Reference Auto

Now that Mahindra and Mahindra has acquired 70% in South Korean automobile maker SsangYong Motor Company, it will have to chart a global marketing strategy to give a major push to SsangYong’s sports utility vehicles or SUVs, which are among the best in the world. Mahindra had paid $463 million for the Korean firm which was valued a tad over $300 million.

SsangYong is in a dismal state. It has a debt of over a whopping $600 million and has been mired in losses. SsangYong had registered losses of $344.6 million during the first half of 2009 and its revenue for the period had fallen by more than half.

Moreover, the global financial slump of 2008 also hit the company, leading to labour strikes at its units. So, a major challenge lies ahead of Mahindra to turn the Korean car company around. This is likely to take nearly a couple of years.

The deal will, however, bring some of the finest SUVs such as the SsangYong C200 compact SUV as well as the worldwide distribution network and technical resources of the Korean auto firm under the Mahindra fold.

SsangYong has a good presence in Europe and South East Asia and Mahindra needs to build up in these regions first before its spreads its wings globally. In other words, Mahindra must tread cautiously and not rush for worldwide presence.

So far as Mahindra’s plans go, the company will bring in SsangYong’s flagship Rexton and ready-for-launch Korando C SUVs in a completely-knocked-down (CKD) format into India. Both these high-end SUVs will slug it out with Toyota Fortuner, GM Captiva, Hyundai Tucson, Ford Endeavour and Honda CR-V, among others.

SsangYong’s two SUVs are likely to be priced economically around Rs 15-20 lakh, and with a higher per cent of localisation in place, prices could come down in future.

In a company release, Pawan Goenka, president (automotive and farm equipment sectors), Mahindra and Mahindra, said, “The coming together of Mahindra and SsangYong will lead to a competitive global UV (utility vehicle) maker. Mahindra is competent in sourcing and marketing. Whereas, SsangYong has strong capabilities in technology. We want to leverage combined synergies by investing in a new SsangYong product portfolio, to gain speed in the world markets.”

The deal was struck after a series of meetings between the two companies since August when the Korean company selected Mahindra as the preferred bidder among the seven in the fray. Another Indian company run by Dunlop’s Pawan Ruia also bid for the ailing Korean auto firm but unsuccessfully.

Despite 70 per cent acquisition by Mahindra, SsangYong is likely to function in an autonomous manner, with primarily a Korean management.

The SUV market in India may be hotting up but it is still in the nascent stages. As per estimates, the market for SUVs (total) could be around 40,000 units annually in the next four to five years. As of now, Mahindra would do well to sell 1,000 SUVs in a year.

Mahindra has tasted success with all its vehicles, including the Bolero, Xylo and Scorpio but its joint venture with Renault, which makes the Logan, had to bite the dust. Mahindra is likely replicate its success in India with the SsangYong buy but how successfully it leverages it marketing skills abroad is to be seen (it is unlikely to taste success in the short term though).

Mahindra and Mahindra is banking on the old-world charm of the ubiquitous Commander Jeep to spur sales of the relaunched version, christened the 4 x 4 Thar CRDe, under a new platform, which it has priced at an aggressive Rs 6 lakh. The price will, however, vary in different cities: while in Mumbai it will come for Rs 6.28 lakh, in Delhi it will carry a price tag of Rs 5.99 lakh.

There is also the DI BS III variant that will be available in Bangalore, Delhi, Jaipur and Mangalore this month itself for Rs 4.47 lakh. Elsewhere in India, it will be launched in the first month of the New Year. The Thar DI is a lifestyle vehicle for the rural market with both two-wheel and four-wheel drive options.

This strategy of re-launching the Jeep is unlikely to find many takers in cities as the company’s own urbane models such as the Xylo, Bolero and Scorpio could cannibalise (or eat into) into the Thar’s sales.

The company, however, is eyeing a big push in towns or semi-urban areas and villages. With its economical pricing, the Thar may see a good response in these markets. Mahindra is also targeting people who prefer the retro look. But among India’s youth or even with those under the age of 40, which probably makes up 60 per cent of India’s population, there are unlikely to be many takers.

Mahindra and Mahindra is already selling this vehicle in South Africa, pricing it around Rs 9.5 – Rs10 lakh in that country.

“Realising the potential of this emerging segment of off-road enthusiasts and lifestyle seekers, we have rolled out the Thar in India. The Thar is an extension of our legacy and what Mahindra stands for,” chief executive, automotive division, Rajesh Jejurikar said.

But Mahindra’s distribution network is a big plus. The Thar will be distributed via the company’s 200 dealers throughout the country. Mahindra said it spent Rs 5 crore on the Thar’s development.

The Mahindra Thar is a replica of the famous Commander Jeep 5 and comes with enhanced suspensions and features. Its ground clearance is excellent and a journey though a rough terrain could turn out to be almost a cruise.

It is powered by a 2.5 litre CRDi diesel engine. “The Thar is a manual 4x4 machine along with a robust CRDe engine 77 kw (105 BHP) and drive by wire technology which allows variable speeds and acceleration. To tackle this excess power, Thar CRDe’s tough ladder frame chassis has been optimised to allow crisp handling. A hi-tech suspension layout of IFS and abuse-resistant rear leaf springs paves the way for a great balance between ride and handling,” said Rajan Wadhera, M&M’s chief executive (TPDS).

Mahindra has always been a specialist in marketing its vehicles. Its SUVs have been logging robust sales while its recently launched two-wheelers Stallio and Mojo have seen sales rev up by a mind blowing 125% in November. But Logan, made through a joint venture with Renault, is yet to see its sales reach satisfatory levels.

So, going by these trends, Mahindra could hope to notch up decent numbers with the Thar, mainly in the semi-urban and rural markets, and of course, with the adventure-loving urban car buff.

