Mahindra and Mahindra is recognized for its powerful line up of Utility Vehicles (UV’s), other firms are now exploring the UV segment to create stiff competition with Mahindra and also to cater to the sporty car craze population. For around two years, the UV segment has hit sharp profit sale volumes for the company with 61 percent of total revenues. Its tractor business added 39%, according to Goenka a top company official majority of revenues are contributed by the UV and tractor business.
Mahindra has however not been too lucky with its sale outcomes in the UV segment, and has noted a sale decline of 27.5% compared to the sales encountered last August. The most interesting part is the company has faced its first ever UV sale dip in thirty five months. On the undesirable sale outcomes, Goenka said, ‘’if the same question was asked 3 to 4 months back, the response would have been on a more positive angle on auto division scenario, and is particularly concerned about the outcomes in tractor segment. This is opposite to our frequent admirable profits; we are not banking on auto sale revivals in the near future.
There is a silver lining as well, Mahindra all time potent SUV, Scorpio has overtaken the highly urbane and polished Renault Duster, and has even damaged the best selling tag of the car. This is indeed startling since Duster has all the attributes of a modernized SUV to meet the desires of today’s generation, the Scorpio sports a rugged and aggressive appeal which is more apt for off-terrain segments.
The rise in diesel costs is a dominant sale hindering factor for Mahindra, since more than 98 percent of the company’s vehicles operate on diesel, Mahindra’s auto rivals such as Maruti Suzuki, Hyundai and so on are keen to release around 15 to 17 fresh products, within 3 years. These firms have strong passenger car base which contributes around 20% of total sales.
According to Mohit Arora, the Executive Director, JD Power, ‘’most companies have cars in areas where Mahindra has generated impressive sales; the drastic increase in competition will result in certain amount of stress factors to Mahindra’s sale portfolio. ‘’
Sources claim that Mahindra is on the move to built new cars, the company has a robust UV scheme for the future with around 12 to 15 new launches within 2020 and will invest Rs 500 to 800 crore in product expansion department. Out of its enormous range of fresh models, 6 to 7 is expected to be new launches, which will include and new SUV to cater to small car consumers.
For some interesting facts, in the past 3 years, Mahindra recorded a whopping 160% growth in its UV segment, Scorpio and Bolero accounted for around 50 to 60 percent of total revenues.
Mahindra is indeed feeling the pressure in UV segment, with Maruti Suzuki working on XA Alpha SUV and Hyundai on a compact mini SUV. Mahindra has built its UV’s with cutting edge techniques; one example is the monocoque chassis in XUV500. The fact that the Scorpio has overdriven the remarkable profit image of Duster is one strong fact that Mahindra will always rule the UV segment.