Mahindra looks to use its EV playbook to strengthen foray into electric bus space via SML Isuzu acquisition

The Chandigarh-based truck and bus manufacturer introduced the Hiroi.ev platform for developing electric buses in January at the Bharat Mobility Expo. The new e-bus portfolio was slated to be launched between April and June.

“SML is in advanced stages of developing its electric buses. We believe that the expertise we have through presence in multiple EV segments can strengthen the proposition and improve costs," Rajesh Jejurikar, executive director and chief executive officer (CEO), auto and farm sector, Mahindra and Mahindra Ltd, told reporters at a briefing on Monday.

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Mahindra is present in the electric passenger vehicle and three-wheeler segments. The entry into the electric bus space will see it compete with Tata Motors Ltd, Ashok Leyland Ltd, JBM Auto Ltd and Olectra Greentech Ltd.

Mumbai-based Mahindra's entry into the electric bus space would come when the e-bus segment's growth has hit some speed bumps. In FY2025, e-bus sales in the country fell 6% to 3,314 units.

However, Mahindra's entry into the space through SML and buoyant commentary by major players present in the segments suggest that hopes are high for the segment to grow.

“The EV bus market in India is doing exceptionally well. Switch India is likely to achieve Ebitda breakeven in FY25, and is hoping to treble volumes in FY26, on the back of 1,800+ e-bus orders in hand," Shenu Agarwal, managing director and CEO at Ashok Leyland, said after the announcement of discussions to withdraw from the UK’s electric bus market.

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The Mahindra group's foray into the electric bus space is part of its broader strategy to strengthen its position in the higher than 3.5-tonne commercial vehicle space. As part of this strategy, it acquired SML Isuzu for ₹555 crore to increase its market share in the trucks and bus segment to 10-12% by FY2031 from 3% in FY2025.

Through this acquisition, the company's market share in the light commercial vehicle bus segment has increased to 21% from 5%.

In the less than 3.5-tonne vehicle segment or small commercial vehicle space, Mahindra has a more than 52% market share.

“We expect the bus segment to grow with time as there is going to be a greater movement of people as the economy grows," Jejurikar said.

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In FY2025, SML Isuzu sold more than 12,000 buses and trucks, as per Vahan data. Between October and December, the company’s net profit had fallen 80.2% to ₹53 lakh.

“Post these two combined segments, we will become the 4th largest player in the trucks and buses segment. We see a lot of opportunities around cost, platform synergy, network and supplier synergy," Jejurikar said.

Industry observers remain bullish about the prospects of the two players.

"The collaboration between Mahindra Buses and SML Buses can help develop more affordable and reliable electric buses. The two can leverage shared technology, which can increase the range and operational efficiency," Sanyam Gandhi, whole-time director at Chartered Speed, said.

Mahindra’s share price ended 2.3% higher on Monday, while SML Isuzu’s share closed 10% below its previous closing price, against a 1.6% surge in Nifty Auto.