Mahindra Banking on TUV300 in the Face of Delhi Diesel SUV Ban

Mahindra and Mahindra has been hit by the recent ban on diesel cars and SUVs with engine capacity above 2,000cc in Delhi from January 1, 2015 till March 31, 2016 and the company is now looking at other avenues, with one of them being the Mahindra TUV300.

The TUV300 has been doing quite well for the Indian carmaker in terms of sales and bookings ever since its launch on September 10, 2015. In fact, the production capacity of the sub-compact SUV - which is equipped with a 1.5-litre diesel engine - was ramped up recently by the company to 5,500-6,000 units a month in order to meet demand. Mahindra had started with a monthly production of around 4,000 units a month at the time of the car's launch.

Pawan Goenka, Mahindra's Executive Director, said at a recent event that the TUV300 sold around 400 units in November in Delhi, with the Scorpio - one of Mahindra's all-time best-sellers - also managing the same number of units. The sales figures of the TUV300 are likely to increase even further in the next few months, at least until the duration of the ban.

As for the engine specs, the Mahindra TUV300 is powered by a 1.5-litre, 3-cylinder, mHawk80 diesel engine, while the Scorpio comes with a choice of 2 diesel mill options - a 2.2-litre mHawk and a 2.5-litre m2DICR.

Also Read: Pollution Tax to Be Imposed on Diesel Cars With Sub-2,000cc Engines

Apart from the TUV300, Mahindra is also banking on the KUV100 to boost sales. The company has already started taking bookings for the sub-compact SUV, with its launch set for January 15, 2016. The Mahindra KUV100 - which is in a category below the TUV300 - will be equipped with 2 engine options from their all-new mFalcon series - a 1.2-litre 3-cylinder petrol motor and a 1.2-litre 3-cylinder diesel unit.

The carmaker also plans to introduce more petrol variants in its SUV line-up in the near future, with Mahindra Scorpio and XUV500 the first in line to be equipped with petrol mills. The company already exports a variant of the Scorpio with a 2.2-litre MPFI turbocharged petrol unit from India, but has not introduced it in the country, considering the fact that there was no demand for a petrol SUV, up until now.

Mahindra's mainstays - Bolero, Xylo, Scorpio, Thar, and XUV500 - which make up for over 95% of the company's sales, come under the ban thanks to their 2,000cc-plus diesel engines. According to Goenka, the company has more than 1,000 unsold cars with its dealers in Delhi and the National Capital Region (NCR).

Though Delhi and NCR account for just about 2% of the carmaker's passenger vehicle sales, Goenka said the market plays a very important role in building the brand even as its volume contribution may not be large.

"I don't think anybody can afford to ignore Delhi as a market... We certainly respect the order of the Supreme Court. We will work to find solutions in line with the court's order, in fairly short time," Goenka said.

The Indian carmaker added that the affected customers who have placed orders for SUVs which come under the ban will be given refunds on their booking amounts. They will also be offered attractive incentives to purchase cars in the sub-2,000cc range, such as the Mahindra TUV300. There is hope for dealers as well as they will be provided with alternatives such as relocating those vehicles to adjoining regions.

According to industry experts, about 4 lakh units of diesel vehicles with 2000cc or higher capacity engines are sold in the country annually and, out of that, 5-8% are sold in Delhi and NCR. Across India, Mahindra has more than 50% share of this market, while Toyota has about 20% and Tata Motors less than 5%.