FY14 was one of the worst years for the Indian automotive industry. Almost all the segments, except two-wheelers, recorded negative growth. Another segment, the highly potential small commercial vehicles (SCVs), which includes vehicles in the two to three-and-half tonne, has managed to buck the trend and grown in volumes. Mahindra & Mahindra Ltd. (M&M), known for its outright dominance in the utility vehicle segment and growing presence in the SCV space, has been one of the few players in the industry to be able to maintain its sales volumes and market share despite the recessionary market conditions. We spoke to Mr. Pravin Shah, Chief Executive, Automotive Division, M&M, who outlines his company performance during FY14 and explains the importance of customer understanding in order to be a dominant player in any market segment.
How was FY14 for Mahindra’s auto division?
Though FY14 was a challenging year for the industry, Mahindra continued to perform well and show growth across segments. The utility vehicle segment had grown by nearly 52 per cent last year but declined by five per cent this year. We have been the market leader in this segment and continue to expand our presence in the space. As far as SCVs are concerned, the industry was at a size of around 80,000 units in FY11 which almost doubled by FY13. In FY14, the segment grew by four per cent whereas we have grown at a much higher rate of nearly 19 per cent, increasing our market share in the process. Both segments put together, we sold close to 2,40,000 units in FY14 with a monthly average of 12,000 units of which around 10,000 are pickups (Bolero & Genio), 5,000-6000 are in the Maximmo range (cargo & passenger) while the rest, 4,000-5,000, are in the sub-one tonne range which includes the Alfa and Gio.
What are the key factors you would attribute your success to in the SCV and UV segments?
As part of the Mahindra ‘Rise’ philosophy, the customer value proposition (CVP) for customers in the class (SCV segment), who come under the commercial category, is ‘Progress in Life’. Our products are bought by people who use them to earn their livelihood and being one of the largest players in the segment and the largest diesel player, we owe a lot of responsibility to our customers in terms of understanding their requirements, both in cargo and passenger transport. Mahindra is a full-range player in the SCV and UV segments with around 12 different models and seven major brands namely Alfa, Gio, Maxximo, Bolero MaxiTruck, Bolero Pickup, Bolero Camper and Genio. Our deep understanding of customer requirements and wide range of exciting products have helped us stay ahead of competition.
What do you think are the differentiating aspects of Mahindra’s approach in the industry? What are your USPs for success?
Firstly, it is our CVP – ‘Progress in Life’. We have a wide portfolio to address the varying needs in the market, both cargo and passenger transport. The products are tough, rugged and reliable with best-in-class mileage. We have a technology advantage and strike a perfect balance between the right product characteristics and excellent fuel efficiency, which makes the Mahindra brand different from the others in the market.
We have also introduced many path-breaking products and features in the market for the benefit of our customers. The flat bed option in pickups for easier loading/unloading is one of them and it gives customers additional load-carrying space as well. The 4WD option is another interesting offering in our products while we also have many fine and small features in the driver cabin which makes life lot easier for the customer. We also offer CNG variants to interested customers in suitable markets where there is good availability of fuel.
Another unique approach at Mahindra is our platform strategy wherein we use the same platform for both passenger and cargo segments, modified as per the market demands. Our FuelSmart technology in the Maxximo Plus is also a first in the CV industry and gives customers the option of switching between power mode and economy mode for improved transport efficiency. The Maxximo school bus, which was recently launched, comes with the Safe Eye technology which has been very well received by schools as it greatly benefits the end-consumers.
We keep inventing and have a very structured way in which we try and understand the customers’ unmet needs and come up with unique product offerings. We offer the best warranty in the industry, both in terms of warranty period and the guiding clauses.
Mahindra is known for its value-added initiatives to support customers. Could you highlight some of them?
We conduct different programs which help us in engaging better with the customers and encourage them to continue their patronage with brand Mahindra. ‘Uday’ which means Rise is a program for customers of Alfa, Maxximo and GIo. While the products helps them earn their livelihood, Uday offers free memberships, no-cost insurance, free mobile recharge, discounts on service and spare parts and many other benefits which delight the customers.
We also have a class of people called ‘Alfa Guru’, a program under which we train vehicle owners on a ‘Do-It-Yourself’ (DIY) approach. Since vehicle downtime is a direct loss of revenue for them, we train them in small and quick-fix issues on their vehicles. Not only does this help them quickly put the vehicles back on road but also aids in maintaining the products periodically. The owners go through a structured program, get certified and also get an ‘Alfa Guru’ tag which gives them a respectful status in the community. We also conduct regular ‘With You Hamesha’ (WYH) programs which is a service and health check-up camp for customers and drivers.
With such exciting programs, we back our trouble-free products and this not only keeps our customers happy but also differentiates us from others in the market.
How have your export operations been in the last year?
On the export front, we primarily focus on India-look-alike markets such as Sri Lanka, Nepal, Bangladesh and some African markets. On the Maxximo platform we ship out around 6,000-7,000 vehicles every year and export a similar number of Alfa units, while the Bolero pickup, Genio single and double cab versions are also exported to these markets.
What are the changing trends you note in the SCV and UV segments? When do you think the Indian auto industry would recover from the current slowdown?
Customers are expecting better comfort and convenience from the product and are also exploring different ways of doing business. They are looking for better products, higher fuel efficiency, better reliability, as most vehicles are owner-driven. With growing infrastructure development in the country and rural areas fast developing into cities, the last mile connectivity becomes more important. This will further drive the growth of SCVs. Another trend is the demand for alternative fuel vehicles which will be further boosted with better availability of fuel across the country.
As for the market recovery is concerned, when we translate the country’s GDP into economic activity, we find that the movement of cargo and people continues to be substantially high. Going forward, with the type of economic projections, reduction in interest rates and other positive factors, I expect the industry to reach a good condition by the second half of FY15, that is, post September this year. The fundamentals of our economy are strong and with increase in economic activity, the industry has to revive soon.