Mahindra revamps two wheeler business

To reinvent itself in the two-wheeler segment, Mahindra Two Wheelers Ltd (MTWL) has started a product-led overhaul. The Mumbai-based company has discontinued sales of two scooters, Flyte and Kine, and one motorcycle, Pantero. Scooter brand Duro is available only in dealerships at present. It has also shifted focus to new-generation products. Its pruned portfolio now has only three models — Centuro, Gusto and Rodeo UZO 125.

This is the first major revamp MTWL has done since its debut in the sector six years ago. The company, which inherited a handful of models from the erstwhile Kinetic Motor Company after acquiring its business assets in 2008, has been struggling to scale up its business against competition from Hero MotoCorp and Honda.

Sarosh Shetty, vice-president (marketing) at MTWL, said: “Our intent is to be a competitive firm in the two-wheeler segment, aimed at achieving five per cent market share. We will launch a refreshed Duro in 45 days; Flyte continues for institutional sales; and Kine was a two-stroke technology, dated and hence phased out. Pantero production was stopped for domestic sales but that platform is available for exports.”

According to data provided by the Society of Indian Automobile Manufacturers (SIAM), MTWL sales fell 18 per cent in the last financial year, closing at 165,344 units against 202,712 units sold in 2013-14. During the same year, the sector grew eight per cent to 16 million units.

Past year, MTWL had a market share of 1.03 per cent. Royal Enfield — which sells models priced three times more than MTWL’s — commanded a 2.02 per cent share, with sales twice of MTWL’s.

Mahindra & Mahindra executive director Pawan Goenka had said a monthly volume of 30,000-35,000 this year would be a reasonable volume level.

He also termed the current year a 'critical year' for the ailing business. MTWL’s average monthly volume in the first quarter of this year stood at 10,500 units, according to Siam data.

Having invested in new technology and products over the past 3-4 years, the company now wants to focus on marketing and promotion. The Centuro and the Gusto are indigenously developed products, while Duro, Kine and Flyte were inherited from Kinetic.

In an interview to Business Standard, Goenka had said that no new investments on products would be made this year, but new investments towards marketing would be done to push the existing range.

Mojo, a 300cc premium motorcycle, is expected to be launched in the first half of the year.

After six product launches and investments of Rs 500 crore, the business was declared ‘potentially sick’ with its accumulated losses peaking to Rs 790 crore at the end of March 2013. As of FY14, MTWL posted a loss of Rs 460 crore according to disclosures made in its last published annual report.

“We also have to reduce our material cost. That is, increase our gross margin from where we are. I think in all the other businesses, we are okay with gross margin; two-wheeler is the only business where we have to work on gross margin and improve gross margin,” Goenka had told analysts.