Despite signing up Aamir Khan as brand ambassador, the company has failed to revv up sales of its only motorcycle Stallio.

Competition in the two-wheeler market is fiercer than ever before and Mahindra's only motorcycle, Stallio, is bearing the brunt of it.

Last-month sales of the 110cc entry-level motorcycle, launched by the $7.1-billion Mahindra & Mahindra group last year, slid more than 10 times from October levels, which was also its best month.

Mahindra 2 Wheelers, the company that was formed after the group bought assets of money-losing Kinetic Motor Company, despatched 256 units of the Stallio last month to 250-275 dealers.

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That is an average of just one unit of Stallio delivered to each dealer.

Sales of the indigenously built motorcycle have been on a downward trend since its launch in September 2010.

From 2,664 units despatched in October, M&M reported a drop of 36 per cent in November, delivering 1,706 units of the bike, according to data provided by the Society of Indian Automobile Manufacturers.

The Stallio is being promoted by the company as a fuel-efficient and stylish bike with an affordable price tag of Rs 41,199 (base model, ex-showroom Mumbai).

The bike is fighting for share against segment leaders such as Honda CB Twister, Hero Honda Splendor and Passion, and Bajaj Discover on price and power parameters.

The CB Twister launched by Honda Motorcycle and Scooter India, country's fourth largest two-wheeler maker, shares almost the same engine specification seen on the Stallio, but is priced a premium of over Rs 5,000 at Rs 46,417, in Mumbai.

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Despite the premium tag, the 110cc Twister sells at over 15,000 units per month and carries a waiting period of two-three months, due to production constraints faced by HMSI.

Meanwhile, M&M states that the reason behind such a dramatic fall in sales to its dealers is primarily because of 'go-slow' approach on its part and also due to shortage in parts supplies for the bike.

When contacted, Anoop Mathur, president, two-wheeler sector, M&M said: "In the initial phase you are producing the bike, but the billing does not happen because it is not launched yet.

"Then we have seen that there is a supply demand mismatch due to shortage of components due to which we have not been able to produce as much as we had liked to."

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However, as per SIAM figures, the company collectively produced 6,825 units of the Stallio during the past three months, but delivered just 4,626 units to its dealers.

The ramp-up in distribution has also been on the slower side with 250-275 dealers currently utilised as against the total strength of 400.

Some units of the Stallio have been used for display purposes only at over 125 dealers, with no sales taking place from there.

The group had brought on board Bollywood actor Aamir Khan for promotional activities and also for being the brand ambassador of Stallio.

The company reportedly paid Rs 14 crore (Rs 140 million) as endorsement fee to the actor.

M&M maintains that consumer demand for the Stallio has been very positive, however, the company refused to divulge retail figures.

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"The feedback on the Stallio has been very encouraging.

"But we are calibrating our deliveries so that we are able to maintain a matched situation.

"The vendors take time to come up to your level of requirement. Nobody pre-places its capacities and capabilities.

They also want to see how (the product) is going, what is the market pull," added Mathur.

Most other two-wheeler makers, including market leader Hero Honda and HMSI, showed improvement in sales in December when compared to November.

This is despite an upward revision in prices this month which could impact retail sales marginally.

Asked whether production for the motorcycle would be raised in the coming months, the M&M executive said: "We are working very hard for that purpose only and during the course of this quarter you will start seeing the effect coming out very clearly."

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Mathur declined to give a targeted production or sales figure. 

To beat competition, M&M is agreeing to provide a market-beating four-year or 80,000km warranty on the Stallio.

In addition, the company is also gearing up for a better service offering in the coming months when it will add more products to its line-up.

Most of M&M's two-wheeler dealers are based in urban centres, which sell automatic scooters such as Rodeo, Duro and Flyte.

The company will try to become more active in rural areas as it moves forward leveraging the Mahindra brands' strength.

"It would be very difficult for Mahindras to have volumes with the Stallio at the very start due to immense competition.

"Things will ease out only when they add more and better products in the market that could challenge the Bajajs and Hero Hondas of the industry," said a financial analyst.