After struggling for eight long years in the two-wheeler business despite investing close to ₹1,000 crore, Mahindra & Mahindra is finally re-aligning itself to focus on the premium niche segment.

M&M entered the two-wheeler business through the acquisition of Kinetic Motors in 2008. While the company launched subsequent products in 2013 and 2014, the uptake was poor and the division remained loss-making despite constant fund infusion.

“We have been looking at it for quite some time now as to how we could take it forward. We had three options. First was to continue investing in the business the way we had been and hope to make a dent in the commuter segment, and second to shut down the business completely. The third option was to re-orient and restructure the business,” said Pawan Goenka, Executive Director at Mahindra & Mahindra, while talking about the need to restructure the business.

Three entities

The two-wheeler business is now organised into three different legal entities – Peugeot Motorcycles or PMTC, in which Mahindra holds 51 per cent stake; Mahindra Two Wheelers Limited, which has eight per cent Private Equity investment, while the rest is owned by the Mahindra group; the newly acquired Classic Legends business, in which Mahindra holds 60 per cent stake, with the remainder being owned by a different set of PE players.

With the acquisition of Classic Legends, M&M is trying to position itself as a lifestyle two-wheeler company, with brands such as BSA and Jawa. While Mahindra acquired BSA motorcycles for ₹28 crore last week, Jawa would remain a brand that it’ll license for sales in India and some other neighbouring countries.

Mahindra is hoping that Jawa’s brand recall in India and BSA’s brand in Europe will help the company revive both brands, which were on the verge of dying.

Goenka said the company will take utmost care to preserve the styling of the two brands, while the bikes will be built using latest technology.

Focussed approach

For the legal entity Mahindra Two Wheelers Limited, the company said it will stop focusing on mass market commuter bikes and focus only on higher margin Mojo bike, which is currently offered with a 300 CC engine.

Mahindra has already cut down on manpower in this division to half over the last 1.5 years, and fund infusion from the parent into the division will be halved going forward.

M&M will only focus on creating new variants of the Mojo brand, and offer it at different price points to make it a premium offering. The Classic Legends business, in which the bikes will be offered without any Mahindra branding, will be the biggest bet for the company to revive its two-wheeler business.

“Given our experience in adventure, lifestyle and SUVs, we believe that is our DNA and this is where we should’ve started. So it is natural that we come back to that and look at the premium motorcycles which offer the same sense of adventure, lifestyle and deep association with a typical Mahindra customer,” Goenka said.

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