Mahindra Adds New SUV to Battle Toyota, Tata in Premium Market

Mahindra & Mahindra Ltd. (MM), India’s largest sport-utility vehicle maker, plans to introduce its XUV500 model to compete with Toyota Motor Corp. (7203)’s Fortuner in the growing premium SUV market.

The Mumbai-based automaker will price the XUV500 between 1.2 million rupees ($24,400) and 2 million rupees, Pawan Goenka, president of Mahindra’s automobile and farm equipment division, said Sept. 26.

The XUV500 is Mahindra’s bid to capture a slice of sales of SUVs that sell for between 1.5 million rupees and 2 million rupees. Mahindra may not be able to persuade buyers that the XUV500 is truly a premium vehicle, said Mahantesh Sabarad, an analyst at Fortune Equity Broking India Ltd. in Mumbai.

“I don’t think it will be as big a game changer as Mahindra expects,” said Sabarad, who has a “hold” rating on the stock. “Brands in the premium bracket need to have some sort of aspirational value which Mahindra and Tata do not have. It won’t bring in great numbers.”

Mahindra gained 3.5 percent to 797.8 rupees at the 3:30 p.m. close in Mumbai yesterday. The shares have gained 2.7 percent this year, compared with a 19 percent decline in the benchmark BSE India Sensitive Index.

Premium SUV Market

The premium SUV market grew 15 percent to 2,102 vehicles in the country last month, while April-August sales grew 20 percent over the previous year compared with a 1.3 percent decline in passenger car sales in that time, according to data from the Society of Indian Automobile Manufacturers, or SIAM. The association said in July it expects industrywide sales to rise 10 percent to 12 percent, to about as much as 2.8 million in the year ending March 31.

“Our goal is to draw volume for XUV500 not just from the premium SUV segment but from current buyers of sedans also,” Goenka said in an interview. The company will introduce the model today.

Mahindra, which is increasing profit from selling more pick-up trucks and SUVs, may see full-year profit rise 6.5 percent to 32.8 billion rupees this fiscal year, according to the median of nine analyst estimates.

Toyota’s Fortuner was the best-selling sport-utility vehicle in the 1.5 million rupee to 2.5 million rupee price range in April-August, selling more than double the second-place model, Bayerische Motoren Werke’s X1, according to data from the industry group.

Mahindra will introduce the XUV500 in South Africa, and may sell the vehicle in other export markets including Brazil, Goenka said. The automaker may also sell the model under the Ssangyong Motor Co. (003620) brand in the future, he said.

To contact the reporter on this story: Siddharth Philip in Mumbai at; Tanya Ashreena in Mumbai at

To contact the editor responsible for this story: Kae Inoue at

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