The company’s strategy aims to capture a wider base in semi-urban and rural India, where its SUVs enjoy a premium image even as it expands its urban network, says Sumantra B Barooah.
17 Apr 2014 | 8668 Views | By Sumantra B Barooah
The company’s strategy aims to capture a wider base in semi-urban and rural India, where its SUVs enjoy a premium image even as it expands its urban network, says Sumantra B Barooah.
When Mahindra & Mahindra announced in October last year its decision to merge its two-wheeler ...
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The company’s strategy aims to capture a wider base in semi-urban and rural India, where its SUVs enjoy a premium image even as it expands its urban network, says Sumantra B Barooah.
When Mahindra & Mahindra announced in October last year its decision to merge its two-wheeler business with the automotive and farm equipment sectors, Rajesh Jejurikar, chief executive of the tractor business, had his work cut out. He had to prepare for an additional role of managing the two-wheeler business from
April 1, 2014.
As part of those preps, he traveled to 25 two-wheeler dealerships to assess the on-ground situation. “It will not be a cakewalk and that makes it more exciting and challenging,” Jejurikar told Autocar Professional. Jejurikar been now been re-designated as chief executive – Farm Equipment & Two Wheeler Division. His task is to build the brand, which is the youngest in the two-wheeler space, given that it had a shaky start and perhaps lost some time.
In a market where the top players in both scooters and motorcycles dominate the respective segments with over 90 percent share, this is a key challenge. That’s why Jejurikar, credited with building leading brands – Bolero and Scorpio – doesn’t want to take the take the leaders head-on but leverage what the Mahindra brand stands for, and “create a niche for Mahindra.”
BRAND BUILDING, ON TWO WHEELS
During his tours, he met customers who have “very high aspirational perception of the Mahindra brand” because of Boleros and Scorpios in those markets. There is a combined population of over 11 lakh Boleros and Scorpios. And a significant portion of them are in semi-urban areas. “There’s an aspirational value that we have with products in the Rs 5-10 lakh range, which others don’t. Some way it’s the brand value of a Rs 5 lakh or Rs 10 lakh product or even a Rs 14 lakh product, if you include the XUV 500, going down now to a sub-Rs 1 lakh product,” says Jejurikar.
top-down approach
Mahindra Two Wheelers seems to be taking the route that some OEMs in the four-wheeler space have done, which is to take the top-down approach which has helped their entry-level products enjoy the premium value sheen of their more expensive siblings.
The strategy to leverage the Mahindra brand values will be increasingly seen now as Mahindra Two Wheelers embarks on building its own portfolio. Almost all the products thus far have been inherited from Kinetic Motor, which it bought in 2008 to enter the two-wheeler space.
The Centuro, launched in July last year, has let Mahindra to ramp up in the bike segment. In the past few months, the commuter bike has played the lead role in Mahindra Two Wheelers’ sales of 18,953 units in the domestic market in March 2014. “ There’s a lot to be done to build the Centuro brand itself. Also to take on from here as we get newer products,” says Jejurikar.
With the Centuro, the company has put behind it its rather shaky start in the bike business with the Stallio. Going forward, the new products will play crucial roles. The products to be launched here on could be all-new without any linkage to earlier ones.
Mahindra’s existing scooter range has been inherited from Kinetic, and its bikes – Centuro and Pantero – have a connection with the Stallio. There are at least three all-new products waiting in the wings – the 300cc Mojo, a 160cc bike and a 110cc scooter. Jejurikar declined to comment on the new launches except to reiterate the announcement made earlier that the Mojo and a scooter will be launched in 2014.
exports beckon
While Mahindra Two Wheelers has tweaked its strategy to gain a strong foothold in the domestic market, the big opportunity is for exports.
“Exports of two-wheelers from India are as high as 170,000 (per month) and we want to focus on that,” says Jejurikar. Target regions are Latin America and Africa. The two-wheeler business will leverage the presence of the auto sector’s presence in many markets in these regions. The company entered the Latin American market with the Duro DZ, Pantero and Centuro in August 2013. Besides the sales, service and spares setup, SKD (semi-knocked down) assembly facilities have been set up in Guatemala City and Managua, Nicaragua.
Mahindra’s presence in motorcycle racing has helped build the brand in Latin America, feels Jejurikar.
In India and overseas, Mahindra Two Wheelers has an advantage of having the backing of parent Mahindra & Mahindra. Over the past five years, M&M has invested up to Rs 800 crore in the two-wheeler business, which is still in the red. But with a successful strategy, it may take another year or two to turn around. “We have the backing and the reassurance of Mahindra. But you still have to convert it into a viable value proposition for the customer,” says Jejurikar.
Success in that effort would help him build a new base of customers for other Mahindra products, including the tractor business he is responsible for. While on one hand the good work by the SUVs and even tractors may help the two-wheeler division, Jejurikar’s strategy, if successful, would lead to building a small step for customers to enter the Mahindra fold.