Mahindra to launch motorcycles soon

MAHINDRA & Mahindra plans to introduce its first motorcycles in India within the next few months as it challenges Hero Honda Motors in the world’s second-biggest two-wheeler market.

The company intends to add motorbikes ranging from low-cost entry models to premium products, Anoop Mathur, head of Mahindra’s two-wheeler business, said in an interview at the company’s Mumbai headquarters on Tuesday. He declined to elaborate further on the product plan.

The two-wheeler unit aims to break even next fiscal year and to become as large as Mahindra’s tractor and sport-utility vehicle businesses within seven years, Mathur said.

India’s largest maker of tractors and SUVs began making scooters in 2008 after buying Kinetic Motor to boost sales in a country where two-wheelers outsell cars about than five
to-one.

“It will be very difficult to break into this market as the existing players are so dominant,” said Vaishali Jajoo, a Mumbaibased Angel Broking analyst. “Mahindra will have to leverage their brand if they want to establish themselves in the twowheeler space.” Hero Honda, partowned by Honda Motor, and Bajaj Auto together control about two-thirds of India’s motorcycle market, the world’s biggest after China.

The company’s scooter sales more than quadrupled in the quarter ended June to 27,000, according to Society of Indian Automobile Manufacturers data. Industrywide sales of motorcycles and scooters rose 28 per cent to 2.7 million in the three months as rising incomes and economic expansion spurred demand.

“We’re looking to become a credible player in the two-wheeler space in India over the next few years,” Mathur said.
“There’s huge potential in the market.” Mahindra’s companywide revenue has increased at an average pace of 25 per cent over the past five years compared with 16 per cent for Hero Honda and 15 percent for Bajaj Auto, according to Bloomberg data. Mahindra's tractor business was its fastestgrowing segment over the past two years, expanding an average of 29 per cent, according to data compiled by Bloomberg. Cars, trucks and SUVs grow at a 14 per cent annual rate in the period.

Mahindra's motorcy cles will be designed by Engines Engineering, an Italian design company it acquired in 2008, Mathur said. The company would consider further acquisitions and collaborations to boost its two-wheeler business, he said. No deals are being actively worked on at present, he said.

Mahindra, which is considering a financial bid for Ssangyong Motor, the bankrupt South Korean sedan and SUVs manufacturer, more than doubled its net income to 20.9 billion rupees last fiscal year as vehicle sales surged.

Profit may gain to 21.8 billion in the current year according to an average forecast by 21 analysts compiled by Bloomberg.

The company may consider exporting motorcycles to markets including Latin America, Africa and South Asia once sales in India have begun, Mathur said.

Nationwide two-wheelers outsold passenger cars 2.7 million to 554,566 in India in the April-to-June quarter, according to data from the Siam.