Recently, Benelli announced its partnership with Hyderabad based Mahavir Auto after its split with DSK Moto Wheels for its India operations. Dante Bustos, chief marketing officer of Benelli Q.J and Vikas Jhabakh, director of the Mahavir Group tell us about Benelli’s plans for the Indian market, its aggressive expansion, setting up the company’s assembly unit in Telengana and the motorcycles lined-up for launch this year.
As told to Sirish Chandran
Can you talk us through the new developments at Benelli?
At the end of 2017, Geely Group had acquired a part of Qianjiang Motorcycle (a Chinese motorcycle manufacturing company, with more than 34 years of expertise). This is the company that acquired Benelli Motorcycles in 2008 from Italy. The Benelli name is retained and we have also incorporated a lot of capital investment for new models and technology. Last five years have been really fruitful; we have penetrated in more than 70 countries already. We are now developing and launching new models aggressively. Earlier we had 300cc twin cylinder engines and 600cc four-cylinder engines, which were successful (in several models). But now we have entered the market with 750cc twin cylinder engines and jumped to 900cc and 1000cc three-cylinder engines which will be equipped with new technology. We will soon have small displacement single cylinder engines with two and three spark plug technology, which will allow us to develop a lot of models for global markets, including India. All this is a result of ten years of engineering. The company now has 500 engineers working only in the engine department. The engine is the heart of the motorcycle, the most important part and this is the core technology, which is at the same time, made in China. That creates a lot of opportunities because we have good quality, high performance and low cost. So, it is a dream for any motor cycle company. It is the only Italian company acquired by Chinese.
You were talking about these large capacity 3-cylinder engines. Why not 4-cylinder?
I think there are fewer examples of four-cylinder engines globally, because the weight increases and at the same time they are more expensive to produce. I am not an engineering person to speak about that but what I have learnt from my own experience is that now technology permits to have much more power than a four-cylinder engine. So, this is the main reason.
You also talked about expanding to new markets. What are the major markets that you have expanded to, apart from India?
We have achieved success in all Asian countries including Thailand, Malaysia and China. This is the second year for us in Malaysia, co-operating with a successful local company. Last year we sold 30,000 units in the small displacement category. When your brand is becoming popular and when you become successful, the top motorcycle companies want to partner with you. When you are not, nobody wants to work with you and so on. So, this is a piece of sample that how the successful models have started to make Benelli more important in the market and this opens a lot of doors for us.
You said that now that Benelli is part of the Geely Group. Why did you decide to partner with another player in India and not come on your own?
We never go on our own to any market, because we believe, for success, you need to have a joint venture. We have experience of our own 100 per cent subsidiaries and it hasn’t really been great. We have subsidiaries in Spain, Italy and Venezuela. We feel that the JV business model is more workable and thus we work with local people.
You were talking about your new product range. What are the new highlights?
We are focusing on the 500cc segment and now we have started with the on-road and off-road Leoncino and TRK together. This is our main target; our goal is to target this segment first. We want to strive in this segment and we feel India to be the best place at the moment as compared to Europe, because a 500cc motorcycle is quite large here. We think we can be leaders in the 500cc segment. So, we want to maximize this potential to be the first one to really develop this market. From the past, we have the experience of 300cc segment and now we are working to update the 300cc to 400cc, perhaps 380cc-400cc twin cylinder engines. But it is difficult to compete with a low displacement product line with the local players in India.
Which motorcycle do you expect to do well in India? and Europe?
