M&M looks to regain SUV dominance with new launches

Mahindra and Mahindra, which last month saw the end of its dominance in utility vehicles segment in Asia’s third biggest car mart, is planning a major product offensive to recapture its top position and fight off growing stiff competition.

The Mumbai-based auto major will launch a multi-utility vehicle or MPV codenamed U321 this year and an SUV codenamed S201 next year to consolidate its position in the country. Additionally, Mahindra is also working on an all-new SUV based on the TUV300 platform, which is longer. It has also planned refreshers of its existing vehicles such as the Scorpio, XUV500 and KUV100 this year.

With these launches, M&M is targeting higher growth than the industry in the utility vehicle space, estimated to grow at 10-12 per cent this year. The upcoming MPV will take on the likes of Toyota’s Innova, Maruti Suzuki’s Ertiga and Tata Motors’ Hexa and the new compact SUV, based on the SsangYong Tivoli’s platform, will be positioned between Mahindra’s KUV100 and TUV300.
It will take on the likes of Ford Ecosport, Maruti Brezza and Tata’s Nexon to be launched in Diwali this year.

“We have two products coming in two years. One is the U321 MPV, which has been developed on the new global platform developed in Detroit, US. It will come out this financial year. Second one is S201, which is based on SsangYong platform, Tiv­oli will come out in the next financial year,” Pawan Goenka, MD at Mahindra and Ma­hindra, said. These vehicles will also be exported.

As a rolling investment, Mahindra is planning to invest Rs 12,000 crore over 3 years and has also allocated Rs 600-800 crore for its nascent e-vehicle business.

Mahindra, who was the king of utility vehicle space with 56 per cent market share in 2012, has now been reduced to half at 28 per cent in the June quarter. It was 32 per cent in June 2016. The maker of popular Scorpio and XUV500 SUV models lost its pole position to Maruti Suzuki, the passenger car market leader, which sells one car out of two bought in the country.

Maruti Suzuki hit the jackpot as its market share rose to 31.62 per cent in the June quarter, up from 22.26 per cent clocked in the same period a year ago. What elevated Maruti Suzuki to the podium was the runaway success of its Vitara Brezza, the compact SUV, in the market increasingly looking for fresh new models.

But the decreasing market share for Mahindra has not been sudden or dramatic. The automaker has been losing ground to archrivals in the last few years.

First it was French carmaker Renault and American Ford Motor, which toge­ther redefined the segment with the launch of Duster and EcoSport compact SUV in 2012. Even Hyundai’s Creta ate into Mahindra’s market considerably.

Even the WR-V, another compact SUV introduced in March from Japanese carmaker Honda stable helped the firm increase its share in the segment to 6.60 per cent in the quarter ended June from 3.84 per cent a year ago, as per data from trade lobby the Society of Indian Automobile Manufacturers (Siam). Also, the ban on 2-litre diesel vehicles in NCR, India’s biggest car market, also impacted sales volume.

From a peak of 56 per cent market share in 2011-12, Mahindra’s share in the UV segment fell to 47 per cent in 2012-13, slipping further to 42 per cent in 2013-14 and 37.36 per cent in 2014-15. New model launches aided it to recover volumes marginally and increase share to 38 per cent in 2015-16. But that fell to 29.20 per cent in 2016-17, the lowest in five years.

Auto analysts said it was clearly because the competitive UV market in India was pumped in with more than 20-25 new product launches in the last five years. This expanded not only the UV market in the country but also its fragmentation.

“Last year alone, for instance, this segment saw six new product launches at different price points, which impacted Mahindra,” they pointed out. Also, two of Mahindra’s workhorses the Bolero and to an extent, the Scorpio, which are rural centric, were impacted due to rural distress, they said.

“With the way every player has come into the UV segment, we don’t expect to ma­i­ntain a very high market sh­a­re. A couple of products that did not perform as per our expectations are the primary reason why we are at around 30 per cent. We are not happy with that and would like it to be higher,” Goenka had said recently.