Honda’s plan to introduce a diesel variant of the City would see a surge in sales while a cheaper version of the XUV500 from Mahindra, the W4, could also jack up the XUV’s numbers (which has already been commendable).

The Mahindra XUV500 W4.

Even as global auto giants such as Nissan and GM’s Chevrolet roll out their pet electric vehicles or EVs, India is not far behind with Mahindra Reva launching the REVAi through five dealers in Pune. Unilke the Chevrolet Volt or Nissan Leaf, which could be available in India in a couple of years, the home-grown REVAi will roll out soon.

The Volt and Leaf EVs, when launched in India, could be priced above Rs 15 lakh, forcing the average Indian car buyer to shy away despite being EVs (which have been created to keep the environment clean and trim running costs substantially when compared to a petrol or diesel car).

But the REVAi is set to be affordably priced around Rs 3.10 lakh (the standard model). Also, in order to woo customers, Mahindra has rolled out a finance plan whereby buyers can shell out Rs 1 lakh as deposit and pay Rs 7,999 for the next three years.

After the three-year period, the car owner can claim the deposit and let go the car or forgo the deposit and take the car instead.

The REVAi can go up to 80 km per charge and both performance and battery life are optimised using a technique called Energy Management System. There is a regenerative braking mechanism employed that facilitates the pumping of energy into the battery when brakes are applied to slow down the car.

The EV has a ‘boost’ mode for power and acceleration, whereas ‘hill restraint’ ensures better navigation in an incline. The car does not have either a clutch or gear and can touch a maximum speed of 80 km per hour. It can reach from 0 to 40 km in just seven seconds. The REVAi is a two-seater hatchback now and the four-seater version will hit the country’s markets next year.

Mahindra Reva’s Bangalore plant will begin operations in April after which annual capacity will more than double to 30,000 cars per annum.

“We are happy to launch the REVAi in Pune where there are many who want to lap up our vehicles. With climate change and carbon credits becoming key issues today, eco-friendly vehicles have become need of the hour,” said R Chandramouli, chief of operations, Mahindra Reva.

“The EV market is ready to grow rapidly. Mahindra’s vast distribution network, along with our unique finance plan will help us make significant inroads into the local market,” added Chandramouli.

Reva was founded in 1994 as Reva Electric Car Company, a joint venture between the Maini Group of Bangalore and AEV of USA. Mahindra Group took majority stake in May this year and renamed it Mahindra Reva Electric Vehicles Pvt Ltd.

It seems foreign players are not keen on bringing in their EVs owing to lack of good roads, electricity, parking spaces and unavailability of charging stations.

Mahindra Reva exports its electric cars to European countries including UK, Norway, Spain and France. It also sells its cars to neighbouring markets like Bhutan, Nepal and Malaysia.

Although, the launch of Reva cars like REVAi could be a trendsetter, lack of charging stations could take a massive toll on Mahindra Reva’s electric car dream and if the government does not put infrastructure projects on the fast lane, then the concept of EVs could witness a slow death in India.

Mahindra & Mahindra (M&M) is betting big on its distribution network to rev up its motorcycles sales, a fiercely-competitive segment the company has entered into with the launch of two bikes — the 110 cc Stallio and the 300 cc Mojo.

The Stallio, whose brand image will be spruced up by none other than Aamir Khan, comes in two variants and carries a price tag of between Rs 41,199 and Rs 44,699 (ex showroom Pune). The Mojo has been priced at Rs 1.75 lakh (ex showroom Pune).

Mahindra has seen buoyant sales almost consistently with three of its utility vehicle models - Scorpio, Xylo and Bolero - which helped the company register sales of 12,994 units in August 2010 against only 11,443 units in same period a year ago. Sales of the Logan, manufactured under a joint venture with Renault, which had failed to find many takers earlier, revved up by a whopping 96.08 per cent to 1,000 units during September, compared to 510 units in the same month a year ago.

An upbeat Anand Mahindra, who is vice-chairman and managing director of M&M, said, “All markets are competitive. But we have a slew of competitive advantages that we feel will be useful for taking us through.”

The Stallio has maximum power of 5.4 kw (7.3 ps) @ 7500 rpm, maximum torque of 8.0 n-m @ 5500 rpm, start is a electric start /kick start, ignition system – CDI, fuel tank has 13.7 litres capacity with a reserve capacity of 1.6 litres, clutch is wet multi-plate, transmission type / gear box is 4 gears constant mesh, brake type at front /rear is 130 mm dia – internal expanding (drum) (front & rear), and suspension type (front & rear) are telescopic hydraulic-damped (front), 5-step adjustable, coiled hydraulic-damped (rear).

The battery is a 12V/ 5Ah one while the head lamp is 12V–35W/35W – halogen bulb (multi reflector type). Mahindra Stallio will come in Derby Red, Colt Black, Equus Blue, Buckskin Yellow and Ranch Green. The bike will be available from Diwali.

The Mojo 300 cc comes with liquid cooled 292 cc engine, 4-valve single cylinder petrol engine with fuel injection (like MPFI), power of 26 bhp @8500 rpm, a torque (maximum) of 24 nm @7000 rpm, gas charged rear shock absorbers, radial caliper brakes, a six-speed manual transmission, LED tail lamps, tubeless tyres and halogen lamp multi-reflector head lamps.

Its ignition system is known as electronic control unit and has fuel tank capacity of 15.5 litres. Its transmission type /gear box is a constant mesh, 6-speed one. The Mojo is an Italian design bike and is targeted at the youth. It will be available in three months and will come in two colours - red and black.

The Stallio and Mojo have an awesome futuristic look and we at The Paperless give a thumbs up to the two bikes which we feel will surely revolutionise the motorcycles industry in India.