A heavy container comes crashing down on a parked car near a discotheque. The people in the vicinity jump in fright. Most of them quickly move away from the crash sight. Who wants to be caught in the midst of pandemonium? Just then the door of the container flings open and a brand new shiny vehicle comes gliding down. It?s the Mahindra Xylo (prices start at Rs 6.25 lakh, ex-showroom Delhi), the new multipurpose vehicle from automaker Mahindra & Mahindra. There?s an interesting tagline that follows: ?The era of sedans is over. Mahindra Xylo, outgrow your sedan!?

Xylo?s entry into the consumer world is dramatic to say the least. It?s even ambitious if you go by the tagline. Says an observer, ?The commercial does make you sit up and take notice of it.? That?s half the battle won for the product in its initial phase. But can it sustain the momentum?

Preliminary reports suggest that the vehicle is receiving a good response from the marketplace. Pawan Goenka, president, automotive sector, Mahindra & Mahindra, says, ?We?ve received over 53,000 inquiries so far. The number of test drives conducted has been around 26,000. Bookings so far have been 6,000 while vehicles delivered to end consumers are over 1,000.?

Interesting numbers thrown by the head of the automotive division at Mahindra ?We have set a target of 2,000 units per month in terms of sales,? he says. ?If we do more, we?d be happy. If we do less, we?d be disappointed.?

Goenka?s optimism is not misplaced.

The company has managed to fill a gap in its product portfolio with a vehicle sitting neatly between the Mahindra Bolero (comes in six variants, starting price Rs 5,30,632 lakh, ex-showroom Delhi) and the Scorpio (comes in seven variants, starting price Rs 7,54,555 lakh, ex-showroom Delhi), the latter perceived as a premium offering mainly for personal use, the former slightly lower down the rung. In fact, to many the Bolero is nothing more than a jeep, say analysts. ?It does look like a typical jeep,? says an observer.

In contrast, the Xylo has been created keeping in mind the need for an urban passenger carrier?something Mahindra has lacked in its product portfolio. Its pick-ups (the Maxx Maxi truck, Bolero Pik Up FB, Mahindra Champ three-wheeler and the Bolero Camper) etc double up as rural passenger carriers. But it has never had an urban passenger carrier. Xylo fills that gap.

In that sense, it competes with Toyota?s Innova, the largest selling model in mid-size sedan and above category, head on. The Tavera from General Motors is also a rival but not to such an extent, say analysts. That is because comfort and driving-feel-wise, it is the Innova that seems to have stolen a march over the Tavera. At about Rs 7.66 lakh, the Innova also costs more than the Tavera, which starts at about Rs 6.25 lakh.

The Xylo, on the other hand, competes with the Innova on all these parameters. Its comfortable legroom, seating capacity for eight people, fuel efficiency, surround cool dual AC at a price tag much below that of the Innova, makes it an interesting bet for transport operators, who want a slightly upscale vehicle to ferry passengers to and fro, something the Innova is doing at the moment. The Innova and Tavera are also popular on the call centre circuit. So the Xylo will eventually find its way there too, say some. Goenka makes no bones about it. ?We aren?t preventing the commercial operators from purchasing the vehicle.?

The company wouldn?t, given that the commercial segment is a key one. Inquiries are coming from there, adds Goenka.

But for all its commercial applications, the marketing breakthrough by the company has been to try and pitch the vehicle to sedan or C-segment car users?for people who have cars in the Rs 8-9 lakh bracket and don?t mind having a second option where they can comfortably seat their families and go on long drives over the weekend. ?These are the ones who are upwardly mobile, young at heart and love traveling with their families over the weekend,? says VG Ramakrishnan, senior director, automotive and transportation, Frost & Sullivan, South Asia, Middle East & North Africa. ?Youngsters who love outdoor activities are also a potential target,? he says.

The company has no intentions to stop there though. Observers opine that the strategy of the company is even more ambitious with the target to take-on the sedan market full-on by positioning the vehicle as the preferred choice of consumers who would have otherwise opted for a conventional C-segment car when making their first purchase in that price range.

This way the company has ensured that the vehicle?s personal-use aspect is not ignored even as it tries filling the gap for an urban passenger carrier in its portfolio. In fact, it is at the heart of the matter. ?Closer to the launch, we realised it was imperative for us to widen our reach, our ambit,? says Goenka. ?Therefore the thinking: why not look at the sedan market rather than restricting ourselves to the multi-purpose vehicle (MPV) segment? It was the first attempt on our part to look at a product inside out.?

By some accounts, the company is plugging into the growing aspiration level of consumers the downturn notwithstanding. Larger more spacious vehicles are finding acceptance among consumers. The numbers show that.

Despite the April 2008 to January 2009 period being a sluggish one for the auto industry, multipurpose vehicles or MPVs, the category in which the Xylo, Innova, Tavera etc fall, registered a sales growth of about 6.33% over the same period a year before, according to data by the Society of Indian Automobile Manufacturers (SIAM). This is good at a time when most other segments under the umbrella of passenger vehicles have skid rather badly. Passenger cars and utility vehicles, for instance, have slid by 0.62% and 7.38% respectively in April 2008 to January 2009, according to SIAM.

Even on the exports front, MPVs saw a decent 16% growth in April 2008 to January 2009. It?s on a small base and nothing compared to the 63% growth that the passenger cars segment saw in the same period. It?s worthwhile nonetheless. Production, in contrast, was the only metric to have worked against MPVs. Production of the latter was slashed by about 8% in April 2008 to January 2009. It?s lower than utility vehicles, whose production was slashed by about 13% in the same period. But it?s understandable, say experts, given the slowdown in the industry.

Quite clearly the growth in sales of MPVs is a boon for automakers such as Mahindra who are trying to pitch their vehicles like the Xylo as an alternative to conventional cars.

But even as the company attempts to do that the threat is that it is likely to cannabalise the prospective customer base of Scorpio, something auto analysts say shouldn?t actually be happening. ?I don?t see much of a difference between the Xylo and the Scorpio. It appears like a fat boy cousin of the latter to me,? says Mahantesh Sabarad, senior research analyst at the Mumbai-based Centrum Broking. ?Cannabalisation is obvious.?

Analysts, in fact, question the rationale of pitching the Xylo for personal use when the Scorpio is already doing the job. But the latter has been performing the task for the last six years. ?Bringing in vitality with new launches is imperative for an automaker,? says Ramakrishnan of Frost & Sullivan. ?Most automakers do that. You have to straddle different price points and perceptions. There is nothing wrong with it.?

In the passenger-car segment, for instance, having different options across the board is not uncommon. Maruti, for instance, has various products cutting across the entry and mid-level car segments. It continues to keep its portfolio vibrant with launches every now and then, and phasing out old models.

The idea, clearly, is to increase interest as well as the stickiness among consumers. An auto expert explains, ?Once a customer gets into a Maruti showroom, he can?t leave it. The company ensures that with products across the board.? Almost an FMGC (fast moving consumer goods) plan, a la Hindustan Unilever.

Mahindra is adopting a similar gameplan in the utility-vehicles segment, where it has largely had the Scorpio as a premium product for the last few years. The entry of the Xylo gives it one more reason to attract new customers into its fold. More launches could be expected.

Goenka isn?t saying anything about new launches in the segment. For now, he is busy trying to meet orders of the Xylo. He says, ?We are expecting about one-third of our existing customers to shift to the Xylo. So yes, cannabalisation will be there. But two-thirds, we feel, will be new customers.?

If that happens, Mahindra?s strategy would have worked.