US bike maker UM building local capacity in India

Plans to launch two new models in next two months

UM Lohia Two-Wheelers (UMLTPL), the Indian arm of American two-wheeler maker UM International LLC, plans to invest in expanding its capacity in the country as it eyes 100,000 unit sales per year within the next three years. The company is also working on increasing localisation in its bikes from a current 65 per cent to 90 per cent over the next few months. Localisation is expected to reduce costs by 15-18 per cent.

Speaking on the sidelines of opening its first dealership in Ahmedabad, Rajeev Mishra, CEO of UMLTPL said plans were afoot to double the capacity at its existing site in Uttaranchal from a current 50,000 units per annum to 100,000 units within the next one year. "Besides, we are also working on setting up a new plant near Hyderabad with a capacity to produce around one hundred thousand units every year. This would take another one-a-half years to complete. The company is also working on an engine manufacturing plant (one hundred thousand units per annum) near Pune," he elaborated. The two projects put together entail an investment of around $100 million (around Rs 640 crore). The company has already invested $50 million so far.

The investment in the engine plant, however, would be made by UM India, the parent company and is estimated to be around $20 million or around Rs 120 crore. The remaining investment on the two plants is being done by the JV UMLTPL.

Mishra said UMLTPL is betting on the cruiser segment bikes which, while comprising only 7 per cent of the bikes market, is growing at 42 per cent annually. “There was a gap in this segment. Most bikes are above 750 cc and there was only one bike at 220 cc. We wanted to plug this gap and have brought in products at the 280-cc range priced between Rs 1.7 to 1.8 lakh,” he said.

It also plans to bring in two new models in the market over the next two months.