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You must be pleased with the response to the XUV Five Hundred, we say, starting our interaction with Mahindra & Mahindra's Mr Rajan Wadhera, referring to the premium sport utility vehicle the company has launched.
“We call it the Five Double-Oh,” he replies, “Five being lucky for Mahindra in the tractor domain. All our models end with 5. And, “O” has been lucky for the auto sector.”
Scorpio, Bolero, Maximmo, Genio, Verito and Geo, he adds, listing the company's vehicle models, all of them ending in an “O.” So, “we thought this one should also end in an O, a double-Oh.”
That sets the tone for our interaction with Mr Wadhera, Chief Executive, Technology, Product Development & Sourcing, Mahindra & Mahindra, at the recent auto expo in Delhi.
Huge challenge
“We are feeling good. It was a huge task when we started,” he says, of the effort that went into the XUV500.
For starters, the company decided to go in for a monocoque structure – where the body and chassis form a single unit – which itself was a huge challenge.
The biggest challenge, according to Mr Wadhera, was in product development. Unlike the local arms of multinational car makers, Indian companies such as M&M and Tata Motors have to spend enormous sums of money on product development. For multinational auto companies, this cost can be spread over multiple plants and multiple products.
M&M spent close to Rs 450 crore on product development and almost 800 man-years, which translates into 200 engineers working on it for four years. The company generated close to 1,800 drawings and 28 patents, both process and component patents.
Product development, says Mr Wadhera, is the toughest part, as it involves coming up with drawings for each and every component that goes into the vehicle, working closely with the vendors to get the parts made, trying them out and then getting them validated. The money spent on tooling development, which involves working with the vendors in getting the dies ready, will be about Rs 200 crore. MNC car makers too will have to spend this amount.
But, where the Indian companies are at a disadvantage is that they have to bear the product development expenses, that too on a single vehicle and in limited numbers. Whereas, a Suzuki, for instance, can amortise this cost on a model like the Swift over more than one plant and spread the cost over all the markets it will be sold in.
This is where M&M's acquisition of SsangYong of Korea will help. Instead of one product, the company will be able to share the product development expenses with SsangYong and over more than one vehicle.
Pricing challenge
Having come up with a product at the price-point that was decided when the company launched on the project, M&M's next task, says Mr Wadhera, is to challenge the next threshold, at the same cost. “I want to give a product better than the XUV500 at the same price point. We are looking at improved levels of finesse and refinement.”
“You got to be in it to feel it,” he says and adds that the difference is between wearing a Hermes tie and a not-so-well-known one.
M&M is looking to use some of the technologies that have been developed, in reducing the vehicle's weight. This, in turn, will help reduce carbon dioxide emissions and increase fuel efficiency. In the pipeline is an automatic transmission XUV500. A refresh is due in 18 to 24 months, by which time the company is confident of getting through with all the improvements.
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