Lesson from Mahindra

#mahindrarise #scorpion #GlobalSUV #mrv

Leaders don’t follow the herd:

In 2009 when I started my career as GET in Mahindra the world was in a different place and so was the Indian auto sector. Indian auto sector was a small car market. It was dominated by one player Maruti. Every second car on the road was a Maruti. There was a huge clamour to enter the entry-level small car market capturing which was the ultimate quest for every automaker. Tatas launched its Nano, and Hyundai its Eon each trying to outsmart and corner the market focusing squarely on the car with the highest sales in Maruti Alto. That was the time world was licking its wounds and recuperating from the worst financial crisis after the great depression. The inflation in India was ever rising always in the double digit. In all this chaos I remember one voice that of an astute businessman-Mr. Anand Mahindra “Mahindra will never build a small car”. For a young automotive engineer, this seemed to be a complete disappointment. Retrospectively I understand this move was a master stroke. Mahindra would have sunk Crores of rupees in the pursuit of the small car market. It takes courage for a businessman to decide against an established belief. To swim against the current with investors clamouring for returns immediately, the world focused on the next shiny object. Anand Mahindra said, “Mahindra is a UV brand and will solely focus on UVs.”

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Not every rainbow has a magic pot at its end:

I used to think why Mahindra should miss the most happening space in the automotive industry the small car space. But within years I saw the failures of 3 brands built for targeting the small car market- Nano, Eon, and Datsun. In fact, in the last failure, I was a fellow traveller in the Renault Nissan flight which crash-landed with shuttering of the Datsun brand. I had a ring-side view of the efforts taken. So much time, energy, and intellectual capability were lost in the pursuit of the magic pot at the end of the small car rainbow. Vendors developed, plants erected, designs created, and unlimited design hours to develop low-cost cars. I remember one of my friends a metallurgist and steel expert called for by automotive brands across for value engineering workshops to reduce the cost & weight of steel consumed. Nobody cared about crashworthiness everybody was focused on low cost.

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If you have to take on Goliath you better have a very good sling:

?Counter-intuitively Mahindra was focused on building its engineering muscle. It was focused on the crashworthiness of its cars and better driving dynamics. Providing cars to the Indian market which are built for the global audience World SUV W201. In 2010 they sent XUV 5OO for crash testing in Australia. They built labs in Mahindra Research Valley worth thousands of crores for a small company like Mahindra it was a big bet. ?With labs and infrastructure matching global competitions whose revenues were 100 times higher than theirs. They established design centres in the UK, US to augment their engineering capabilities. There was no other Indian auto manufacturer that was building such engineering muscle power in that time frame. The other auto companies were collaborating with foreign partners to acquire the engineering capability. The foreign partner often pulled the plug, and the Indian companies were left gasping for survival competing with the same partner with whom they developed the product. On the other side of the spectrum were companies that were shelling out extraordinary amounts as royalties for acquiring know-how with research centres which were in distant parts of the world. While Mahindra kept building and upgrading to new technologies that wow customers with Indian capabilities. They built cars which are aspirational to Indians. While others were building tin cans with foreign engineering which saw India as a market and thought Indians didn’t deserve better. Today the Mahindra Research Valley where I was the first few Engineering trainees is the shrine for automobile technology. With this sling of MRV Mahindra is taking on global giants like Toyota etc.

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Conclusion

Today more than 50% of the Market share of the Indian auto market is UVs. Indians are aspirational and want the best safety, comfort, and features comparable to global cars, but they want it at Indian prices. Mahindra has captured more than 50% of the Indian UV market by revenues. Mahindra’s bets have paid off healthily though it was a bumpy ride. But the ride was worth it: with overflowing order books of lakhs. With cars coveted by enthusiasts and drivers across the world. With SUVs which make your jaw drop and shout value. With features which are first in class like ADAS. With cars which are extremely safe with a 5 Star GNCAP rating. I am proud to say Mahindra has done what Mr Anand Mahindra always used to say “Indians are Second to None”.

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The business lessons I learnt from this were enormous.

1.????Invest in innovation, you need to build engineering capability before you build a world-class product.

2.????Be as close to the customer as possible and look at their aspirations. Rather than treating them as your market from far away land. Don't just follow the herd.

3.????You need to take risks sometimes existential risks if you must win in the market competing with giants. There is no free lunch.