Tuesday, March 31, 2009

Mahindra and Mahindra : A New Scooter Segment

To take on Hero Honda, Bajaj Auto, Honda Motorcycles and Scooters India. Almost a year after India’s premier tractor and utility vehicles maker, Mahindra & Mahindra (M&M), announced the acquisition of Kinetic Motors, it has put up a blueprint to enter every key segment of the two-wheeler market.

The Mumbai-based company will take on Hero Honda, Bajaj Auto and Honda Motorcycles and Scooters India (HMSI) and will have models in the 100cc, 125cc and 150cc mobike segments, and also in the ungeared low and high-powered scooter segments.

Hero Honda has a 60 per cent share of the motorcycle segment, while HMSI commands 58 per cent of the scooter market.

At a press conference, Anand Mahindra, vice-chairman and managing director, M&M, said: “Our two-wheeler project is complete; we have already begun marketing the fleet in Bangalore .” When asked what two-wheeler products will roll out, Mahindra replied, “You will be able to see it soon.”

The company is planning to leverage the research and development (R&D) strength of Engines Engineering Srl, an Italian engine and design company it bought last year. The company specialises in developing small yet powerful and fuel-efficient engines for motorcycles. The idea is to establish M&M in the two-wheeler segment through transfer of technical knowhow.

In addition, SYM, the Taiwanese two-wheeler company, which has agreed to extend its tie-up to M&M after the Kinetic takeover, will also help provide technology, perhaps more for the gearless scooters segment.

“Our ultimate goal is to be in every segment of the two-wheeler industry and this will be achieved through the strong R&D support M&M currently has. We want to be in the big engine segment of motorcycles, as well as in the smaller entry-level scooters”, said a source from Mahindra Two Wheelers.

The company is reportedly developing a 650cc-750cc petrol-fired engine with the help of the Italian company. However, it has refused to give details.

M&M currently sells only a gearless scooter called Flyte. This product, originally built by SYM, has been altered by M&M to suit the Indian consumer. Its sales have more than doubled after the Kinetic takeover. M&M currently sells 3,500-4,500 units of the scooter a month, as against the 1,500-2,000 units sold earlier. According to sources, demand for the scooter has been growing 50-70 per cent every month, mainly on account of improved marketing techniques.

Freshly developed products by the company may see co-branding of Mahindra Kinetic, as both companies enjoy a strong brand value.

M&M had earlier bought the business assets of the then loss-making Kinetic Motor Co, run by the Pune-based Firodia family, for Rs 110 crore. M&M holds 80 per cent in the new entity, while the balance is held by Kinetic. Now all we are eagerly waiting for new segment of scooters from M&M.

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