Report: Mahindra Two-wheelers to exit mass-market, focus on premium motorcycles
Mahindra and Mahindra has decided to exit the mass market motorcycle category, reports Moneycontrol.com. The company had first started down the path of becoming a full-spectrum two-wheeler manufacturer with the acquisition of Kinetic Motors roughly a decade ago. Since then, however, the Mahindra Two-Wheelers journey has been full of hiccups and sales success has been hard to find.
The Mahindra, identified by its twin golden ribs is the Mahindra motorcycle for the mass-market
Mahindra began with the scooters that it inherited from the Kinetic Motors, including the excellent Flyte that was created in the Kinetic-SYM arrangement. But today, the Mahindra Two-wheelers operation is the smallest of the Indian two-wheeler makers with sales dropping 77 per cent between April and July over the same period in 2016. Market share is less than 0.1 per cent.
While the dealers report that sales continue as normal, the company has slowly been looking to the Mojo as the product that will take it forward, as per the MoneyControl story. Of course, the Mojo, as a product has also been around without updates for a long time, even the ABS update that was expected to come has not shown up yet.
This is the recently released Euro IV 2017 Jawa 350 OHC. The Indian Jawa project, though, is expected to be run by Mahindra Two Wheelers, based out of India
Mahindra & Mahindra, of course, also made news with the acquisition of the rights to make Jawa-branded motorcycles in this part of the world. And then, it also announced that it had acquired the rights to the BSA name, from a company that does little more than use the brand for merchandising at this time. Mahindra had announced that while the Jawa programme would be run out of India, the BSA bikes were likely to be developed for export markets. And of course, Mahindra also owns Peugeot Scooters which was part of its 2016 Auto Expo booth though an Indian premium scooter product is yet to see light of day.
This is the Peugeot Speedfight, a scooter shown at the 2016 Auto Expo at the Mahindra Two-Wheelers booth
MoneyControl reports that with a loss of Rs 471 crore last year, the Mahindra Two-wheeler business has sustained total losses of Rs 2,876 crore as of the end of the last financial year. The company is now busy "right sizing" resources and cutting costs this financial year. It also has pursued the export market and it sold 6,707 units outside India, higher than its domestic performance and 17 per cent higher than the same period last year.
OVERDRIVE spoke to company officials who emphasize that there is no change in the current product plan and all products including the Gusto scooter and the Centuro production and sales continue. We are awaiting an official quote and the story will be updated to reflect this.
While we still wait for the official word from the company, the situation in the mass market is dire for everyone who isn't in the top two or three positions in terms of volume. The Honda Activa dominates the mass-market scooter class and the Hero fleet of small motorcycles enjoy a similarly strong position in the commuter motorcycle market. Because of the nature of the market, the prices are low and the margins slim. Given how historically India tends to favour a clear market leader in every single segment of the automotive space, it isn't just Mahindra who will be forced to consider a premium-market only, niche-product centric business strategy. The commoditisation of the two-wheeler at the bottom of our market, unfortunately, accrues to the market leader rather than democratise the sales across brands. If Mahindra were to confirm this new change of direction, in fact, it wouldn't even be the first. Suzuki, for example, had already indicated that going forward it would focus more and more on the premium motorcycle market rather spending time and effort on a relatively unresponsive commuter market.
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