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Mahindra revamps its struggling 2-wheeler biz

 

Mahindra and Mahindra logo

Mahindra and Mahindra logo

 

  Mahindra & Mahindra on Tuesday announced an overhaul plan for its loss-making two-wheeler business.

Mahindra Two Wheelers (MTWL), the bike and scooter unit of M&M, said it would infuse Rs 250-300 crore in the business to resurrect BSA and Jawa brands, pushing Peugeot products into newer markets and to develop new products for domestic market.

ROAD AHEAD MTWL said it would infuse Rs 250-300 crore in the biz This will resurrect BSA and Jawa brands, pushing Peugeot products into newer markets M&M hopes to upgrade from being a mass market, low-cost maker of scooters and bikes to a premium and lifestyle bike manufacturer
More than two-thirds of 16.5-million-units-a-year domestic two-wheeler business is controlled by Hero Motocorp, Honda and Bajaj Auto. M&M has already pumped in nearly Rs 2,000 crore in two-wheeler business since 2008. Last week, MTWL acquired defunct British motorcycle company BSA through a newly formed subsidiary Classic Legends (CLPL). Subsequently, it has acquired the rights to produce, market and sell famed Czech bike brand Jawa in India. Both these brands were present in India several years ago. With the help of these two legendary brands, M&M hopes to upgrade its positioning from a mass market, low-cost maker of scooters and motorcycles to a premium and lifestyle bike manufacturer. The firm presently makes 100cc-125cc two-wheelers with a minuscule market share.

Pawan Goenka, executive director,  said, “In two-wheelers we have not been able to attain the kind of success we had been hoping for. We had the option of shutting down the (two-wheeler) business completely or to reorient it. We decided to restructure the business. We were waiting for last piece to fall in place which is the buyout of the BSA brand. Our plan is to focus on the niche and premium two-wheeler business.”

M&M’s two-wheeler business now stands on three pillars — Peugeot Motorcycles, Classic Legends and its own two-wheeler business — each of these will see simultaneous push from the parent firm. M&M will work towards rebuilding both BSA and Jawa and aims to position these against Triumph, Indian and Royal Enfield.

Though both brands will be independent of each other even in the area of product development, they will be appealing to a niche set of high-end customers.

Both brands will have independent retail network and will see product launches after two years, said a senior executive of the company. While BSA remains an outright buyout for Rs 28 crore, M&M has acquired only production, marketing and sales rights for Jawa for India without any investment. Both brands will not carry Mahindra branding.

While product development and manufacturing of Jawa bikes will happen in India at M&M’s plant in Madhya Pradesh, BSA will be largely manufactured abroad. Actual production plans of BSA bikes have not been finalised yet but the target sales market will be the US and Europe.

Products under Jawa will be developed from scratch. A separate team has been formed to look at both Jawa and BSA. For MTWL, the company has decided to focus on the premium segment for the time being where it has a 300cc bike named Mojo. New variants (touring, cruiser, adventure and street) of this bike will be launched progressively.

“As far as MTWL is concerned, we have restructured the organisation. Today we are half the size of what we were about a year ago. We have cut down our marketing expenditure and there is also a substantial reduction in cash infusion from the parent M&M. We will not have new product developments in the commuter segment but will instead focus on Mojo,” added Goenka.