M&M eyes pole position in the 'core SUV' segment in three years

Riding high on recent launches and a pipeline of new SUVs, Mahindra & Mahindra (M&M) is eyeing pole position in the “core SUV” segment in three years, a top company executive said. The erstwhile market leader is in the process of redefining what it considers a core SUV. 

“In the next three years, we are pretty sure that we will be the No.1 in what we call core SUVs. We will put out a formal definition (of core SUVs) by the next quarter,” Rajesh Jejurikar, executive director – farm equipment and auto sectors – at M&M told Business Standard. It doesn’t only mean body-on-frame or chassis-based vehicles, but M&M will exclude some models in the count of what’s a core SUV, he clarified. 

“Many of the models in the market today that claim to be an SUV are not so by any standards – be it ground clearance or seating height, among others. Hence, we are doing some “re-processing” to arrive at a definition,” he said.  

Mahindra, he pointed out, is very comfortable with a model like XUV300. “If you compare it with the competitive set, it is bigger, better, has higher ground clearance and seating height which gives it that distinctive positioning. In the future, we may not go below that,” said Jejurikar. 

As part of a plan to make a strong comeback in a segment it ruled till recently, M&M plans to launch nine models by 2025-26. Four of these — the XUV700, all new XUV300, W620, and V201 — will also have an electric powertrain option; two will be pure electric models and the rest will be internal combustion engine-powered ones.

First among these to go on sale will be the XUV700. Mahindra plans to take wraps off the seven-seater model this weekend. Much the same way it did with the new Thar. The Thar has been a huge success for the company and commands a waiting period of 8 to 10 months. The model was unveiled on August 15 last year.

Jejurikar’s confidence to be able to get back in the leadership position stems from strong bookings of most models in the company's portfolio.

While the Thar has an order book of over 39,000, XUV 300 and Scorpio have over 10,000 and 6,000 bookings, respectively. The Bolero Neo, launched on July 13, has over 5,500 bookings. The global shortage of chips, which has been crippling production at most of the auto firms, could be a deterrent in an otherwise strong outlook the company has.

Considering the uncertainty due to a chip shortage, it is building a system stock to prepare for the festive season. Inventory is still low at 72 per cent of what it was in the first quarter of FY20. The festive season this year may be a challenge from the supply point of view even as demand looks strong, Jejurikar said during the post earnings call on Friday.

In the quarter that ended in June, Mahindra sold 43,202 units of utility vehicles (UVs) against 11,942 units in the corresponding period of the previous year. The volumes are, however, not comparable owing to last year’s lockdown. Though the numbers are rising month-on-month, it’s still some distance away from the sales performance in 2019 when it sold 56,095 units, according to Society of Indian Automobile Manufacturers.

Its market share in the UV segment during the quarter dropped to 14.88 per cent from 17.20 per cent in the same period a year ago. The market share is not a correct representation of Mahindra’s position as it includes even crossovers/soft roaders and cars with SUV-like body style.

 

In response to competition, Mahindra also launched SUVs with car-like stance — not one but several, including the Quanto, NuvoSport, KUV100, Verito Vibe, TUV300, and XUV300. With the exception of XUV 300, derived from Ssangyong Tivoli, none lived up to the volume expectations. In the process of protecting its turf and chasing volumes, M&M ceded ground to competition in a big way. The firm’s volumes fell to 180,000 units in FY20 from the peak of 280,000 in FY12.   

Ravi Bhatia, president and director at JATO Dynamics, says M&M has a legacy and is a legitimate contender in the SUV space. It was one of the first to launch a model like Thar and also a multi-utility vehicle with an SUV style like the Scorpio. It may have lost focus for the short term but is now back in the reckoning. “A sharply defined strategy it has now embarked upon will definitely work. However, a lot will depend on how it prices and positions models,” said Bhatia. Being a seasoned player, M&M is expected to define the segment in a broad way and not narrowly, he added.