Eicher shuts down its loss-making personal utility vehicle business

The company had invested Rs 2.9 billion in the Polaris joint venture

Eicher Motors, the maker of Royal Enfield motorcycles, has decided to shut down with immediate effect the personal utility vehicle division that it had set up as an equal joint venture with American firm Polaris.

The company had invested in the venture an amount of Rs 2.9 billion, which will now be written down. The joint venture incurred a loss of Rs 0.91 billion in FY17.

Eicher Polaris, the joint venture company, had launched Multix, positioned as the country’s first personal utility vehicle in 2015.

The vehicle was to target independent businessmen in smaller cities and towns. A separate marketing network had been set up for Multix, rolled out from the Jaipur manufacturing unit.  

Multix initially generated significant interest from customers, the company said in a statement. “The initial interest could not be sustained and the subsequent sales performance was significantly slower than expectations. Despite several initiatives, the company’s performance could not be revived. It is in the best interest of all stakeholders to close the operations,” Eicher said.

In the coming days, Eicher Polaris will engage with all its stakeholders, including customers, suppliers, employees and channel partners to implement the closure. Eicher said the company would continue to provide spares and service support for the fleet of Multix vehicles on the road.

The Jaipur plant of Multix came up at the same site where Eicher had set up a Royal Enfield manufacturing unit in 1999. However, since volumes of these motorcycles were small, the company decided to shut it down and move all of its production to the Chennai unit. 

At a glance

• Eicher joined hands with Polaris in 2012
• Priced attractively at Rs 232,850, the vehicle could only sell 3,500 units since launch
• The JV’s Jaipur unit had a capacity to produce 60,000 vehicles a year
• The JV lost Rs 0.91billion during 2016-17