M&M plans motorcycle foray

The 30,000-unit at Haridwar to start rolling out 100/125/150cc bikes by early 2008.

Utility vehicle maker Mahindra & Mahindra plans to set up a motorcycle assembly plant at Haridwar in Uttaranchal at an estimated investment of Rs 300-400 crore.

The 30,000-unit capacity plant was expected to start marketing 100 cc and 125/150 cc bikes by early 2008, said sources in M&M. The company is understood to have tied up with Chinese two-wheeler maker Lifan, which will supply the manufacturing technology.

The plant will be set up adjacent to M&M's three-wheeler facility in Haridwar, which was inaugurated in late 2005. The motorcycle plant will also make engines and critical components needed for two-wheelers.

The M&M stock today gained 1.43 per cent in a firm market to close at Rs 647.75 on the Bombay Stock Exchange, up from yesterday's close of Rs 638.60.

M&M is currently scouting for component makers for its bikes. It expects to sell 30,000-50,000 bikes in the first year after the launch. The motorcycles would be competitively priced, said M&M sources.

"M&M is currently conducting the final stages of prototype testing of its 100 and 125/150 cc motorcycles at its testing facility near Hyderabad. Soon, we will apply for certification with the Automotive Research Association of India (ARAI)," said M&M sources.

Prototype testing checks the riding credentials of a motorcycle in response to its engine and other critical components. Elements like fuel and component efficiency are judged by riding a motorcycle for more than a 1,000 km.

The entry of M&M is expected to shake up the existing motorcycle market dominated by Hero Honda, Bajaj and TVS. The size of the two-wheeler market in India currently is seven million, of which 4.5-5 million are cornered by motorcycles.

During the first 11 months of the current financial year, the combined market share of the top three players increased by 2.5 per cent to 85.39 per cent.