Mahindra XUV 500 – Cheetah that killed a Segment!

Mahindra XUV 500 was launched in September 2011. XUV 500 – read the ‘00’ as O as in superstiti‘O’n.  Ever wondered why after Mahindra Armada all Mahindra’s vehicle names ended in “O” – BolerO, ScorpiO, XylO, VeritO, QuantO, NuvO(Sport)?  Good they have not rebranded themselves as “MahidrO & MahindrO”.

Jokes apart, XUV 500 was indigenously designed vehicle inspired by Cheetah, the animal which we don’t have in India since 1947. And it is quite a design, aggressive and butch in front and sporting muscles all around though looks little MUV like from behind and rear three quarter. It has cheetah inspired, claw like door handles, never seen before in India and it had whiskers too ingrained in front bumper design. Though it shed those whiskers when it got a facelift in May 2015. In human parlance how many actors since 90s use to sport a prominent moustache, barring Anil Kapoor! It had very strong diesel engine and if you recall the post 2008 economic crisis period diesel was tasting ever sweeter because of high price differential between petrol and diesel caused due to lopsided fuel subsidy policy. Unlike its younger sibling Scorpio it was more car like, having monocoque chassis and appeared more sophisticated thus appealing to urban dwellers.

This cheetah had claws with real killer instinct and it hunted down an entire segment of sedans which I christen as Premium Sedan (4.6m) – comprising of still in production but struggling for numbers – Toyota Corolla, Hyundai Elantra and Skoda Octavia, others just got discontinued over time.

*For apple to apple comparison monthly average sales figure is considered, since launch till they got discontinued

Price-Wise This Is How They Stack Up

Segment Classification

For effective segmentation instead of following conventional A, B, C, D category of classification, I tried to personify each segment, what it stands for. Length is considered as primary factor because it defines the footprint of the vehicle and proxy to the overall size and space it offers. Secondary factors are price and positioning. Having said that, some products are really difficult to perfectly fit into well-defined segment. If you see the below classification, XUV500 is case in the point.  Thus, such product may be able to create a unique position for itself, redefine the market and prove to be a differentiator or may land them in no man’s land.

Mass Market Sedan Segments

Mass Market SUV Segments

 

Premium Sedan (4.6m) Segment

This segment came into existence with Skoda Octavia, launched in 2002. It filled in the void between executive segment sedan and luxury segment sedan. Also known as mid-segment, it offered more space inside, with bigger engines in tune of 1800cc for petrol and 2000 cc for diesel engine. Larger space means it qualifies for premium category and larger engine means superior performance. Priced above Tata Safari at that time, still attracted quite a few buyers because of refinement on offer, especially in urban concrete jungle. These cars were ideal for chauffer driven back seat passengers. So if you want to differentiate your status and cannot afford Mercedes at 20 Lakhs, you had a choice.

Over the years new cars got added and pie expanded, accommodating all brands. Competition was from within the segment and not from segments placed above or below. Segment started seeing decline when petrol prices started touching roof as market leaders namely Corolla and Civic came only in petrol avatar and executive segment cars like Honda City started getting more premium touches than before. Launch of XUV 500 has caused free fall of the segment, now majority of them are discontinued and manufacturers do not have plans to re-launch them.

  • Octavia (Skoda)

2002-2010 

The car which actually kick started this segment. Before Octavia there was large void in sedan segment between likes of Mitsubishi Lancer and Mercedes Benz C200, bottom end of Luxury segment. Powerful TDI engine won the heart of many and made them believe that diesel engines could be refined too. It had tank like build and diesel engine propelled like rocket for first time in India at price point of 10 Lakhs. So  2002 onwards, if you want to buy luxury car and cannot afford Mercedes Benz you had a choice.

2013+

Octavia brand resurged after demise of Laura. Car was wearing new family look with crisp lines all around. With option of powerful petrol and diesel engine it is still posting good numbers despite being called niche and not mainstream anymore.

  • Corolla (Toyota)

2003-2008

Best seller globally and Toyota reliability has given instant success to Corolla.  

2008-2014

After launch of Civic, Corolla started feeling as it looks dated in that comparison. Toyota brought in the new generation Corolla to retain its pole position. Initially launched in petrol, it was later joined by diesel though low on power but high on fuel economy.

