Sales of Mahindra & Mahindra (M&M) two-wheelers slumped 13 per cent last year, pushing the company to the seventh spot in the list of India’s biggest two-wheeler makers.
M&M treated it as a wake-up call, and things have improved quite a bit. Result: From the lows of around 6,200 units recorded in December last year, sales have increased to a monthly average of 9,500 units per month, thanks to the Duro DZ. Priced at Rs 45,845 (ex-showroom Maharashtra) the Duro is cheaper than its direct competitor Suzuki Access 125 priced at Rs 49,687 (ex-showroom, Mumbai).
What ensured Duro DZ’s success is aggressive marketing. Two months ago, the company launched an aggressive nationwide marketing campaign that challenged prospective consumers to test ride its new scooter. If they settle for a rival product after the test ride, M&M promised to hand out Rs 500 in cash.
Mahindra Two Wheelers claims only eight consumers returned to claim the money. It had feared at least 10,000 people would turn up for claims.
The attention-grabbing scheme led to more footfalls in showrooms, pushing enquiries to an all time high. A brand new advertising campaign featuring actress Kareena Kapoor also helped.
Viren Popli, senior vice president, strategy and market development, two-wheeler sector of M&M, says the bold campaign “brought in those customers who were unsure about us. In that period, we got 50,000-60,000 walk-ins every day against the usual 25,000-30,000”.
The footfalls were significant for a brand which was virtually written off by most rival manufacturers and market watchers after the company withdrew its economy motorcycle due to faulty gearboxes.
Encouraged, M&M has prepared a war chest of over Rs 100 crore to fuel its promotional activities for two-wheelers.
Aggressive campaigns are alright, but the company realised it needed to ramp up its product portfolio quickly so that the interest is sustained. That’s the reason why it has lined up at least five launches this year. “We need to do this quickly and we will do it. We also completely restructured our marketing department and the research and development wing. We are also expanding our sales and service reach to be able to reach a larger audience”, adds Popli.
With the launch of the new Rodeo RZ this week and gradual ramp- up in production, M&M hopes to double its scooter sales to over 18,000 a month by the end of the year. The company retails four automatic scoters in India priced at Rs 32,000-46,000. The Rodeo RZ is, however, priced higher at around Rs 50,000.
Widening its presence in automatic scooters was a must saw as the segment sales of 2.56 million units last year — an increase of 25 per cent over the previous year. The growth was in fact double the motorcycle segment’s growth.
Presently, Honda Motorcycle and Scooter India (HMSI) controls 48 per cent of the scooter market with only three models, followed by Chennai-based TVS Motors with 20 per cent share. However both companies do not offer products in the 125cc category where M&M products sell.
Its’ not the scooter market alone where M&M is targeting growth. Before the end of the year, at least three M&M branded motorcycles will hit the market with one of them being a 300cc premium performance bike. The company is also bringing back the 106cc motorcycle Stallio later in the year, which was withdrawn from the market merely five months after it was launched in September 2010. Poor market response and negative publicity also contributed to the fall in Stallio’s popularity even though it had roped in actor Aamir Khan as brand ambassador.
“We launched a product and we stopped production even though we could have fixed the problem on the spot. That’s because we didn’t want a quick-fix solution. We are now ready with the brand new product,” Popli says.
Market watchers, however, are not so sure. However market watchers believe that it may not be that easy for M&M to make a dent in Hero and Honda's bastion. A Chennai-based auto analyst says Yamaha is coming up with its scooter range this year. Honda and Suzuki have just entered the 110cc motorcycle segment. With so much in competition, M&M has a real tough battle.
Mahindra forayed into the two wheeler space after it bought the operating assets of the Firodia family-led Kinetic Motor Company in 2008, for Rs 110 crore. The assets included the manufacturing facility based in Madhya Pradesh, the two-wheeler models of the company and an R&D center in Pune.
M&M has pinned a lot of hopes on the R&D centre, which the company claims is the third largest among two-wheeler companies, is working on several motorcycle and scooter concepts.
The company also has kept the option open for products of SYM, its Taiwanese partner.
“Once you build a strong R&D capability you can have a strong pipeline of products. There would be different kinds of products, refreshments and totally new products. A large chunk of our investments has gone into R&D”, adds Popli.
M&M also is heavily banking on sales in rural areas where it already has a substantial presence, courtesy its tractor and utility vehicles. The company plans to ask its existing dealers to create separate space for two-wheelers. That’s a reach competitors would die for.