Saturday, December 12, 2009

Last Mile Connectivity and Mahindra Gio

The last few years has seen quite a few attempts at breaking into the within the city transport segment, and Tata Ace has been the undisputed success story in the segment. Industry experts estimate that Ace has over 80% share of the 2,500crore small truck segment (one tonne capacity) and Ace can actually be credited with the creation of the segment. But this blog post is not about Ace, which I have written earlier, but about a new competitor which has entered the segment, Mahindra & Mahindra Gio, a 0.5 tonne small truck. The best part about the new launch is the price at which it is available Rs 1,67,000 which is at a slight premium versus the three wheelers and substantially lower than Ace which is around Rs 2,80,000. And in terms of carrying capacity Gio is able to take much higher load than the three wheelers. So in effect what Gio is also trying is create a new a segment for itself below Ace and just above the three-wheelers.

And over the next few years Gio will add to the credibility of India as a low cost automobile development center of the world.

In the company's official release Dr Pawan Goenka, President Automotive Sector says,

“With the launch of Mahindra Gio, we have created a new Compact Truck category in the commercial vehicle segment. The Mahindra Gio is the first of its kind entry level 4 wheel cargo vehicle, and is all set to change the dynamics of the small CV segment. As city limits gradually expand and distribution needs increase, the Mahindra Gio presents a high earning potential for customers who will benefit from its high mileage, low maintenance cost, optimum utilization of space and low acquisition cost,”

I think one element which both Ace and more recently Gio have been working on is to capture the pride associated with owning a three-wheeler versus a four-wheeler, and they have worked on that aspect by improving the driving comfort and styling in the driving cabin, with things like bucket seats, to give a feel-of-car, but then with Gio being priced so close to three wheelers one needs to see whether this would work for long.

But all in all I would rate Mahindra & Mahindra as one of those old economy companies which has responded very well to the opportunities brought out by opening up of the economy. The success it has had with Scorpio and Tractors in overseas market is something on which I deserves a separate post...

Thursday, December 10, 2009

Hamara Bajaj

Some people may call it natural progression or evolution that the company which created the category in the country decides to stop producing scooters, and focus it's energies on motor bikes.

In fact in the pre-lib days it use to as part and parcel of the middle class house hold, even use to be integral part of the dowry ...and I am used to quoting it as an example of how long one had to wait to get a scooter versus the off-the shelf purchase in as many colours as you want today (99 for a scooty!!!!). But then when I read the news in the morning that Bajaj is exiting the scooters business, it brought a sense of nostalgia and sadness that after a few years we may not it plying on Indian roads ...

Bajaj says it wants to focus on making motorcycles, and maybe the decision was always around the corner after it stopped the production of Chetak a couple of years back , which was the largest selling scooter in the world at one point in time. But recently Mahindra and Mahindra made an entry into the category, all time rival Hero is also saying it is unable to keep up with the demand for its scooter brand 'Pleasure', sale of Honda 'Activa' has always been good, and TVS Motors is planning to add 110 cc Wego to its range.

With so much of activity in the category why is it that Bajaj wanting to stop making scooters, obviously it cannot keep making the same old scooter, but to leave a category??? The company says it wants to become the world's largest bike manufacturer and scooters limit it's focus?? somehow I am not convinced that it is the right decision, looking at the strong association of scooters and Bajaj.

Last few years have seen many strong brands in India getting lost , ( Deccan, Satyam..) maybe we will add it to the list. I look forward to comments from readers if they agree with me or not ...

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