In March this year, Mahindra &Mahindra (M&M) completed its acquisition of South Korea’s SsangYong Motor Company. This was a major milestone for the company which is India’s top SUV maker and has been in the news for the outstanding success of the XUV500 which recently completed a year.
In mid-October, M&M launched the Rexton, the first of its offerings from the SsangYong stable. The SUV, which is being brought in via the completely-knocked-down route or CKD will take on the key players in the SUV space that includes the Toyota Fortuner, Honda CR-V and Mitsubishi Pajero, to name a few.
At the launch in Mumbai, Yoo-Il Lee, CEO of SsangYong, said: "India is a fast-growing market with a strong SUV segment. We have a good opportunity to bring in our products."
When M&M announced its plans to acquire SsangYong in 2011, its stated aim was to be a global SUV maker. Its journey towards this goal has involved several steps. Among them was the launch of the XUV500 (W201) that sells close to 4,000 units a month. The vehicle has been priced aggressively and was an instant hit. M&M sources said that at that price point, the vehicle offered buyers a range of features that included state-of-the-art in-car and electronics features which, it said, was a first for a vehicle in that space.
Rexton rolls in
Now with the Rexton, M&M’s gameplay goes into the high-end SUV segment. Here the vehicle is pitched against the Toyota Fortuner and Ford Endeavour.
At the time of the buyout, M&M had outlined some of the key factors it hoped to leverage with SsangYong. Firstly, the Korean company's expertise in engine technology and two, its dealer network. With an estimated 900 touch-points worldwide, the network offered M&M a chance to sell its vehicles in several countries.
What is interesting is the Rexton's badging. With a badge that says ‘SsangYong by Mahindra’, the Indian SUV maker is betting that its own strength as a brand can be seen in the Indian context, capable of bringing a foreign marque to India. For SsangYong, this is a chance to get more numbers from the new and emerging markets. The SUV is a hit in Russia, which is its largest market with sales of 33,000 units, and India is set to be the second largest.
If the Rexton rollout is one key milestone, the others are the Bolero and the Verito. But first, the Bolero. Almost a year ago, M&M refreshed this brand, one of the oldest in its stable, and even the company could not have expected the response that it generated. The refreshed MUV hit the 10,000-unit sales mark in March 2012 and has grossed over 100,000 units over a year. The Bolero's popularity can also be attributed to the fact that being diesel-powered, it is a hit in both Tier 1 and 2 cities.
The recent refresh of the Verito saloon also promises to be another feather in M&M's cap. After the new Verito appeared in end-July, sales hit the 2,000-unit mark, the first time since M&M took over the brand from Renault. Made in Nashik, under a contract manufacturing arrangement, the Verito, then the Logan, was a hit in the taxi segment. What worked for Mahindra was the car’s diesel 1.5-litre engine and that USP has carried over under Mahindra’s stewardship with the petrol model selling in single digits.
The new Verito has been equipped with a host of features that includes a less-boxy rear and LEDs in the new tail-lamps. There have also been significant improvements in the interior design and a Scorpio-like music system in the centre console. Also in the works is a sub-four-metre Verito slated for a March 2013 launch.
Last month, M&M launched a sub-four-metre version of the Xylo that it has christened the Quanto. Targeted at the lower end of the compact UV segment, the company hopes to leverage the buyer preference for small SUVs.
While these have been M&M’s noteworthy achievements, it has not been able to take forward its plan to launch a pick-up version of the Scorpio in the US.
M&M was unable to pass the strict crash tests that are mandatory for an entry in the US market on the one hand even as it has had its share of legal issues with the main distributor there.
Reva NXR to charge in
This month, M&M will launch the first electric-powered vehicle under the Mahindra brand, the NXR. Mahindra had acquired Reva in May 2010, taking a 55 percent stake. The NXR will be followed by several other products but clearly the advantage that M&M sees is leveraging the technology across its own vehicle range. One of the first to get this is likely to be the Maxximo minivan. It was first displayed at the 2010 Auto Expo.
Trials on two wheels
One area that M&M won’t be very happy about is its two-wheeler business that has been an area of concern for M&M after the company had to withdraw its first bike, the 110cc Stallio from the market. It hopes to bring out a better, all-new bike but the going isn’t getting easier with the likes of Honda and an aggressive Hero Motocorp going all out for the crown in the segment.
That may be the only dampener in a year in which M&M set up an R&D centre in Michigan and has invested an estimated Rs 2,000 crore in a two-wheeler R&D set-up at the Mahindra Research Valley, in Chennai.
M&M has come a long way since Project IDAM that spawned the Scorpio. At that time, Mahindra was not quite the brand it is today and so launched the vehicle under the Scorpio brand name itself in order to establish a niche. Today, Mahindra is now a strong brand and can hold its own in an increasingly competitive market.
M&M'S Q2 RESULTS
Mahindra & Mahindra has announced its Q2 results and its 100 percent arm, Mahindra Vehicle Manufacturers, located at Chakan, has posted revenues of Rs 10,786.7 crore as against Rs 8,235.8 crore during the corresponding period last year, up 31 percent. Net profit before tax for the current quarter is Rs 1,327.2 crore as against Rs 1,001.4 crore in Q2 2011. After providing for tax, the same is Rs 978.1 crore against Rs 761.5 crore in Q2 last year, up 28 percent.
In the passenger UV segment, 62,751 vehicles were sold in Q2, up 32 percent over Q2 last year. In the quarter, the Quanto generated 5,000 bookings in just the first three weeks of its launch.
In the cars segment, 4,899 Veritos were sold. On the export front, 10,349 vehicles were shipped, up 43 percent over 7,239 vehicles exported in Q2 last year.
In the farm equipment sector, 47,065 tractors were sold as compared to 54,585 tractors in Q2 last year, with a domestic market share of 40.3 percent. According to the company, 3,043 tractors were sold in the quarter and its engine business revenue grew by 11.1 percent to Rs 231.3 crore in the same period.
Gross revenues and other income of M&M for Q2 were Rs 10,891.4 crore as against Rs 8,212 crore during the corresponding period last year, up 32 percent. Net profits were Rs 901.8 crore as against Rs 737.4 crore in the same period last year, up 22.3 percent.
BRIAN DE SOUZA