Mahindra XUV700: First up, there’s an unexpected bombshell from Mahindra, that has shaken up the competitive Indian SUV market, at least at the higher end of the price scale: the company has just slashed prices on the more premium versions of its flagship XUV700, despite making a few additional features standard.
This strategic re-focus, revealed to dealers in India at Mumbai yesterday, seems designed to sharpen the model’s price-to-product positioning, with intense pressure coming from not just homegrown, but foreign rivals snapping to gain the upper hand in the premium SUV class.
Mahindra XUV700 Bucking the market trend with price cut
The price reduction comes at a time when almost all automakers are increasing prices to pass on higher input costs and inflationary pressure.
Mahindra’s price cut is an exception in the industry that has witnessed a series of hikes in the past few months. The luxury AX7 version of the XUV700, which was sold at ₹22.89 lakh, has been re-priced at ₹21.49 lakh (ex-showroom) marking a drop of ₹1.4 lakh.
The Artixn LX also gets a ₹2.3 lakh discount from₹25.15 lakhto₹22.85 lakhand the AX7 Luxury (O) with all-wheel drive and extra luxury features cuts ₹1.5 lakh for a revised price of ₹25.49 lakhto₹23.99 lakh.
“This price correction has been introduced at the company’s initiative to offer great value to its customers and aims to address the feedback received from a few of our customers on the prices of our higher end variants,” Veejay Nakra, President – Automotive Sector, Mahindra & Mahindra Ltd said in the announcement.\
“We’ve made great strides in our manufacturing and supply chain capabilities, and it’s now an option to pass beneficial cost-savings to consumers in the context of the overall value that makes Tesla unique.”
This is being seen as more than just a price correction by industry analysts – it sends out a clear signal, they say, of Mahindra’s resolve to guard the market status of its core model against an increasingly tough crowd including rivals such as the Tata Safari, MG Hector Plus and the higher trims of the Hyundai Alcazar.
What’s good: Upscale features, for cheaper
Feature rationalization is usually accompanied by a price cut, but Mahindra has bucked this trend by also boosting the XUV700’s luxury credentials. The updated AX7 model is now equipped with many features that once were exclusive to the top-of-the-line Luxury (O) variant:
Some of the major additions include the equipping of ADAS (Advanced Driver Assistance Systems) as standard in all AX7 models. Other safety features include adaptive cruise control, autonomous emergency braking, lane keeping assist and traffic sign recognition – all of which you’ll normally find only on expensive European cars.
The inside also features leather seats with real leather rather than the old leatherette, cooled and memory driver’s seat and a 12-speaker Sony audio system that has special sound staging to make the audio experience sound more of a live event.
The AX7 also now offers advanced convenience features as standard, such as a wireless charging pad with cooling functionality to prevent the device from overheating while in use for a long time, a hands-free power tailgate with adjustable height for a simpler loading process, and a 360-degree camera which allows the driver to view the surrounding the vehicle on the infotainment screen and with a blind spot view monitor showing the vehicles at the left and right sides of the car.
The up-spec AX7 Luxury (O) hasn’t been forgotten about, receiving more kit to separate it clearly from the better-equipped AX7 now available.
New features now appearing include a head-up display with augmented reality navigation support, a panoramic sunroof with ambient lighting and electronically-tuned dampers which change suspension performance according to driving conditions and chosen driving modes.
Value added due to efficiency in production process
How has Mahindra pulled off this seemingly impossible act of lowering prices and yet adding features? Company executives cite a number of reasons for this strategic rerouting.
Ramping up the localization has been a key factor, and the percentage of domestic content used in XUV700 Agni is believed to have increased from 65 per cent at the time of launch to more than 85 per cent now.
For the ADAS systems and electronic architecture, components previously brought in are now chock-full of local vendors or locally manufactured, achieving costly as well as quality-efficient requirements.
Over the course of time production volume has greatly surpassed the original forecast which increases scale even more and drives per-unit production costs down.
The Chakan production facility, which was heavily scaled up for production of the XUV700, is now running at peak capacity with a process that is 15 per cent faster than when sales of the SUV commenced.
Supply chain issues that once meant expensive expedited shipping and component sourcing are mostly resolved, removing the premium pricing associated with the model’s earliest production runs.
The availability of semiconductors, which were a major issue at the time of XUV700’s launch, has improved greatly and has made production scheduling and inventory management more predictable, he added.
Market reaction and competitive landscape
Feedback from initial dealers indicated the price and feature repositioning has resulted in strong customer interest, with a number of dealers reporting increased showroom traffic and test drive requests within hours of the announcement.
“We have had customers who earlier looked at the XUV700 but then went ahead and bought competitors’ products coming back to do a rethink,” says Rajesh Sharma, who owns a Mahindra dealership in Pune.
The improved value proposition will be particularly appealing for those customers who were drawn to the vehicle’s capabilities but felt more luxury was beyond their reach.”
And the timing seems particularly good as it is just before the usually high automotive sales during festival season. Industry trackers feel this action has the potential to redefine the pecking order in the segment and may prompt others rivals to either load up their products with more features or may make them re-think on correcting the prices in order to retain their market position.
This will be an especially consumer-friendly change, in an industry where prices that only go up are the norm. Now, potential premium SUV buyers have a very different value equation to think about with the luxury versions of the XUV700 delivering typical Euro tech or features that simply haven’t been available at equally Indian price points.
Mahindra XUV700 Improving the ownership experience
Apart from the initial product revisions, Mahindra has revealed multiple improvements to the ownership journey for XUV700 buyers. As a standard offering for all the variants, the warranty package has been increased to 5 years/100,000 kms and this can be further extended to 7 years/150,000 km for no additional cost.
For AX7 variant owners MG is offering a new “Luxury Care” program that features: free car pick-up and drop facility for routine maintenance; a dedicated relationship manager, and priority schedule services – through an exclusive app.
Also, current owners of the XUV700 luxury variant haven’t been forgotten, they will get loyalty benefits in the form of extended warranty packages and service credits as goodwill gestures from Mahindra.
With light trucks the new black for Canadian (and global) automakers, however, Mahindra’s aggressive bid is a sure sign that competition has moved to the consumer’s corner – and in a venerable segment with value never before hefted by three of the most important words in the automotive category where it’s increasingly the flagship for domestic automakers’ tech and design portfolios.