As fortunes reverse, Mahindra & Mahindra begins offering discounts

Mahindra & Mahindra pushes XUV500, Quanto sales with Rs 50,000 worth of offers

Last fiscal, Mahindra & Mahindra (M&M) was the only car maker among the top five to not offer major discounts or schemes, as sales of its popular utility vehicle (UV) models moved faster off dealer shelves than what it could produce. That's not true any more.

Since April, slower sales have led previously popular products like the XUV500 and the recently launched Quanto to be available for the first time with a variety of discounts and schemes leading to savings of up to R50,000 on the sticker price for consumers, multiple dealers told FE.

The reversal in M&M's success story of last year comes on the back of rising diesel prices (up R2.54 in Delhi since January to R49.69) and the additional 3% (from 27%) excise duty imposed on SUVs in the Budget this February. This has brought down volume growth for the company from 26% (at 3.10 lakh units) in FY13, to 0.35% (23,107 units) in April 2013.

M&M CEO (automotive) Pravin Shah said, "There is a combination of factors as to why we are giving offers on these models for the first time. The XUV500 is a 20-month-old product, plus the market and competition is giving many discounts, so we have to react. The increase in excise duty on SUVs have also slowed down sales and as a result, there are no waiting period for the models any more."

Both the XUV500 and Quanto were launched a year apart the former in September 2011, while the Quanto was launched in September 2012. Initially, the XUV500 had been a huge hit, with waiting periods stretching to around six months and encouraging M&M to almost double output from the initial 2,500 to about 4,500.

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