Mahindra & Mahindra to revamp two-wheeler business

Mahindra & Mahindra has announced a major revamp for its two-wheeler arm, Mahindra Two Wheelers, to turnaround its business. Sales have been lower than expected, and there are reports that the company will lay off jobs to bring costs in control.

Pawan Goenka, executive director, Mahindra & Mahindra, said, "Volumes have not been as planned. We right-sized and gave Voluntary Retirement Scheme (VRS) to 250 people. We are evaluating the way forwards for the two-wheeler business. A formal announcement will be made in the next few months." He further stated that the company would not consider exiting from its two-wheeler arm.

The Indian manufacturer saw a sales decline of 12.7 per cent to 1,33,355 units last fiscal. The company sold 13,549 units in the first couple of months this fiscal, down by 38.21 per cent compared to the same period in the previous year. Scooter sales have dipped by 19.24 per cent in the April-May period this year while motorcycle sales have dives drastically by 60.72 per cent to 3,940 units from 10,031 units a year ago.

The company will focus on premium scooters and motorcycles that offer higher margins. It also plans to move beyond the traditional scooters and motorcycles segments where it competes with the likes of Hero MotoCorp, Honda Motorcycles and Scooter India. Goenka added that Mahindra Two Wheelers would focus on the 300cc motorcycle, Mojo and the 125cc Gusto, which are doing reasonably well.

Vinod Sahay, CEO, Mahindra Two Wheelers Limited, said, "Mojo's brand positioning has received good acceptance in its segment. With a presence in 15 cities, we are already doing 200-250 units a month, and the idea is to take it to 500 in the five-six months."

With scooters, the strategy will be different as the premium scooter market in India is pretty much in a nascent stage. "Currently the Mojo type of segment (premium-lifestyle) does not exist in scooters, so one option is to see if our Peugeot range can tap that. We have plans to take Peugeot to South-East Asia, and we are evaluating an India entry right now," says Sahay.

Mahindra Two Wheelers also plans to launch six to seven new models next year that'll include new variants of the Mojo and Peugeot products.

Mahindra recently acquired a 51 per cent stake in Peugeot scooters and is set to reap the benefits of the new partnership with the European manufacturer. After all, Peugeot has a wide European footprint and is one of the oldest (120 years) manufacturers of motorised two-wheelers.

Mahindra Two Wheelers is also evaluating the prospect of launching a few Peugeot scooters in India. Three scooters - the Django, Speedfight and the advanced three-wheeled Metropolis - were showcased at the 2016 Auto Expo in Noida. Mahindra Two Wheelers is also expected to utilise the technological know-how of Peugeot to develop products.

Mahindra also competes in the Moto3 category and won its first GP at the 2016 Dutch TT

Mahindra Two Wheelers forayed into the Indian market in 2008 by taking over the ailing Kinetic Motor Company Limited. It then partnered with Taiwanese two-wheeler manufacturer SYM (Sanyang Industry Company) to develop a range of scooters. It rolled out a number of scooters, such as the Rodeo, Duro and Flyte as well as motorcycles such as the Pantero and Centuro. While these products have had a fairly decent run, the Gusto 110cc, Gusto 125cc and Mojo are a clear step ahead in the right direction.