After setback on 2-wheel strategy, Pawan Goenka mulls way forward; bullish on SUVs

Auto major Mahindra and Mahindra is restrategising its two-wheeler business after sales did not meet expectations of the company during the past year, while at the same time it is bullish on its SUV and tractor businesses.

By: | Published: July 7, 2016 6:20 AM
Auto major Mahindra and Mahindra is restrategising its two-wheeler business after sales did not meet expectations of the company during the past year, while at the same time it is bullish on its SUV and tractor businesses. Auto major Mahindra and Mahindra is restrategising its two-wheeler business after sales did not meet expectations of the company during the past year, while at the same time it is bullish on its SUV and tractor businesses.

Auto major Mahindra and Mahindra is restrategising its two-wheeler business after sales did not meet expectations of the company during the past year, while at the same time it is bullish on its SUV and tractor businesses.

“We are currently in the process of restrategising our two-wheeler business and deciding what is the way forward for us. Perhaps in the next couple of months we will make an announcement on how we are going forward with two-wheelers,” Pawan Goenka, executive director, Mahindra & Mahindra said on Wednesday. “It is unlikely we will exit the business”.

The development comes after two-wheeler sales grew a marginal 3% to about 1,64,55,911 units during FY16 compared to a year earlier, hurt by lack of demand especially in rural areas, according to data from the Society of Indian Automobile Manufacturers. Mahindra and Mahindra, which makes the Gusto scooters and Mojo motorbikes also witnessed tepid sales during last fiscal.

The Mumbai-based company sold 150-170 Mojo motorbikes, which was “not enough” for sustaining production at its manufacturing facility, Goenka said. The company has already given a voluntary retirement to 250 of its employees, he said.

Still, the company is bullish on its SUV and tractor businesses.

Currently, Mahindra is working on a new SUV in the mid-range segment using the Ssangyong X100 platform. The new vehicle will be from the Mahindra stable and will cost less, Goenka said, adding that the price of Ssangyong vehicles in the country is far higher than what the consumers can afford here.

During FY16, the company's SUV business grew 11% higher than the industry's growth of 7%, he said.

Moreover, the company is confident of better sales of its tractors during the current fiscal, following better monsoons, Goenka said, adding that he expects tractor sales growth to reach “mid-teen” during the current fiscal, higher than the 10% sales growth earlier forecast by SIAM.

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