Product differentiation by creating new segments within existing categories is the order of the day for the two-wheeler industry, feelsAnoop Mathur, President , Two-Wheeler Sector, Mahindra and Mahindra.Excerpts from an interview with Business Line :
Mahindra is in the two-wheeler business for about five years now. Why does the company still remain a fringe player with a negligible market share?
Yes, it has been five years since we took over the business assets of Kinetic in December 2008. Till our launch of the Centuro bike in July this year, we were a player in the scooter segment only.
In the scooter industry too, in the past 12-18 months, there has been a substantial increase in capacity. What was a demand-supply gap in favour of demand earlier on, has now turned the other way round.
Besides, a host of new launches have come in the marketplace in this period so much so that the growth that has happened in the last 12-18 months is on account of the new models alone. Even for the market leaders here, volumes have been either flat or shown a de-growth in this period. We have maintained a moderate level of performance with our refurbished Duro and Rodeo through Rodeo DZ and RZ.
you have launched Centuro in the commuter segment, at a time when the market is favouring bikes in the higher 125 cc segment...
This is the difference we would like to highlight. We do not look at segments on the basis of engine displacement. What we are trying to do is to look at it from the customer perspective.
The Centuro is a 110 cc product but it is a completely differentiated and uniquely positioned 110 cc. So it is like a premium segment within the executive segment. That’s why so far we have such an attractive pull with a waiting period of 5-6 weeks. The customer is finding a huge value proposition in this product — car-like features never seen before in a motor cycle, being provided at a price which is ‘non-refusable’ as far as this segment is concerned. So we have created a segment within a segment.
That’s how Bajaj also differentiates its Discover bikes. Is this a new trend in the two-wheeler industry?
Well, happily so and about time, too. For many years, the hapless consumer was inflicted with what the OEMs (original equipment manufacturers) decided to inflict on him. Now the segmentation is happening in terms of how the customer sees it — in terms of usage and habits, psychographics, etc. Therefore, the so-called 125 cc or 150 cc segments may actually have three sub-segments.
Bikes generally have greater rural reach than scooters. How is your network geared to sell your bikes?
Until a few months ago, we were essentially a scooter player. Our network was going up to a certain level into the semi-urban and rural areas. But ever since we started working towards the launch of our motorcycle 6-8 months ago, we have been working to increase our footprint.
More particularly so that the sub dealers and service centres reach out to the lower taluk levels as much as possible. To do this we are using the network of Mahindra Finance and Mahindra’s tractors division to the extent we can. We will be having 500 touch points in the southern region in the next two years and maybe 2,000 touch points across the country in the same period. We are expanding our reach quite significantly, a lot of which is happening in Tier 2 and 3 towns, largely because we are going to be a player in the motorcycle arena as well.
How would you describe the profitability of bikes vis-à-vis scooters in your product portfolio?
Motorcycles still constitute almost 70 per cent of the size of the two-wheeler industry. The scale itself gives it an inherent advantage because when you are procuring such huge quantities of components, you have that much negotiating clout with the suppliers.
Scooters have much more moulded plastic parts so there is a higher level of material costs.
In the end, even if you analyse the income statements of listed companies, you will find a very mixed bag. One listed company is a pure blue-blooded motorcycle player with no scooters, another has a small proportion of scooters and a third one has a portfolio which is almost equally distributed between bikes and scooters.