 "Mahindra & Mahindra XUV500")
The marketing team at Mahindra & Mahindra may be battling a demand slowdown just like the other carmakers in the industry, but it has reason to celebrate its last SUV launch. The XUV500 (XUV) has seen a sustained demand in a weak market and in a segment that is high-margin.
The company's entry into premium SUVs has charted a sine curve, with tweaks along the way, but the brand has still clocked 77,000 units over the last two years (average of 3,200 units per month).
Albeit, the slowdown has made car marketers struggle to meet sales target, and the XUV's demand has slid to around 2,500 units per month but that is still more than its nearest competitor, Toyota Fortuner, clocking 1,500 units a month.
Before the XUV's launch, the SUV segment above Rs 10 lakh was populated by the likes of the Fortuner, Chevrolet Captiva, Honda CR-V, Hyundai Santa Fe, Nissan X-Trail and the Skoda Yeti. But these foreign marques sold the cars for over Rs 15 lakh. Priced at Rs 11.90 lakh (entry model, ex-showroom Mumbai) the XUV costs much less but has comparable specs. It had also marked Mahindra's entry into the premium segment, with a tag that was twice the price of its highest selling utility vehicle Bolero at Rs 5.66 lakh.
With a lack of product availability (except for Tata Motors offering the Safari) in that price range, the XUV targeted buyers of premium sedans as well as expensive SUVs with a foreign badge. However, Rajan Wadhera, chief executive -technology, product development and sourcing, automotive and farm equipment sectors, says, "What we have learnt is customers in this segment are ones who trade down from buying higher-end SUVs more than customers tradng up from sedans," says Wadhera.
As Mahindra was not present in the premium SUV segment, getting a traction with such buyers was a clear challenge. The car's launch hype was hard to miss. Mahindra had drummed up a buzz with a sense of secrecy and exclusivity around it.
Fully-loaded engineering
The company also offered features available in higher-end SUVs. Built for Rs 650 crore, involving over 200 engineers, the XUV came with voice command, six air bags, infotainment system, GPS, automatic temperature control and ABS with EBD.
Wadhera says, "The Captiva and the Santa Fe were the only SUV crossovers present. Our price point was much lower and all the features were comparable. Our fuel efficiency was better and micro-hybrid. The customer got a fully-loaded vehicle which she would have otherwise had to pay Rs 35 to 40 lakh for." Wadhera says that the customers in this segment are a lot less compromising than others on quality in interiors, features and styling.
A tweak in time pays off
However, with intense hype came intense scrutiny. Within a few months, there were customer feedback on technical glitches faced by them when driving the vehicle. But Mahindra decided to take the bull by its horns and came up with tweaks to renew its claim to the segment.
"We had some issues with the brakes. Customers (in India) wanted very aggressive braking, whereas the calibration of the brakes had been done keeping the worldwide consumer in mind. We (Indians) want a bite in the brake, because of our driving habits and road conditions. Whereas European driving, for example, is all very soft braking. We had to move from high ferrous-based material to something which is a little more dampening. And, in order to maintain our price-point ,we tried out a lot of innovations on the cost side. We know the change improved the product," says Wadhera.
The oft-repeated customer reports also led to a recall of 30,000 units of the SUV manufactured between 2011-12. Their fluid hoses, front power windows and left wiper-blade covers were changed.
As a result of the changes, the 2013 model has performed better than the previous versions, admit customers on fora managed by car afficionados.
Technical tweaks apart, Mahindra also adjusted the price. The tax was raised in the last Union budget on SUVs with ground clearance of more than 170mm, to 30 per cent from 27 per cent. Within a few months, Mahindra lowered the XUV's clearance and effected a lowering of price by Rs 33,000, arresting the impact of the slowdown to an extent.
Mahindra plans to make the most of the brand, lining up a base variant and one with more bells and whistles than the present version for launch by 2014-15.
Competition too has been racing to tap the segment, with Nissan recently launching the five-seater Terrano, undercutting the seven-seater XUV by pricing it under Rs 10 lakh. Honda, Isuzu, Volkswagen, Maruti Suzuki are learnt to be either in the process of developing similar SUVs or scaling them up.
