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      Amid rising competition, revenues of Mahindra & Mahindra from utility vehicle segment gets effected

      CarTrade Editorial Team

      CarTrade Editorial Team

      Over the recent time, the utility vehicle segment has been dominated by Mahindra & Mahindra and the company has been successful in establishing a loyal customer base. This statement seems legitimate considering the fact that 61 per cent of the revenue generated by Mahindra & Mahindra accounts from the utility vehicle segment of the Indian auto market. However in present terms, the scenario is fast changing for the leader as its rival are planning a slew of launches in its crowned segment.

      During the month of June, the auto maker posted a decline in sales of utility vehicles for the first time in 35 months. The major reason cited for this performance of the company has been the rising fuel cost, which led to a fall of 27.5 per cent in the demand for utility vehicles since August 2012. Commenting on this Pawan Goenka (President of automotive and farm equipment sector) was quoted as saying, "If you would have asked me three to four months ago, I would have been very optimistic about the auto sector and somewhat concerned about the tractor space. But what has happened is totally reverse. As of now, we do not see signs of revival in sentiment in the automotive space."

      Amid rising competition, revenues of Mahindra & Mahindra from utility vehicle
      Amid rising competition, revenues of Mahindra & Mahindra from utility vehicle
       

      Now with the launch of more and more utility vehicles from different car makers, it will further mount the problems for the Indian auto maker. Besides the competition, Mahindra & Mahindra's vehicles are mainly available in diesel fuel options and the rising prices have marred their demand. According to industry experts, the emergence of urban markets in the utility segment is seen as one of the major reasons which is bringing in the market share of Mahindra & Mahindra. In rural areas, models like Bolero and Scorpio have remained as one of the best sellers in their respective segment and have actively contributed to the fortunes of the company.

      Amid rising competition, revenues of Mahindra & Mahindra from utility vehicle
      Amid rising competition, revenues of Mahindra & Mahindra from utility vehicle
       

      The consumer sentiment of Mahindra & Mahindra, being a home grown company, is rampant in rural areas and the auto maker has benefited a lot from it. The challenge mainly lies in urban markets where every major company seems to introduce a new product, which in turn has increased competition. During the market decline in 2013, the demand for Xylo registered a dip by almost 50 per cent, while for Quanto it fell by 40 per cent and for XUV500 by 30-50 per cent. These three models contribute to around 30-35 percent of utility vehicle sales of the company. Yet, the company remains optimistic about its performance with Goenka saying, "As for Xylo and Quanto, both these models should do much better. They are good products, with good pricing and spacious interior. We need to do a few surgeries on them to get them to full potential."

      With the surging demand for utility cars in India, Maruti Suzuki seems to be also eyeing on the market share. When asked, Mayank Pareek, the Chief Operating Officer for Maruti Suzuki was quoted as saying, "A significant portion of these 2 million buyers are likely to upgrade to UVs in the future. With the Ertiga MPV, we are only in 35% of B-segment UV market, we would like to take part in 65 per cent of the SUV market.” According to auto analysts, Maruti Suzuki expects the utility vehicle segment to grow faster as compared to other spaces and therefore, it is said that the auto maker might specifically pin point this category to gain a sizeable share. Now with company planning to introduce XA Alpha, it further cements the claims.