title-bar

Mahindra looks to be a sport with launch of Korando C by FY16 end

By: |
Mumbai | Updated: April 9, 2015 11:03:24 AM

The country’s largest utility vehicle manufacturer, Mahindra & Mahindra (M&M), plans to launch a compact sports utility vehicle (SUV) — Korando C...

Mahindra & Mahindra, mahindra, sports utility vehicle, mahindra suv cars, Mahindra Korando C, Korando CThe country’s largest utility vehicle manufacturer, Mahindra & Mahindra (M&M), plans to launch a compact sports utility vehicle (SUV) — Korando C — by the end of FY16 to regain its domestic market share.

The country’s largest utility vehicle manufacturer, Mahindra & Mahindra (M&M), plans to launch a compact sports utility vehicle (SUV) — Korando C — by the end of FY16 to regain its domestic market share. The car, manufactured by its South Korean arm Ssangyong Motors, is already plying on overseas roads.

Sources told FE the Korando C will be pitted against the Renault Duster in the 4-metre compact SUV segment. The company intends to price the car at Rs 9.5-10 lakh for the entry-level variant. The premium model may be priced at Rs 12.5-13 lakh, sources said.

M&M intends to take the completely-knocked-down (CKD) route for the Korando C, which will help it price the product aggressively
“We are expecting 40-50% localisation in the beginning with critical parts, such as the engine, imported from South Korea” the source added.

Unlike a completely built unit (CBU), under CKD, companies import critical parts and assemble the unit in the country where it is to be sold.

The CKD route attracts lower taxes. Importing CBUs attracts a higher tax rate (customs duty ranging from 30% to 167%, depending on the tariff rate).

The Korando C commands 52% of Ssangyong Motors’ total vehicle exports. The company exported 37,863 units in 2014 and the model was its best-performing vehicle in foreign markets. M&M bought a majority in Ssangyong Motors after acquiring a 72% stake in 2011.

“If M&M starts to assemble the Korando C in India, it will help bring customers from the urban markets, besides the ones from the rural market”, said Amit Kaushik, principal analyst, IHS Automotive.

M&M currently does not have any product in the compact SUV segment, which contributes 30-40% of total utility vehicle sales. As a consequence, its market share in the UV segment has come down to around 40% in the last two years.

The Korando C will fill the void between the yet-to-be-launched S101 (a compact SUV) and the existing XUV500.

Praveen Shah, M&m’s CEO for the automotive segment and international business, neither confirmed nor denied the development. M&M takes decisions based on its analysis of market dynamics and whether a certain product will be able to supplement and complement both the brands to co-exist, Shah added.

“I won’t say we are considering or not. We always look for the right opportunity,” he added.

Analysts say the production of Korando C will help imports in neighbouring countries like Myanmar, Bangladesh and ASEAN.

This move to assemble and manufacture the Korando C could be a strategic move as Russia — the biggest export market for Ssangyong — has been under-performing and China’s automobile market has been stagnant lately. Besides, intense competition from foreign and local players in China will further present Ssangyong with fresh challenges.

“The Indian UV market is highly under- penetrated and customers have to choose from a limited number of products. Companies are trying to get new products to capture the market,” said an auto analyst who did not wish to be identified.

For Updates Check Business News; follow us on Facebook and Twitter

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition