Just about five years ago, Mahindra & Mahindra sold a little over half the number of utility vehicles sold in the country. But with entry of new players, several new launches in the compact utility vehicle segment at competitive prices have hit M&M hard with its market share falling to around 29-30 per cent for the financial year-ending March 2017.
M&M is readying a slew of measures as it looks to claw back some market share | Reuters
Now, the company is readying a slew of measures, including a brand new SUV launch and at least 2-3 refreshes to existing products as it looks to claw back some market share.
M&M plans to spend around Rs 12,000 crore over the next three years on capital expenditure (new product development, capacity expansion etc) and investments (acquisitions, investment in group companies etc).
"We are not happy with a market share of around 30 per cent. We will be launching a brand new SUV (code named U321) and 2-3 refreshes. That, plus our existing TUV300 and KUV100 starting to do well, should help us grow market share," said Pawan Goenka, managing director, M&M.
However, with the increased competitive intensity, reaching previous record of 55 per cent may be tough.
"The UV industry market share has now reached 25 per cent of the passenger vehicle market. It has reached a saturation point and I feel now UVs and PVs will grow in tandem," said Goenka.
In 2016-17, M&Ms UV sales rose just 0.1 per cent to 222,541 units, while the UV industry grew 30 per cent.
SUVs once were considered big and rugged, meant for all terrains. But over last few years, compact UVs like Maruti Vitara Breeza, Hyundai Creta, Renault Duster and Ford Ecosport have attracted a lot of interest.
Mahindra too launched three compact UVs over the last 2 years—TUV300, KUV100 and the Nuvosport—but they haven't been as successful.
The company had already introduced new features and accessories, including dual tone exterior colours, which it hopes will boost the appeal of KUV100 and TUV300.
Its upcoming U321 is expected to take on the hugely popular Toyota Innova multi utility vehicle.
It is also stepping on the gas in the electric vehicle business, where it plans to invest around Rs 600-800 crore on new product development, expanding production capacities and increasing battery capacities so that cars can have a longer range.
"We continue to remain optimistic on EVs. The value proposition is very high," said Goenka.
Over the next two years, its EV capacity will go up to 5,000 per month from 400 per month now.
The company sees rising demand for EVs from fleet taxi operators. Lithium already runs a fleet of Mahindra e2o electric cars in Bengaluru, and couple of days ago, ride hailing app Ola also launched an EV project with Mahindra in Nagpur with 200 EVs.
The Niti Aayog released a report recently calling for fiscal and non-fiscal incentives to push EV sales.
For the quarter ended March 2017, M&Ms standalone net profit rose 20 per cent to Rs 725 crore, while revenue rose four per cent to Rs 12,320 crore. A Bloomberg poll had estimated the company to report a net profit of Rs 605 crore.
The stock closed up 0.8 per cent at Rs 1,362 on Tuesday on better than expected results.
