Mahindra & Mahindra begins trial production of mini-Xylo

Small is beautiful, seems to be the new mantra for India's largest utility vehicle manufacturer Mahindra & Mahindra. M&M is all set to launch a mini version of its popular car -- Xylo. The trial production has already begun. The car will be launched in the next two months and is likely to be rolled out of company's new plant at Chakan.

A diesel mini-Xylo is expected to be priced around Rs 5 lakh, making it an attractive option for customers buying premium hatchbacks like Maruti Suzuki Swift, Hyundai's i20 or mid-segment sedans like Tata Motors Indigo. Experts also believe that a more fuel efficient diesel sports utility vehicle (SUV) will be much in demand at a time when petrol price hikes are burning a hole in a car owner's pocket. When contacted, M&M declined to comment. M&M's stock on the Bombay Stock Exchange was down 0.10 per cent at Rs 672.45 from previous close.

Speaking on the potential of such a mini-SUV, Automotive Dealers Association of Maharashtra chairman Sandeep Kumar Bafna said, "It's the package which will be of the essence – for example if a company can come out with a mini SUV wherein the price is Rs 5 lakh to Rs 7 lakh and it is a diesel product with excellent gearbox, engine and performance. For customers, a mini SUV is something that a person can use as an office going car as well as a weekend car."

Currently most 5-seater SUVs like Suzuki's Vitara are priced above Rs 18 lakhs, which many cannot afford. Even Xylo priced around Rs 8 lakhs is out of reach for many customers. A mini-Xylo could become a volume driver for M&M especially when the Xylo faces stiff competition from the popular Toyota Innova in that segment.

Commenting on the sales outlook for this year, M&M's automotive division CEO Rajesh Jejurikar said, "We have a strong portfolio of brands and we have a lot of products in the pipeline to be launched over the next 12 to 18 months. We are sure we will have a good year."

It also makes strategic sense for M&M to launch a mini-SUV as it wants to leverage its strengths in the utility vehicle market. The company is also expected to launch a global-SUV priced above Xylo later this year. In the second quarter of next year, the company will bring cars like Korando and Rexton to India from Korea's Ssangyong Motor after completing market feasibility studies. M&M completed the acquisition of Ssangyong in March this year and will work closely with Ssangyong for new product development and penetrating international markets.

These cars are in great demand in India!

The passenger vehicle market may be slowing, but Maruti Suzuki's Swift Dzire sedan and Swift hatchback, Mahindra & Mahindra's utility vehicle Xylo and Hyundai's i20 have long waiting lists that have their manufacturers struggling to increase production.

Xylo, the multi-utility vehicle (base model is priced Rs 6.48 lakh (Rs 6,48,000) ex-showroom, Delhi) that was launched in January this year, has a waiting period of over two months.


Mahindra & Mahindra's xylo

Despite M&M raising prices by Rs 10,000 to Rs 12,000 about a month ago, sales have not been dented, say company executives.

The company had initially set a production target of 120 units a day; unprecedented demand has forced it to raise this to 130 to 135 units per day.

"The top-end variant is seeing the maximum surge in demand," said Pawan Goenka, president (automotive sector), M&M.


Mahindra & Mahindra's Scorpio

The Xylo has even eaten into the share of M&M's sports utility vehicle Scorpio and MUV Bolero. About a quarter of buyers who had planned to buy Scorpio or Bolero booked Xylo, said the company.

Maruti Suzuki's Dzire, the sedan version of the popular Swift hatchback that was launched in March last year, has a waiting period of three to four months for both versions (the diesel variant costs Rs 5.47 lakh (Rs 547,000) and petrol Rs 4.61 lakh (Rs 461,000), ex-showroom Delhi).


Maruti Suzuki's Dzire

"Initially, there were some constraints on availability of engines. Those are over and we are raising capacity.

But demand has also increased," said RC Bhargava, chairman of Maruti Suzuki.

He added, "It is difficult to say if we will have spare capacity to increase production further."

The company initially produced 3,000 Swift DZires a month but had to quickly scale up to 7,000 as demand grew. Bookings, however, crossed 10,000 vehicles a month.

"We have continuously scaled up production for Swift DZire but the demand is still far ahead. The car, which is promoted as a vehicle that meets all aspirational needs, will continue to see healthy growth in demand even in such a downturn," said Mayank Pareek, executive officer (sales and marketing), Maruti Suzuki.

About 65 per cent demand for Swift DZire is for the diesel variant.

Maruti's Swift hatchback has a waiting period of over three months in most markets, with the diesel variant being the most in demand.

Company executives said they were producing over 9,000 units a month but were booking about 11,000.

The petrol version costs Rs 3.99 lakh (Rs 399,000) and diesel Rs 4.67 lakh (Rs 467,000 ex-showroom, Delhi).

Hyundai had priced the i20 at a steep Rs 4.79 lakh (Rs 479,000, ex-showroom, Delhi) when it launched it in December last year and did not expect to sell more than 1,000 units a month.


Hyundai i20

Bookings however, have ranged from 2,000 to 2,200 cars every month.

"Initially we had a waiting list of 60 days but this has come down to 45 days after we increased production.

However, we had not anticipated this response for a car that was considered expensive in its category," said a company spokesperson.

Hyundai says that it has been able to increase production to around 1,500 a month -- which is around 7 per cent of monthly production -- by juggling the production of different models.

Mahindra to Launch Xylo in India

Mahindra and Mahindra announced that it is ready to launch its new MUV, Xylo, in India. It has developed its multi-ultility vehicle under the name of Ingenio. The new vehicle has been developed completely in-house after the success of its SUV, the Scorpio.

According to the press release from the company, “The much awaited Mahindra XYLO has been co-created with customers for developing a vehicle around the lifestyle and luxury aspirations of its end customer. This is further testimony to Mahindra’s customer centric vision of co-creating products and services based on the feedback and latent needs of its consumers.”

The vehicle has already undergone thorough testing in India and other countries. It is expected to be priced around Rs. 6.5 lakh to Rs. 7.5 lakh and will be pitted against Toyota Innova and upcoming Tata Indicruz Crossover.

“XYLO has been developed by a team consisting of 160 experts who have created new benchmarks in styling, technology and performance,” said Pawan Goenka, Mahindra Auto President. The car may be launched by end of December 2008.