The Multix is not the message

The Multix is not the message

Roshini Josepherson and Prathyusha Rao

20 June 2020

India's first “Personal Utility Vehicle ”, the Multix was launched in June 2015. The Multix was designed to accommodate five people, to provide about 2,000 litres of luggage space, and to serve as a source of back-up electric power when needed [1]. As the very name suggested, the Multix was offered as a multi-purpose solution[2]: the 652 cc two-cylinder diesel engine / 4-speed manual transmission “extremely adaptable three-in-one solution ” was made available in two variants, the AX+ and MX, priced at INR 278,000 (~USD 4,365) and INR 341,000 (~USD 5,355).

By about March 2018, however, having sold a mere 3,000 units, the parent companies decided in favour of ceasing Multix production operations, and of shutting the company down. By May 2018, one of the parent companies Eicher Motors offered to absorb a portion of the workforce laid off from the closure[3].

Why did an apparently robust product brought out after 'extensive market research' not appeal to the market? Were the positioning and pricing to blame for the tepid market response? Was it too soon to decide on shutting down? Introduction

Eicher Polaris Pvt Ltd (EPPL) was incorporated in October 2012, as a privately-held limited liability company: a 50:50 joint venture between Eicher Motors Ltd (an Indian manufacturer of motorcycles and commercial vehicles) and Polaris Industries Inc., (an American manufacturer of motorcycles, snowmobiles, all terrain vehicles (ATV) and neighbourhood electric vehicles).The joint venture was constituted with the objective of manufacturing parts and accessories for motor vehicles and their engines and for designing, developing, manufacturing and selling a new range of personal vehicles suitable for India and other emerging markets'[4].

The parent companies decided to combine their research and development facilities and the joint venture company (EPPL) established a plant at Kukas, near Jaipur, Rajasthan. The Multix plant was situated at the same site where one of the parent companies, Eicher Motors Ltd., had set up a Royal Enfield manufacturing unit in 1999. The company moved the motorcycle production to its Chennai unit (in southern India) since the volume of production of these motorcycles were small[5]. Jaipur also formed part of the Delhi - Agra - Jaipur “tourist triangle ”and enjoyed superior road and rail connectivity.Air shipments could be routed through the Delhi International Airport and bulk cargo could be routed through the Mumbai port for ship based transport as necessary. In addition, the state of Rajasthan ranked 6thin India in the “Assessment of State Implementation of Business Reforms ” carried out by the World Bank in 2015 [6].The state continued to make efforts to attract investors by providing well- developed social, physical and industrial infrastructure, including reliable and adequate power supply as well as good Internet connectivity.

The Multix Product

Following extensive consumer surveys, EPPL designed and announced its first offering named the Multix, in June 2015, described as a “Personal Utility Vehicle ”. At the time of the launch, parent company Eicher Motors' Managing Director and Chief Executive Officer ( “MD & CEO ”) Mr. Siddhartha Lal claimed that EPPL had identified a large, untapped segment of about 58 million independent businessmen and that EPPL had committed itself to creating a new and strongly differentiated automotive solution for such independent businessmen through the 'Multix'[7]. A network of 30 dealerships was initially established and more dealerships were to be added as the company had planned to sell 60,000 units within the first year itself.

The body of the vehicle was constructed out of highly durable and damage resistant “FlexiTuff ” material which provided enhanced toughness and increased resistance to cracking. The Multix also had a tough tubular frame with a roll cage for added safety and protection ( “roll-over-protection-system ”). The car went through rigorous testing in both India and the U.S.and its 511cc diesel engine offered a mileage of more than 28km per litre and thus provided more value for money expended relative to comparable product options.It was available in two variants and in four colours and was priced upwards of Rs. 232,000 (ex-showroom Jaipur) [8]

. The Multix was designed as a small car for easy manoeuvring on congested Indian roads and yet powerful enough to double-up as a generator to light up homes or a small business. It was appreciated[9] forits independent suspension system and 225 mm of ground clearance to tackle potholed or flooded streets. It could transport 5 people in its dual cab facilities and had close to 2,000litres of luggage space, which collectively made it ideal for small families or businesses.

