Re: Wow! Is Mahindra silently making its way into the USA? EDIT: Got EPA go-ahead Pg. 1. Selling tractors and farm equipment in the US has no bearing whatsoever on how the american consumer will react to a mahindra car or SUV.
2. Hyundai was the butt of jokes for 25 years, sold with huge discounts and terrible resale values to the bottom rung car buyers who just wanted a new car at the lowest possible price and didn't care about anything else. It is now with the latest Sonata and the genesis that Hyundai is finally earning respect for the quality and capabilities of its vehicles. Only when Hyundai has made vehicles that beat the best of Honda and Toyota at their own game has the ridicule started to subside.
THis fate awaits mahindra as well. Mahindra can either choose to make a profit now with lousy vehicles and then spend 20 years digging itself out of the hole, or it can let another generation or two of vehicles pass before exposing itself to ridicule that will then have to be undone.
3. What price will they sell it at? Let us look at some vehicles that are close to the XUV500 in price in India and are also available in the US and see what their prices there are:
The 4wd variant is 13.5lacs ex showroom. At approximately that price you can get:
Chevy Cruze LT. Petrol variant is $20,000 in the US. lets say $22,000 for the diesel (if it were available)
Honda Civic 1.8V A. Approximate equivalent is the Civic EX-L with leather upholstery which is $22,000
Toyota Corolla 1.8G automatic, comparable to the 1.8LE automatic, $20,000.
VW Jetta TDI, $23,000.
So we see that on average, vehicles that cost about Rs 13.5 lacs here cost about $22,000 in the US.
However, note that:
- The Subaru Forrester 4wd is $20.6k
- CRV AT 4wd for $23k.
- Jeep Wrangler 3.8V6 is $22k
For $25k, you can buy the 4x4 versions of the Toyota RAV4, the Outlander, the Jeep Liberty, and the Hyunda Santa Fe.
Clearly, Mahindra will not be able to sell this vehicle at $22,000.
I bought a brand new 2007 Toyota Camry CE with all the features (power everything, cruise, A/C etc), at a discounted price of $18,000. At the time the Honda Accord LX was offered for $19,000 on discount. Will Mahindra be able to sell the XUV500 at anything approaching Camry/Accord prices in the US when it cannot dream of charging 21lacs for the vehicle in India that an accord costs?
Its failure to meet Honda/Toyota/Hyundai/Subaru (etc) levels of engineering, refinement and quality means that it cannot be sold at more than about $16,000. thats 8lacs. If you remove the 22% excise duty from the 4wd SUV500's 13.5 lac price, you get 11 lacs. Which means mahindra will have to sell an 11 lac rupee vehicle in the US for 8 lacs.
How much money will they make at that price?
And if they sell it cheap, apart from thin margins, if they make any money at all, what brand perception will they get except "cheap Indian junk"?
I am afraid that Indians don't understand how harsh and mocking and unforgiving the american market is. The products are superb, the efficiency of the factories is phenomenal, the used car market is rich with top notch high value cars, and there is virtually no tolerance for anything except the very best unless it is bankruptingly low prices.
Sure, they have to start somewhere, and you can argue that they will learn by exposing themselves to the harsh winds of that market which will force them to do better. That is true, but I think that there are so many things about the SUV 500 that can be straight off marked off at bad, and it would be foolish on mahindra's part to suffer the ravages of the market to learn the lessons it ought to know and that it can be taught by the knowledgeable immediately.
Just my thoughts. No doubt the brilliant people in charge know better than me.
But it ought to be noted by the prudently skeptical that the diesel mahindra bolero pick up got 19/21 city/highway mpg rating from the EPA ,when something like the fullsize F150 with the 302hp 3.7L petrol V6 Ford F150 gets 17/21 despite its much larger towing and payload capacity and cost about the same that the mahindra pickup was expected to (about $23k). In a country where diesel is more expensive than petrol.
Its a VERY TOUGH market over there.
Last edited by Harbir : 10th March 2012 at 19:10.
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