pick-up in sales for the upcoming festive season.