Entering commuter two-wheeler segment was a mistake, admits Anand Mahindra

Mahindra said they entered the two-wheeler market with the confidence to "win".

Anand Mahindra, the chairman of the homegrown auto group Mahindra & Mahindra, on Wednesday admitted that entering the commuter bike segment more than a decade ago was a failure on the part of the group.

The group entered two-wheelers after buying out Kinetic Motors in July 2008 and relaunched the ‘Freedom’ bikes under the label of ‘Mojo’ but has not been able to make a mark in the vastly entry-model driven two-wheeler space in the country even after a decade. The market is dominated by Hero Motorcorp and Japanese major Honda which together control close to two-thirds of the over 21-million units per annum market.

Of this, Mahindra sold a paltry 4,004 units in FY19, down 73 per cent from FY18. The only player in an over a dozen OEM market behind Mahindra is Kawasaki Motor which sold 3,115 units in the year, according to Siam data.

In the year to March 2019, according to the Saim data, the domestic two-wheeler domestic market stood at 21.2 million units, up 4.86 per cent from FY18.

Terming failure as “capital”, just like financial and human capital, Mahindra said the learning from the commuter bike episode, which was a “product failure” led to the learning and entry into the premium two-wheeler segment where he claimed the group has been successful.

Mahindra said they entered the two-wheeler market with the confidence to “win”, on the back of having a strong understanding of the ecosystem, distribution, R&D and also brand positioning.

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“We knew our dream well and we had the right things, but how to win is where we went wrong. We should have never gone to the commuter bike side,” Mahindra said, speaking at an event organised by British carrier Virgin Atlantic on looking at ‘business as an adventure’.

Sharing the stage with the Virgin group founder Richard Brandson, Mahindra said they brought the premium Java brand to the country a year-ago and seemed to suggest that it has been a success, stating that there continues to be a five-month wait for the cult bikes.

He also said they will soon be launching the BSA bikes, which was acquired earlier.

Meanwhile, amid widespread slowdown in the auto sector, Mahindra claimed that “the most optimistic” people in his group today are those in the auto and farm equipment segments, as they expect sunny days to come back from April.

Ford likely to form JV with Mahindra, end independent ops in India: Report

The deal would make Ford the latest automaker to pare back its interests in India.

Ford Motor Co is nearing a deal with Mahindra & Mahindra to form a new joint-venture company in India, a move that will likely see the US automaker cease independent operations in the country, two sources with direct knowledge of the talks told Reuters.

The deal would make Ford the latest automaker to pare back its interests in India. At the end of 2017, General Motors Co downsized its Indian operations and stopped selling cars locally, dealing a blow to Prime Minister Narendra Modi's strategy to encourage domestic manufacturing.

Over two decades, Dearborn, Michigan-based Ford invested more than $2 billion in India but has consistently struggled - it currently has a market share of just 3 per cent in India, one of the world's fastest-growing car markets.

Under the terms of the deal being negotiated, Ford Motor will form a new unit in India in which it will hold a 49 per cent stake, while Mahindra will own 51 per cent, the two sources said.

The US carmaker's Indian unit will transfer most of its current automotive business to the new entity, including its assets and employees, according to one of the sources.

"It's like a partial exit (for Ford from India)," the source said.

The deal is expected to close within 90 days, the sources said, adding the value of the transaction was not yet clear.

They spoke on condition of anonymity because of the sensitivity of the matter.

Ford said it does not comment on speculation, but added both companies continue to work together "to develop avenues of strategic cooperation that help us achieve commercial, manufacturing and business efficiencies".

Mahindra too said it does not comment on speculation. It said in a statement it was "working together in identified areas" with Ford after a 2017 partnership arrangement, and "will announce further definitive agreements as we progress on some of the other areas."

Currently, Ford manufactures and sells its cars in India through its wholly-owned subsidiary. In 2017, it formed a strategic alliance with Mahindra under which, among other things, they will build new cars together, including sport-utility vehicles and electric variants.

Business Standard

Jan PV sales slide for 3rd straight month as manufacturers reduce inventory

Domestic car sales were also down for the third consecutive month, declining 2.65 per cent to 179,389 units.

Article Source BS : Domestic passenger vehicle (PV) sales declined for the third month in a row in January, dropping 1.87 per cent, as manufacturers continued to reduce inventory at dealers following a tepid festive season sales, according to SIAM.

As per data released by the Society of Indian Automobile Manufacturers (SIAM) Friday, PV sales in January stood at 2,80,125 units last month as against 2,85,467 units in the same month last year.

Domestic car sales were also down for the third consecutive month, declining 2.65 per cent to 179,389 units as compared to 1,84,264 units in January 2018.

"Stock correction by manufacturers continued in January to cut inventory that were piled up during the festive period, which saw sluggish sales," SIAM Deputy Director General Sugato Sen told PTI.

He, however, said retail sale was better than wholesale in January, and the industry expects demand to grow in the remaining two months of the fiscal.

During the month, market leader Maruti Suzuki India (MSI) posted a marginal growth of 0.18 per cent in its PV sales at 1,39,440 units. Rival Hyundai Motor India Ltd (HMIL) also posted 0.65 growth at 45,803 units.

Similarly, homegrown utility vehicles major Mahindra & Mahindra also saw 0.88 per cent rise in its PV sales at 23,864 units last month.

In passenger cars segment, MSI's sales stood at 1,01,865 units, down 4.12 per cent. HMIL's car sales was also down 1.58 per cent at 35,439 units last month. Honda Cars India, however, saw its car sales grow 51.67 per cent to 14,383 units.

In the two-wheeler segment, SIAM said total sales in January were down 5.18 per cent to 15,97,572 units compared to 16,84,761 units in the year-ago month.

Motorcycle sales last month declined 2.55 per cent to 10,27,810 units as against 10,54,757 units in the same month a year ago.

Market leader Hero MotoCorp's bike sales last month was down 4.95 per cent at 5,16,451 units. Rival Bajaj Auto, however, posted growth of 24.67 per cent at 2,03,358 units last month. Honda Motorcycle and Scooter India's bike sales stood at 1,28,525 units, down 24.19 per cent.

Total scooter sales last month declined by 10.21 per cent at 4,97,169 units as against 5,53,695 units in January last year, SIAM said.

Market leader HMSI's scooter sales were at 2,72,170 units, down 14.77 per cent. Chennai-based TVS Motor Co also saw its scooter sales dip by 0.41 per cent at 83,794 units.

Suzuki Motorycle India, however, witnessed a 60.28 per cent jump in it scooter sales at 61,348 units last month.

SIAM said sales of commercial vehicles were up 2.21 per cent to 87,591 units in January.