Mahindra Two Wheelers Ltd, a part of the $16.5 billion Mahindra Group, is leveraging synergies from its automobile business in order to reduce costs.
Despite the steady growth of the two wheeler industry, Mahindra Two Wheelers could not catch up with the pace in terms of volumes. The company is now aiming for a strong come back with its indigenous products, with the help of synergies from its automobile business.
While Mahindra is already a leader in the utility vehicle space, its two-wheeler segment currently do not even contribute 5% to the overall automotive business. As a result, the company is aiming for higher numbers with the launch of more entry-level products. "We need to do at least 80,000 sales a year to become a substantial player in the market," said Pawan Goenka, ED and president of the automotive division at Mahindra & Mahindra.
The company currently sells 20,000 units on an average on a monthly basis.
In order to remain competitive, Goenka said the company is benefiting a lot on cost due to common synergies from its automotive business. The company is not only looking at selling two-wheelers from its select auto and tractor dealerships, but is also saving costs on the product development side.
"We have worked a lot on cost reduction. In fact our synergies between various businesses give us the maximum benefit, especially on material cost reduction, because we have an overall buying of $5-6 million for overall business together," said Goenka.
"There is a lot of knowledge we have in four-wheelers that in fact filters into the two-wheelers and gives us an advantage over other two-wheeler players because four-wheelers in some terms is further ahead in terms of technology. There were certain things that we launched in Centuro, first time. Big key, follow me lamps etc, all of these features are routine in four-wheelers but new for two wheelers. Even the height adjustable seat; the idea came from four- wheelers," he added.
The company so far has been using the product platforms it acquired from Kinetic. Gusto is the second product that Mahindra developed in-house.
"It took us three years to set up our R&D centre and 2 years to develop Centuro ground-up. You can say that our two-wheeler business is only 14 months old," Goenka said while addressing the media during the Gusto launch on Monday.
Admitting the weak performance of company's two-wheeler business, Goenka said, "There is no hiding that the two wheeler business has not financially performed for us. But in some sense we should look at our two-wheeler as just 14 months old. First Centuro and now Gusto because our earlier products came from Kinetic and we did some refreshes. They did sell but certainly did not create a wave in the market. With Centuro we came in strong. Since the launch we have increased the prices by 8% in 14 months."
Considering the already competitive market scenario, Gusto too was launched at an aggressive price point. The company is looking to eventually raise prices, depending on the market demand.
"Clearly, Rs 43,000 is not sustainable and we will increase prices," the company said.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}