New Delhi: Homegrown auto major Mahindra & Mahindra (M&M) is restructuring its two-wheeler business after the division failed to meet its expectations and has given voluntary retirement scheme to 250 workers as part of 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.
While he did not share details, Goenka further said: "A formal announcement will be made in the next couple of months."
Explaining the rationale behind taking such a step, he said: "Volumes were not as we planned." On the implications of the restructuring, Goenka said: "We have right sized...We have given VRS to 250 people."
When asked if Mahindra will exit the two-wheeler business, which it had entered in 2008 after acquiring assets of then Kinetic Motor Co, he said "It is unlikely that we will exit."
In 2015-16, Mahindra Two Wheeler saw sales declined by 12.7 percent at 133,355 units. So far this fiscal, it has sold a total of 13,549 units in the April-May period, down 38.21 percent 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 percent from 11,899 units in the same period last fiscal. Its motorcycle sales also declined by 60.72 percent to 3,940 units from 10,031 units in the same period last fiscal.
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 plans is to focus on the Mojo motorcycle and the scooter model 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 upgradation 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 at Rs 95,000. 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 tractor, 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.