2014+

This model adopted Lexus inspired design and had added level of flamboyance. Now its third iteration in India is still having leadership position in the segment.

  • Elantra (Hyundai)

2004-2008

Hyundai is the company which has introduced modern engine technology in mass market of India, namely MPFi Petrol and CRDi Diesel engine. Elantra had both of them in powerful avatar, and packed with all bell & whistles, however, it never was exciting to own in the company of Corolla, Octavia and Civic.

2012-2016

In second iteration fluidic design did the magic, it looks like sport car in sedan body. That helped become segment leader for short moment before Corolla snatched the crown back. Numbers tapered down quite fast despite having looks inside-out and powerful engines.

2016+

Third iteration is here now with restrained fluidic sculpture, but number suggest it has lost the game from very beginning. May be not very good time to be in this segment.

  • Laura (Skoda)

2005-2013

This model was replacement of Octavia globally. However, following Maruti and Hyundai’s footstep Skoda retained Octavia as is and positioned Laura above it. Idea was to have incremental volumes from Octavia. Indian context it worked well as Octavia aged well. In 2009 it came up with face lifted version which continued to soldier on till 2013 when it passed the baton to Octavia brand. Laura like all Skoda had strong build quality and lovely diesel engine. Skoda brand itself is considered premium and people love their diesel engine. After-sales-service was, and is, something which people don’t love about Skoda in general.

  • Optra (Chevrolet)

2005-2012

Chevrolet introduced Daewoo Nubira as rebadged Optra in Indian market. It was positioned at lower end of spectrum and it did compete with Honda City. Designed by Pininferina, it was refreshing to look at. In 2007 it was given facelift and had almond shaped headlamps. It continued till 2012 and used to clock good numbers, though positioned below the stable mate Chevrolet Cruze.

  • Civic (Honda)

2006-2012

Civic was launched in petrol only as Honda did not have diesel engine. It was quite unique offering, having sport car silhouette. Look at it from rear and it looks similar to Ferrari because of twin pot tail lamp. Younger buyers jumped off Corolla’s wagon to get into Civic. It was enthusiast car with top notch performance. Step inside and you will be welcomed by driver centric aircraft like cockpit with digital console never seen before in India. On the downside boot space was small and ground clearance was too low that it always scrapes its belly on Indian roads. Non availability of diesel power plant and high petrol prices after 2008 economic crisis has pulled its number down and finally Honda pulled the plug in 2012.

  • Jetta (Volkswagen)

2008-2011

Jetta was part of VWs entry journey into India. VW followed a top down approach by introducing premium products to establish its brand. Positioned alongside Skoda Laura, it has same family characteristic of strong build quality and sweet diesel engine. To me this generation Jetta’s headlamp resembled that of Tata Indica, slightly more rounded.

2011-2016

2011  version followed a completely new family look. Sharp and crisp lines running around and used to resemble a man wearing tuxedo. In fact all VW cars look smart but very much identical, some time you have to see them from side to identify who is who, based on the length. Skoda’s numbers were always higher then Jetta and people perceive Skoda to be more premium.  2016 numbers reduced to single digit and VW threw in the towel. Now question is whether VW decides to bring in MQB platform based Jetta. Seems unlikely.

  • Cruze (Chevrolet)

2009-2017

From beginning it was available only in diesel. Engine was really powerful and had made quite a fan following for itself. Owners love to modify their vehicle and tried to add more x-factor. With Chevrolet now shutting shop here in India its goodbye Cruze.

  • Fluence (Renault)

2011-2016

Renault has followed top down product introduction approach in India. By launching premium product first to establish the brand. Unlike other cars in this segment, it never had any unique proposition to entice the prospects in particular and onlookers in general and died very quickly, unnoticed.

Cheetah and The Killer Instinct

XUV 500’s value proposition for customer can be summarized as

A spacious 7-seater SUV having appealing design and powerful engine packaged well with all the bells & whistles one can imagine for urban dwellers at an aggressive price point undercutting a segment above by a fair margin

Sweet sweet diesel

  • Instinct : Powered by punchy 140 BHP diesel engine only, which has performance on tap and good fuel economy
  • Defense : Sedans were on par and exceeded performance but all of them didn’t have diesel at enticing price point

SUV – lifestyle and aspiration oriented

  • Instinct : High ground clearance is good for Indian roads and SUV do provide commanding position from inside out.
  • Defense : Sedans are more aerodynamic and have good handling characteristic with less body roll due to low center of gravity. But buyers get carried away by aspirational value.

