E-VEHICLES WON’T BRING QUICK GAINS, SAYS M&M’S PAWAN GOENKA

Mahindra & Mahindra (M&M), known for its utility vehicles (UVs), has seen competition surge, pulling down its market share. The company’s next bet is electric cars, but the government has dropped the plan of an electric vehicle (EV) policy. Managing Director PAWAN GOENKA tells Ajay Modi that a

100 per cent shift by 2030 is not possible and that EVs need to expand gradually. Edited excerpts:

Your passenger vehicle sales are growing at 5 per cent against the industry’s growth of 8 per cent. When will we see M&M grow in sync?

Every company aspires to grow higher than the industry. It finally comes down to the products that we have. This year, at least three products will be launched. Of these, two are in high volume segments — a sub-4 metre SUV and a 7-seater vehicle. We have a firm belief that in 2018 we will grow in line with the industry, if not higher.

Can M&M reclaim the lost market share in UVs?

You must not look at the UV segment growth in isolation. A lot of the growth is happening at the cost of passenger cars. At M&M, there is no passenger car, so we cannot say we will grow at the cost of cars. The market share for UV now does not have the same meaning as it did five-six years ago, because at that time UV was a niche segment. Those UVs were traditional off-road vehicles. Now, many of the so-called UVs are actually cars. It is almost becoming meaningless to talk about the UV market share. We hope to

become a clear first in UVs again.

Is one-tenth market share in the domestic PV market a possibility?

I think that is not unreasonable to talk about. Right now, we are about 7.7 per cent. We are a clear No.3, but there is a big gap between No.1 and No.2 and between No.2 and No.3.

What makes the farm equipment segment a bigger contributor to the company’s profits while being smaller in revenue?

Every industry has a different profitability benchmark. The farm equipment industry globally is more profitable than automotive. On the farm equipment side, we are higher than global profitability average and the same is the case in the automotive business.

Is the government’s decision to not bring an EV policy a dampener?

I do not think so. The government is now saying that other technologies will co-exist and it also wants to promote EVs. We know that shifting to 100 per cent EVs is not possible by 2030.

EVs attracted a lot of attention for a year but we do not see any significant traction among buyers. Do you agree?

I agree. I call 2017 as the year of EV talk. The year 2018 has to become a year of EV action. If 2018 does not see traction, all the interest will die. Nobody is going to keep pumping in money if volume does not pick up. We do not aim to see profitability, but at least volume must grow. We hope this year 1 per cent of PV sales become electric, and goes up to 2 per cent the next year and then 3 per cent and so on. If this happens, we can reach 13 per cent by 2030. No sudden magic will happen.

When we talk of electric cars for Ola and Uber, does range come as a limitation?

Yes. The ideal thing would be if they don’t require a fast charging during the day. That means the driver charges the vehicle at night and runs it for the day. In a city like Delhi or Mumbai, the required range is 200km on full charge. In a city like Nagpur, 140-150km is needed. Range is a function of price. If I put a more powerful battery, I can get higher range but cost goes up. Today, Ola and Uber would require a partial fast change during the day. If we can eliminate that, the electric car becomes very attractive for them.

What are the challenges of expanding the sales network? What will be the future direction?

Buying behaviour, especially among tech savvy buyers, has changed drastically. They don’t just want to know the basics of the car. They want to experience it. We have come up with a concept of digital showroom that will use virtual reality. With the real estate costs (going up), nobody can afford to open a new dealership in metro cities and make money. Bringing in digital technology into sales is the future. Our first such digital showroom will come up in Mumbai this year.