Export focus: Anand Mahindra (left) with other company officials at the launch of the XUV500 in Pune on Thursday. (Photo PTI)

This, analysts said, will not only give SUV buyers a better option over the ageing Scorpio model and higher-priced premium SUVs, but also help M&M launch itself in the next phase of growth, in India and globally.

“The XUV500 will get us the high seat in the global automotive table. It’s a bold step towards becoming a globally recognized SUV brand," M&M vice-chairman and managing director Anand Mahindra said.

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“It’s as big a leap from Scorpio and Xylo, as it was from Bolero," said Pawan Goenka, president, automotive and farm equipment sectors, at the firm.

The price band of the SUV starts from 10.80 lakh (ex-showroom, Delhi).

Available in three variants, including four-wheel drive, the model will go on sale in five cities—Mumbai, Delhi, Bangalore, Chennai and Pune—from 1 October.

The new platform has been developed over four years at Mahindra Research Valley, the company’s research and development centre in Tamil Nadu.

The model will be manufactured at the company’s factory in Chakan near Pune.

Positioned between the Scorpio, which retails at 9.35 lakh onwards, and premium SUV offerings such as the ToyotaFortuner, priced upwards of 17 lakh, Mahindra plans to sell the XUV in Western Europe, South-East Asia, South Africa, Australia and South America.

It will use the network of its Korean subsidiary Mahindra Ssangyong to sell it in markets where Mahindra is not present.

The company will launch the vehicle in South Africa on Friday.

Exports account for 5% of M&M’s total sales. “Unlike the other models, this has been planned with an eye on export markets. We will be happy if we are able to sell 20% of them in overseas markets," Goenka said, adding the model has been validated in several countries.

Rajesh Jejurikar, chief executive, automotive division, said considering the minimal price difference between the XUV and Scorpio, there will be some cannibalization but it doesn’t bother him as eventually it will help the firm consolidate its position in the SUV market and maintain the dominant 60% share it currently has.

Puneet Gupta, analyst at sales forecasting and research firm IHS Automotive, said: “With companies launching SUVs at affordable prices, the market is set to expand as new set of buyers enter the segment."

Ajay Shethiya, analyst at Centrum Broking, said with a production capacity of 2,000 units a month, the model may not be a volume-spinner for M&M but it prepares the firm for the next level of growth. “What works in their favour is the absence of a formidable rival priced in the range of 10-12 lakh."

Pune-based Force Motors Ltd entered the SUV space earlier this month with the Force One. Priced at 10.56 lakh, Force One also aims to bridge the gap that exists in the similar price range.

Shethiya said even though the initial response to the model from Force has been good, with M&M having a legacy of successful SUV launches, buyers will give preference to a Mahindra SUV.

India sold 325,000 utility vehicles in fiscal 2011, up from 272,000 a year earlier, according to Society of Indian Automobile Manufacturers. “With the XUV, we are moving into a different segment, not only in terms of price but also in terms of features," said Goenka. Powered by a 2.2 litre mHawk diesel engine, it sports features such as integrated driver information system, GPS navigation systems, reverse park assist system, among others.

“With the Scorpio having reached a matured phase in its life-cycle and an absence of a model in Mahindra’s portfolio that can vie for international markets, a new SUV will be critical to the company’s domestic and global strategy," said an analyst at a global consulting firm, who declined to be identified