Mahindra offers VRS as two-wheeler sales fail to zoom

Indian automobile major Mahindra & Mahindra is restructuring its two-wheeler business after the division failed to meet its expectations, and has offered a voluntary retirement scheme to 250 workers in the process.

"It is one vertical which has not met expectations last year. We are currently in the process of deciding the way forward for our two-wheeler business," Mahindra & Mahindra executive director Pawan Goenka told reporters in New Delhi.

He did not share details, saying a formal announcement will be made in the next couple of months. "Volumes were not as we planned," he said.

On the implications of the restructuring, Goenka said, "We have right sized ...we have given VRS to 250 people."

When asked whether Mahindra will exit the two-wheeler business, which it had entered in 2008 after acquiring assets of what was then Kinetic Motorc Co, he said, "It is unlikely that we will exit."

In 2015-16, Mahindra Two Wheeler sales declined 12.7 per cent to 1,33,355 units.

This fiscal year, it has sold a total of 13,549 units in the April-May period, down 38.21 per cent from 21,930 units in the year-ago period.

The company's scooter sales were at 9,609 units in the April-May period, down 19.24 per cent from 11,899 units in the corresponding period a year ago.

Its motorcycle sales also declined 60.72 per cent to 3,940 units from 10,031 units in the corresponding period a year ago.

The company's scooters business has fared better with its models such as Gusto, Rodeo and Duro than the motorcycles segment, where it currently sell the Mojo and Centuro models.

Goenka said the company's plan is to focus on the Mojo motorcycle and the scooter models such as Gusto 125, which is doing reasonably well.

Commenting on M&M's other plans, he said currently the company is working with Italian design Pininfarina, which it had acquired last year to develop a new vehicle, without sharing details.

Pininfarina is also helping M&M's other products, including the compact SUV, TUV300.

On the preparations for the upgrading to BS VI emission norms from BS IV, Goenka said a total of 30 models, including variants of the company has to be upgraded and homologated with the per unit cost of it Rs95,000.

 He also said the company is working on development of petrol engines and by 2020 all the company's mainstream models will have petrol options.

On tractors, he said sales have grown owing to a good monsoon and the industry is likely to clock around 5.5 lakh units in the year.