The Automobile Industry has been showing signs of shifting its focus from the conventional ICE (Internal Combustion Engines) to the EV (Electric Vehicle Platform.)
The transition may happen much much faster than what is being envisaged. Digital Technology up-gradation too is happening side by side.
Now, Mahindra and Mahindra, India’s leading SUV manufacturer have shown their interest in the EV platform and other related services, as it aims to recapture its lost dominance.
This focus, on the EV platform, has been envisioned by its new CEO Mr.Anish Shah.
Mahindra, the undisputed SUV leader a decade back, has consistently faced a loss to its domineering position for the past seven years. Its market share has now dropped to an alarming 13%. The pandemic; and its woes have affected the recovery plans drastically what with two consecutive losses in the last two quarters of 2020. The breakdown of collaboration plans with Ford only added to the pressure of a recovery.
The company has however outlined ambitious plans for FY22. Anish Shah, the current CEO of Mahindra & Mahindra Co, asserted that the company’s focal point at this moment is to sustain inside the dynamic automobile industry.
What has caused surprise amongst the Auto Pundits is that Mahindra n Mahindra, which commanded such a domineering position both in terms of volumes and revenue, is now facing a revenue crunch for its investments and recovery plans.
That’s all in the past, said Shah, who was previously Mahindra’s chief financial officer. “At this point, I’m looking at it as more of a growth story rather than a turnaround story,” he said in an interview.
It is to Mahindra & Mahindra’s credit for the interest generated and growth in the emerging segment of the SUVs by launching the XUV500 a decade ago.The SUVs provided to the customer a new hitherto aspirational driving experience.
Now Mahindra is exiting from the loss-making business as it sets out on a new road map to regaining its domineering position in the SUV segment, said Mr.Anish Shah, CEO.
The future road map could be led by the new SUVs, electric cars, and digital services.
The company will now have a focussed approach for its core SUVs unlike when it catered to the whole SUV market.
What will be Mahindra’s mantra for the future?
The SUV segment has generated interest across households in the highly competitive personal car segment. New successes have emerged in the SUV space with brands like Hyundai, Morris Garage, and Kia. And Mahindra has lost its domineering position and market share due to these new entrants.
More than 60% of the Mahindra Groups' revenues come from its Automotive Business and making a recovery in the SUV segment is thus imperative.
Shah is betting on its new Thar Model, a four-wheel-drive reminiscent of its earlier success Scorpio. The Thar has a waiting list stretching for about a half and a month.
The loss of market share by Mahindra has been attributed to the relatively lacklustre performance of its present SUV range when compared to its rivals from Hyundai/MG and Kia primarily.
Could the innovations in the present SUVs of Mahindra have been one too many; moving away from its core smooth offroading quality, that customers vouch for?
The claims came out from Anish Shah, who brings forward a list of changes.
However, the rebound in India’s overall car sales will get badly hampered by another lockdown especially in Maharashtra, which contributes to more than 20% of total Auto revenue. Already there are severe restrictions across the country and more could be possible.
The lockdown has made the market constricted and conservative. Mr.Shah is not very optimistic of a rebound so soon and the company will not be too indulgent for inducing growth. The company's vision is to get into ventures with digital startups that could grow into unicorns.
The company will not continue to bleed cash in loss-making companies. Its decision to sell its majority stake in Ssangyong Motor Co was a decision taken with this in mind.
The company’s priority would ensure that Mahindra’s Group business stays on track from a returns point of view.
The group could also be betting on electric vehicles as the new CEO sees them overtaking the ICE offerings by 2030. However, the EV SUV space could be getting congested, what with many offerings on offer, by 2030.
Flipkart partnership with Mahindra Logistics to Speed up EV deployment. This will see Flipkart's fast-track deployment of Electric Vehicles as part of its fleet. The company had launched its Electric Vehicle brand EDEL towards the end of 2020 in this regard.
Now, this has meant that Mahindra is now a vital aspect of the e-commerce industry. This would involve investments in creating infrastructure for charging stations and parking lots too. EDEL is presently operating in the metros of Bengaluru, Mumbai, Delhi, Pune, Kolkata, and Hyderabad. As the business grows, there is a potential to spread across in other cities and geographies too.
This could well a huge revenue and profit generator for the company. Mahindra will continue to look for cashing in on further cost-cutting measures as it improves its financials.
The company’s representative, Anish Shah, has asserted that the company's efforts over the past two quarters have reflected positively in their farms and agribusiness.
The automobile industry had seen a sluggish end in the last quarter of 2020.
The company will continue with its cost-effective measures for sustainability.
While the Pandemic has slowed things down everywhere, Mahindra wants to use this still period to understand the reasons for its decline even as it plots a revival; as it plans to regain its domineering position.
Mahindra Group is looking to reduce its losses to Rs. 300 crore by the end of the fiscal year 2022-23; even as it maintains its premium quality. The group had done very well with its international subsidiaries gaining massive profits but affected by the demand woes in the domestic market, due to the pandemic.
The new CEO has been asserting that the company will be expanding its focus in all aspects including digital services, marketing, and many other tech-related services.
The profit-making entities will now be getting sub-categorized according to their rates. This will help to eradicate the problem from the lower rate brackets, the new CEO asserted.
The company’s board has identified EV’s as a primary revenue booster, for the following two quarters. And Mahindra is also setting up a separate vertical to address the small four-wheelers for load transport, independent of the SUV. The company will also accelerate the research and development of EVs, especially in areas where the competition is perceived to be working. If all goes to plan, there could be Mahindra EVs by end of 2021.
The research and development in the EV space could give Mahindra a good brand positioning internationally too, in the forthcoming three to five years. Anish Shah would take over the reins to become the New Chief Executive Officer, and its vision to expand EVs will be on the floor starting from November. Mahindra Group will also then have a product which will be getting launched with Automobili Pininfarina – which will be one of the best electric cars in the world.