Aggressive positioning

Positioning a utility vehicle as a replacement for mid-size sedans is not new in India. For a C or C-minus sedan customer who wants a bigger and better vehicle as he grows in affluence and his family grows in size, a utility vehicle or a multi-purpose vehicle is a cheaper option compared with a high-ticket C-plus executive sedan where he has to pay an additional 20 per cent excise duty.

M&M did a lot more than position the Xylo as a sedan replacement -- it asked people to trash their cars. "The idea was to shake up people into considering the brand. We needed something clutter-breaking for people to look at this category differently," reasons Jejurikar.

According to the Society of Indian Automobile Manufacturers, 220,000 utility vehicles were sold in India in 2008-09 and M&M's market share was 48 per cent. The company has entered the multi-purpose segment of this market with the Xylo.

This space saw sales of 140,000 units in 2008. It is at the moment dominated by the Toyota Innova which has a 36 per cent market share. The rest of it is populated by the Chevrolet Tavera, Tata Sumo Grande and ICML's Rhino.

Utility vehicle sales, to be sure, are not as robust as they used to be. After hitting 15 per cent growth in 2005-06, sales have plateaued -- 2008-09 sales in fact fell 9 per cent. The year was bad for the multi-purpose vehicles segment as well, which saw a decline of 13 per cent.

The mid-size sedan segment, on the other hand, was one among the few that continued to grow during 2008-09. It rose 6 per cent last year. Thanks to the Logan's dismal sales, M&M has an insignificant presence in this category.

Of the total mid-size sedan sales of 250,000, with diesel and petrol versions divided in the 53:47 ratio, M&M accounted for 6.5 per cent and 4.3 per cent sales, respectively.

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