Utility vehicle market leader Mahindra & Mahindra (M&M) has ceded dramatic ground to rivals in the past five years as its market share hit the lowest mark in over a decade.
The Mumbai-based maker of popular sports utility vehicles (SUV) and multi-utility vehicles (MUV) saw its domestic share go down to under 30 percent by close of last financial year, according to data supplied by the Society of Indian Automobile Manufacturers.
Creation of new categories such as the compact SUV, cross-over and premium hatchback segment coupled with the entry of new players in the SUV space such as Maruti Suzuki, Hyundai, Honda and Ford, M&M’s share in the UV segment took a knock.
Just five years ago the company’s share stood at an enviable, life-time high of 55 percent, powered ahead by demand for Bolero, Scorpio and XUV 500. While the entire domestic UV segment grew by 30 percent last year M&M during the same year remained nearly stagnant.
The startling fall in market share of M&M comes despite the company introducing three new models in the domestic market over 18 months ending March 31, 2017. TUV 300, KUV 100 and the Nuvosport all of which were launched by M&M after September, 2015 have failed to generate volumes expected from them.
“The company accepted that its recently launched compact SUVs (KUV100 and TUV300) have not met management’s expectations but they have taken corrective action to redesign these vehicles. Management expects KUV100 and TUV300 volumes to double from its current run-rate over the next one year, which was the company’s initial target when they launched these vehicles”, said a recent report by Kotak Institutional Equities.
Average monthly sales of the Pininfarina-designed TUV 300 stood at under 2,200 units last year whereas the internal target for the vehicle was over 3,500. The TUV 300 was to take on the Ford Ecosport and the Maruti Suzuki Vitara Brezza.
Similarly, the country’s cheapest SUV the Mahindra KUV100 averaged sales of under 3,000 units per month last financial year though initial expectation was to retail at least 5,000 units a month.
“Both brands (TUV and KUV) have met with success especially considering the highly competitive segments they have entered and the fact that this is our first attempt to target these consumer segments. Going forward our focus will be on establishing these brands in their respective segments and extending their reach in those segments. We have a robust product plan including regular upgrades & refreshes to ensure success of these brands”, said a M&M spokesperson.
M&M's biggest disappointment was the Nuvosport, which is essentially a redesigned Quanto, the mini version of the Xylo MUV that too failed to excite buyers. As per data available the Nuvosport averaged 200 units sales per month last year with the last three months managing to sell just 201 units.
M&M, however, believes that the entry of new players into the UV space has led to fragmentation of the segment, hurting its market share. The SC judgement on diesel vehicles and demonetization last year have been unfavourable for growth, said the company.
“The UV segment has seen almost 20 new product launches in the last five years which has resulted in not only an expansion of the segment but also the fragmentation in the segment. Last year alone the SUV segment saw 6 new product launches at different price points. With the size of market base expanding, the market leader is bound to lose some share”, added the company spokesperson.
M&M-led Korean company SsangYong, too, failed to excite buyers in India. The Rexton premium SUV, which was targeted at the Toyota Fortuner sold just 121 units last year including zero sales in February and March.