Let’s start with some hard facts.
- On 1 October 2022, Mahindra & Mahindra became the largest selling SUV manufacturer in India in both volume and revenue. The 270,000 strong booking list exceeded the company’s annual sales in FY22.
- Monthly volume has doubled, as has M&M’s share price, and capex has increased by 25% to keep pace with bookings.
- M&M’s EV company raised $250 million at a $9.1 billion valuation and plans to invest $1 billion to reach a sales target of 200,000 vehicles by 2027.
- It has tied up with Volkswagen for one million vehicle parts.
- And all this happened in just eighteen months.
- More than a dozen people ET spoke with agreed that focus, speed, flexibility, autonomy have been key defining factors in this transformation story.
- Flashback to April 2020: As Covid-19 sends India into a severe lockdown, Rajesh Jejurikar takes charge of both M&M’s farm and auto businesses.
- The flagship SUV business has been slipping — volumes fell 27% to 1.87 lakh in FY20, its fifth straight year of decline — with market share nearly halving to 13% in three years, as Newcomers MG and Kia took the field.
Just weeks before the lockdown, amid the Covid scare, Jejurikar decided to skip his tractor review meeting in North America and instead traveled to Chennai, Mahindra Research Valley – his SUV kitchen.
The agenda is to get a feel for the new Scorpio, XUV 700 and Thar — models that could make or break Mahindra’s future.
Jejurikar recalls that his first reaction to the three vehicles was “impressive” and the company had “winners on its hands”, but he was aware of the dark clouds hanging over his UV business.
Jejurikar and Pawan Goenka (former MD), the two architects who devised the turnaround plan with the first-generation Scorpio in 2000, are back on the drawing board with new MD Anish Shah. However, this time around Goenka was playing a supporting role, passing the baton to his younger colleagues. After weeks of deliberation, the verdict was delivered unanimously. M&M will bring its focus back to its core: authentic SUVs with an unforgettable presence and adventure-ready capabilities. It will go back to the lineup of disruptive products like the Scorpio, Bolero and XUV, and stay away from cars, flats and MPVs.
“We felt that these were the segments, where we had the right to win. This would help us become number one in the core SUV segment,” recalls Jejurikar.
As the first wave of CoVID-19 subsided, the new Mahindra Thar practically premiered on August 15, 2020 – perhaps the first major Covid baby.
Given the changeover from BS-IV to BS-VI, dealers hardly had any stock and M&M was eager to get the new Thar on the road as soon as possible. Meanwhile, bookings doubled to an expected 2,500 units per month due to online buzz. Given the broken supply chain, the waiting period quickly stretched to a year. Mahindra diversified its chip supply base, bought semiconductors from the open market, and used generic chips in some of its products to make up for the shortage. Along the way, the organization was also restructured, as Shah’s new capital allocation plan meant M&M exited its Ssangyong and Ford JVs.
Bazari came up again in Jejurikar. To begin with, Mahindra changed its visual identity for SUVs, and marketing and communication moved to the front. With a brand new logo and a sharper focus, M&M’s pushed digital marketing forward. “We went in with the mindset that if we were going to do presales, the marketing should be done by the launch date,” Jejurikar said. The buzz around the new XUV 700 and Scorpio N was created through short 30-40 second snackable videos on various digital platforms.
Backed by solid product and very aggressive pricing, the first 25,000 units of the XUV 700 were sold in 57 minutes and in the words of Anand Mahindra the first 25,000 units of the new Scorpio N “sold out in 60 seconds”.
Based on learnings and feedback from past slip-ups, Vijay Ramnakera, President, Automotive Business at M&M, says the new product range will have an added emphasis on disruptive innovation and technology with performance, design, refinement, sophistication. has been given.
The products should be at least on par and in most cases far better with a wider bouquet of options. “Customers recognized and saw the value, and you can see better performance since then,” Nakra added.
The new ED’s focus on creating space for different brands worked.
M&M is the only domestic brand successfully marketed to premium and luxury buyers.
People in the know say that Jejurikar was lucky to inherit the products developed by Goenka and R. Velaswamy (president, automotive technology and product development) but credited “their efficiency which delivered impressive results”. They go.
Nikanj Singhi, one of Mahindra’s oldest dealers, attributes the change to Jejurikar’s ability to read customers and the market. He points to the strategic calls to reduce the price of the XUV 300, rebrand the TUV 300 as Bolero Neo and replace it with the Scorpio Classic, which made an immediate impact in the market.
