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Business News/ Industry / Manufacturing/  Mahindra plans new models in fight with Honda for No. 3 slot
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Mahindra plans new models in fight with Honda for No. 3 slot

Honda, after being reduced to a fringe player in 2010 and 2011, has bounced back with three new products

Mahindra and Mahindra, the current holder of the third position, has already been twice surpassed by Honda Cars India in monthly sales during the year to March, and the Indian firm now runs into the risk of losing out to Honda in annual sales, too. Photo: Abhijit Bhatlekar/MintPremium
Mahindra and Mahindra, the current holder of the third position, has already been twice surpassed by Honda Cars India in monthly sales during the year to March, and the Indian firm now runs into the risk of losing out to Honda in annual sales, too. Photo: Abhijit Bhatlekar/Mint

New Delhi: Mahindra and Mahindra Ltd plans to introduce at least two models and is banking on an economic recovery in the current fiscal year to spur demand for its utility vehicles to stave off a challenge from the Indian unit of Honda Motor Co. for the number three position in the Indian passenger vehicle market.

Mahindra and Mahindra, the current holder of the third position, has already been twice surpassed by Honda Cars India Ltd in monthly sales during the year ended 31 March, and the Indian company now runs into the risk of losing out to Honda in annual sales too.

Mahindra’s vehicle sales declined 8% to 210,021 units in the year ended 31 March, following a sharper 18% drop in the previous fiscal year. In comparison, Honda sold 41% more cars in India in the just-concluded fiscal year for a total of 189,062 units after posting a 82% increase in sales in the previous 12 months.

During the previous fiscal year, Honda outsold Mahindra twice, once in July and then again in March when sales at Honda’s local unit rose about 23% to 22,696 units, while sales at Mahindra and Mahindra declined 10% to 21,030 units.

However, the maker of sports utility vehicles such as the Scorpio and Bolero is confident that it will be able to retain the coveted third position on the back of a quick turnaround of the utility vehicle, owing to improving economic growth and a slew of new product launches during the year.

“Our stated objective is to stay in top-three," Pravin Shah, president and chief executive (automotive division), Mahindra and Mahindra Ltd, said in a phone interview from Mumbai on Wednesday.

Jnaneswar Sen, senior vice-president (sales and marketing), Honda Cars said his company is “not running after the number three position".

“It is not our target," Sen said.

Honda is likely to surpass Mahindra in sales this year, according to a consultant, who did not want to be named as his firm works for both car makers.

“All the factors are in favour of Honda. One can foresee what will happen in the near future. Mahindra is under pressure on Quanto and Xylo (Mahindra’s utilty-vehicle models) while the demand for all Honda’s products are higher," the consultant said.

To be sure, Mahindra was one of the fastest growing company in the Indian automotive industry when it took advantage of as much as 30% difference between prices of diesel and petrol fuel.

This coupled with India’s penchant for big vehicles had helped the Anand Mahindra-led company to emerge as the number three in the passenger vehicle market, trailing Maruti Suzuki India Ltd and Hyundai Motor India Ltd.

But the government’s decision to link fuel prices to market rates has bridged the price differential between the two fuels, hurting Mahindra’s sales.

In comparison, Honda, after being reduced to a fringe player in the market during 2010 and 2011, has bounced back with three new products in the mass segment and a built from scratch a diesel engine that powers all its cars except the Brio hatchback and CR-V sports utility vehicle. Its next generation mid-segment sedan City has also been a runaway success.

Honda has sold more than 100,000 current-generation City sedans in the span of a year and three months. This is the fastest any car in this class has reached this milestone.

But Shah of Mahindra is not perturbed. “I would not like to comment on Honda but if you have noticed we have a sizeable lead over them in year-to-date numbers," he said. Shah said he expects the economy to rebound in the current fiscal, led by a strong government at the centre and forecast of a good monsoon.

The passenger vehicle industry is projected to grow at 9-10% and we hold the same view, Shah said.

“On the other hand, the UV (utility-vehicle) market will grow faster...more than 10% and we expect gain handsomely from that," Shah said.

He added that the company will introduce two SUVs in the hot-selling compact SUV segment. “These are different platforms. We will address the gaps in our product portfolio and we expect to bounce back in the market," he added.

Honda, on the other hand, will be banking on launch of next generation Jazz and Accord in the current financial year, Sen said. This may be followed by a compact SUV and a full model change of Brio in 2016-17.

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Published: 03 Apr 2015, 12:57 AM IST
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