By:Moneycontrol Bureau
Utility vehicle maker Mahindra & Mahindra (M&M) finally launched its much anticipated premium global sports utility
vehicle XUV500 this week. While impressive exterior styling and top-end features internally was expected, given that it is
also targeting global markets including Europe and Latin America for XUV500, apart from expanding its leadership in the UV
segment in India, the competitive pricing has surprised the street the most.
Many had expected M&M to price the SUV around Rs 13-15 lakh. The company, however, sprang a surprise, with prices starting
at Rs 10.8 lakh going up to Rs 13 lakh.
"M&M's XUV5OO, perceived to be an entry segment luxury SUV, has surprised with its disruptive pricing... The pricing has
surprised us as we were expecting the new SUV to be priced higher than the top-end Scorpio at Rs13 lakh plus," said
brokerage Sharekhan.
"We believe that M&M has got it right by pricing it competitively... We expect the new SUV to impact sales of all its peers
and will also partially cannibalise Scorpio sales," said Bhaumik Bhatia of IDBI Capital.
It was expected that the XUV500 would be pitted against Tata Motors ’ crossover vehicle Aria, whose price starts at near Rs
12 lakh to over Rs 15 lakh.
However, now with this surprise pricing, it will not just fight with Tata Aria, but will also compete head-on with Toyota
Innova and try to convince its high-end Scorpio customers to migrate to the XUV500, Sharekhan said.
Kotak Securities analyst Hitesh Goel feels XUV500’s "attractive price points" will also attract customers of sedans like
Honda City and Toyota Corolla by providing high-end features, which are otherwise only available in SUVs like Toyota
Fortuner and General Motors’ Chevrolet Captiva.
GPS, anti lock breaking system (ABS), six airbags, full touch integrated audio system, hill-descent control are just some
of the hi-tech features that M&M has packed in the SUV.
So on the one hand it will compete with the likes of Innova, Aria and Tata Safari on the pricing front and with Fortuner
and Captiva on the features front.
Apart from the features, the company also claims a fuel efficiency of around 15 kms a litre for the XUV500, higher than
many other SUVs it will compete with.
The company aims to produce 2,000 units of the SUV at the Chakan plant near Pune. Apart from launching it in India, the SUV
will be introduced in South Africa and it then hopes to drive it into Australia, Western Europe and the Americas.
Goel of Kotak Securities says M&M has designed the vehicle at an "incredible low cost," with development cost of Rs 850
crore including Rs 200 crore spent on engine and transmission. Nine years ago, Scorpio was designed at Rs 500 crore, he
noted.
Bhatia of IDBI Capital feels, the XUV500 could repeat the success story of the Scorpio for M&M.
M&M shares were traded up 0.3% at Rs 815.90 on NSE in afternoon trade.
Sharekhan has a "buy" and Kotak Securities has a "add" rating on the stock.
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more info
Utility vehicle maker Mahindra & Mahindra (M&M) finally launched its much anticipated premium global sports utility
vehicle XUV500 this week. While impressive exterior styling and top-end features internally was expected, given that it is
also targeting global markets including Europe and Latin America for XUV500, apart from expanding its leadership in the UV
segment in India, the competitive pricing has surprised the street the most.
Many had expected M&M to price the SUV around Rs 13-15 lakh. The company, however, sprang a surprise, with prices starting
at Rs 10.8 lakh going up to Rs 13 lakh.
"M&M's XUV5OO, perceived to be an entry segment luxury SUV, has surprised with its disruptive pricing... The pricing has
surprised us as we were expecting the new SUV to be priced higher than the top-end Scorpio at Rs13 lakh plus," said
brokerage Sharekhan.
"We believe that M&M has got it right by pricing it competitively... We expect the new SUV to impact sales of all its peers
and will also partially cannibalise Scorpio sales," said Bhaumik Bhatia of IDBI Capital.
It was expected that the XUV500 would be pitted against Tata Motors ’ crossover vehicle Aria, whose price starts at near Rs
12 lakh to over Rs 15 lakh.
However, now with this surprise pricing, it will not just fight with Tata Aria, but will also compete head-on with Toyota
Innova and try to convince its high-end Scorpio customers to migrate to the XUV500, Sharekhan said.
Kotak Securities analyst Hitesh Goel feels XUV500’s "attractive price points" will also attract customers of sedans like
Honda City and Toyota Corolla by providing high-end features, which are otherwise only available in SUVs like Toyota
Fortuner and General Motors’ Chevrolet Captiva.
GPS, anti lock breaking system (ABS), six airbags, full touch integrated audio system, hill-descent control are just some
of the hi-tech features that M&M has packed in the SUV.
So on the one hand it will compete with the likes of Innova, Aria and Tata Safari on the pricing front and with Fortuner
and Captiva on the features front.
Apart from the features, the company also claims a fuel efficiency of around 15 kms a litre for the XUV500, higher than
many other SUVs it will compete with.
The company aims to produce 2,000 units of the SUV at the Chakan plant near Pune. Apart from launching it in India, the SUV
will be introduced in South Africa and it then hopes to drive it into Australia, Western Europe and the Americas.
Goel of Kotak Securities says M&M has designed the vehicle at an "incredible low cost," with development cost of Rs 850
crore including Rs 200 crore spent on engine and transmission. Nine years ago, Scorpio was designed at Rs 500 crore, he
noted.
Bhatia of IDBI Capital feels, the XUV500 could repeat the success story of the Scorpio for M&M.
M&M shares were traded up 0.3% at Rs 815.90 on NSE in afternoon trade.
Sharekhan has a "buy" and Kotak Securities has a "add" rating on the stock.
....