This is a special week for Mahindra & Mahindra. The centre of attraction is the Scorpio, which celebrates its 10th anniversary and is still going strong.

The last decade has also seen M&M grow from strength to strength and emerge the strongest player in India’s utility-vehicle segment. Its Bolero is the largest selling brand, with monthly sales inching towards the 10,000-unit mark, while the recently launched XUV500 will soon take over as the company’s flagship brand. Then you have the Xylo which fits into the MPV (multipurpose vehicle) space.

However, the Scorpio will continue to hold pride of place because it was the key to M&M’s growth strategy, which was first conceived way back in the late 1990s. Till then, the products from its stable were the Armada and the Commander, which were basic offerings that did little from the image positioning point of view.

The onset of reforms in 1991 saw the Government thrown open its gates to global auto majors keen on investing in India. It was quite natural for companies such as M&M to team up with one of these big names. Talks kicked off with Chrysler (which had a small stake in the company) to bring the Jeep Cherokee to India. Reports then began doing the rounds of a possible alliance with Renault when clinics of the R-17 and R-19 were carried out in select cities.

Ford tie-up

The unexpected happened when M&M decided to join hands with Ford Motor Company to manufacture the Escort at its Nashik plant. It was a clear signal of its intent to get into cars, which seemed only logical considering that other Indian automakers such as Premier, Hindustan Motors and (the then) Telco had also entered into joint ventures with big names such as Peugeot, Fiat, General Motors, Mitsubishi and Daimler. In fact, Bajaj Auto also toyed with the idea of going beyond two-wheelers and had zeroed in on Chrysler as a potential partner at one point.

Cars were clearly the flavour of the 1990s and M&M was no exception to the rule. However, it was also getting increasingly clear that Indian companies had precious little to contribute in these joint ventures, especially in technology and financial support. And while the alliance with Ford was a great learning experience (for a company whose product portfolio was quite limited till that point), M&M was not unaware of the fact that it would have to focus on its core business of utility vehicles to stay relevant in a rapidly changing market.

This obviously meant that it had to quickly prioritise its investments for the future. Project IDAM (Integrated Design and Manufacture), the foundation for the Scorpio, got the nod for Rs 600 crore while the company took the backseat in its Ford joint venture.

Tight budget

It was not the easiest of decisions to take, for M&M was staking its future on a project that could determine its very survival in the long term. And while it may seem an insignificant sum today, Rs 600 crore was a lot of money then. This was the beginning of a tough journey when M&M pulled out all stops to make the Scorpio a reality. Mr Anand Mahindra roped in Mr Pawan Goenka (now President of the Automotive and Farm Equipment Sectors) from General Motors in the US to be part of the leadership team spearheading the project. It was not the easiest of tasks to put in place a spanking new SUV for a company that was starting from scratch.

Valuable lessons on processes had been imparted during the days with Ford and these were put to good use during Project IDAM. M&M’s intent was to offer a top-class vehicle at a competitive price, which meant costs had to be constantly kept in check during the journey at Nashik. After all, the budget was only Rs 600 crore, a fraction of what MNCs would have typically earmarked for such an ambitious project.

At one point, M&M even explored the option of using the PAL-Peugeot facility at Kalyan as home to the Scorpio. The French automaker had abruptly brought down the shutters on its Indian operations and the facility was now on offer to anyone in need of a readymade automobile production base. M&M apparently dropped the idea because of the labour unrest legacy which had crippled PAL-Peugeot’s operations earlier.

The right thing

When the Scorpio was finally unveiled in 2002, people were stunned by what they saw. In terms of design and styling, it was way ahead of other models in the market, and at a pretty affordable price. M&M had also decided to do away with the ‘Mahindra’ prefix because it was not entirely convinced if this association was appropriate for a premium product.

The reception to the Scorpio convinced M&M that it had done the right thing in focusing on its core strengths of making SUVs instead of venturing into unknown areas. It has stayed true to this objective since then and the present business model in the auto space comprises joint ventures for new businesses such as trucks and two-wheelers while SUVs constitute the nucleus and, hence, the major revenue centre.

The best part is that a decade after it parted ways with Ford, M&M got back into cars through an alliance with Renault. The Logan did not quite work and the partners eventually went their own ways, but M&M got the rights to manufacture the car, which has since been rechristened Verito. The company now wants to be associated in all segments where it can provide transport solutions right from bikes and cars to buses and, of course, SUVs.

All this has been made a reality thanks to the Scorpio whose success unleashed new energy within the M&M system. Its 10th anniversary is, therefore, special and goes beyond sales numbers. The Scorpio was the make-or-break product for M&M eventually which paved the way for a new future in the SUV space. It also played a big role in building the company’s brand and this was more than evident in the heady response to the XUV500. The same M&M, which was taking a big chance with Rs 600 crore for the Scorpio, ended up acquiring SsangYong Motor of South Korea for over three times as much last year. Nobody would have dreamt of something like this happening way back in 1997. It was the Scorpio that made the difference.

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