M&M is looking to do a Nano by rolling out the country’s first sub Rs 5-lakh SUV this year, a compact version of the Xylo. India’s largest utility vehicle maker is working on a mini version of the Xylo in the Rs 4.5-5 Lakh range, or 35-40 per cent cheaper than the existing base model, by 2011.
The company hopes to achieve this by shortening the length of the vehicle to within four metres so it attracts a lower excise duty of 10 per cent compared to 22 per cent for bigger cars and utility vehicles.
However, M&M officials have declined to comment. If it manages to bring down the Xylo’s price to less than Rs 5 Lakh, the SUV will enter a price band that accounts for 60 per cent of India’s car sales and directly compete with compact cars like the Maruti Suzuki WagonR, A-Star, Hyundai Santro, i10, GM Beat, Ford Figo, Fiat Punto and Tata Indica.
The compact Xylo will sport a much smaller engine than the 2.5-litre diesel engine that powers the vehicle now and Mahindra is yet to decide on the number of seats in the new vehicle, said one person close to the development.
The compact Xylo will mark the entry of a big player into this segment. Meanwhile, M&M is also planning to launch a micro-hybrid version of the Xylo before the year-end. The Mumbai-based automaker will also be introducing the Xylo in several overseas markets in the next few months.
The Xylo, which is the most ambitious project of M&M after the Scorpio, is currently priced in the range of Rs 7.57 lakh to Rs 9.69 lakh (ex-showroom Mumbai). It is produced on the same assembly line as the Scorpio.
While the company does not release product-wise sales, M&M’s sales of utility vehicles, including Scorpio, Xylo, Bolero and pick-ups, slipped 3.6per cent year-on-year in June 2010 at 17,010. The company blamed constraints in supply of critical components for this. Cumulative utility vehicle sales during January-June stood at 53,948 units, up 11per cent year-on-year.