Mahindra and Mahindra to launch cheaper variant of XUV 5OO

In a bid to revive the fortunes of its erstwhile bestseller XUV 5OO, utility vehicle major Mahindra and Mahindra (M&M) is planning to introduce a cheaper entry level variant of the vehicle by the end of this fiscal.

The XUV 500, launched in the middle of 2011, had a fairytale start with the company unable to make enough of them and waiting period extending over 6 months. Sales, however, have tapered off in recent months. M&M said the increase in excise duties in this year's budget has impacted the sales performance.

"The increase in excise duties on SUVs by 3% has impacted the entire segment but big ticket products like the XUV are impacted more," said Pravin Shah, chief executive, automotive division, M&M. "We keep a close watch on the trends in the market and what consumers want. We are planning to launch a lower variant of the vehicle in this year."

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Over 63,000 units of the car have been sold since its launch. In March, Mahindra recalled 30,000 units of the vehicle to replace some components like fluid hose, front power window unit and wipers. "That was the biggest recall exercise conducted by an Indian manufacturer ever," Shah said. "We found some issues with the vehicles and hence replaced the parts free of cost. But now it is behind us and sales will go up."

At present, marketed in three variants in the domestic market, the XUV comes at a price between ₹12.13 lakh and ₹14.78 lakh (ex-showroom Delhi). The company said the SUV segment was facing a slowdown for the first time in over 2 years.

"In FY13, utility vehicles segment grew by 50% but in the first two months of this fiscal, it has grown by just 4%," he said. "Within the UV segment, those which have come under the extra 3% excise duty, sales have declined by 14% so far."

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