Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  Mahindra hopes to do a Scorpio with the KUV100?
BackBack

Mahindra hopes to do a Scorpio with the KUV100?

With KUV100, which has been priced competitively at Rs4.42-6.76 lakh, Mahindra aims to draw buyers from both small car market as well as SUV space

Pawan Goenka, executive director at Mahindra and Mahindra (left) with Pravin Shah, president and chief executive (automotive), during the launch of new Mahindra KUV100 at their manufacturing facility in Chakan, Pune, on Friday. Photo: Abhijit Bhatlekar/MintPremium
Pawan Goenka, executive director at Mahindra and Mahindra (left) with Pravin Shah, president and chief executive (automotive), during the launch of new Mahindra KUV100 at their manufacturing facility in Chakan, Pune, on Friday. Photo: Abhijit Bhatlekar/Mint

Mumbai: Almost a decade-and-a-half after the launch of the Scorpio—a sport utility vehicle (SUV) that changed the fortunes of Mahindra and Mahindra Ltd—India’s largest utility vehicle maker aims to replicate the success with the KUV100, a micro SUV that the company launched on Friday.

Prices of the ‘Kool Utility Vehicle’ start at 4.42 lakh and go all the way up to 6.76 lakh (ex-showroom, Pune).

“The birth of the Scorpio marked a significant inflection point for the Mahindra Group. The launch of the KUV100 is another inflection point as significant as the Scorpio," said Anand G. Mahindra, chairman, Mahindra Group, in a recorded video address.

Launched in June 2002, the Scorpio, India’s first ingeniously developed and designed SUV, was instrumental in giving Mahindra’s image a makeover. Till then, it was known as the maker of rugged utility vehicles.

With its latest offering, Mahindra aims to create a new segment in the passenger vehicles market, drawing buyers from the small car segment—an area that has been the stronghold of Maruti Suzuki India Ltd and Hyundai Motor India Ltd. Eight out of 10 compact cars (hatchbacks and small sedans) sold are made by two companies.

The KUV100 is pitted against the Maruti Swift and Hyundai Grand i10.

The need to have an affordable SUV was further necessitated by the fact that the lines between vehicle categories have been fast blurring and buyers now want the price and ease of a compact car with the looks and convenience of an SUV, said Pawan Goenka, executive director, Mahindra and Mahindra, adding, “People buy small cars but everyone aspires for an SUV."

Goenka, who is fondly referred to as the father of the Scorpio by Anand Mahindra, said the company is “entering unchartered territory", but is more confident than ever that it will succeed. Developing the KUV over four years and for which Mahindra has pumped in 1,200 crore was a challenge in more ways than one, he said.

The challenges came in the form of developing an in-house gasoline engine, packing the model with all the safety and convenience features with an eye on young, first-time buyers with a cool quotient, and at a price which is on par with those of best-selling compact cars.

Increasing competition and shifting buyer preference for compact cars with the looks and convenience of an SUV put Mahindra, which didn’t have anything to match, at a disadvantage.

As a result, Mahindra ceded ground to rivals. Its share in the utility vehicle market fell to 37.36% in fiscal 2015 from 41.73% the year before. It stood at 36.64% in the first nine months of the current fiscal, according to industry lobby Society of Indian Automobile Manufacturers (Siam).

The launch of the TUV300, its first compact SUV, in September 2015 has helped the company recover some ground. Mahindra has positioned KUV100 below the TUV300 as a micro SUV and its lowest priced utility vehicle.

“It could turn out to be a volume spinner," said Nitesh Sharma, analyst at Phillip Capital India Pvt. Ltd.

But there will be challenges.

According to an analyst, who declined to be identified, the company will have to find a way to make the KUV100 attractive to traditional Mahindra buyers, who are used to performance-oriented SUVs. Drawing new buyers away from existing models in the market will also not be easy.

To be sure, the launch is well-timed as traditional SUVs with big diesel engines are drawing flak on the pollution front. This could push the demand for compact SUVs with fuel-efficient petrol engines.

The contribution of such models to utility vehicle sales grew to 45% last year, said Pravin Shah, president and chief executive-automotive division, Mahindra.

The firm has created capacity to make 5,000 units of KUV100 a month, he added.

Mahindra’s move into the compact SUV segment comes as no surprise. A majority of the launches lined up until next year are in this category. At least half a dozen compact SUVs, including the Suzuki Vitara Brezza, Honda BR-V and Tata Hexa, will be unveiled at the New Delhi auto expo next month.

The new launches are expected to help boost overall sales of utility vehicles that have been stuck in low gear for a while. Their share in the passenger vehicle segment dropped to 20% in the nine months from April to December 2015, from 21% a year ago.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 15 Jan 2016, 02:16 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App