RIP Kinetic. The inevitable happened. Mahindra & Mahindra decided to do away with the brand after they acquired Kinetic Motor?s assets. Last month, Mahindra Two Wheelers launched the Mahindra badged Rodeo and Duro and marked the end of the Kinetic two-wheeler brand. Ki Ho, Kine (pronounced Ki Knee) were some of the endearing names that the brand was called. The brand?s connect with teenagers and women was incredible as it simplified their lives and gave them a sense of liberation as they breezed away on their Kinetics. The Kinetic was a big leap in modernised personal transportation in India. It did to the scooters what the Maruti 800 did to cars in India?changed them forever. But unfortunately Kinetic could never ride the change. It did make an electric start and had a good run till the ride was cut short.
Arun Firodia, founder and chairman of the Kinetic Group did rewrite the rules of the game in the two-wheeler market when in 1984, the Kinetic Group got into collaboration with Honda Motor Company of Japan and set up Kinetic Honda Motor Ltd to unleash a new generation of automatic scooters to challenge the geared scooters market.
The JV made sense for both?Kinetic got access to the new gearless technology while Honda had a smooth ride into the Indian market with a partner that was not picky about its stakes in the venture. What Honda?s technology brought in was a change in the human machine interface?electric start, gearless transmission, large storage space, easy to use stand and ergonomics. Kinetic had a grip on how to do the two-wheeler business in India thanks to long experience with the Kinetic Luna mopeds. The JV took off and their collaboration delivered the ?Kinetic? brand.
The Kinetic did cause excitement in the two-wheeler segment and generated good top line and bottom line. Enthusiasts drove the Kinetic to the Khardung La Pass near Leh?the highest motorable road in the world, the Sahara desert, rode it from Kashmir to Kanyakumari rally covering 3,869 kms across 12 states with zero breakdowns. The Kinetic raced against the Pune-Mumbai Deccan Queen train and reached Mumbai a full 15 minutes earlier.
In all this, the Kinetic Honda prowess was demonstrated. But then, this was all about Honda?s technology. The JV lasted 14 years, until Honda learnt all it had to learn about the Indian market, which was what Kinetic brought to the table and time was ripe for their solo ride. So, they dropped their pillion rider and exited the JV in 1998.
Kinetic Motor was on its own and at that time Kinetic chairman, Arun Firodia, confidently said that this exit would not hurt and they could survive on their own. But the 1998-2008 decade tested Kinetic. Consumer preferences were changing and suddenly the motorcycle was the new kid on the block. Kinetic did try to shift gears and make scooters and motorcycles, but this did not work. They tried newer technology partnerships. There was the Korean two-wheeler maker Hyosung Motors in 2001, Italjet Moto Spa of Italy in 2004 and then there was SYM of Taiwan in 2006. But, none of this could replay the magic of Kinetic Honda and Kinetic skidded. Negative growth in business and piling debts left the company with few options and best of these was to sign a Rs 110 crore deal with M&M.
It is not that the market for gearless scooters vanished. Motorcycles did overtake scooters but the market for modern gearless scooters was there and Honda Motorcycle and Scooter India has demonstrated that by grabbing close to 60% of the market. M&M believes that the two-wheeler market in the country is still largely under-penetrated and there is evidence that two-wheelers are going to enjoy a renaissance so they have invested. This segment is still seeing close to double-digit growth and gearless scooters account for 20% of the two-wheeler domestic market where 1.14 million units are sold. And, there is still a vast mass of customers who have yet to own a motorised transport and are eons away from possessing four wheels.
Globalisation opened new doors for Indian companies and inward flows led to new JVs and collaborations to tap the growing Indian market. But this did not necessarily mean long-term technology transfers that could enhance competitiveness of Indian firms. Technology diffusion and absorption has not happened to the extent desired. Imported technology could only get companies this far. Companies that rely on their partners totally are bound to go down the road Kinetic has gone.
Kinetic is not the only company; many automotive companies have been through this and so have other manufacturing companies.
A majority of the losers will be Indian companies and an MNC failing at this game will be an exception. Easing of FDI norms and ability to scale up in the Indian market on their own means JV partners will not need Indian partners for long. Unless they add some good value to the business, Indian partners will remain a sidekick?not the main star. For longer and sustainable growth, Indian companies would have to invest more in R&D, product development, next generation technologies and, above all, talent. They have to learn from the Japanese who could absorb imported technologies, improve on it and then capitalise on it. But the truth as on date is that the bulk of technology in India today resides in JVs and that will last as long as the marriage lasts. After that, who knows?