With a remarkable 23% y-o-y rise in sales in March, Mahindra and Mahindra (M&M) has ended FY16 on a high; the original SUV maker has regained market share to close the year at 40%. Only nine months back, in July last year, the share had dropped to 30%.
But with volumes of 2,22,324 units by the end of the fiscal, it's been turnaround time for the Mumbai-headquartered firm. M&M's gain has been Renault and Ford’s loss: while Ford had picked up some market share that's gone down to 8% in the utility vehicle market.
“While the prospects of a good monsoon are a positive sign, we believe Mahindra has structural challenges on its UV business as competitive intensity increases and it has to shift to gasoline given the momentum against diesel in the country,” said Credit Suisse in a report.
Analysts at JP Morgan point out that M&M has been rolling out new SUVs over the past 18 months including the next generation Scorpio, the TUV300, the Tivoli (from Ssangyong), the KUV100 and now the NuvoSport. “These models have enabled M&M to gain a foothold in the compact SUV segment,” they say.
Analysts at Credit Suisse say post nine new launches last year and the recent launch of Nuvo sport, the focus going forward will be on consolidating these new launches. “The company is working on a compact crossover and also plans gasoline variants of Scorpio and XUV 500, using the 2.2 litre gasoline engine that it uses for export markets by the end of FY17. All its vehicles will have a gasoline option by mid-FY19,” they say.
The country's largest utility vehicle manufacturer missed a compact SUV in its portfolio as competitors like Ford, Renualt-Nissan and Hyundai rolled out smart compact models— the Ecosport and the Duster. M&M fought back with the TUV300 and KUV100 — both compact SUVs launched in September 2015 and January 2016.
From October 2015 onwards the sales charts were looking up. Last month M&M introduced the Nuvo sport - adding a third compact SUV to its portfolio.
Compact SUVs contribute almost 40 - 45% to the total utility vehicle segment, according to industry experts.