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Africa is new hunting ground for Mahindra Two Wheelers

Murali Gopalan | Updated on January 08, 2018

Jawa 350

The company upbeat on prospects here even while India remains elusive

Mahindra & Mahindra’s foray into the two-wheeler segment may have yielded precious little in terms of market share or brand recall in India but the company believes that there are opportunities beyond its borders.

“Today, we are growing our two-wheeler exports to Africa, especially countries such as Nigeria,” says Rajesh Jejurikar, Head of Mahindra Two Wheelers. “We will continue to focus on this market while business continues to be good in Sri Lanka, Bangladesh and Nepal.”

New markets

And even while India has not been a particularly happy hunting ground for the company, especially in the mass commuter segment where it has had to contend with serious competition, these new markets are more than making up. This could translate into some sales momentum for products such as the Centuro and Gusto.

The company has already made it known that it will freeze all investments in marketing as far as the mass market in two-wheelers is concerned. “We will not invest in brand-building either and will manage our business better as a result,” adds Jejurikar.

This pragmatic stance stems from a realistic assessment of Mahindra’s potential in India’s intensely competitive two-wheeler space where the likes of Hero and Honda have over 70 per cent of the market sewn up. The balance has equally strong brands in the form of TVS and Bajaj, which are established players in the two-wheeler space with Yamaha and Suzuki also keen on growing their business.

Things were, however, quite different a decade earlier when Mahindra acquired Kinetic’s beleaguered two-wheeler business. It made sense at that point in time since the acquisition cost was almost negligible compared to what an investment in a new facility would have entailed. Further, the move fitted in with Mahindra’s intent to focus on a host of new mobility solutions in addition to its core business of manufacturing SUVs.

The market did not share this sentiment and the company found the going tough, which explained its decision to stop all further front-end investments related to marketing that take up quite a chunk of costs. So long as the products do well in regions such as Africa and neighbouring markets in South Asia, there is a sense of confidence that all is not lost.

“We will let the mass segment sustain on low investments,” says Jejurikar. “The idea is to sell our products to customers who want Mahindra.” African markets are also happy hunting grounds for companies such as Bajaj Auto whose entry-level offerings like Boxer are doing well there. TVS, likewise, is betting big on the region while Yamaha has an exclusive Africa strategy, which will be serviced from India.

While Mahindra Two Wheelers has chosen to cut back investments in the mass space, it has now opted for a niche brand strategy in two-wheelers where there are three legs: Peugeot, Jawa and BSA. “None of these has Mahindra as part of a conscious brand strategy,” says Jejurikar. “The way to succeed in two-wheelers is to create niche premium brands each of which has its own values.”

People in Jawa clubs are “super excited” about its entry and there is enough reason to believe it has super aspiration value. “Jawa will definitely be here within two years and we will build on its legacy, heritage, nostalgia and overall brand appeal,” he says.

Peugeot Scooters, in which Mahindra Two Wheelers has a 51 per cent stake, has no India plans right now given the higher price points and products made here would largely cater to Europe, Vietnam, Indonesia and other parts of ASEAN. BSA, likewise, will be targeted for the UK and markets in Europe.

Electric two-wheeler space

Incidentally, the electric two-wheeler space is another area of interest powered by GenZe, a group company in the US. Conceived in Silicon Valley, it offers a connected product suite of electric scooters as well as bikes, which are “well accepted” in the US.

The company is exploring other markets, including India, but “cannot comment on the timing, investments or the product specs”. Given that e-mobility is one of the hottest topics in the automotive space, Mahindra will be hoping that it can strike the right chord with its GenZe electric two-wheelers.

Published on October 26, 2017

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