 "Mahindra counts on a tough new SUV to revive sales")
This new boxy compact sport utility vehicle (SUV) is Mahindra & Mahindra's latest attempt to regain the business it has lost in the last several quarters to rivals. Its share of the SUV market has fallen from 55 per cent in March 2010 to 39 per cent in the June-ended quarter, according to the Society of Indian Automobile Manufacturers. While the SUV segment grew 6 per cent in 2014-15, Mahindra & Mahindra's volumes slid 5 per cent.
The reasons for this decline are not hard to find. Rivals like Ford, Renault and Nissan have come out with compact SUVs which have taken the market away from Mahindra & Mahindra.
Then there are new crossovers like the Hyundai Creta and Maruti Suzuki S-Cross, and utility vehicles like the Honda Mobilio and Maruti Suzuki Ertiga that have eaten into Mahindra & Mahindra's sales.
On the other hand, Mahindra & Mahindra hasn't launched any new vehicle for several years now, though it has come out with upgrades of the Scorpio and XUV5OO. It did try to plug the compact-SUV gap in its portfolio with the Quanto but it failed to excite the market. The SUV was a re-engineered Xylo with its rear chopped to size.
Quanto volumes dipped 75 per cent last year and were reduced to an average of just 161 units a month, according to SIAM. For now, Mahindra & Mahindra has decided to continue with the Quanto even as reports of a facelift have started to do the rounds.
That makes the TUV3OO crucial for the company. Built at a cost of Rs 1,200 crore, it is the costliest vehicle Mahindra & Mahindra has created, beating the Rs 650 crore it spent on the XUV5OO, Rs 550 crore on the Xylo and Rs 250 crore on the new Scorpio launched last year. However, it is still substantially lower than the Rs 3,000-4,000 crore it takes abroad to build a new car.
Built on a completely new platform, the TUV3OO (TUV stands for Tough Utility Vehicle) claims to have features not seen in any of its rivals. It is the only vehicle in its class which can seat seven people, has an automatic transmission and is built on the ladder-on-frame chassis. And at Rs 6.9 lakh (ex-showroom, Mumbai), it is the most affordable SUV in India with the exception of the Premier Rio.
What has pushed development cost to an all-time high is the ladder-on-frame technology. Considered ideal for off-road performance, the ladder-on-frame chassis provides better overall rigidity and strength than the monocoque designs: ladder-on-frame chassis are heavier and more expensive to build. While monocoque SUVs are preferred for city mobility, ladder-on-frame SUVs are for those who wish to take their vehicle to the countryside occasionally.
Developed with inputs from the famed Italian design house Pininfarina, which has churned out Ferraris alongside the high speed train Eurostar, the TUV3OO is made to appeal to buyers looking for a rugged yet affordable off- and on-road SUV.
Mahindra & Mahindra has pitted the TUV3OO directly against the more urban Ford Ecosport, pricing it almost Rs 100,000 cheaper than the American soft-roader. Despite its higher price, the EcoSport clocks sales in excess of 4,300 units a month, generally considered a respectable volume by market watchers.
While Mahindra & Mahindra executives refuse to give any sales projection, sources in the company say that the TUV3OO should be able to clock 4,000-5,000 units a month, given that there has not been any new launch in this segment (sub 4 meter). Mahindra & Mahindra Executive Director Pawan Goenka says: "If the total SUV industry in India right now is about 47,000 a month, if this vehicle (the TUV3OO) gives us volumes of 4000-5000 per month, there will be 8-10 per cent increase in (our) market share".
Though cheaper than any other SUV, Mahindra & Mahindra wants to position the TUV3OO higher than the Ford Ecosport when it was launched. The Ecosport was priced substantially cheaper at Rs 5.59 lakh at the time of its launch in mid-2013. With consistent price rises in the last two years, the Ecosport has quietly vacated the space of 'affordable SUV' and now competes (on price terms) with the bigger and more spacious Renault Duster which costs only Rs 40,000 more.
The TUV3OO is keen to fill this space created by the Ecosport. "We believe the vehicle's rough-and-tough positioning could find more takers in rural and semi-urban markets. Mahindra & Mahindra already dominates the segment with 75 per cent-plus share (largely ladder frame products) in its flagship Bolero and Scorpio models. The new launch will likely give a fillip to volumes, but could also cannibalise on Bolero sales," says a report from Religare.
Not a cakewalk
The challenge is that rivals too have designs on the compact SUV segment. Maruti Suzuki, which wants to reposition itself as a serious player in the premium segment, will leave no stone unturned when it introduces its own sub-4-meter SUV next year. Like most of its products, this too promises to be affordable and economical to own.
Others who are also waiting in the wings include Tata Motors, Fiat and Hyundai all of whom are working on projects that compete in the sub-4 meter space. Some other players like Nissan, Toyota, Honda, General Motors and Volkswagen too have products but in a category just above the compact segment, competing against the likes of the Renault Duster, Mahindra Scorpio and more recently Hyundai Creta.
Mahindra & Mahindra still has an ace up its sleeve. The company will launch a monocoque-based vehicle codenamed the S101 in the next few months. This will be a soft-roader positioned below the TUV3OO, with stylish exteriors and compact crossover-like dimensions.
Before that, the company has to first convince buyers to overlook Renault, Hyundai, Ford and Nissan for the TUV3OO. With two failures in the sub-4 meter space (the Quanto and Verito Vibe) in the past, it would be a challenging task for the company which prides itself in being a 'utility vehicle specialist'.