I will give you my personal opinion. I think TRK would be a hit in India for two reasons. First, we have a lot of prospective buyers, who are waiting for an affordable, adventure bike – with more than 30-40hp on tap, for off roading. For a little bit more than what you pay for a small displacement 300cc like for example, the G 310 GS, you can have a 500cc bike. You can have more capacity, better design, more response and better stability because the weight of the motorcycle is also more. So, in this segment, this is the best, motorcycle in the whole world, at this moment. It offers the best balance between price, performance, design and is the perfect bike in my opinion. A successful story in my opinion would be selling nothing less than 1000 units a month. But we are realistic. We want to go step by step and we need to be sure that we have an established network; we need to ensure that we have the spare parts and after sale. So, what we are planning to do in India is something unique. We are trying to convince our network to convert from the traditional store to a pitstop place, where you can meet with the riders to have coffee and make friends. If we can connect all the dealerships with a little bit more technology and connectivity, we use the free space in the shops instead of the warehouse, make hangout joints, showers, washing room for motorcycles and give the riders a full package for ready-to-go travelling. Before we pitch for motorcycles, we want to sell the experience. Motorcycle is just a part of it. We cannot continue doing what we have been doing in the past. We are responsible now to offer the consumers the full experience. We have a young management here with the same idea, vision, energy and we have seniors from DSK with experience like Krishna and other guys in after sales and manufacturing. We have an amazing team. We are like free horses now, running and more aggressive with a clear vision of our future about what we want here.
How did you come up with the idea of partnering with Mahavir Group?
It was very easy. First, we needed people with experience of more than three years and secondly, we had to make a fast decision. We have known Mahavir Group for a long time and we have many other dealerships so the decision was easy. We considered their previous experience the car industry and it was honestly perfect. It is not that easy.
Did you have other expressions of interest from other Indian parties?
Vikas, your group has experience in car dealerships and Benelli. From a dealer to a manufacturer, it is a big step. What made you take this step?
It is a huge step for us and we are very happy to take it. Just to stress a little more, as a dealership and as Mahavir Group, we have been around for 30 years. My father Mr. Yashwant started the company 30 years back and he is still the chairman of the group. We have been associated with a lot of brands in the country including Mercedes-Benz, Skoda and Isuzu. Our relationship with Mercedes-Benz and Skoda is 22 years and 18 years old, respectively. We were the first dealers in the country for Isuzu. Our relationship with them has been for so long that we have seen the brands grow in India and we have grown with them. My father and me had the opportunity to work very closely with our manufacturers on various policy making decisions, pricing decisions like what car to bring and what customers to go after and how to expand the footprint in India. This experience that we have had has given us a lot of insight into what are the difficulties and challenges the manufacturers face, what kind of decisions they need to make and how quickly they adapt to the changing market. A lot of that experience helps us tremendously, now that we have been given the responsibility of Benelli.
What are the plans for Benelli in India now?
(Vikas): We had a very large development recently with respect to Benelli and its future in India. We signed an MoU with the government of Telangana, committing to India about Benelli’s future. The arrangement works in two phases. In first phase, as their partners in India, we will be setting up an assembly line in Hyderabad which will be spread over approximately 3 acres. The plant is already under development and it should be ready to roll out the first bike as early as October this year. The plant at full capacity can make (assemble) close to 10,000 bikes a year. We believe that at least for the short term, this is going to be enough to take care of the demand in India. We are capable of assembling all the variants here in this plant but what is more important is that Benelli is going to start working with a task force along with some people in our team over here to figure out a more permanent entry into India.
This task force is going to be working on various issues such as localisation and doing a feasibility study of more investments coming in from Benelli entering India through a joint venture. They are exploring many opportunities here; they are looking at building a manufacturing, R&D hub here in India itself. They are also looking at possibilities of bringing certain auto component manufacturers from China and other places to India, because a lot of them are already suppliers to Benelli. They are also well aware of the expertise that currently exists in the auto manufacturing space in India. They are also aware of the engineers who are available. So, a lot of study will happen over the next 12-18 months to help decide the scale of entry whether it is manufacturing or manufacturing and R&D and things like that.
So, what happens to Mahavir and the partnership?
The joint venture is with us and like he said, Benelli intends to enter countries along with a local partner over there and in the JV also we will be the local partner, obviously depending on how big the investment is. The nature of the JV will be discussed at a later date as that hasn’t been discussed yet. But the way I see it is, we bring certain skill sets to the table, we know the market, we have good relations with the government and customers. They bring tremendous value to the table as they have manufacturing, R&D expertise and I think together, we make a complete team. We will be acting as the support system for all the on-ground activities with them, help them set up and run the plant. As of now the partnership is agreed upon with distribution right Mahavir and Benelli, and we are the official India importers. In phase two this moves into a JV where they start investing money into our facility.
The volumes come from small capacity motorcycles and scooters. Does Benelli have any plans for making scooters in India.?
