While Mahindra SUVs have millions of satisfied customers, the high waiting period tests the patience of new buyers. Mahindra is cognizant of the situation and has been taking steps to reduce the order backlog. The efforts are bearing fruit, as a 60k reduction in order backlog has been achieved in a period of just around three months. In a significant stride towards operational efficiency and customer satisfaction, Mahindra & Mahindra, one of India's leading automotive manufacturers, has successfully reduced its order backlog by a staggering 60,000 units. Deliveries have also been ramped-up. With these efforts, Mahindra open bookings are down to 2.26 lakh units, as of February 01, 2024. A 60k reduction is significant, as customers can expect faster deliveries.
Background: The Challenge of Backlog
On an average, Mahindra SUV bookings are around 50,000 units per month. With increased production, Mahindra has been able to increase deliveries to around 40k units per month. However, there’s still a significant backlog for popular Mahindra SUVs. The top selling product is Scorpio / Scorpio N, which collectively have 101k open bookings. An average of 16k bookings is received for Scorpio/N every month. For Mahindra & Mahindra, like many automotive manufacturers worldwide, managing order backlog has been a persistent challenge exacerbated by various factors, including supply chain disruptions, fluctuating demand, and production constraints. Recognizing the urgency of the situation, Mahindra embarked on a mission to address the backlog head-on and restore operational efficiency.
Strategic Initiatives
Mahindra's success in reducing the order backlog can be attributed to the multifaceted approach encompassing strategic initiatives aimed at the boosting production, and the optimizing supply chain operations, and to be enhancing manufacturing efficiency. Here are some key strategies employed by Mahindra to achieve this remarkable feat:
- Supply Chain Optimization: Recognizing the critical role of a robust supply chain in meeting customer demands, Mahindra worked closely with its network of suppliers and logistics partners to streamline procurement processes, minimize lead times, and ensure timely delivery of components and raw materials to production facilities.
- Process Improvements: Mahindra implemented efficiency-enhancing measures and process improvements across various stages of the manufacturing process, from component sourcing to final assembly.
- Customer Engagement: Mahindra maintained open lines of communication with customers affected by the backlog, providing regular updates on order status and delivery timelines.
Impact and Implications
The reduction of the order backlog by some 60,000 units represents the significant milestone for Mahindra & the Mahindra and has been several far-reaching for implications and for the company's business operations and the market positioning. Some of the key impacts are include:
- Improved Customer Satisfaction: With shorter order fulfillment times and faster deliveries, customers are likely to experience heightened satisfaction and a more positive overall purchasing experience.
- Enhanced Market Competitiveness: By addressing the backlog and improving production efficiency, Mahindra strengthens its position in the highly competitive automotive market.
- Financial Performance: The reduction of the order backlog is to be expected which have to be positive impact on the Mahindra's financial performance, with improved sales volumes and revenue generation.
- Brand Reputation: Mahindra's successful efforts to be reduce the order backlog and also reflect positively on its brand reputation and the credibility as a customer-focused and also the operationally proficient automotive manufacturer.
Conclusion
Bolero and Bolero Neo have combined open bookings of 10k units. Average bookings are around 11k units per month. For XUV300 and XUV400, the combined order backlog is 8.8k units. Average bookings are around 9k units per month. Mahindra had launched the updated version of XUV400 last month. Later this month, Mahindra is expected to announce the pricing for XUV300 facelift. Talking about booking cancellations, the number increased to approximately 10 percent during the period from November 2023 to January 2024. Mahindra has attributed this to year-end VIN change. The company has also stated that booking cancellations were reduced to less than 8 percent, as of January 2024.