Singhi, who has dealt with several leaders in the past, described Jejurikar’s mantra as “lock in success first and then success will return profits”, as opposed to the cost-plus approach of the past. was
Along with rising consumer confidence, Shah’s strategic call to exit loss-making projects globally has been appreciated by shareholders. The loss of international subsidiaries was brought down to Rs 191 crore at the end of FY22 from Rs 3,429 crore at the end of FY20. Return on equity increased from 0.2 percent in FY20 to 14.8 percent at the end of FY22.
But then, there was M&M’s electric vehicle (EV) business, an entirely different ballgame about which skeptics remained, especially investors.
In 2021, Jejurikar restructured the EV organization by developing Last Mile Mobility as a separate division under Suman Mishra, while integrating EV with its core PV business.
Recognizing design as a key differentiator, Jejurikar brought on board Pratap Bose, a key architect of Tata Motors’ new design language. Bose will report directly to Jejuriker and was given a dedicated base in Oxfordshire UK to define the Clean Slate EV portfolio.
The G5 as they are called internally or the Group of Five – Veejay Ram Nakra, R Veluswamy, Rajeev Goel, CFO of the Auto Business, Vinod Sahay, President & Chief Purchasing Officer, and Pratap Bose Design Head have come up with an exciting Born EV. Started the drive. .
With bookings in the market maintaining momentum, with open bookings of 2.7 lakh, confidence is high within.
Jejurikar believes speed and agility were key in defining the EV blueprint. “Great autonomy” was extended to the lower levels and extended to just above Anish Shah’s level, which helped in quick decisions.
Instead of a “relay race” approach, M&M took a “parallel track” approach – with R&D, sourcing, design and engineering and finance all working together to get a quick go to market plan.
“Alignment of all functions was very important to move forward. It was not just about catching up but planning to jump ahead. We had to set up something that was big and bold,” said ED, who spent more than two decades at M&M. It has been a long time. The VW sourcing partnership was completed in less than 10 months and the fund infusion from British International Investment was closed in 3-4 months.
Jejurikars office or EA also wore a double hat as a product planner – with open access to all top managers. It ensured speed and agility in closing and escalating issues where needed.
Not one to follow templates, in this dynamic and evolving venture, “”Rajesh has managed all the stakeholders so well, none of the top managers feel that any of their needs are well served. Has not been done,” said one of the people who closely company.
The company engaged both internal and external consultants who were conducting an exercise in parallel to ensure that Mahindra was adopting the most futuristic solutions required of the time.
All this meant – the Volkswagen sourcing partnership was completed in less than 10 months and the British international investment closed in less than 3-4 months.
The grand vision for the EV was unveiled on August 15, 2022, exactly two years after the Thar’s unveiling date—underscoring the speed of M&M’s decision-making process.
Mahindra announced a billion dollar plan to invest in EVs and unveiled 5 electric SUVs under the all-new EV brand BE that will hit the roads over the next three years. and a one million vehicle parts deal by 2030 from European giant VW.
These EVs are not just meant to compete, but to keep up with Volkswagen’s latest generation MEB support system.
Thomas Schmall, a member of the board of management of Volkswagen AG, who signed the trade agreement in the UK, said, “I have never seen agreements pop up so quickly, as in our relationship, and I 30 years in the car business. I have seen the future of both companies and it comes to 24-25-26 in quick order.
Waiting for recovery
However, M&M’s faced supply challenges and customer frustration with long waiting periods.
Ravi Bhatia – President, JATO Dynamics India, says that smart marketing to make up for the scarcity factor led to large bookings in a constrained supply chain environment, which helped Mahindra maintain net pricing power. “What remains to be seen is whether this demand and prices can be sustained? Once supply improves.
Sanghi asserted that with improved supply the company needs to rethink its distribution strategy – with allocation heavily linked to bookings.
“There are multiple bookings, cancellations and sometimes a significant reduction in model waiting period on better supplies, the overall customer experience needs to be addressed at the dealership,” Singhi added.
So far, M&M has been able to maintain its differentiation, but the competitive landscape will only intensify as more choices emerge from the likes of Maruti-Toyota, Hyundai-Kia and Honda.
Not to forget its close rivalry with Tata Motors, especially on EVs, where the Nexon and Safari maker already has a considerable lead.
On the EV front too, it has only shown potential on paper, now it’s time to deliver on the roads, justifying the high prices.