We have had a meeting in Italy and in China where we discussed that we need to have more development for the scooter range. It will take not less than 2 years for us to react. So, we will concentrate on the big bikes until then. But what we think is, in the next 5 years the market will be more mature. People who ride 200cc today will jump to 300cc in 2 years or 500cc in 5 years. We are the specialists in 300cc and 500cc motorcycles, so we want to be there when the riders want to upgrade and look for something better.
What is the USP of Benelli?
We don’t have a fixed positioning, because we believe that different models need different positioning. What is TRK? It is the best combination between price, performance, design and ability. We are the top in the 500cc segment now. In terms of scooters, we are not the best and can’t position ourselves as the top player because at this moment. We are very aggressive in development though, more aggressive than any other brand in the world.
More aggressive than Honda?
Yes, in terms of development. Last year in EICMA, you could see how many bikes and engines we are proposing in the next 2-3 years. The speed would be more realistic from next year. Next year Benelli will enter many different segments. The key is going up gradually, and improve our network and brand communication. We are not worried about volumes.
When would the TRK come to India?
We plan to launch it this year; by November. It would depend on operations related to homologation, testing etc.
What about the Leoncino?
We are planning to launch both of them together
What do the dealers have to sell now?
Honestly nothing, right now we have not re-entered the market with any models. Because of the change in management, we have gone through the process of homologation all over again which was critical because without the necessary safety checks we cannot take the risk of putting bikes back on the road. We will introduce 3 bikes at first, the 300, 302 and the 600i by October. We have met all our partners one on one, they are very important to our success and are an extension of us at the customer level. We shared with them the current situation and what’s going to happen in the next one year and our long-term vision. We are supporting the network to stay open until the bikes come in. The dealers are taking on a cost to keep the brand alive; this loyalty is going to be paid back over time to them so that they don’t take on the financial burden all by themselves. They also feel that Benelli is the brand that they want to be associated with in the long run.
How many of the dealers are willing to continue?
90 per cent have continued, so there are about 18-19 dealers.
What happens to the existing bikes, in terms of service and warranties?
Spare parts supply to all dealers started last month, flown in to Hyderabad, and all dealers now have spare parts. Backlogs are getting erased and operations will be ready soon. All warranties, RSA and promises made to the customer will be kept and will be delivered. The customer is an asset that we have thrived upon in India for the last three years.
What is Benelli’s stand on electric mobility?
In Europe, we have already started the E-bike, an electric bicycle and are also working hard on the bicycle segment, such as mountain bikes, road and urban bikes. Honestly, we don’t think it’s the same channel so we are considering this as a second step.
Is Benelli into racing, or any plans to get into it?
No, but we have plans to start with Moto3. We still need to capitalize on the distribution network worldwide and make sure that the platforms are ready. So, when we invest in racing, we can capitalise well and get marketing benefits. Benelli global is a very young team now; this is something that needs to be considered
By April next year, how many bikes has Benelli planned to launch?
The plan is to launch seven new models until the end of next year, TRK on and off-road, Leoncino on and off-road, TRK 250/300 (either single or two cylinder), Leoncino 250/300, facelifted TNT300 by end of this year, Imperiale 400/500 by the second half of next year. If we are lucky, a new version of Leoncino Sport will also be launched. So, it’s close to 12 bikes, considering the face lifted 302 R.
Is the Imperiale being designed for India? Are there any inputs from India?
The product is 100% developed for India, we have also taken ideas from other bikes as a heritage and we plan to launch a brand ‘Imperiale’. We want to launch a complete experience of the Imperiale, not just the motorcycle.
How will you position it against the Royal Enfields?
I cannot tell you how the Royal Enfields engines are, but the Benelli Imperiale’s engines will be high performance yet cost effective.
How will you lure customers to buy a Benelli instead of a Royal Enfield?
We will offer the Italian heritage; we will not offer an ‘India’ (British actually) look and feel. We developed the product for India but we will provide the style of an Italian motorcycle.
So, the whole plan for the manufacturing and exploring of setting up a plant is for the Imperiale?
We cannot confirm right now, but we think it is possible that the Imperiale will be the first motorcycle to be manufactured in India by Benelli and exported to other countries.