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Photo: Reuters
Photo: Reuters

Mahindra launches TUV300 as India’s cheapest compact SUV

The TUV300 is priced much lower than the comparable diesel variants of the EcoSport and the Duster

Mahindra and Mahindra Ltd is set to unleash a price war in the utility vehicle market with its TUV300, launched on Thursday. Starting at 6.9 lakh and going up to 9.12 lakh (ex-showroom, Pune), it is the cheapest diesel compact sport utility vehicle (SUV) in India.

Pitted against Ford’s Ecosport, Renault’s Duster and Nissan’s Terrano, the TUV300 is the first sub-4m SUV made by market leader Mahindra.

The TUV300 is priced much lower than the comparable diesel variants of the EcoSport ( 7.89 lakh) and the Duster ( 8.30 lakh). It is also the first SUV to offer automated manual transmission (AMT), or auto gear shift, which has so far only been available in car models.

For Mahindra, a late entrant to the compact SUV market, the competitive pricing and AMT could swing demand in its favour and help the firm recoup some of its market share.

From a high of over 40% two years ago, the company’s share in the utility vehicles segment has dropped to 36% in the first four months of the current fiscal year, according to industry lobby group Society of Indian Automobile Manufacturers.

Anand Mahindra, chairman, Mahindra Group, said that, notwithstanding growing competition, he is confident the company’s design and brand will resonate with buyers of “true blue-blooded SUVs", and help create a strong differentiator.

“Our brand for SUVs, particularly in India, is very strong. We are focused players in SUVs, that’s all we do. It’s our core area and that holds us in good stead. Secondly, our designs have a very long heritage to a global perception of what SUVs should look like," Mahindra said at the launch in the company’s plant in Chakan near Pune.

Mahindra said he sees the contribution of utility vehicles in the passenger vehicle market, 23% at the end of 2014-15, going up to 30% in “no time". The firm has invested 1,200 crore in the TUV300, developed over four years, and can make 5,000 units per month, said Pawan Goenka, executive director.

Utility vehicle volumes have grown 51% over the last three years, as compared with low single-digit growth before that. Most of the growth, however, has been led by compact SUVs. With the TUV300, Mahindra aims to “address the need gap" in the hardcore SUV market and position itself away from the clutter in the compact SUV market, which has as many as nine models, said Pravin N. Shah, president and chief executive (automotive division) at Mahindra.

Analysts believe the TUV300 might be a bigger draw among rural and semi-urban buyers.

“Competitive pricing coupled with safety and technology features like AMT will draw buyers to the new offering and should help the company get an additional 3,000 to 4,000 units per month," said Puneet Gupta, associate director at IHS Automotive, an industry tracker.

However, he pointed to the vehicle’s similarities to the Bolero, saying this could deter some urban buyers because of the strong competition from models such as Hyundai’s Creta. “The pricing is aggressive but the model’s appeal might largely be confined to semi-urban and rural buyers," said Nitesh Sharma, analyst at Phillip Capital India Pvt. Ltd.

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