UM entered the Indian market more than 2 years back and has made its presence felt in the affordable cruiser segment. We spoke to Rajeev Mishra, the CEO of UM Lohia Two Wheelers Pvt. Ltd. as he gives an insight regarding the company’s future plans and a few perceptions which surround UM. Here’s the full interview:
xBhp: What are the difficulties that you faced as a start-up?
Rajeev Mishra: I think we have gained a lot of ground and yes, as a start-up there are many issues which come up. One of them is that a new company faces the problem of localisation. That is to get into the local market and try to get the local component. There is a cartel and it doesn’t favour the new entrant in the market and that’s why we struggled a lot. Second issue is attracting new talent to a new company. For a start-up getting new talent is also a big challenge. And third, automotive industry is highly competitive. Every manufacturer has created a wall against them and the walls are very strong. So, going and hitting it directly and getting across that, is also a challenge. In other terms, I see that as an opportunity since a lot of new players were trying to get in and the big players were trying to consolidate and when consolidation happens, there’s always opportunity for the new players. Now the challenges remain there but still we have covered a lot of ground in the last two and a half years and this year is going to be a challenging and rewarding one for us.
xBhp: What is the level of localisation that you have achieved?
Rajeev Mishra:We started with almost 40% localization because that was the key to success in the Indian market because every customer wants an economical bike. In last two years we have achieved almost 70% of localization. The remaining 30% is what we are trying to localize in this financial year and probably by the end of November-December, we’ll manage another 20-25%. So by end of this financial year our target is to localize almost 100%. As you are aware that we are putting up another engine plant so that will certainly help us achieve our goal.
xBhp: India is predominantly a commuter centric market so what brought you to India?
Rajeev Mishra: India is still a commuter centric market and it will remain a commuter centric market because 50% of India still lives in Bharat. India is growing but at the same time, Bharat is growing. That gap will fade with time but for the next 5-7 years, I think that that segment will dominate. Today it is almost at 68%. Being an American brand, cruisers are our DNA and that is why we wanted to come to India with. In India that segment is not very crowded. It is quite open and there are only one or two players and that too particularly in the mid-segment which is below 300cc-350cc or below Rs. 2 lakhs. So we saw an opportunity of getting into that segment and create a niche for ourselves. That is how we entered in that market. Commuter market is highly competitive and I’d say is led by only one or two players. I mean if you look at the 100-125cc or 150cc segment, it is highly skewed towards one or two brands. So getting into that market was too difficult. We also found that the cruiser market is growing at a very healthy rate of around 27% and the commuter segment is seeing this negative growth for the last couple of years which will probably continue for the next 2-3 years. So the healthy growth of the cruiser segment and the lack of too many competitors in that segment ensured low entry barrier. And thus, we chose to be in that segment.
xBhp: What’s the head count in UM India as of now and how do you plan to expand?
Rajeev Mishra: As a group we have close to 500 people working for us. I mean that includes our plant and R&D operations plus the sales and marketing group. Moving forward I think as we will add a few more products in the coming days our head count will grow. With the addition of the engine plant, I think the headcount should move up; close to a 1000 members in a year’s time.
xBhp: What kind of support do you expect from the govt. and what kind of support are you willing to lend them in order to make the industry grow?
Rajeev Mishra: See, we are a part of the movement which the govt. started four years back; Make in India. As I said, 80% of localization was our aim from the very first day and that shows our commitment to be there as a part of the make in India campaign in order to support the govt. And 100% localization, which is our target, is also helping us present ourselves in the market with the Make in India concept more profoundly. However, the govt. has been trying to incentivize the auto industry. With GST, a lot of things have eased out but still, higher GST slab is a deterrent and I think moving forward the govt. needs to look at that. Mobility is still an issue in India and a last mile connection is still a big problem especially in the rural market and smaller market. So a lot of connectivity is needed and the mobility has to grow. If this industry needs to grow, support from the govt. is paramount. And for a company like us or any other company for instance, giving benefits to the consumer or consumer affordability would be key and with that perspective I think reducing the slab of GST would be a big gain. Another thing is opening up the market especially of component manufacturing. In that, we still have closed operations and that happens because of high taxation and low access to the far-end technology. Govt. needs to promote R&D and give incentives to promote R&D. With this, I think this industry can grow further.
xBhp: How do you differentiate from your products being perceived as Chinese?
Rajeev Mishra: I don’t think our products are perceived to be Chinese. It is propaganda of a few of our competitors and probably the people who have a vested interest in talking about us being Chinese. Because I don’t think any product in India, any automobile product, forget us, any automobile product is there which doesn’t have a certain percent of Chinese component, be it BMW, be it Harley-Davidson or any other brand. So having some components sourced from China doesn’t make you a Chinese company. So I rebut the belief that people perceive us as Chinese very strongly. In the last 1 year we have sold almost 13000 bikes which are much higher than many other competitors, who are more ‘Indian’. According to that, I think we are more Indian than any other Indian brand. Second, yes there is a certain percent of component that we source from China and that is a trade in automobile industry. Everybody does that because it’s cost effective and if you have to manufacture a product which is cost effective, which is affordable, you try to source from where you can get the components at a good price. And a certain percentage, the 10-12% of the component which comes from China makes more sense and in future also, we will be sourcing from China and when it comes to quality, I mean all the big brands exist in China. It’s not like China doesn’t make BMWs or China doesn’t make Harley-Davidson or China doesn’t make good bikes, so component base available are of high quality and that is what we have been evolved into. I think everybody is buying one or the other component from there. So that doesn’t make us Chinese. Therefore, I don’t believe that we are perceived to be Chinese.
xBhp: How are you planning to ensure a wider dealership and service network for UM?
Rajeev Mishra: We started with a few number of dealerships because we wanted to get into the bigger cities first, that is, the state capitals and metro cities. But as we moved forward, we started towards the Tier II and Tier III cities and today we have 80 dealers across the country and in the next 3 months we’ll probably reach a 100. All our dealerships are 3S dealerships i.e. Sales, Service and Spares facilities are available at the dealerships. In future, these 100 dealers will start opening up their branches which will have a service and spare facility. So by the year end I assume that we’ll have at least 300-400 touch-points where customers can go and get the service. It was a challenge before like, if you buy a UM product in Delhi and you live 100-150 kms away, you don’t have a service facility. But we are creating touch-points along with our dealers to provide the service across the nation and by end of this financial year; we’ll have 300-400 such touch-points. Almost every Tier II and Tier III town will be covered in the next one year.
xBhp: Is UM looking at any other segments in India?
Rajeev Mishra: Not as of now, other than electric that we launched in Auto Expo 2018. Electric is going to be the future. But even in electric, we are getting in the cruiser segment. So user per se, we’ll probably remain in the cruiser segment and whatever products we have planned to launch in the future, will remain in the cruiser segment. So in next 3 years I don’t think we have any plan to divert or veer away from our plan to be in the cruiser segment be it gasoline or be it some other alternative fuel.
xBhp: Does that mean some any new models are already in the pipeline?
Rajeev Mishra: Yes. As we declared and displayed in Auto Expo 2018, we are going to launch 220cc-230cc bike called Duty, which is a smart city commuter cruiser bike. It is to be launched before the festive season starts; sometime in September. It will have two variant; one is the cafe racer version and other is the cruiser version. So these two products are to be launched this year and then we have some lined up for the next year as well.
