The Wall Street Journal reports this morning that despite continued parts shortages, Mahindra experienced a 40% gain in net profit for the first fiscal quarter of 2010. The WSJ post does not clarify, but we believe this 40% increase is over the same time period last year. The increase in net profit is directly attributed to the fast recovery of the Indian economy from the peak of the global downturn in 2008-2009.
Mahindra is also claiming that it under-produced vehicles by 5% due to parts shortages from suppliers who are still recovering from the downturn. Slow supply of key components such as engine and transmission castings, tires, and fuel injection equipment are to blame.
High levels of domestic demand for Mahindra vehicles and local parts shortages, leaves us wondering if delays in Mahindra’s US pickup truck launch may be partially related. A quick risk assessment would place a much higher value on known demand in the Indian market over the unknown American market.