Mahindra & Mahindra's latest offering, the XUV500, has literally set the market afire with nearly 9,000 bookings in just ten days.
However, the company does not think it is time to uncork the champagne yet. “It is still early to celebrate because right now the customer is reacting to what he is seeing or experiencing through test drives. He can be as brutal, and rightly so, if we do not meet his expectations,” Dr Pawan Goenka, President (Automotive and Farm Equipment Sectors), told Business Line .
M&M, he added, would be more comfortable six months from now with sustained demand in place coupled with good feedback for the vehicle's looks and reliability. The company plans to produce 2,000 units per month this quarter going up to 3,000 in the next (January-March, 2012). The intent is to go up to 5,000 units a month by end-June 2012.
Pricing factor
From M&M's point of view, the biggest challenge with the XUV500 was to create a mass market in the Rs 11-13 lakh space. This was no easy task considering that many big names have not quite fuelled customer excitement in this price space.
From the response to the bookings, it is evident that the XUV500 is creating a new segment from two sides. One is from the higher price category where customers realise that they are getting as much from a relatively more affordable option. Likewise, demand is coming from the price segment below the XUV500 where buyers have figured out that by stretching their budget a bit, they can get a lot more in the process.
“This is the magic of our pricing where the XUV500 is now a truly aspirational product for people who would normally not look at this range. Nobody is thinking SUV but XUV,” Dr Goenka quipped.
The company is reasonably confident that there will eventually be 3,000 customers ready to pay Rs 12 lakh apiece for a Mahindra vehicle. “This is an important breakthrough for us,” he said.
Strong brand
It was a happy coincidence for M&M that its new baby would be part of the recently commissioned Chakan plant which has top-class systems and processes in place. The company also pulled out all stops to create the pre-launch buzz. “It is this combination of product, manufacturing and launch which has made the product what it is today,” Dr Goenka said.
The response is also testimony to the growth of the Mahindra brand. “By the end of the day, it is a tribute to Team Mahindra. I believe that what this product can do for our brand is probably much more than what any (product) has done in the past, including the Scorpio,” he said.