Mahindra Clears The Air On XUV 7OO Price Cut Amid Stock Plunge

Mahindra & Mahindra Ltd. has clarified that the price cut on the top variant of its best-selling SUV is part of its ongoing business strategy, and not a response to overtures in the wider automotive industry.

“There is no linkage between the price cut on certain XUV 7OO variants and UP EV/hybrid policy as reported by some media,” the Scorpio maker said in a stock exchange filing on Wednesday. “The price cut is a continuation of our business strategy… ‘to bring down the average price point to drive growth’.”

“These well-deliberated actions were incorporated in our annual business plan, basis the material cost savings realised earlier, and hence we do not expect any material impact on our financials.”

That wasn’t enough to arrest the slide in M&M’s share price. The stock fell as much as 7.78% to an intraday low of Rs 2,697.8 apiece on the National Stock Exchange. It pared some of the losses to end the day 6.61% lower at Rs 2,732 apiece.

M&M had in May launched the AX5 Select—a mid-spec variant—and has now reduced the prices on XUV 7OO’s AX7 variant. That narrows the price gap between the two variants to Rs 2 lakh from Rs 4 lakh earlier. The launch of the AX5 Select variant had reduced the demand for the AX7 variant, so much so that there was a build-up of inventory, according to a Delhi NCR-based dealer who spoke with NDTV Profit on the condition of anonymity.

But M&M rejected any concerns of stockpiling at dealerships.

“The demand for the XUV 7OO continues to be robust, and we have increased our manufacturing capacity in line with the demand,” M&M said in the exchange filing. “Our new XUV 7OO bookings in June were 23% higher than May and there is no concern of unsold inventory as reported in the media.”

On Tuesday, M&M revised prices of XUV AX7 variants by more than Rs 2 lakh—the best-selling diesel variant now starts at Rs 19.99 lakh, ex-showroom Delhi. The petrol variant is cheaper still at Rs 19.49 lakh. The “celebratory pricing”, to mark 2,00,000 units in less than three years of production, is valid for four months.

Earlier in the day, Tata Motors reduced the starting price of its Harrier and Safari SUVs to Rs 14.99 lakh and Rs 15.49 lakh, respectively, from Rs 15.49 lakh and Rs 16.19 lakh earlier. Some of the best-selling variants of these SUVs have discounts of up to Rs 1.5 lakh. The offer is valid on bookings made until July 31.

On the same day, news emerged that Uttar Pradesh has waived with immediate effect the road tax on strong hybrid and plug-in hybrid vehicles, in a boost to Maruti Suzuki India Ltd., Toyota Kirloskar India Pvt. and Honda Cars India Pvt. Their hybrid cars are at once cheaper by up to Rs 3.5 lakh in the state.

Still, M&M doesn’t ascribe to the hybrid theory.

“We firmly believe that hybrid is an interim and costly solution,” the Mumbai-based SUV maker said in the exchange filing. “And, we have the readiness to offer high quality products for all solutions that our consumers desire.”