SUV space hots up, Hyundai leads in segment

As the SUV segment sees increased competition from products like Kia Sonet, Hyundai Venue and Creta, Maruti Vitara Brezza and some of the upcoming launches; the country's largest UV player, Mahindra & Mahindra has been feeling the pressure with falling sales.

To keep it competitive and reach out to a wider set of customers Mahindra has recently cut the price of XUV300 by Rs 90,000.

Mahindra dealers say that the range of Mahindra UVs are overpriced as the starting price of its UV is at Rs 8 lakh. In addition, there are supply issues and the company has not been able to despatch sufficient vehicles to its dealers. Says Vinkesh Gulati, a dealer of Mahindra “The company has recently recalibrated the price of some of its’s UVs. The W80 petrol variant of XUV300 saw a reduction in price of about Rs 87000 which we hope will bring in the volumes. In addition, supplier issues are also causing constraints”.

The entry-level W4 petrol variant, saw its price cut by Rs 35000 ,so bringing it under Rs 8 lakh. The W6 petrol variant, saw its prices cut by Rs 17,000 at Rs Rs 8.98 lakh.

Veejay Nakra, CEO of Mahindra’s automotive division said "We have just taken a price value correction for some of the models and have some new products planned for the upcoming festive season”.

Interestingly , Hyundai Motors has leapfrogged the country’s largest car maker, Maruti Suzuki in Utility Vehicle (UV) sales for the first time. For the first four months April to July of the current fiscal, FY2020-21, Hyundai sold 34,212 units of UV as against 32,577 units of Maruti.

Experts say that the demand for the best-selling Creta as well as the Venue has been driving the growth for Hyundai. Mahindra sold only 22,477 units during the same period.

Hyundai has an interesting take on its product mix. With leaders vacating the small diesel engine space, at least temporarily, the Korean company has seized this opportunity to play in this segment giving it additional volumes and the ability to price attractively. Hyundai's director, Marketing, Tarun Garg says the trend of SUVs is here to stay and customers wants to buy these vehicles. Hyundai gives the choice of power trains , technology ,price points and features for its range of SUVs namely, Tucson, Kona, Creta and Venue. "We have SUVs at different price points , thereby giving a number of choices to the empowered customer."

With only 4 models, Hyundai saw a growth of 40% in this segment in FY19-20 at 1.76 lakh units. Maruti Suzuki, saw a decline of 11% at 2.35 lakh units during the same financial period. Mahindra , the market leader in the UV space with 9 models saw a degrowth of 19% at 1.75 lakh units.

“Mahindra is losing out to Hyundai and Kia (even Maruti and Tata) due to the lack of refinement of the basic product and the polarised styling. They had a bull run till others did not enter the SUV segment at their price points. Once that has happened, they are on a weak wicket. Mahindra makes tough, robust vehicles which are not necessarily the liking of the urban customer who wants the styling of the SUV but the comfort of a sedan”, says Avik Chattopadhyay, an independent auto consultant.

What is interesting is that fuel efficiency and performance of petrol vehicles have also improved, offsetting an advantage diesel had over the lighter fuel. The downside of petrol cars as a variant is not there anymore, say experts. “We have to see how consumer behaviour plays out over the next couple of quarters, with respect to continuing popularity of certain combinations of vehicle body type & powertrains, price elasticity and the perceived product value proposition”, he said.

The next six months of the financial will be interesting to note if Hyundai continues to maintain its numero uno position in the UV space over Maruti. For Mahindra, it will be a catch up game in a segment where it was the undisputed leader a few years ago, say experts.