Mahindra revising its two-wheeler strategy

Given the dip in sales for its products in the recent past, Mahindra Two Wheelers is planning to switch its attention to premium products given the higher margins

Despite making a good start, Mahindra Two Wheelers haven’t been able to sustain its sales in the Indian market. The two-wheeler arm of Mahindra & Mahindra had introduced new products in the Indian market but somehow they haven’t been able to make a mark in the competitive market. The Mahindra Centuro commuter bike was the first indigenously developed offering from Mahindra and distinguished itself from the hordes of commuter offerings with its unique list of features but after the initial buzz sales have fizzled.

In the last fiscal, Mahindra managed to sell 1,33,355 units, which's a decline of 12.7 per cent as compared to previous year’s performance. Mahindra had introduced the Gusto scooter few years back and despite the fact that scooter sales have grown in general for other manufacturers it reported a decline of 19.24 per cent in the April-May period. The biggest worrying factor for Mahindra will be the statistic of 60.72 per cent dive in overall sales in the April-May period.

Commenting on the same, Vinod Sahay, CEO, Mahindra Two Wheelers Limited, said, “Mojo’s brand positioning has received good acceptance in its segment. With a presence in 15 cities, we are already doing 200-250 units a month, and the idea is to take it to 500 in the five-six months. Currently the Mojo type of segment (premium-lifestyle) does not exist in scooters, so one option is to see if our Peugeot range can tap that. We have plans to take Peugeot to South-East Asia, and we are evaluating an India entry right now.”

To arrest this slide, Mahindra has decided to change its strategy for its two-wheeler unit. It has already started the cost cutting initiative by sacking 250 employees. Also it is now focusing its attention on premium two-wheelers as they have better profit margins than entry-level two-wheelers. The cutthroat competition in the mass market segment is also among the factors for Mahindra to make this shift.

Mahindra has received good response for the Gusto 125 scooter and the Mojo 300cc motorcycle. It had also recently acquired majority stake in Peugeot scooters and it had also displaced many products from the French brand at the 2016 Auto Expo. Given the fact that scooter sales are booming and also the fact that options for powerful scooters are limited, it can be a good opportunity for Mahindra to capitalise and ride in the premium scooters from Peugeot.