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With cheaper Rexton, M&M to take on Toyota Fortuner

Source : BUSINESS_STANDARD
Last Updated: Wed, Oct 17, 2012 19:22 hrs

Utility vehicle market leader Mahindra & Mahindra (M&M) launched the Rexton, its first product from the SsangYong stable, at Rs 17.67 lakh, making it substantially cheaper than the Toyota Fortuner, the top seller SUV in the premium segment, priced under Rs 25 lakh.

Mumbai-based M&M is the parent company of SsangYong Motor Company, owning 70 per cent stake of the listed South Korean company. The Rexton will be part-built in India by M&M and sold through its own outlets.

M&M's primary target is the Rs 21.7-lakh Toyota Fortuner, that has a 70-per cent market share in its category.

The Japanese product’s volumes increased to 7,824 units in the first half of this year, a 44 per cent growth compared to 5,436 units sold in the same period a year ago. The growth recorded by Toyota is much higher than the industry’s, which grew just 4.5 per cent.

Pawan Goenka, president, automotive and farm equipment sectors at M&M and chairman, SsangYong Motor Company, said: "This is a new price point for M&M, as its earlier premium offering was the XUV 500 launched last year. This is the first premium product from our SsangYong portfolio to be offered in India.”

M&M, in its presentation to reporters, compared the Rexton directly with the Fortuner, spec-to-spec. The Rexton is wider, lengthier, more spacious, with better ground clearance and cheaper, it said. Both are, however, seven-eight seater.

Although volumes are small in this segment, there is no dearth of competition. Other players are Ford Endeavour, General Motors Chevrolet Captiva, Honda CR-V, Hyundai Santa Fe, Nissan X-Trail and Renault Koleos.

There will be no separate sales outlets for the Korean brand. It would share space with M&M's existing distribution set-up. They will, however, have a committed space inside M&M's dealerships with dedicated sales personnel.

Besides M&M's service back-up, SsangYong products will leverage Mahindra's brand presence even in its range, sporting the "by Mahindra" tag on its products. M&M spent Rs 63 crore in developing the Rexton for the Indian market.

The Rexton will be assembled at the Chakan facility of M&M, near Pune. Parts will be shipped from SsangYong's manufacturing facility in Korea in completely knocked down (CKD) format.

Based on the success of the Rexton, M&M will introduce more models of the SsangYong brand in India in the future.

Yoo-Il Lee, chief executive officer, SsangYong Motor Company, said: "This the best possible market for SsangYong. I am sure that India will become the second-largest export market for the company.”

Experts say that although M&M plans to leverage its brand strength for SsangYong to push it into India, the Korean brand remains largely an little-known brand. "Toyota is a much bigger brand than SsangYong, and is known for its large SUVs. It would not be easy for M&M to push SsangYong (in India) despite using its comparatively larger sales base", said a Chennai based analyst.

SsangYong has started with a localisation level of 22 per cent and M&M plans to increase this gradually, although it will not be raised up to 100 per cent. The Chakan plant can produce 500 units per month in single shift for the time being, and can be ramped up later if the demand increases further.

M&M has already announced an investment of Rs 1,500 crore to develop a new vehicle platform with SsangYong over the next three years. M&M and Ssangyong are developing a new engine platform both for petrol and diesel that will be used by both the companies.




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