Mahindra XUV 500

The Market Analysis is done for the Mahindras New venture called Mahindra XUV 500 which is a SUV and is positioned very handsomely between low end SUVs like Mahindra Scorpio, Tata Safari, Tata ARIA and high end cars such as Toyota Fortuner , Chevrolet Captiva, Mitsubishi Outlander and Honda CR-V. The SUV will be evaluated on the following parameters Market Size Market Growth Rate Market Profitability Industry cost structure Distribution Channels Market Trends Key Success Factors

Lets have a look at all the factors Individually Market Size

The market for SUVs below Scorpio is around 3 lakh units annually, wherein there are offerings like Bolero, Xylo, Safari and Innova. The market size for SUVs which are above Rs 20 lakh is just about 25,000 units. Now since the Mahindra XUV 500 has been priced between these two categories it can reap the benefits from both the ends. While the company did not specify sales targets for the new vehicle, officials said M&M has made arrangements for an initial production capacity of 2,000 units a month.

Market Growth Rate SUVs are regarded as status symbols of rich and powerful in India. Many prefer SUVs to other cars as they have more space to accommodate, can be used on difficult Indian roads, have higher seating and it is easy to drive them in chaotic traffic and bad roads. SUV in India has a large market base, and the demand is growing exponentially with time. Crossover SUV vehicles in which the Mahindra XUV 500 Fits aptly is making great waves presently in the automobile scenario. The Society of Indian Automobile Manufacturers (SIAM), had revealed that in the fiscal, April 2009 to March 2010, the sales of SUVs noticed 20.88 percent rise. A total of 272,733 units were sold against 225,621 units in the same period a year ago. Official figures reveal, India has 14 million cars and three million SUVs.

The growth rate is not just based on the market potential but various other factors such as the sales of complementary products and demographic information. Talking about the sales of complementary products it has been seen that there has been a cancellation in booking of many SUVs such as Mahindras very own Scorpio, Tatas safari and Aria to name a few. Mahindra XUV 500 is seeing a tremendous response from the consumers. The online strategy proved to be a blessing as Mahindras latest offering in the SUV space attained popularity not only in India but across the world. The contest that involved the guessing of the price of the XUV500 grabbed 1,15,000 entries, while the product received 4,50,000 Likes on Facebook alone. Mahindra and Mahindra is targeting Generation X with this car and has endowed it with features hat appeal to the members of the key demographic. Therefore, the car boasts of features like keyless entry, integrated music system, USB plug-in, Bluetooth and automatic climate control, which are expected to get a good response from the young crowd. New Mahindra XUV 500 also comes with traction control mechanism, daytime LED running lights and airbags.

Market Profitability The market profitability for Mahindras XUV 500 can be determined using the following five forces model given by porter Buyer Power Supplier Power Barriers to entry Threat of substitute products Rivalry among firms in the industry

Buyer Power It has been seen that the Indian SUV market has been growing at a rate of 20.16% annually and with the rise in the disposable incomes of Indian consumer the growth rate is slated to increase. This will inturn result in higher buyer power and high profitability for Mahindra. Supplier Power Mahindra has a strong network of around 150 suppliers which have been providing them with the necessary equipments since the launch of its flagship SUV Scorpio. The same set of suppliers has been providing them with the equipments required for XUV 500. The recently convened meeting of the suppliers in Seoul South Korea was held to enhance the ties with its suppliers and to strengthn the relationship with the suppliers of Mahindras swaraj division. The Supplier meet was an ideal opportunity for us to discuss challenges faced by the Indian automobile industry such as impact of input costs, hike in interest rates and rising commodity prices. The possibility of opting for appropriate areas of cost advantages in the zone of new technology and new processes was also discussed. It was also an

occasion to share efforts made by the supplier community to change the image of the Indian auotmotive industry Barriers to entry Mahindra XUV 500 belongs to a segment which has not been explored to an extent as complared to the high and the low end segments. The only other car that caters to this segment is TATA ARIA which has not fared as per TATAs expectations but Mahindra holds various ambitions for it XUV 500 because of its strong feedback from the consumers. XUV has been designed taking into considerations the consumer aspirations across the globe as Mahindra targets various markets such as Africa, Australia and South Asia Markets. Threat of substitute products XUV 500 doesnt face any threat as off now from any other product in its category since the only product belonging to its category currently is TATAs ARIA which hasnt been a success story since its launch. And with the promising quality and performance of XUV the brand loyalty for Mahindra is bound to increase. Rivalry Among Firms In Industry The XUV500 is the first Mahindra which is built on a monocoque frame and as per international standards. The XUV500 gets a 2.2-litre mHawk engine producing 140bhp and comes bolted to a 6-speed manual transmission. The XUV500 comes loaded with features like airbags, ESP and ABS. Mahindra has been advertising aggressively on all the platforms from internet to newspapers.

Industry Cost Structure The cost structure is important for identifying key factors for success. To this end, porters value chain model is useful for determining where value is added and for determining the costs. The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity. Mahindra being a $ 11.1 billion company has invested hugely in innovation and research of which XUV 500 is a product. Mahindra and Mahindra which is best known for its distribution and servicing network across India has opened information Kiosks across india so that people can come and know more about the XUV. The various contests associated with F1 has also bought XUV 500 one step closer to being a big hit.

Distribution Channels

The market analysis for XUV 500 has been done using the following two distribution channels Existing Distribution Channels: Mahindra has a network of 185 dealerships across 150 cities which it plans to use as a catalyst to incresase the reach of XUV 500 Emerging Distribution Channels: Mahindra has given its sole dealership to Ideal Motors (Pvt.) Ltd for distribution of its products across Sri Lanka. Also it is in talks with various dealers and partnerships across Asia and Africa to enhance its distribution network. Market Trends Today the market is changing constantly but Mahindra has taken into account this also by adding the next generation features to the XUV 500 and offering the car in various segments is like an icing on the cake. But since this segment bridges a wide gap between the low end SUVs and the high end SUVs Mahindra anticipates the entry by some of automobile majors in this segment. For this Mahindras constantly working R&D team has provided with some features which are rarely found in the high end SUVs. Key Success Factors XUV 500 is a perfect mixture of technology and art. The car is truly a value for money as it provides various high end features at a very nominal cost for a SUV. The success factors for the XUV 500 is its price combined with a host of features and off course the credibility and prowess that Mahindra offers in its SUVs.