Mumbai: A boost in Scorpio sales has helped Mahindra & Mahindra to perform better in the utility vehicle (UV) category.

In October, the Scorpio contributed to 26 per cent of UV sales and grew by 82 per cent year on year as production of the Scorpio increased to 100 vehicles per day. The company is hiking its production capacity of the Scorpio to 118 units by December. This will further boost Scorpio sales, says HSBC Securities.

Sales of other UVs grew by 27 per cent in the past month. M&M''s automotive division (UVs, light commercial vehicles [LCVs] and three-wheelers) sales grew by 41 per cent in October 2003. While UV sales were up 38.3 per cent, three-wheeler sales grew by 91.9 per cent. LCV sales, on the other hand, declined by 8.8 per cent.

The recent nationwide launch of the Maxx pick-up, which competes directly with the 207DI of Tata Motors and offers bigger carriage space, could help regain some of the market share loss in that segment, says HSBC Securities. M&M''s market share in pick-ups declined to 56 per cent in H1 FY 2004, following the launch of the Tata 207DI, compared to 76 per cent in FY 2003.

M&M''s tractor sales, in the meantime, increased by 23.4 per cent to 6,792 units in October 2003 following a growth of 23.7 per cent in September 2003 after more than nine quarters of decline in sales.

The performance in October 2003 is the best in last 24 months for M&M. The company has managed to bring down its receivables by 30 per cent and dealer stocks by 34 per cent in H1 FY 2004. The company''s stock at the dealers'' end is 2,700 tractors and in its own books, at 3,000 tractors (approximately 45 days'' sales).

M&M tractor receivables are at 55 days of sales as compared to six months for the industry; hence, the impact of recovery in tractor sales will be felt by M&M relatively quickly, says HSBC Securities.

The first signs of tractor demand recovery have become evident. "With better monsoons, we expect demand to remain robust for UVs as well as tractors," says the broking firm. It has forecast that the UV segment will see a growth at 22.5 per cent in FY 2004 and 15 per cent in FY 2005. However, it is expected that tractor sales to decline by 7 per cent for FY 2004.