The Multix boasted of a unique feature known as the X-PORT which could be used as a generator to produce up to 3kW of power (using only 0.74 litres of diesel per hour) to light homes, and power professional equipment such as drilling machines, DJ systems, water pumps, and the like. The initial response across South India and the state of Uttar Pradesh was positive especially from Tier 2 and 3 cities. The Multix was promoted as "India's first personal utility vehicle", that was targeted at a new segment, the “independent businessmen aiming to fulfil multiple roles- personal mobility, family transport, goods transport ” and to serve as a “power generator ” [10]. The company hoped to target residents from rural and semi-urban areas routinely employing two-wheelers to ferry small loads over short distances. On receiving expressions of interest and positive reviews from many parts of the country, EPPL was keen to expand into the major cities and capture more of the Indian market share.

Writing for the automobile trading platform Carwale.com, Ninad Mirajgaonkar [11] had opined “It has been a while since a product has impressed me as the MultiX from Eicher Polaris joint venture. It may not be something that everyone will buy or even need, but it leaves a lasting impression with the ingenious innovation dedicated at solving problems. ” He then went on to conclude, “The Multix is a lot more than a car. It is a one stop solution that will be ideal in the rural markets ”.

A similar review by NDTV car and bike stressed on the vehicle's ability to multi-task, the quiet cabin and the fuel efficiency while highlighting the ground clearance and the smoothness of rides even on rugged terrain[12].

The company appointed Baba Automata as its distributor in Kathmandu, Nepal and by March 2017, flagged off its first lot of Multix vehicles abroad. EPPL claimed to be 'confident that it [the Multix] will act as an enabler to independent businessmen in Nepal'.[13] The company also announced plans to explore opportunities to export the Multix to Bangladesh, Guatemala and some African nations, listing these countries among 'potential markets for Multix, considering its utility and applications similar to those of the Indian markets.' [14]

Upgrade and Emissions compliance

Bharat Stage Emission Standards (BSES) were instituted by the Central Pollution Control Board (CPCB), instituted within the Ministry of Environment Forests and Climate. BS norms were introduced in Indiafor the first time in the year 2000, and Bharat Stage - IV (BS-IV) norms have been in place since April 2010.These standards set up by the emission norms instituted by the Government of India to regulate the output of air pollutants produced by engines including automobiles.BS-IV norms are slated to be replaced by more stringent BS-VI norms in the year 2020 [15] .In March 2016, EPPL rolled out its Bharath Stage-IV (BS-IV) - compliant Multix which was powered by a 650 cc, single cylinder, four stroke, direct-injected diesel engine. This was ahead of theEnvironment Pollution Control Authority's regulation deadline of 1st April 2016.[16]

The Multix was now made available in two variants i.e., AX+ and MX (AX+ with curb weight of 650kgs and MX with curb weight of 750kgs) and priced at Rs. 319,000 (ex-showroom, Delhi) and Rs 349,000 (ex-showroom, Delhi) respectively. The new variantsoffered improved fuel economy of 27 kilometres per litre of diesel which meant that the Multix's fuel efficiency and running costs were comparable to a conventional mass market two-wheeler.Later in the same year, the EPPL entered into a strategic agreement with the Bank of India to extend financing facilities to Multix customers[17]. By 2017, the number of dealerships had increased to 74 (with 25 more under development) and EPPL aimed at increasing the dealer network to 150 outlets by 2018.

Terminal Decline

The initial interest generated from the market could not be sustained and the subsequent sales performance was significantly lower than the company's expectations.As of 31 December 2017, Eicher Motors had invested INR 2,895 million in EPPL (50% of Rs.5,790 million / ~USD 91 million). In fiscal year April 2016-March 2017, EPPL had reported a net loss of INR 918.3 million. Market performance of the Multix continued to be weak in the months that followed.

