Eicher Motors Shuts Joint Venture with Polaris

Motorcycle maker Eicher Motors Ltd. (EML) on Monday is immediately calling off operations of its joint venture with powersports vehicle group Polaris Industries Inc., as subsequent sales performance slowed after initially gaining significant attention from customers.

EML stated that talks of the implementation of the closure of Eicher Polaris Pvt. Ltd. (EPPL), the same venture that introduced India’s first personal utility vehicle Multix, are expected to take place in the coming days.

The company will engage with its stakeholders, including customers, suppliers, employees, and channel partners to instigate the shutdown.  

EPPL was formed in October 2012 and launched the Multix model in June 2015. The mini-truck at first garnered success, but its sales weakened in the following years.

Despite a number of initiatives, performance of the combined entity remained slower than EML’s expectations, pushing the New Delhi-based group to shut its operations down. The decision was made by EPPL’s board during a meeting held on March 9.

EML said EPPL will continue to provide spares and service support for the existing fleet of Multix vehicles on the road.

During the year ended March 31, EPPL reported a net loss of ₹918.3 million ($14.13 million), while EML had invested ₹2.90 billion ($44.60 million) in the venture as of December 31.

As both EML and Polaris appeared to be going on their separate ways, production of Multix might be inevitably discontinued from the Indian market. The 3-in-1 vehicle was intended for independent businessmen in smaller cities and towns.

Shares of EML were up 1.2 percent to ₹28,316.90, following the announcement.

EML’s Successful Run in the Motorcycle Space

The shutdown is probably one of the rare drawbacks for a company that has been having a very good run in the motorcycle industry, with its affiliate Royal Enfield and its joint venture for commercial vehicle (CV) with Swedish automaker Volvo Cars being amongst the successful CV business in India.

Sales of Royal Enfield have risen from under 50,000 units in 2010 to about ₹7.53 million in 2017.

The motorcycle maker also confirmed in the previous week that it is planning to create an electric two-wheeler platform for the Indian market, but further details, such as the timeframe, were not specified.

Royal Enfield president Rudratej Singh said there was no indicative timeline for the development and said not to expect a production bike before 2020.

After a weak response to its Himalayan and Continental GT model, further volume growth for the company might have to depend on the success of its recently launched Thunderbird 350X and 500X.

Meanwhile, Volvo Eicher Commercial Vehicles (VECV) reported a 25 percent year-on-year sales volume growth in February 2018.

The venture was able to sell 6,889 vehicles in the prior month, adding 25 percent from the 5,499 recorded in the same period last year.  

HQBroker is here to give you a daily news roundup about the forex, commodities, technologies, automobiles, and economies. You can open an account now and make yourself updated with essential news in the market. Share your thoughts and experiences with us by commenting your HQBroker reviews.