Bigger is better

  • Instinct : Has lot of bulk and enticed those who just want a vehicle which is bigger than their neighbor’s.
  • Defense : Sedans have similar footprint but not the bulk.

3 rows of seats

  • Instinct : Could accommodate 7 or 5 with tons of luggage.
  • Defense : 5 seater but mostly good to carry 4 in comfort. Luggage space is good enough but not great as UV.

Bells and whistles

  • Instinct : Cramped with features of a segment above like touchscreen infotainment system, voice command, auto headlamp and wiper, day time running LED with bi-Xenon projector headlamps and later saw an addition of sunroof and electric driver seats – all this and sold at price segment below.
  • Defense : No sedan was equipped to that level at given price point. Buyers love gadgets both functionally and emotionally.

Virtually no competition from SUV pack

  • Instinct : As Mahindra had cleverly identified the sweet spot and offered more car per car.

Note that, XUV is not best SUV to have either. First the ride is quite wobbly, step inside and dashboard plastic feels little tacky and 3rd row of seats are meant for children only. Still it wins heart over mind.

The Other Hunters – Hyenas

Executive sedan (City, Verna, Ciaz, Vento, Rapid, Sunny)

Have started inching closer in size, more premium and feature rich, though seems slightly underpowered in comparison to elder segment siblings, still a plenty full  for the mass market. They started encroaching the segment from below by offering higher value for lower bucks.

Compact SUV (Creta, Duster, S-Cross, BRV, Terrano)

One can easily argue that compact SUV segment, which was kick started by Renault Duster, could also be considered as a factor that brought down an entire segment. Yes they emerged around 2012, however, they were a notch below in terms of pricing, dimension, engine size and power output. Though less bulk but still have quite a charm of a SUV to lure customer away with budget inching to 15 Lakhs.

Now they are hunting down another Sedan segment in India. See the graph.

*For apple to apple comparison monthly average sales figure is considered

Hunter Is Now Being Hunted

Yes, of late XUV 500 is also witnessing a decline in sales, but it is a normal lifecycle decline which every product will eventually have, except with few notable exceptions like Mahindra’s own Scorpio and Bolero, and Indian’s beloved Toyota Innova. These vehicles have lived beyond their grave, which in India is around 6 years from launch, including mid-term facelift within 3 years.

Moreover story of XUV 500 now is more of a hunter who is now being hunted. There is huge onslaught of SUV in the 15-25 Lakh ₹ price bracket. Ones which are really heating up the competition are discussed ahead.

Current Pack

  • Hyundai Creta

Though a segment below offering, still has power to punch above its weight. Strong engine, premium interiors and has all bells and whistles. It undercuts XUV 500 price and someone looking for just 5 seater, compact and under 15 Lakh ₹ budget, usually looks no further.  That’s what makes it leader in 10-20 Lakh ₹ segment range.

  • Toyota Innova

King in its own right. Had a presence in India since 2005 as a replacement of Qualis. It made a space for itself on its own and never ever looked back. It had a very steady sales data with ever increasing price. No, it didn’t killed the Premium (4.6m) sedan segment, as at the same time, the segment under question flourished well, together.

Crysta – the new iteration exudes more premiumness and seems to be owned largely as personal car now and fleet operators are having less affinity, due to higher pricing. Unlike its predecessor, which was loved both as personal car and premium taxi. Despite being owned as fleet vehicles across India it never lost its premium personality, thus loved to be part of personal car (though it is utility vehicle but inside it feels like a CAR) and that’s just opposite to what happened to Tata’s Indica-Indigo sibling.

  • Tata Hexa

Doing well as compared to its predecessor Aria, and gaining acceptance like never before (just look at Aria’s number). It is quite surprising that Tata chose Aria for another round and not the Safari. Still no match for XUV 500’s number in initial lifecycle phase.

  • Tata Safari

The forgotten underdog. Well Tata never did justice to the product or the brand when it was launched as new generation, on 5th  January 2012, badged as Tata Safari Storme. It received Tata Aria’s underpinning. Looks were kind of sissy as oppose to Hulk it used to be. And look, they even forgot to design an integrated  audio system and fitted aftermarket CD player from the previous generation. They missed a huge opportunity and how!

