M&M's new price warrior

Last Updated: Fri, Sep 21, 2012 05:43 hrs

Utility vehicle manufacturer Mahindra & Mahindra has done it once again: it has sought to create a new segment by launching the Quanto, the world's most compact seven-seater at a sedan-beating entry price of Rs 5.82 lakh (ex-showroom, Thane).

The Quanto, launched today, is only as lengthy as the Fiat Grande Punto (a hatchback) and is built to cater to consumers looking for a vehicle bigger than a hatchback but as affordable as an entry-level sedan. Yet, it is compact enough to deal with the chaotic city traffic.

Though compact in size, the Quanto (name derived from the word quantum and in keeping with the M&M tradition of having the letter 'O' at the end of every name) is more spacious than any hatchback or sedan on sale in India.

Built at an investment of Rs 100 crore, the Quanto shares its platform with Xylo. The similarities are many - be it the outer styling, interior upholstery, cup holder, dash board - except of course the price. Xylo costs Rs 7.08 lakh upwards.

The Quanto is available in four variants C2 (Rs 5.82 lakh), C4 (Rs 6.35 lakh), C6 (Rs 6.86 lakh) and the C8 (Rs 7.36 lakh) coming loaded with airbags, ABS and alloy wheels.

The Quanto measures less than four meters and uses a diesel engine smaller than 1.5 liter. This allows M&M to enjoy a lower excise duty on the Quanto at 12 per cent compared to 27 per cent imposed on the regular Xylo.

One of the most crucial offerings on the new Quanto is its 1.5 litre twin turbo engine, powered by diesel and generating peak power of 100bhp. No premium hatchback driven by diesel in India produces as much power.

Pawan Goenka, president (automotive and farm equipment sectors) M&M, says "The Quanto offers more space and comfort than any hatchback or sedan in India. We are creating a new segment here".

Demand for diesel vehicles in the last several months has outstripped petrol models by a staggering 4:1. Petrol is 43 per cent more expensive than diesel despite the recent price hike. Though the Quanto is not the cheapest utility vehicle from the market leader (Bolero is cheaper at Rs 5.43 lakh), it is a fusion between a sports utility vehicle and a multi-purpose vehicle, unlike the Bolero which is a multi-utility vehicle. M&M, though, is promoting the Quanto as an SUV positioned as an affordable alternative to the recently launched Renault Duster and Maruti Ertiga, both of whom are witnessing robust demand.

However the main target for M&M is the customers of entry level sedans and premium hatchbacks. Aspirational buyers from these segments don't have much of a choice in the utility vehicle space because of a lack of models. Except for the Premier Rio, no company has any product in the compact utility vehicle space.

The entry sedan segment (prices starting at Rs 5.15 lakh for Maruti Dzire petrol) and the premium hatchback segment (prices starting at Rs 4 lakh for Ford Figo) together clocked a growth of a little more than 10 per cent in the April-August period, beating the overall passenger car market growth of one per cent during the same period.

Despite the broader slowdown in demand, premium hatchback and entry level sedans have grown owing to their aspirational value, says a market analyst. "There is a lack of a spacious vehicle which is not as bulky and huge as normal SUVs and behaves like a car. The Quanto is the first vehicle of its kind", he adds.

Though the country's new found love for UVs has forced several companies to line up at least half-a-dozen launches, the only concern for M&M could be the dip in demand for Xylo. Market watchers say that demand dipped to new lows of 1,200 a month till the company launched a new version a month ago. Though the Xylo is spacious and comfortable, dated design and styling and availability of better options hurt demand.

"The choice of aspirational buyers are different. They are looking for styling, power and versatility. The Quanto being a condensed version of the Xylo is not amongst the best looking vehicles around. But if space is a top priority, then Quanto will suit the best", adds a Chennai-based analyst.

Maruti Suzuki Swift is the largest selling premium hatchbackfollowed by Hyundai i10 and Ford Figo. Amongst the entry sedans, Dzire is the largest seller followed by Toyota Etios.

However, since the Xylo and Quanto share the same genes, M&M has the flexibility to tweak its production line in tune with market demand for the two models. The company can ramp up production to 7,000 units per month from around 3,000 units at presently.

More from Sify: