Raft of glitches fixed, M&M hopes GiO will ride

In October 2009, Mahindra & Mahindra took a bet to bridge the gap between a rick and the Tata Ace with the GiO, a three-wheeler with an unusual visage.

And soon ran into gearbox and powertrain problems that customers balked at.

Sales were so bad, they totted up to an average 2-4 vehicles a month per dealer. 

Industry sources said today, around 900-1,000 units of GiO are sold every month, but officials at rival Piaggio (which competes with M&M in the 4-wheeler 0.5 tonne cargo space) claim that number is more likely 750 units.

Rahul Jain, sales manager of Win-Win Automobiles, a Madhya Pradesh-based dealership, said M&M started modifying GiO in the last six months and introduced a BS-III version, which is now receiving good response.

“It is difficult to change the customer perception about the vehicle due to the problems it had earlier. We are trying to change that notion and hope that the sales pick up,” Jain said.

According to the dealers, the company had made around 17 modifications to the product, including changes in the gearbox, transmission, accelerator cable, clutch, starter motor, front suspension and rear axel.

Rajesh Jejurikar, chief of operations (automotive sector), M&M, said the changes had to be made as the vehicle was subjected to load abuse.

“The vehicle is designed to take a load of 0.5 tonne and this can be extended to another 35% more load, but the customers were overloading it by almost 1.5 times. It was necessary then to bring about changes in the product where we did modify the transmission,” Jejurikar said.

After the modified BS-III variant is launched, the 12 dealers to whom DNA spoke to, said they are selling around 8-10 vehicles a month.

Sandeep Vbobhate, sales manager with Global Gallarie Agencies Pvt Ltd, a Thane-based dealership, said that now the customers are at least willing to see the product.

“We were worried that the customers had written off the product but now we see a change in the way customers are perceiving the product,” he said. A Bhopal-based dealer concurs with Vbobhate.

“It is difficult to change the perception of the customers. They feel that the vehicle is a failure. However, with the new modifications, the sales have started to pick up.”

According to a Bangalore-based dealer, “Problems started around 8-10 months back when customers started complaining about technical issues with GiO. There was a problem with GiO’s gear box. Apart from this, pick-up was a major issue, due to which sales did not pick up. However, around two months back, the company rectified the problems. Currently, we sell 8-10 vehicles a month.”

A Mumbai-based dealer said, “We were also given a CD wherein all the modifications are explained in a detailed manner. Customers are apprehensive about buying the product due to the technical issues. Hence, the sales are struggling. The company’s Alfa is doing well with a waiting period of one month. We are trying to pitch GiO to the customers who are interested in buying Alfa,” he said.

Piaggio, which entered the GiO segment in October 2010 and sells only in Maharashtra and South India, is clocking 700 units of Ape Mini LCVs per month on an average. Last month the company sold 800 vehicles, said a source close to Piaggio. The pan-India sales will start in 2-3 months. GiO is sold pan-India through 206 dealerships.

According to a Piaggio source, “M&M was not been able post strong numbers despite having pan-India presence because of the technical glitches. Piaggio expects to sell better numbers as we go pan India in few months.”

Currently, the company has 800 touch points across India.
At present, only Mahindra and Piaggio are offering 4-wheel half tonne pick-ups. With Tata Motors also expected to launch Tata Ace Zip, the LCV segment is expected to see stiff competition between the three.

According to analyst from PINC Securities, “The market for 0.5 tonne vehicles is currently at a nascent stage with only two players. The 3-wheel pick-up (up to 0.75 tonne) market sees a sale of around 7,000-8,000 vehicles on a monthly basis, which will slowly be captured by 0.5 tonne four wheel vehicles.”

At the time of GiO’s launch, Jejurikar of M&M had said that the mini-truck market size is 110,000 vehicles and the three-wheeler is 68,000 vehicles annually.

While M&M is optimistic about GiO sales getting stronger, it is launching the passenger variant of the same in the eastern market.

Vivek Nayyar, vice-president (marketing), said the passenger variant will fill the gap between M&M’s Alfa passenger and Tata’s Ace Magic.

“Alfa costs Rs1.55 lakh while Magic Rs3.2 lakh. There is a clear gap between the two segments, which the GiO passenger variant will fill in at a price point of Rs1.95 lakh.

The product is already retailed in Patna and in a week’s time it will be sold in the north-eastern market as well,” Nayyar said.

The product delivers a mileage of 30 km/hour and will bring about 27% higher earnings than a 3-wheeler passenger vehicle, he said.