No one has a portfolio that is expanding at this rate,” beams Vivek Nayer, Senior Vice-President (Marketing), Automotive Sector at Mahindra & Mahindra Ltd. He was referring to two of the launches planned for the next financial year — the Rexton SUV from the Ssangyong stable and a mini-SUV that has captured the auto media's attention, with good reason.
We met with Nayer the day after February sales numbers appeared in print. While domestic sales topped 40,400 units for the month, clocking 27 per cent growth year-on-year, passenger vehicles had grown 33 per cent to 20,500 units.
Passenger vehicles have contributed to roughly half the sales of two lakh units since April last year. It's possible, admits Nayer, that the sales spike in January and February may have been aided by a possible levy of additional tax on diesel vehicles in the budget, but adds, “No one knows.”
He is quick to point out that while car sales have been flat across the industry, utility vehicles have grown by 13 per cent in the current financial year — and Mahindra's by 18 per cent.
Of the passenger vehicles, Mahindra's sedan Verito clocks in close to 1,500 units a month. The rest are utility vehicles and SUVs that Mahindra is famous for, a category in which Mahindra's share is 58 per cent in India.
If the top-of-mind brand from Mahindra is the Scorpio, at least in urban India, the Rs 5.5 lakh-onwards Bolero is the leading SUV in the country, having sold over 83,000 units last year, according to Nayer.
And its most recent launch (September-October 2011), the XUV 500, registered over 8,000 bookings in 10 days. Bookings were re-opened in end-January, through a draw, asking applicants to put Rs 80,000 upfront for the Rs 12.5 lakh-onwards ‘global' SUV. The result was the same — of the over 25,000 applicants, 8,500 will get their XUV 500s.
The Rs 7.5 to Rs 11.5-lakh Scorpio, meanwhile, continues to command a waiting period of three to four weeks. The relatively newer Xylo, starting at Rs 7 lakhs-plus, is selling too, points out Nayer. A Business Line report noted that by the end of March 2012, the Xylo is expected to have sold 1 lakh units — since its launch in 2009.
“Each vehicle is positioned sharply and differentiated, so there is no cannibalisation. When we launched the Xylo, people said the Scorpio and the Bolero would be hit. The same was said of the Scorpio when we launched the XUV 500. No such thing has happened,” says Nayer.
It doesn't come as a surprise then that the Rexton will be positioned at the top end, expanding the portfolio upwards, while the compact SUV will occupy a niche at the bottom end. Even with 25 to 30 per cent of Bolero buyers estimated to be first-time car — sorry, four-wheeler — buyers, Nayer believes differentiation will ensure that every slice of the pie keeps growing.
The evolving buyer
The utility vehicle category sees several buyers upgrading from cars, according to the Mahindra spokesperson. And the profile of buyers is well-defined, though there are no numbers available. While Bolero buyers are relatively younger and the Scorpio buyers have ‘arrived in life', the XUV 500 buyers are those who seek luxury, space and comfort.
While 30 per cent of Scorpio's sales come from beyond the top-25 towns today, these markets contribute 60 per cent of Bolero's sales. Five years ago, towns beyond the top-25 would contribute hardly 10 per cent of Scorpio's sales, explains Nayer.
“Lifestyle changes and growing aspiration in consumers are being witnessed across the board, be it in the top-25 towns or beyond,” he adds. There are upgrades from within the portfolio born of loyalty, he claims.
As Mahindra has grown its portfolio to keep up with growing consumer aspirations, competition has been growing too, within utility and sports utility vehicles. Nayer would like to believe that if the XUV 500 draws on its competitive pricing advantage over the likes of the Toyota Fortuner or the Honda CRV, the Scorpio competes for market share with the Tata Safari, and the Xylo with the Toyota Innova.
“Research over the years shows that the car owner owns the car — the SUV owner possesses the SUV. People who are fond of SUVs love to be in control,” reiterates Nayer, while explaining the ‘upgrade' witnessed from sedans to SUVs.
DIGITAL ENGAGEMENT
Engaging those possessed by the idea of owning a SUV has been a priority. In the last three years, the spend on digital media, including social, has gone from nil to 10 per cent of media spends, according to the marketing head. Digital has also been a key platform for launches, including that of the XUV 500.
The company claims 3.5 million fans on Facebook for its brands, including 1 million for the iconic nine-year-old Scorpio. All brand teams have been trained on social media. At some point, integration started to kick in and fuelled the digital drive further — each on-ground event for Mahindra owners, such as the Mahindra Great Escapes, are now advertised on social media and on the Web site. All 20 Great Escape events and the ‘Specials' to Leh and Kerala, among others, are running full.
Social media also helps address customer complaints. With Twitter-friendly Anand Mahindra being the face of the company, a tweet or two does reach the company's head honcho.
“A lot of people do send him messages, and a lot of people do call the customer care number provided at all our showrooms. It gives us a chance to address the issue, instead of people talking to other people about a bad experience,” explains Nayer.
Even as digital engagement keeps growing, a slew of new launches means a whole lot of mass media. And for the established Bolero and Scorpio, there's the maintenance level activity. That brings us to the television commercial for the XUV 500, one that has drawn a mixed response. What with its junglee fantasy storyline explaining why the protagonist doesn't like carrots, and ending with ‘May your life be full of stories…'
“It was a campaign-able insight and we pushed the envelope on innovation on the basis of that. Some people liked it, some haven't. The mass customer may not appreciate it. But then you can't be everything to everyone,” says Nayer.
Why isn't one surprised? After all, this is a brand portfolio that thrives on differentiation.