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As fortunes reverse,Mahindra & Mahindra begins offering discounts

Mahindra & Mahindra was the only car maker among the top five to not offer major discounts or schemes.

Written by Roudra Bhattacharya | New Delhi | Published: May 15, 2013 3:52:13 am

Mahindra & Mahindra pushes XUV500,Quanto sales with Rs 50,000 worth of offers

Last fiscal,Mahindra & Mahindra (M&M) was the only car maker among the top five to not offer major discounts or schemes,as sales of its popular utility vehicle (UV) models moved faster off dealer shelves than what it could produce. That’s not true any more.

Since April,slower sales have led previously popular products like the XUV500 and the recently launched Quanto to be available for the first time with a variety of discounts and schemes leading to savings of up to R50,000 on the sticker price for consumers,multiple dealers told FE.

The reversal in M&M’s success story of last year comes on the back of rising diesel prices (up R2.54 in Delhi since January to R49.69) and the additional 3% (from 27%) excise duty imposed on SUVs in the Budget this February. This has brought down volume growth for the company from 26% (at 3.10 lakh units) in FY13,to 0.35% (23,107 units) in April 2013.

M&M CEO (automotive) Pravin Shah said,“There is a combination of factors as to why we are giving offers on these models for the first time. The XUV500 is a 20-month-old product,plus the market and competition is giving many discounts,so we have to react. The increase in excise duty on SUVs have also slowed down sales and as a result,there are no waiting period for the models any more.”

Both the XUV500 and Quanto were launched a year apart — the former in September 2011,while the Quanto was launched in September 2012. Initially,the XUV500 had been a huge hit,with waiting periods stretching to around six months and encouraging M&M to almost double output from the initial 2,500 to about 4,500.

“Inventories are high across and the situation is very tight in the market. For M&M,the XUV 500 and the Quanto are no longer hot-selling and one has to make an effort to sell,so there are offers on them for the first time. There are some schemes on the Bolero and Verito as well,” a M&M dealer said. Another dealer confirmed that while the offers are a new development for the company,cash discounts are not being encouraged.

On the XUV500,customers can save up to R50,000 on the on-road price of about R14.24 lakh (base variant in Delhi) through a combination of exchange bonus (or loyalty bonus),40% insurance discount and other schemes. On the Quanto,which has an on-road starting price of about R6.4 lakh,savings can add up to R34,000.

These schemes,a first by M&M in the recent past,follows other major car makers like Maruti Suzuki,Honda,Hyundai,General Motors,Tata Motors and Toyota Kirloskar,who are all offering various schemes and discount,which start at about R30,000,but go up to as much as R1 lakh on premium models.

To improve sales,Shah further said that M&M is now working on modifying both its SUV range and UV range so as not to qualify under the new excise duty hike,which will help reduce model prices and push demand.

However,this process will take several months. For the purpose of the excise hike,SUVs are defined as vehicles over four metres in length,with more than 1.2 litre and 1.5 litre engine capacities and with above 170 mm ground clearance. While impacting many SUVs,but sparing some like the Renault Duster (diesel) and upcoming Ford EcoSport,this definition has also inadvertently included certain sedans such as the Maruti SX4 (petrol) and the Toyota Corolla (petrol).

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