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| M&M hops on rural ride in 2-wheeler segment |
| Swaraj Baggonkar / Mumbai Sep 21, 2009, 00:50 IST |
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Mahindra & Mahindra, the $6.5-billion conglomerate, is strengthening its rural presence by launching two scooters aimed at the market there. It hopes to capitalise on its existing brand value in these areas.
The company says the scooters are priced lower than competition and deliver more power. It expects to corner market share though these products establish its brand before launching its motorcycle range. "The Mahindra brand is very strong in the rural market due to our tractors....there was a need to further capitalise on this. We are sure our two-wheelers will get the benefit (from this)," said Anand Mahindra, vice-chairman and MD.
Hero Honda generates 40 per cent of its sales from rural markets. Two-wheeler penetration levels of less than 10 per cent in rural areas is a huge opportunity, says market research firm Ernst and Young in its recent report on the rural sector. The corresponding figure is 23 per cent in urban areas.
While Honda Motorcycle and Scooter India (HMSI) is the leader in the ungeared scooter segment with a 57 per cent market share, its penetration levels in rural areas are much lower than Hero Honda, say market experts.
| MARKET SHARE |
| Company |
April-August
‘08-’09 |
April-August
‘09-’10 |
Market Share
‘09-’10 (%) |
| Hero Honda |
1,446,557 |
1,863,077 |
51.29 |
| Bajaj Auto |
623,503 |
563,506 |
15.51 |
| TVS Motors |
491,298 |
538,763 |
14.83 |
| Honda |
388,975 |
480,005 |
13.21 |
| Yamaha |
52,937 |
86,774 |
2.38 |
| Total |
3,085,633 |
3,632,314 |
— |
| Source: Society of Indian Automobile Manufacturers |
Still, Hero Honda has only one product in the scooter segment, while M&M has three products of its own (Duro, Flyte and Rodeo) and three products of Kinetic which it can market (Nova, 4S and Kine).
 In addition, HMSI's popular products like Activa and Aviator are priced higher by 5-6 per cent, even while its engine size is 12-18 per cent lower than Mahindra's scooters, says M&M.
To strengthen its reach in the rural and semi-rural market, M&M is looking to tap into its standalone commercial vehicle showroom outlets where it can also display its two-wheelers. A senior executive said owners of commercial vehicle showrooms will be appointed for setting up two-wheeler showrooms too, while having an option to display these at their existing outlets.
Anoop Mathur, president-two wheelers, M&M, said: "The (two-wheeler) market itself is growing at high double-digit rates and we certainly foresee that it will grow at 10-12 per cent per annum over a period of time. Our focus is to expand the two-wheeler market and create a differentiated position." Adding:"We have carried out a massive market research exercise, which has given us the idea of what should be rolled out. We cannot reveal what products those would be but we have a very clear blueprint.”
Automatic scooters today comprise 20 per cent of the two-wheeler domestic market, with sales of 1.14 million units, a growth of 9 per cent over the earlier financial year. This segment has reported a growth of almost 21 per cent in the April-August period selling 559,00 units this year.
The motorcycle market, meanwhile reported a dismal growth of 1 per cent selling 5.8 million units last year, led by a demand fall for the entry-level bike segment (100cc segment). However, M&M hasn't tried to avoid this segment.
"We would not like close our minds to anything at this point," Mathur said, while referring to a proposed entry into the 100cc space.
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