Mahindra & Mahindra has invested Rs5.5bn in the Xylo project over a 4-year period. Xylo is positioned against the sedan (A3) segment customer. M&M management believes that given the Xylo’s superior product price proposition, it can convert the sedan customer to Xylo. We don’t agree – there might be some cannibalization from the Scorpio / competing vehicles – but it will be difficult to shift extant sedan customers to an SUV product.
It appears attractive, prima facie, when compared to competing vehicles. Xylo is offered in 4 variants (E2, 4, 6 and 8) at prices ranging between Rs6,24,500-7,69,500 (ex showroom Delhi). Given the attractive price, we believe the vehicle will be a strong contender to the Toyota Innova, but in the process could also cannibalize M&M’s Scorpio sales.
Management indicated that they plan to launch the vehicle initially in the domestic markets and target exports (S. Africa, followed
by S. Asian markets). Management also indicated that they do not plan to curtail any planned investments in the auto sector.