Mahindra bets on XUV300 to claw back market share

Mumbai: As India’s SUV market exploded in the five years beginning 2013, Mahindra and Mahindra Ltd that unleashed the first wave of SUVs in the early 2000s with its Scorpios and Boleros was caught napping. While the SUV market boomed to account for nearly 30% of overall passenger vehicles market, Mahindra barely managed to hold on to its volumes, resulting in a loss of market share.

Pawan Goenka, managing director of the firm, acknowledges as much, saying the company never anticipated the SUV boom to have come so fast. Now Goenka, also known as the "Father of Scorpio", is planning to turn the clock back. In an interview, he also talks about the challenges Mahindra faced in its bread-and-butter segment and how it plans to claw back market share. Edited excerpts:

You have launched a series of new models; portfolio is fairly well spread now; how do you rate your journey in the last two to three years?

Clearly, there is a transition that has happened in the SUV segment. One that worked very well in our favour and one that did not. If I go back to 2013, the contribution of SUV in the passenger vehicle segment was 17-18% and that has now become 29%. So, the growth of SUV has been significantly faster than that of passenger cars. Therefore, the whole segment has become much larger which was in 2013-14. So, that has worked in our favour. What has not worked in our favour is the transition from frame-based vehicle to monocoque—a vehicle structure in which the chassis is integral with the body—was somewhat faster than what we had anticipated. Therefore, we lost out on that opportunity of SUV growth and did not participate in it as much as we could have, if we could have been faster in bringing in monocoques.

Did you fail to read the transition?

Two things happened. The speed at which it changed was a little faster that we had thought. We had planned a gradual shift. We were focusing on our frame-based vehicle while developing the monocoque vehicle.

We did not have the internal expertise in doing small monocoque vehicles because our smallest vehicle was Bolero, which was 4.1 metre. Therefore, it took us a little time to come out with the KUV100. If we would have come out with that two years sooner, that would have been perfect.

By the time the XUV500 came out as first monocoque, and it did very well for us. On the smaller side, which was not our strength, we were behind many other players. First one that came out was in 2016, which was KUV100 and now we are coming out with XUV300. So, with this, our journey is now complete. Now, we have no disadvantage in terms of product offering.

So, how are you planning to claw back market share?

Between these three products, we will get 9,000 volume. I am reasonably sure that 9,000 will happen. Out of the 9,000, I am assuming that 2,000 will be cannibalization. So, it should give a fairly significant growth in market share. Between these three products, XUV 300 has the larger potential.

Now, after this launch of XUV300, we have something in every segment from 3.6 metre KUV to Alturas. Therefore, now we have nothing to say that we don’t have a product and that we are not participating in the growth. From here on, we have to look at reversal of market share in order to compensate for the growth that had happened in the last four to five years and last quarter, for the first time, after about 11 quarters, our market share went up.

Now after we launch the XUV300 and get volumes, which are significant in numbers, assuming it does not cannibalize too much with our current products. That will certainly help us to increase our market share.

How do you see the competition in the segment that is XUV300 and below?

Quite intense. I will take names here. Clearly the market leader is (Maruti Suzuki's) Vitara Brezza, followed by (Hyundai) Creta, followed by (Tata) Nexon, closely behind is (Ford) EcoSport and then the rest. So, it is a fairly intense competition. What we have tried to do here is that we have taken a view that if we were to launch a me-too product and try and compete on pricing, it is going to be an uphill battle. For any challenger to come into a sub-segment, you have to offer something that is wow! You cannot be doing that by doing something which is incrementally better than what the leaders are doing.

Do you think you can still leverage Scorpio and Bolero in this fight to claw back market share?

Scorpio and Bolero continue to give us the volume that they have been giving. So, we are not looking to grow volume there. We continue to grow volume from these three models—the third being XUV500—without eating into our existing volumes.

But increasingly, there would be more advanced models coming into the market due to regulatory changes. In such a scenario, do you think Scorpio and Bolero will hold ground?

When a product reaches an iconic stage, then logic does not work. If you were to look at Bolero, which we launched in 2000 and we have done cosmetic changes. It is with the same dyes and we are selling 7,000 a month—our highest selling product. So, that product has a certain identity that is evergreen. Same thing with Scorpio, which is doing about 4,000-4,500 a month. Styling and design, which was a breakthrough when we launched but now it is dated, but the product continues to do very well. So, Bolero, Scorpio and XUV 500 are timeless and these are our top volume earners.

So, will these models comply with the new regulations such as BS VI emission norms, safety norms, etc.?

Of course. Undoubtedly. Bolero was the last one to pass the internal test. All other products, including the new products, will meet the safety as well as the new emission norms. We would probably start production of the first BS VI vehicle around January 2020.