Mahindra & Mahindra, the largest shareholder of Ssangyong Motor, failed to sell any vehicles in the Indian market in April, according to the Chosun Biz report on May 7. It also showed Mahindra's share of the Indian market has fallen sharply this year.
Mahindra's dependence on domestic demand in India stands at 97.8 percent. Mahindra's profits fell sharply in the fourth quarter of last year as conditions in the Indian market worsened.
Analysts say that additional support for Ssangyong will be difficult as Mahindra's financial situation worsens further this year.
India's Automobile Manufacturers Association announced in April that Indian car sales were "zero." Not all automakers, including No. 1 Maruti Suzuki, No. 2 Hyundai and Kia, No. 3 Mahindra and No. 4 Tata, have sold any cars.
This is because auto sales outlets and factories were closed after a blockade was imposed across India because of the COVID-19.
The problem is that Mahindra's market share and financial conditions began to deteriorate from the fourth quarter of last year. In other words, Mahindra, which has a relatively weak financial situation, is more likely to face more difficulties in the future.
Mahindra sold 34,000 passenger cars in the first quarter of this year, according to market research firm MarkLines. It is a report figure that is only 1,000 units different from the fourth-ranked Tata (33,000 units).
Mahindra's market share plunged 2.6 percentage points to 5.2 percent in the first quarter of this year from 7.8 percent in 2019. Tata's market share also fell 0.6 percentage points to 5.0 percent in the first quarter of this year from 5.6 percent last year, only succeeding in maintaining the third place.
Mahindra has been struggling for the past few years. Last year, its sales of passenger cars stood at 230,000 units, about the same level as the 231,000 units sold in 2014. During the same period, the Indian passenger car market grew 15.2 percent from 2.571 million to 2.962 million units.
In 2018, when India's auto market increased to 3.395 million units a year, Mahindra's sales were only 250,000 units. Except for Mahindra, all the other major players saw their sales increase sharply, with Mahindra remaining in place.
Mahindra sold 467,000 cars, including commercial vehicles such as trucks and buses, in 2019, with domestic sales in India reaching 457,000. Domestic demand is 97.8 percent of its total sales, which means there is no way to make up for the sluggish sales if its sales are poor in India.
Finally, Mahindra's net profit fell 88.7 percent in the fourth quarter of last year. Sales fell 4.5 percent to 250.2 billion rupees in the same period in 2019 from 261.85 billion rupees in the fourth quarter of 2018, while operating profit fell 15.2 percent to 23.65 billion rupees from 29.28 billion rupees in the same period. Net profit plunged from 15.08 billion rupees to 1.71 billion rupees.