November 16, 2023

The Rise and Fall of LML: India's 2nd Scooter Giant Falters

 You must know about this legend if you were also born in the 90s like me or even earlier than that. This scooter was used to carry both people and heavy luggage and it used to have a very strong body. If this scooter crashed in TATA Punch, even that could also break isn't it too much that LML NV and Bajaj Chetak used to be rivals at one time? Just like Mahindra Scorpio and TATA Safari with the changing times, Bajaj Chetak was discontinued. But the complete brand LML was closed you might get amused after knowing that. During the early 2000s, LML was the second biggest scooter manufacturer in India. 

LML | IndustryInsider | LMLFailure | Scooter | Indian scooter |1985

However, in 2017, LML was discontinued because of too many losses. I know, these scooters had superb engines these scooters used to have exceptional build quality and these scooters used to come with a classic design just like Vespa they used to look wonderful. But if the scooters manufactured by LML were so wonderful Why did the company have to close its operations? If we look on the other side, The other Indian two-wheeler companies have become the biggest two-wheeler brands in the world Bajaj, Hero, and TVS.

How did they do so? 

In this article, let's understand this two-wheeler brand's business case study and get the answer to this question in detail. The primary business of Lohia Machinery Limited, LML revolves around Finished Leather Goods and Synthetic Yarns, and this company was established in the year 1972 In Kanpur, Uttar Pradesh. LML was focussing on its primary business and was also trying to enter more businesses, the other business in which LML was involved was the manufacturing of sophisticated machinery. These machineries were used in the fiber industry Like crimping machines, row texturing machines, Assembly Twisting Machines, screen printing Claridges, up, Twisting Machines, and more machines like these.

Name Behind LML

The company was also named Lohia Machinery Limited because it was involved in the manufacturing of Machinery, the machinery manufactured by LML used to have exceptional quality because of their magnetic crimping machines. The production capacity increased manifolds and in the year 1982, this machine was generating a production capacity of 3 tonnes in a single day. During this time, the French and Italian engineering firms established strong relationships with LML at that time, LML had just started to manufacture its twisting machines. In collaboration with these foreign firms the French Lesanie and Italian Mario, the relations of LML with French and Italian firms were becoming strong because of their primary machinery manufacturing business. But the chairman of LML was looking somewhere else as well, He knew that French and Italian brands manufacture superb two-wheelers.

The links LML has created with these foreign firms because of their primary business with the help of those foreign firms, LML can launch its scooters in India and they can lead the scooter market in India Because, at that time, the majority of the Indian population could not afford four-wheelers, That's why the majority of the Indians used to own two-wheelers looking at this opportunity, 

In 1982, Indian LML and Italian Piaggio formed a technical collaboration. Yes, it is the same Piaggio that is famous all around the world for its Vespa Scooters. But this collaboration between LML and Piaggio was not straightforward and why am I saying this? To understand this we need to go a little back in time before LML, the Italian Piaggio was involved in a collaboration with Bajaj under the collaboration of Piaggio and Bajaj, the Vespa 150 scooter was launched in India. This was a complete metal body, 150 CC two-stroke engine. But later on, this Vespa 150 Scooter was converted into Bajaj 150 and Bajaj made many changes to the looks of this scooter's headlights, etc. In the year 1977, the collaboration between Bajaj and Piaggio ended, and with this, Piaggio filed a lawsuit against Bajaj for patent infringement Piaggio asked the court to stop Bajaj from selling this scooter in foreign markets immediately and after this, Piaggio and LML came into the picture. We had just discussed this the scooters manufactured by LML that looked like Vespa were introduced in the market during the early 90s. During this time, the Italian Agnelli family that owned Piaggio decided to form a proper joint venture with LML and launch their scooters in India with this, a joint venture was established between Piaggio and LML And Piaggio had also acquired 28.5% stakes in the LML-Piaggio joint venture In this joint venture, many scooters were launched in India. Earlier LML Vespa NV 2 Stroke, select 2, and select 4 scooters were famous during that time because of their Superb Look, good fuel efficiency, and strong metal body. These scooters could be used for both personal use and carrying heavy luggage as soon as these scooters were launched in India. These scooters were loved by the Indian population and during the 90s, LML became the second biggest scooter manufacturer in India after Bajaj. But this success did not last for long and today, there is no existence of LML. Why did this happen? 

