With BE 6 and XEV 9E, M&M is seeing new dynamics in customer response
“What we are hearing right now is a very large proportion of people who never considered Mahindra,” said Rajesh Jejurikar, ED & CEO, Auto and Farm Sectors, in a recent meeting with analysts following the third quarter results.
The topic of discussion was the recently launched electric SUV duo, BE 6 and XEV 9E, and the interesting customer dynamics panning out as a result. There are people who are in the INR 25 lakh to 30 lakh car bracket looking at luxury brands or owning a luxury brand. As a result, it is a very different profile of customer than what the company has handled in the past.
“It is not like we have not had that profile of customer at all in the last two or three years. Many of them have bought Thar as a second or third car, or whatever, but there is a very serious consideration of this as being a car they will use every day to work,” clarified Jejurikar.
New category creations
Launching two new products leads to new category creations which typically draws early adopters and innovators who come into a category. But after two or three quarters, “we will have to have more mainstream ICE (internal combustion engine) buyers who will have to buy an EV”.
M&M is also not unduly worried about cannibalisation because “we do not want to second guess the customer”. The top priority is to ensure that the buyer has a choice between ICE and EVs which is “why we are consciously keeping the showrooms selling the EVs and ICE together”. This is especially important at this stage of the evolution of the category.
Jejurikar admitted that there would also be customers who had not yet decided whether they want an ICE or EV. “When they go to check out either one of them, they would want to check out the other at the same place rather than go to another place. So, in our mindset right now we do not want to second guess the customer and will deal with the cannibalisation as we go along,” he explained.
In any case, this is not particularly unusual since there could be Scorpio end customer who may be looking at a Classic or a Thar 3-door customer exploring the ROXX or the other way around.
Cannibalisation inevitable
“We do not want to overanalyse the cannibalisation (issue) and will learn with every quarter what is happening because the profile of the customer will keep evolving,” said Jejurikar. It was not as if only luxury car buyers would come into the segment over the next three years as mainstream ICE buyers would be part of the base as well.
By the end of the day, M&M is confident that its electric SUV strategy, based on “three primary bases of differentiation” will pay off in the market. The company has made it clear that it was not planning to retail the new offerings on conventional parameters of economy or fuel saving and so on.
“We were selling this as a lifestyle SUV statement, what we may call ‘objects of desire’, based on three primary bases of differentiation. One is the design, the second is the HMI or the intuitive human machine interface and third is the high-tech features,” explained Jejurikar.
Right products matter
M&M believes that irrespective of the price points, it should be able to do a starting initial volume of about 5,000 a month for both the products together. As he put it, right products create categories and the EV market is not really going to take off without right products coming in.
“We had also spoken about the fact that we want to launch these as highly aspirational ‘wow’ offerings. We first have to get the customer emotionally connected to “Yeah, I need to own this” or “I really want to own this”, and then start dealing with some of the barriers which come in the way,” continued Jejurikar.
There are 2-3 “very important” building blocks to breaking the barrier. One was a range of more than 500 kilometers in real world city. This is a very big barrier breaker because for most people, “you don't need to charge more than a week, not more than twice or thrice a month since 1,500 km is a fairly large usage”.
Battery warranty
The second part of the barrier breaking was the battery warranty, which also is “a big question” in people's minds. One of “the big things that we realised" is the positive inclination to own this overcame any question that most people around many parts of the country had on charging.
“Because at a range of 500 km, if you had any kind of ability to charge in your building or in your office, which apart from some high rises in places like Mumbai, is actually a non-issue in many parts of the country,” said Jejurikar.
So this was one of the learnings — that with the barrier broken and the hype on ownership of owning something which is international — there is a huge amount of desire and excitement. As M&M moves to the next phases of growth, charging infrastructure is going to become important.
As for the potential customer base, the first lot of people will be multi car owners which is the segment that the company is targeting. “This is the first time we have launched two products together and there is a learning out of that as well. We are seeing customers anecdotally say, ‘Book two, book three’,” added Jejurikar. This was perhaps happening because of two people in the family, one wanted an XEV and the other a BE.
3XO fuel dynamics
On another specific query relating to the XUV 3XO, where the capacity is around 9,000 units, M&M is “constrained” by the mix of gasoline and diesel because it had estimated about 65%-70% to be gasoline. However, its demand is higher and close to 80%-85% creating “some gasoline capacity constraint right now”.
To resolve this, the company is working on increasing capacity of this SUV by a couple of thousand units over the next 3-4 months. Interestingly, 3XO is seeing “very strong” demand from South Africa where the run rate is almost 700 a month and it is all gasoline which again is placing a constraint on total numbers.
M&M is also seeing good traction for the 3-door Thar. “We had got into discounts just when we launched ROXX to protect the cannibalisation but we almost pulled off all of those discounts and the demand still continues to be very, very good for 3-door,” said Jejurikar.
Global roadmap
Yet, the company will prioritise ROXX in a relative context because the waiting list is long which in turn will lead to a slight increase in capacity. The first phase of growth will come out of markets where it has a presence like South Africa, Australia and New Zealand followed by Chile which is a left-hand drive market.
“As we move into phase two, we've spoken about creating a global lifestyle pick up which we had also displayed in Cape Town a year and a half back. So, that will be one of the mainstays in ICE, in left hand and right hand drive markets.
“We do have a strong presence in many markets with the pickup portfolio, which is a Scorpio pickup. We will now leverage this new pickup in single cab and double cab both. So, that would be one of the key drivers of exports,” said Jejurikar.
Likewise, the electric SUVs are also seeing “major traction” from neighbouring countries and the idea is to go to right hand drive markets first which would mean Australia and New Zealand while the UK could also be an option. The next phase is to look at left hand drive regions as part of a calibrated path to globalisation.
