New Delhi: As its dominance of the Indian utility vehicle (UV) market comes under threat, Mahindra & Mahindra Ltd is planning an overhaul of the way its vehicles are designed and developed.
For starters, the automaker is seeking to introduce the specifications of a car into its sports utility vehicles (SUVs).
The first of such vehicles is being conceived by company engineers. Mahindra plans to introduce the vehicle, priced between Rs6 lakh and Rs9 lakh, executive director Pawan Goenka said.
“The space that is emerging newer is what one would call... almost a car UV. And that’s where we have to have more products coming in,” Goenka said.
“If the customer is saying I want only a UV look, and everything else should be like a passenger car, we have to design that. That’s the change that has to... will come in our product planning. That we may have to look at a platform that just looks like a UV but is a passenger car,” he added.
The move is a significant departure for Mahindra from its stance of projecting itself as a “UV only” company that made some of India’s most rugged utility vehicles, such as the Bolero, Scorpio and XUV 5OO and in the process stole a march over rival Tata Motors Ltd in the SUV market.
The move has been necessitated by changing consumer preferences in India. Duty rebates on sub-four metre cars first made way for compact sedans such as the Indigo CS and Swift Dzire. With rising aspirations of Indian consumers and their wish to look tall on the roads, small SUVs, in some cases a hatchback with higher ground clearance and bold looks, made their way to the market.
Renault India Pvt. Ltd’s Duster, Ford India Pvt. Ltd’s EcoSport, Hyundai Motor India Ltd’s Creta and Maruti Suzuki India Ltd’s Vitara Brezza have cornered this market.
Mahindra clearly did not anticipate such a change in consumer preference and continued to introduce products such as the TUV 3OO and NuvoSport—which carried forward the Mahindra legacy of sturdy SUVs.
“So, basically what is happening is that, for many customers, UV only means the exterior look. Whereas, to us, UV is not just exterior look. UVs also, along with exterior look, have several other things that we look at. In fact, very simply, the way the accelerator responds when you press it is different for a UV than for a car,” Goenka explained.
But urban India wanted the kind of SUVs which motoring publication Autocar India magazine once described as a “hatchback on steroids”.
“(We did not expect it). Not to the extent it has changed. We had always expected that UVs will grow more than passenger cars and the reason I expected that is that the share of UVs, when I talked about this, was 18-19%. And I said that 22-23% is roughly where it should come. Now it’s become 25% in a very short period. So this kind of steep growth in UVs is more than what I had thought,” said Goenka.
As a result, Mahindra’s share of the overall passenger car market has come under pressure. From 11.56% market share in 2012-13, it came down to 8.47% in 2015-16. During the period, its sales declined 24.67% from 313,707 units to 236,307 units while overall passenger vehicle sales grew 6.5% from 2.61 million to 2.78 million.
Goenka said the entry of new companies such as Maruti, Hyundai and Ford had expanded the size of the market but led to a decline in the share of Mahindra.
Mahindra has what to takes to succeed, said Abdul Majeed, partner and national auto practice leader, PwC.
“Mahindra will be quick to bounce back. It understands the segment better than anybody else. That coupled with its vast sales network will be key to success of the new model.”