Companies

M&M banks on new products to drive growth in 2011-12

Murali Gopalan Mumbai | Updated on March 12, 2018 Published on January 10, 2011

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Expects car, CV segments to do well with electric options

Mahindra & Mahindra is upbeat on its auto business prospects for 2011-12, taking forward the momentum from this fiscal.

“I do believe it will be an exciting year for us. We will have completed the acquisition process of SsangYong which will pave the alignment with M&M,” Dr Pawan Goenka, President, Automotive and Farm Equipment Sectors, told Business Line.

The company is banking on the launch of new products to generate volume growth during 2011-12. The global sports-utility vehicle codenamed W201 will be a key part of this plan. “It is an important product for us and will take over the flagship position of the Scorpio,” he added.

The year is also expected to see other new vehicles and variants (of existing ones) being launched, though Dr Goenka cautioned that given the relatively low product hit rate in the auto sector, the company needed to be very careful. “The customer can always reject a product which we are in love with,” he said.

A year to remember

Last calendar year was a memorable one for the company where the highlights were two acquisitions in the form of SsangYong and Reva. “Both are redefining moments for us in the journey towards auto excellence. While Reva brings us into the green technology space, SsangYong will help us with our global ambition of being a big SUV player,” Dr Goenka said.

With Reva in its kitty now, M&M is pulling out all stops with the NXR passenger car due to be launched by the end of 2011-12. It is also exploring the option of extending the Reva technology to other vehicles like the Gio and Maxximo pickups.

“We believe both the car and commercial vehicle segments will do well with electric options. The obvious benefits are clean air and better running costs per kilometre which make them good value-for-money propositions,” he added.

Only issue

The period also saw M&M buy out the Logan car business from former ally, Renault. Contrary to common perception, the company maintains that there was nothing wrong with the alliance. “M&M was very happy with the value Renault brought to the table and vice-versa. It was not a failure of the partnership. The only issue was that the business model we put in place did not deliver the results though we are happy that there is a solution now,” he said.

According to Dr Goenka, the other significant aspect of 2010 was the commissioning of the Chakan plant near Pune. This is home to the company's medium and heavy commercial vehicle business being executed jointly with Navistar. The Maxximo and Gio pickups are also produced here and the coming months will see the rollout of the W201.

M&M is categorical that despite this huge product portfolio, its core focus will be SUVs where the idea is to maintain the leadership position in India while looking at opportunities overseas. Likewise, the pickups and three-wheelers are as critical though these will largely be confined to the domestic market.

Big test

The company is still a small player in the two-wheeler space where monthly sales are in the region of 18,000 units. However, the market has been growing rapidly which gives it reason to believe that it still can play a role. The next big test is the medium and heavy commercial business.

“Our business model has been so structured that we focus closely on each segment without being distracted by the others in our portfolio business,” Dr Goenka said.

As President of the Society of Indian Automobile Manufacturers, he believes the growth momentum will continue for the industry into the next fiscal too. However, commodity prices remain cause for concern.

“This year's increase in costs was compensated by high volume growth. However, if this is not replicated next fiscal, prices will go up,” Dr Goenka said. Likewise, liquidity is beginning to “become a bit of a problem” and could spoil the party if the pattern continues.

Published on January 10, 2011

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