“This has been in the works for a while. If you recall what Anand Mahindra said, the ownership (model) is out and shared mobility is the new reality,” says Harish Bijoor, founder, Harish Bijoor Consults. The reference is to the time when the Mahindra group chairman had spoken of the challenges ahead in vehicle ownership especially with the younger generation.
The Meru move is also in sync with the company’s renewed mobility priorities which include picking up a stake in Zoomcar in 2018, launching premium e-mobility service Glyd, or merging its SmartShift business in Porter to grab a bigger slice of the logistics business. M&M clearly believes that the new flush of consumers no longer believes in owning an asset, but sees mobility as a service.
“There is no denying that the new generation, Gen-Z, millennials are not looking at ownership models. They are looking to hire, use-when-required. For Mahindra, it is a simple understanding that people will look to rent more cars over time,” says Kiran Khalap, co-founder, Chlorophyll Brand Consultancy who had also closely worked with Meru during its launch.
As he reiterates, it is an established brand which was doing well till Uber and Ola came along. At the time of its launch, Meru was the “finest brand that there was” which saw the company hire “the best trainers” from Germany to put its own chauffeurs through the drill.
“We know the kind of work that has gone into making not just a product brand but as a service brand in terms of driver behaviour. Even today, of all the brands that are out there, the Meru driver speaks the least,” says Khalap.
In his view, M&M is only too aware that the business of owned cars has limited scope. “I do not think it will completely vanish; people will continue to buy cars in India especially when aspiration levels are still high. However, the top-end will see churn with the newer generation saying let me hire mobility, homes, furniture, clothes,” he adds.
Giving what the customer wants
To that extent, M&M is “future-proofing its own business” where mobility is no longer just about manufacturing but making available what the customer wants.
Bijoor echoes these sentiments and reiterates that the company has taken a smart decision. “If I was in Mahindra’s seat, I would simply say ‘Listen, I make cars, I can sell them either directly to the consumer (B2C) or to another business which is a Meru (B2B2C segment),” he elaborates.
According to Bijoor, this is “classical marketing at play” where there is a product, Mahindra, at one end and service at the other in the form of Meru. “M&M wants to play not only the product but also the service because there is a certain joy in captivity.”
In his view, the “beauty of this buyout” lies in the fact that the company is not buying an Ola, which is much bigger. or an Uber, which is classier, but a greenfield enterprise in Meru. “They can change it the way they want it. This is personally a great thing to do — to buy somebody who is not yet rigid in the market with a particular mindset,” says Bijoor.
It’s classic blue sky thinking, the art of finding completely new ideas, where “I am buying into a third player like that and I can do exactly what I want to do with it and there is no image issue. And I can be a captive service provider”.
As Khalap declares, “No single brand can create a social trend; what every brand needs to do is to make sure that it rides the social trend correctly. It is a way of making sure that your brand remains relevant in the future.”
(This article first appeared on autocarpro.in)