Trends in Suv Market

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- Taxation

The government is seen to impose additional taxes on premium cars. But this effect will apply to all of XUV 500’s competitors and so the effect is mitigated.

- Development of Waterways

If realized, this can reduce the cost of logistics for pan-India companies such as Mahindra and Mahindra.

- Make In India

This government initiative and others have made the public more favourable to companies which design and develop in India. Mahindra, being a Indian company stands to gain with this.

- Manufacturing Hub

There is a drive towards making India a manufacturing hub for Indian and Asian customers.

ECONOMIC

- GDP growth

India is now the 4th largest economy by PPP in the world. In the last fiscal, India was the fastest growing large economy in the world, overtaking China. This will boost disposable incomes of the middle class and present great prospects for SUV’s.

- Manufacturing growth

Manufacture sector has grown at close to 10% in the last few years.

- Exports

Government provides a favourable environment, in terms of financing, for exports.

- Finance options for customers

There is also a rise in financing options for the modern customer. This is especially important for the urban customer.

- Demonetization

This is likely to act as a temporary dampener on sales, but mostly only in rural areas where cash transactions are more likely. Further, future sales are likely to pick up as the positive economic effects start showing up.

SOCIO-CULTURAL

- Average family size of 4. This augurs well for four-wheelers.

- Safety – larger and heavier cars are seen to be safer – for those who can afford it.

- It can be observed that in rural areas, there is a trend among the affluent to have a car projecting power and masculinity. This is beneficial for the XUV 500 with its powerful looks.

- SUV’s are also preferred by the rural affluent segments due to off-roading capabilities and extra space for family.

- Indian consumers look for value-for-money. XUV 500, with its price range of 12-14 lakhs is just above Mahindra’s own Scorpio and MUV’s such as Toyota’s Innova and well belong competitors like Toyota Fortuner which sell above 20 lakhs.

- Feature wise, the XUV offers features unavailable in premium segments.

- Ads exhorting people to ‘live young, live free’ and shot in exotic locales such as Africa, showcase the brand as a young, dynamic and premium-feel brand.

- Ads appeal to urban users too as its shows both on-road and off-road performance (for the occasional trip).

- Brand consciousness

Indians across all segments are seen to be becoming more brand-conscious. While this is good for established brands, it works against Mahindra as it was known primarily as a maker of tractors and other heavy vehicles. Also, foreign players are perceived as more competent (such as Toyota’s Fortuner or Renault’s Duster).

TECHNOLOGICAL

- Research

There is a push towards research and development in India itself. Mahindra is well poised to exploit the capabilities. There is now a 150% weighted tax reduction for research done in-house.

- Green Energy

There is a growing need for more fuel efficient and environment friendly technology. There is a hybrid version of the XUV called the Mahindra XUV Hybrid is on the line.

- Safety and Features

There is a growing demand for safety and other advanced features in SUV’s. Mahindra recognizes this and the XUV has many features unavailable in competing automobiles, such as GPS tracking.

- NATRIP

GoI is promoting National Automotive Testing andR&D Infrastructure Project (NATRIP) to encourage the growth of automobile industry in India.

- Internet and Mobile Penetration

This makes it easier to track and collect info from customers and improve the supply chain.

ENVIRONMENTAL

- Growing Environment Awareness

Rising levels of climate change, education, media coverage and difficulties such as dust and smog in cities are forcing Indians to think of environmental impact of their vehicles. SUV’s do not compare favourably in this regard. Companies need to project themselves are more environment-friendly as compared to competitors.

- The National Green Tribunal (NGT)

NGT recently stepped in to control air pollution by stopping registration of all diesel vehicles initially and also de-registering all diesel vehicles over 10 years old in Delhi. This

LEGAL

- There have been moves to indicate that the Government intends to harmonize Indian road transport regulations in line with world-standards.

- SafetyRegulations

Stricter safety features (crash tests, effective airbags etc.) are likely to become mandatory for cars produced from 2018.

- Environmental laws

Emission laws are also likely to get stricter with the GoI favouring a move towards cleaner transportation.

- Goods and Services Tax

GST – a comprehensive overhaul of the indirect taxing system – is likely to make businesses more competitive from 2017 with uniform taxing across states and avoidance of double taxation. While larger cars are currently taxed at a collective rate of 48% to 54%, GST promises to bring it down to 28% for all cars. But luxury cars including SUV’s would likely see additional cess imposed on