Price play

If all else fails, Mahindra still has the price card. The Xylo's price tag of Rs 625,000 (Delhi ex-showroom price of the entry-level E2) puts it closer to the mid-size sedan segment than all its rivals. "If a customer wants to upgrade from a Swift Dzire (the diesel variant is priced at Rs 540,000 in Delhi) to a utility vehicle, he can easily go for a Xylo," Jejurikar says. More important, its price tag is Rs 1.8 lakh (Rs 180,000) below that of the Toyota Innova.

Data shows that Toyota sold 2,979 Innovas and Prados during March, and M&M claims it sold 3,171 Xylos during the same month. At any rate, it is too early to tell if the Xylo is a threat for the Innova, feel experts.

"Even the Logan did extremely well during the first two months following the launch, but sales fell sharply within a year. We will have to wait for the next six or nine months to see whether the Xylo can be said to be an Innova-challenger," says an industry analyst who has served M&M in the past.

Moreover, the Innova enjoys unflinching loyalty from its customers, some of whom even scoff at the Xylo's grandstanding. "A multi-purpose vehicle that claims to be posing a challenge to Innova does not even offer basic safety features such as ABS (anti-lock braking system) and airbags," says Manav Shah, a financial consultant and an Innova owner.

Jejurikar responds, "We are a couple of months away from ABS, and few months after that from airbags. It is in the development pipeline."

Ernst & Young Partner (automotive practice) Kapil Arora cautions that, since the Xylo is positioned between the Bolero and Scorpio, it can potentially cannibalise some of the existing sales from the two brands.

M&M, in fact, acknowledged recently that it witnessed cannibalisation of 25 per cent between the Xylo and Scorpio. Consequently, M&M slashed the Scorpio's price by Rs 34,000-70,000 last month, bringing it close to the Xylo's price band in order to stop the cannibalisation between the two.

The Xylo has done well so far. Total bookings till April 20 have crossed the 15,000 mark, informs Nayer, even when the company has put a cap on the number of bookings in small cities. What is more, of the 335 M&M dealers based in metros and non-metros, only 127, most of them based in metros, are taking Xylo bookings as of now.

"The attempt is to create visibility first," says Jejurikar. There is another important reason behind the booking cap. It buys the company some time to ramp up production capacity at its Nashik facility which, at the moment, can roll out only around 2,000 Xylo cars every month.

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