In March 2018,within months of launching the upgraded variant of the Multix, the board resolved to dissolve the six year joint venture and to close down operations in India [18]. The company promisedits existing customers the sustained provision of spares and service support for the fleet of Multix vehicles on the road [19].

Stephen Jay Gould, in his essay “The Median isn't the message ”, describes his odyssey with mesothelioma. When diagnosed with the disease and estimated with the 8-month median survival for his condition, Gould delved deep into the statistics to glean any signs of hope. Fortunately, Gould survived another 20 years, and passed away from a different form of cancer [20]. 'The Median isn't the message' gives the warning that basing decisions on the means and medians of statistics provided by extensive and exhaustive market research may not always provide the predictable outcomes that we expect and that statistics in not infallible.

Where could have the EPPL gone wrong?

  • Sales, Production and Capacity
    Given the weak sales performance of the Multix (close to 1,000 in FYE March 2016, 1,640 units in FYE March 2017 and under 1,000 units in FYE March 2018), the plant's production capacity was nowhere near fully utilized [21]. In the statement announcing the dissolution, Eicher Motors had stated that “despite several initiatives, EPPL's performance could not be revived ”. It is not immediately apparent if the company had explored the possibility of redesigning the Multix itself, or of the surplus capacity for manufacturing other vehicles like ATVs which are a specialty of Polaris Inc.
  • New Markets
    The fortunes of the Multix remained largely untested in export markets though the company had proposed exportingto other markets ranging from neighbouring Nepal and Bangladesh, to far off Guatemala. The company did flag off a lot to Nepal after establishing a distributor in Kathmandu. However, there were no further disclosures with regard to exports or foreign markets.EPPL claimed that the Multix was targeted at independent business-men in India (after extensive research) but the company seems to be prepared to move into markets abroad based on the claims of potential interest generated in a few other developing countries citing its similarities in the targeted segment (independent business-men).
  • Project Risks and Longevity
    The Multix variant complying with the stronger emission norms was launched in June 2017. Yet, within months of launching the follow-on offering, thejoint venture partners had decided to cease production operations and to shut the plant down. EPPL's Multix was a new brand that tried to compete against decades-old and established brands in India- among both, two wheelers and four wheelers. This sort of new entrant,seeking to create a new market segment would generally take several years to establish itself and a dealer network to create a market presence.EPPL closed down in under 3 years after commencement of production.A brand new offering like the Multix, which was to create and definea new segment on its own would have been classified a riskier venture than a model entering an existing market segment.
  • Market Positioning
    The company could have drawn on, and benefited from, the positioning experience of the budget passenger car, (an affordable car which the markets viewed as the “poor man's car ”) the Nano from Tata Motors which had, to some extent, sought to upgrade two-wheeler users, and had met with similar market response. By the company's own pronouncements, the Multix fell within a new product category[22] at the intersection of goods carriers, passenger vehicles and mobile power generators “unique positioning and differentiated product features ”.
    “Multix represents our perceptiveness in understanding consumer requirements and keen interest in offering a solution that works for all. ”- Pankaj Dubey, CEO EPPL[23]
    Even as the company had sought to upgrade two-wheeler owners by focusing on the rural market [24], it is difficult to assess if the market viewed the Multix in this light. Perhaps the product offered a clutch of features that would individually appeal to different consumers, while all of the features collectively might have appealed to a significantly smaller market sub-segment.
  • Pricing
    Linked to the ambiguity in positioning is the question of pricing. Was it possible that the price of the Multix was benchmarked against two-wheelers, against passenger cars or against goods carriers - but not against a comparable product offering similar and multiple benefits? Sales volumes were low. It is not apparent if higher sales volumes at the same pricing would have helped the company amortize fixed costs of producing and selling the Multix. Could higher pricing have been associated with the superior value slated to be offered by the product? The extensive market research undertaken prior to the launch of the product might have shed light on these aspects of pricing and positioning.
  • Timing
    Was the Multix a product ahead of its times? Would the versatile and rugged Multix serve to manoeuvre narrow urban streets for applications such as food delivery better, perhaps even supporting refrigeration with the in-built power generation capacity?