Nashik: Auto maker Mahindra and Mahindra Ltd (M&M) has pitched its latest multi-purpose vehicle Xylo aggressively against sedans, but Anand Mahindra, vice-chairman and managing director, says the company’s core competency is making utility vehicles and it will stick to that. The firm is not competing with joint venture partner Renault SA, the French car maker it has tied up with to make the low-cost Logan sedan in India, he clarified. In an interview, Mahindra also talked about why Tata Motors Ltd’s Nano small car is unlikely to dent its plans in the two-wheeler segment. Edited excerpts:
The launch of the Logan about a year-and-a-half ago was a step towards diversifying into a segment other than utility vehicles. With Xylo pitted against sedans, what is M&M’s positioning, going forward?
Brand positioning: Anand Mahindra says the two-wheeler business offers great opportunity to place the firm as a bottom-of-pyramid player. Abhijit Bhatlekar / Mint
As far as brand Mahindra is concerned, its core goal is going to be in the utility vehicle space, which includes pick-ups, trucks, etc. And then we will participate in the broader automobile ecosystem by way of alliances.
Our car business with Ford (Motor Co.) came out with a brutal recognition of the fact that we can’t do everything ourselves. We then told ourselves, “can we retain focus and the agility that comes from being present in one segment?” Arguably, the focus has helped.
We...have managed to retain 45% share in the utility vehicle segment and be present in the ecosystem by way of alliances. Therefore, while in trucks it’s with Navistar (International Corp.), for cars it was with Ford, and now with Renault.
At Mahindra, we continue to pay ruthless focus on the utility vehicle segment. We would try and expand it at the cost of other players; it will go global with the brand (and) wherever possible, with the partner.
Is the positioning of Xylo against sedans likely to make Renault unhappy?
Certainly not. They are deeply involved in the project. Our partnership with Renault is of immense benefit in terms of procurement... Certain parts of Xylo...have been supplied by the Renault suppliers. Our quality systems have been upgraded based on Renault’s inputs.
Why do you think Logan has not worked in India?
Everywhere else in the world, be it Iran or eastern Europe, it’s the cheapest product. In India, it has not worked because of the excise anomaly.
How do we see company’s two-wheeler business panning out?
There are two reasons why it’s an important segment for a transportation company.
The two-wheeler business is a bottom-of-pyramid (BoP) business in a true sense. There was a concern that Nano will eat into the two-wheeler business. Such concerns aren’t there any more. The price at which it was announced was a special price. That price cannot be achieved any more.
Secondly, if we look at the two-wheeler market globally, there will be a renaissance.
After oil prices went up, sales of scooters and bikes in Europe shot up. The two-wheeler business, the scooter business in particular, offers immense opportunity to place yourself as a BoP player and as a volume player globally. We would get a very important benefit psychologically of being a global player.
There have been reports about M&M’s interests in some global two-wheeler brands.
We do not have any plans of acquiring a global two-wheeler business. It’s speculative. We are right now busy in digesting the Kinetic (Engineering Ltd) acquisition. We closed it a month ago.
We have an acquisition in Italy on the engineering side that provides us the know-how on the product development side for two-wheelers.
Considering what the Tata group is going through following its Jaguar-Land Rover deal, are you relieved that you decided against the acquisition?
We walked away from it because we found it unaffordable. I had not expected recession of this level in the world economy, but even otherwise, we felt it was unaffordable risk for the company.
Are we happy we didn’t go for it? Yes, we are.