M&M to invest Rs 1,000 crore for developing petrol engines

NEW DELHI: Mahindra & Mahindra (M&M) has firmed up plans to invest around Rs 1,000 crore in developing petrol engines over the next two to three years. The company is working on developing new petrol engines (1.5 litre and 1.6 litre) in-house and a 2.2-litre petrol engine in collaboration with Korean subsidiary SsangYong Motor Company (SMC).

Apart from joint engine development, M&M Executive Director Pawan Goenka said the company is also reviewing opportunities to share platforms with SMC. The first of the petrol engines developed jointly with SMC — a 1.2-litre mFalcon G80 — has been strapped in KUV100.

Goenka told ET: "Over the next two-three years, we will end up spending Rs 1,000 crore in putting petrol engines in our vehicles. We are working on 1.5-litre petrol engine right now. The 2.2-litre petrol will come in Scorpio and XUV500 in mid-term."

There are four engines that will be available in petrol — 1.2 litre, 1.5 litre, 1.6 litre and 2.2 litre — and in some time M&M will strap them across entire product portfolio, Goenka said.

The company is examining possibilities of sharing platforms with SMC. Goenka said, "The petrol engine we developed together, Ssangyong has launched in Tivoli and we have launched in KUV100. Platform sharing is more difficult. We are looking at platforms right now and when there is a right opportunity, we will definitely look at sharing platforms."

Goenka said, with operational issues largely addressed at SMC, M&M would now focus on the financial turnaround of the company. "SMC brokeeven in the last quarter of calendar 2015. Certainly, the focus until now was more on turning around the company in terms of products volumes, union labour issues, brandbuilding. We have managed to do all of that reasonably well. Now we will focus on financial turnaround," Goenka said.

The Supreme Court in December 2015 suspended registration of vehicles strapped with diesel engines bigger than 2.0 litres in the National Capital Region (NCR) till March 2016, prompting M&M to intensify focus on development of petrol engines. M&M launched its flagship models — Scorpio and the XUV 500 with a downsized 1.99-litre mHawk diesel engine later in January to tide over the crisis in the NCR. Scorpio and XUV accounts for almost 40% of M&M's monthly volumes of 20,000 units and almost 4% of that comes from the region.

Overall, industry experts say, about 400,000 units of diesel vehicles with 2-litre or heavier engines are sold in the country annually and of that 5-8% are sold in Delhi and NCR. Across India, M&M has more than 50% share of this market, while Toyota has about 20% and Tata Motors less than 5%. M&M has been working on diversifying its product portfolio in terms of available fuel options to de-risk sales from the adverse noise against diesel in the country.