There are two main reasons behind this

The first reason is the Agnelli family They used to own the Piaggio brand. All the scooters of LML were based on the Vespa Scooters or their technology through this, we can understand that LML was completely dependent on Piaggio for its scooter business. Due to this fact, this collaboration was formed during the early 80s some problems were observed in both of these brands after some time. This Piaggio brand was owned by the family as mentioned earlier and this family had a huge reputation in Italy at that time the head of Piaggio was Giovanni Agnelli. He was only 26 years old, his uncle was Gianni Agnelli and at that time he was the head of the Fiat group with this fact, you can understand that the Agnelli family had a strong grip on the automotive market in Italy. Why I have told you all this about the family? Because the decisions made by the Agnelli family were the reason behind the downfall of LML, the first choice of the family was Bajaj. Even after their prior experience with them and this statement was even given by Giovanni publically. But still, the Agnelli family formed a tie-up with LML, unfortunately, this tie-up was broken when at the early age of 33 years Giovanni Agnelli died because of Intestinal Cancer. Immediately after this family announced to end of the tie-up with LML and after this the situation became poor Deepak Singhania who was the chairman of LML at that time took back the stakes of Piaggio in LML and in the year 1999, Piaggio and LML settled outside the court and this joint venture was ended in the year 1999, this distress became a huge reason behind the downfall of LML, now they can sell only those scooters whose designs were not provided to LML by Piaggio. That means scooters from the P series but LML at its end made these P series scooters highly innovative because, of course, LML was already in trouble and debt as well. Hence, according to me, they could not innovate much Because a huge amount of money is required for Research and Development everybody knows about this the effects of this were even visible in the sales of LML Because LML used to keep 25% of the share in the Indian scooter market in the year 1998 it was at second place in terms of sales of scooters. 

In the year 2000, the market share of LML was reduced to 22% Now, this change might not look significant to you but the share of other minor companies was increasing continuously. In the scooter market in India if we look at TVS-Suzuki. In the year 1998, this joint venture only had a market share of 7.1%. In the year 2010, this share was increased to 10.2% and obviously, it was happening because the majority of the Indian two-wheeler brands were involved in joint ventures with Japanese brands. Due to this, these Indian two-wheeler brands had access to the technology that LML did not have but Japanese brands did one more thing that destroyed LML and that was motorcycles. During the early 2000s, Indians preferred buying motorcycles because of their mileage and speed because of the Japanese tie-up Indian two-wheeler brands like Bajaj, Hero, and TVS became experts in manufacturing motorcycles. But LML did not have any such expertise which is why LML could not introduce motorcycles in India for a very long time and that's why LML lost its control over the Indian market in terms of motorcycles LML introduced motorcycles like Freedom, etc India and even made Shahrukh Khan their brand ambassador. But still, the sales of LML continued to decline. 

One more problem was also associated with LML apart from the motorcycles and that was the Honda Activa that was launched in the year 2005. When Activa was launched in India in the year 2005 at that time there was no such scooter in India that was so refined and had such an automatic gearbox Activa proved problematic not only for LML. But it also destroyed Bajaj, Bajaj had other star products in its fleet apart from Chetak Like Pulsar. Bajaj discontinued manufacturing scooters gradually and they shifted their complete focus to Motorcycles but LML did not have any other means to save itself and neither of their scooters came close to Activa. That's why LML continued to suffer losses and in the year 2017, LML was discontinued. But I would say one thing because I had driven the Chetak scooter of my father a lot during my childhood that's why I liked these bulky and heavy metal scooters very much and the scooters introduced by LML in its last days. Those scooters were only for niche enthusiasts because in the end, for its revival LML introduced the 200 CC 4-stroke scooter this scooter was named Star Euro 200. LML also launched a similar-looking 150 CC automatic scooter and trust me, driving these scooters would be fun. Especially the geared scooters because a 4-stroke Chetak scooter and any present-day scooter could not match its torque.

Re-Entry of LML

Now, what happened cannot be changed but LML is soon going to re-enter the Indian market this time they are going to launch EVs, and the EV scooter showcased by them on their website looks very high-tech. But a personal request and suggestion for LML is that they should also launch a scooter in India that has the shape of Star Euro. It would be joyful if a similar scooter was launched in India.

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