M&M evaluating entry into two-wheeler segments

26 May 2008

Mumbai: Sports utility vehicles and tractor maker Mahindra &Mahindra (M&M)is reportedly seriously evaluating an entry into the low cost entry level two wheeler segment possibly with an eye on the rural market.

M&M has set up a separate team that will look at all aspects of the two-wheeler business - from research and development (R&D) activities as well as sales and marketing. Operations of the two-wheeler business will function independently.

While on the one hand M&M is said to be eyeing Kinetic Motors, which is desperately looking for a buyer for its languishing two wheelers business, the Mumbai based company has reportedly evinced interest in Italian bike manufacturer MV Agusta. The Italian company has been in financial trouble for some time due to low production and limited sales which has left it with no finances for new bike research and development. The owner of MV Agusta Claudio Castiglioni is said to be looking for potential investors / partners.

M&M has already bought a controlling stake in Italian automotive design house, Stile Bertone. A couple of years ago M&M was said to be in talks with Chinese bike maker Lifan for a possible tie up. According to sources, M&M had recently tested an entry level 100cc bike along with a premium 150-175cc cruiser---both bikes being from China.

On the face of it there may not be any immediate synergy between M&M and MV Augusta but with the market for entry level bikes tapering off in urban areas M&M could be looking at shifting focus to high end bikes for its urban markets.

M&M is also in the race for acquiring scooter maker Kinetic Motors. The acquisition will provide M&M with ready infrastructure as it will get an installed manufacturing facility with workforce, suppliers, a distribution network and sales outlets.