Remember how Mahindra was successfully able to pull off the same trick for Scorpio. Underpinning has undergone transformation but body shell was retained. The trick was having meaner and angrier looking SUV, packed with goodies and that’s what personality people look for in SUV – intimidating!

  • Jeep Compass

The original Jeep, having grill design which was borrowed by Mahindra in 50s. Now seems to be pointing in right direction for FCA. It is already giving jitters to XUV500 and Hexa which is apparent with Tata and Mahindra’s current advertisement. Pricing of Compass is very aggressive and its acceptance can be seen in the numbers it is doing and bookings it has garnered.

  • Hyundai Tucson

Overpriced & lost in oblivion. Hyundai never had success in terms of numbers for anything priced over 15 Lakhs – Elantra, Sonata, Santa Fe. It is still finding it difficult to transgress the mental boundary created into the minds of customer to differentiate between premium tag it claims for product like SantaFe. Had Tucson been priced starting around 17+ could have made its presence felt or become a star like Creta!

  • Honda CRV

Right now it is an overpriced petrol-urban-soft roader. May be a diesel heart transplant in future and new design can change its fortune. That’s highly likely, unless Honda gets greedy and loose its thinking cap, and end up with poor pricing.

New Members Joining the Pack

  • Renault Captur

Soon to be launched. More premium than Duster but need to be priced right otherwise it will meet the fate of Tucson.

  • Skoda Koraq

Seems highly unlikely that it will be priced below 20 Lakh. But less likely to meet fate of Tucson as in India Skoda is still considered as premium over its parent VW brand. It is given that success and failure will be decided in real battle ground, pre-launch assumption does not help much.

  • Maruti Suzuki Grand Vitara

Previous launch was commercial failure. Brought in as CBU it was overpriced for a car having steering wheel and power window switch from Swift. It was available only in petrol guzzling engine and never had  butch SUV appeal. Now things have changed for Maruti, with Vitara Brezza being a success, older sibling may make it presence felt and catapult Maruti in premium segment, if priced aggressively.

  • Nissan Kick

Nissan want to replay the Duster-Terrano story with Renault launching Captur. This time hopefully it is not just the badge swapping with cosmetic surgery.

  • Honda HRV

Not sure if Honda will be able to position in 15-20 price bracket, if it can with a diesel heart than its better choice over Civic.

  • Toyota Rush

Despite having competent product in its global portfolio that fits well in Indian segment, Toyota has never given serious thought. It is an opportunity to fill the gap what Corolla is ceding now. May be Toyota does not want to cannibalize Innova in the price bracket but lower end of spectrum still looks like sweet spot.

(The article is written by the Newest Pundit on the team – Rohan Rishi. You can connect with him emailrohanrishi@gmail.com)

5 thoughts on “Mahindra XUV 500 – Cheetah that killed a Segment!

    1. Maruti Ertiga is based on extended Swift platform and has been quite successful in fending off competition in the 7-10 Lakh price bracket for diesel. When launched in 2012, it created a distinct position for itself, unlike all other MUVs, it had monocoque chassis. It expanded the market size rather than eating into others market share. But it is notch below the segment we are talking about in terms of space on offer, engine size, power output, performance and aspirational value. So it never rival XUV 500 or any other premium segment sedan, directly or indirectly and pricing wise it is positioned between Maruti’s Dzire and Ciaz, far below 13+ Lakh product segment considered here .

      Let me know your thoughts on this.

      1. In fact, every vehicle from every manufacturer was considered for this analysis, the ones who really make a mark are detailed in the analysis report.

        1. Maybe there is a point in your stats and analysis wrt XUV500 . But the premium sedan segment is moving up in price in the mentioned years as well as the options below gotten more safety features at least on high-end variants. It would be nice to add the moving price from 2011 as well in the analysis.

          A bit away from ur analysis, People go premium for several reasons based on their auto industry education. VW and Skoda think they are premium brand in India, but I think they are not. MB or AUDI used car market is actually very much overlapping with the premium sedans. That is another reason for social status premium buyers moving away from regular brand premium sedan buyers.

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