Can TUV300, Mahindra's Rs 1,200-Crore SUV, Meet Sales Estimates?

M&M is banking on the TUV300 to drive its sagging sales.

“M&M’s first compact SUV has met our expectations. We believe the company is trying to clearly differentiate the product from the crowd by launching a muscular and bold SUV,” said Hitesh Goel of Kotak Institutional Equities.

Maybank analyst Jigar Shah noted that the TUV300’s starting price of Rs 6.90 lakh is lower than expected. According to Kotak, TUV300 has been has priced 15-25 per cent lower than Ford EcoSport and 25-30 per cent lower than Creta and Duster.

The competitive pricing and good looks suggest that M&M may have got a winner on its hands, analysts say.

M&M is banking on the TUV300 to drive its sagging sales; the country’s pre-eminent utility vehicle maker’s market share has been falling at time when passenger vehicle sales have picked up after a gap of three years.

After falling 12 per cent in 2014-15, M&M’s passenger vehicle sales are down 8 per cent in the first five months, while industry’s passenger vehicle sales rose 7 per cent. M&M’s share in utility vehicles space fell to 37 per cent from 42 per cent a year ago, according to industry group Society of Indian Automobile Manufacturers. In the June quarter, its share of the utility vehicles market fell 200 basis points from the same period a year ago to 38.5 percent, industry data showed.

Unsurprisingly, M&M has lots of hopes from TUV300. The company’s executive director Pawan Goenka on Thursday said that the TUV300 could clock 4,000-5,000 units in monthly sales.

If TUV300 meets M&M’s target, it would end up cornering nearly 10 per cent of the SUV industry, a big achievement for the company. Analysts, however, are not so optimistic.

“We do not believe this model will be a big volume driver for the company but should be able to gain decent volumes,” Kotak Institutional Equities said. The brokerage expects TUV300 to clock 2,000 units per month in 2016-17.

“We are not completely clear about the product positioning in terms of whether it is targeted more towards rural or urban customers,” Kotak added.

Gaurav Vangaal, senior analyst at IHS Automotive, told Reuters that TUV300 may help in incremental volumes but regaining market share of the past looks difficult.

“They lost it and they may not regain it in near term,” he added.

As of 12.36 p.m., M&M shares traded 0.12 per cent higher at Rs 1,717.20 in a market that traded 0.25 per cent higher.

(With inputs from Reuters)