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M&M eyes premium tag for Mahindra brand, luxury for Ssangyong

Jan 10 2014, 19:55 IST
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This is not the first time that the Mumbai-based M&M has evinced interest in acquiring a premium brand, though it hasnít been able to lay its hands on one. This is not the first time that the Mumbai-based M&M has evinced interest in acquiring a premium brand, though it hasnít been able to lay its hands on one.
SummaryPremium brands like M&M are nice to own but itís difficult to make money from them because fixed costs are high.

Mahindra & Mahindra (M&M) is looking to go upmarket. While the auto major has been eyeing a marquee brand for some time now, it wants the parent brand to turn premium even as it places Ssangyong in the luxury space.

Pawan Goenka, executive director and president of M&Mís automotive & farm equipment businesses, told FE, ďWe are very interested and keen to own a marquee brand because the auto business is to a large extent a brand business, much like FMCG. Today, a near-identical product branded differently can fetch an altogether different price, such is the value of the brand.Ē

Goenka added, ďWhen you pay R25 lakh, youíre paying not for the machine but for the brand. Thatís the game Mahindra has to play. In 20 years our brand has come a long distance, but it is nowhere a job done ó that is still a generation awayĒ.

This is not the first time that the Mumbai-based M&M has evinced interest in acquiring a premium brand, though it hasnít been able to lay its hands on one. In 2007 it pitched for Jaguar Land Rover when Ford was doing a distress sale ó the brand was picked up by Tata Motors. More recently, in 2012, M&M was reported to be in the running for General Motors-owned Swedish car brand Saab and later had shown interest in British niche sportscar maker Aston Martin.

ďPremium brands are nice to own but itís difficult to make money from them because the fixed costs are high. The auto business is a very difficult one and itís not easy for companies like Tata and Mahindra to make a mark in the global arena given the kind of spends needed on technology,Ē Goenka said.

M&M plans to position Ssangyong more in the luxury segment over time in India, while the Mahindra brand itself will move towards the premium market. Ssangyong, which M&M acquired in 2011 and turned around in 2013 with record sales of 1.45 lakh units, is also expected to see a re-branding both because the name is tough to spell and because the brand is associated with negative connotations like labour strikes in South Korea. M&M has appointed Strawberry Frog, a New York-based creative agency, to take a look at the groupís re-branding strategy.

ďWe are hoping that Ssangyong will also take the Mahindra brand to a higher level in India. With Mahindra we hope to go beyond

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