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Mahindra brand awareness key as Australian sales grow

Growing pains: The recently launched XUV500 Petrol will play a significant role in raising awareness of the Mahindra brand in Australia.

New product, dealer expansion, community work to increase Mahindra Australia sales

5 Mar 2018

MAHINDRA Automotive Australia (MAA) has prioritised brand awareness over sales volume as it looks to expand its local automotive operation with better product, a larger dealer network and a community focus.

Speaking to journalists at the national media launch of the XUV500 Petrol last week in Gold Coast, Mahindra and Mahindra Limited chief of international operations Arvind Mathew provided a frank assessment of the brand’s prospects on an Australian and global level.

“Work has to be done, and the work that has be done is all around product, it’s all around branding, it’s making sure that we’re a well-known organisation globally – not just for automotive, but for Tech Mahindra (and) Aerospace,” he said.

Specifically, Mr Mathew cited Mahindra Group chairman Anand Mahindra’s goal of becoming a globally admired brand by 2021 as a significant challenge, particularly in Australia.

“It’s a very slow and steady game – you just keep playing. Do tractors, do commercial vehicles, build your brand, build your awareness and then start slowly bringing in SUVs,” he said.

“It’s a long play. It’s not just something you can come with a bunch of advertising and great pricing and try and get volume – it doesn’t work like that.

“We’re here to stay. It’s been a long journey, but we’re clearly invested. We will continue to invest more product will come out – whether it’s automotive or farm – we believe that you’ve got to keep investing in the country.”

MAA does a brand survey each year, featuring a sample size of 1000 people from an even split of urban and country backgrounds, with two questions asked: ‘Have you heard of Mahindra?’ and ‘What does Mahindra make?’

According to the survey results, brand awareness has grown in each of the past three years, including up 18 per cent in 2016, up 98 per cent in 2017 and up 153 per cent in 2018.

MAA national manager Mahesh Kaskar stressed the local arm will not chase sales volume for success, instead preferring to further build the brand’s image in line with Mr Mahindra’s vision.

“Volume is just one part of measuring success,” he said. “We would like to be known as a tough brand, whose customers are more loyal to this brand than any other emerging brand, and that’s where we will invest our marketing and other resources.

“We’d like to make the customer experience unique, so when they’re with Mahindra, they must feel ‘wow, I would not have thought they’d be that responsive’ and ‘they’re so good’ – that’s the expectation which we carry for this market.”

For this reason, customer referrals are key to growing the brand, as demonstrated in Chile where an increase in sales volume came as a direct result.

Nevertheless, MAA is still aspiring to sell 3000 to 5000 SUVs annually by 2020, with the XUV500 and a forthcoming small SUV, and possibly the Scorpio (see separate story), to account for these sales.

Mr Kaskar said that MAA’s LCV sales have been restricted by the lack of an automatic option, but that will soon be corrected with the self-shifting Pik-Up introduced next year, opening the brand up to more buyers.

Despite the growth of SUVs outpacing that of LCVs, he added that 5000 LCV sales annually by 2020 is not out of the question, especially given Mahindra’s no-nonsense and budget-friendly focus.

MAA predicts that if it achieves automotive sales between 8000 to 10,000 units by 2020, it will be among the top 15 to 20 brands in new-vehicle sales – an ambitious goal by its own admission.

Reflecting on MAA’s 2017 sales performance, Mr Kaskar explained that several factors meant results were not ideal, but they helped prepare the company for its future.

“Sales-wise, we had a transition period last year because we planned to come out of the existing Pik-Up, as well as the Genio and the diesel XUV500,” he said.

“In terms of volume, it was a rough year. Having said that, we are well set for the future. Now the dealer network is quite ready to take on the new Pik-Up and XUV500.

“We are here to stay. We are not looking for a one-year performance, we are looking for a long-term stay in Australia.”

Currently, the Genio is in run-out, with the facelifted Pik-Up to carry the LCV load by itself after stock of the former dries up in about six months.

The decision to axe the Genio was made because sales volumes were too low, while XUV500 Diesel will be discontinued due to buyer preference for petrol SUVs, such as the newly introduced XUV500 Petrol.

While MAA does not provide monthly sales figures to the Federal Chamber of Automotive Industries (FCAI) and its VFACTS database, Mr Kaskar confirmed its 2017 performance was impacted by dealerships clearing existing stock and the transition from Euro4 to Euro5 emissions standards that prevented old product from being imported.

Currently, Mahindra has 90 dealerships nationally – including automotive and agricultural – and 5000 to 6000 current customers. Around 40 of these dealerships sell automotive products, while the other 50 are exclusively agricultural.

MAA plans to have 80 automotive dealerships by 2020 – thus, doubling the current number in just two years. Some of these dealerships will be standalone, while others will be multi-franchise.

While its dealership focus has been rural, MAA would like to expand into more urban areas, but that will likely take place after 2020 when more appropriate product for those customers is available.

However, 40 to 50 per cent of current sales in each state is skewed towards LCVs, so rural customers will still remain a focus in the future.

Community investment will also play a key role in growing the brand, with several projects already falling under the Mahinda Community Program banner, including police, ambulance, school and hospital initiatives.

“We strongly believe in giving back to the community,” Mr Mathew said. “As a very diverse organisation, we have 45 different initiatives that we spend money on (globally), and the money (spent) is $AU20 million annually.”

Entering Australian market in 2005, MAA has steadily grown since its inception, with a boost in brand awareness coming thanks to the ambassadorship of former Australian test cricketer Matthew Hayden from 2015 onwards.

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