Premium Sports Utility Vehicle (SUV) Rexton, produced by SsangYong Motor in collaboration with Mahindra & Mahindra, has already become the number 2 car in the Rs. 15-25 lakh category. In doing so, this vehicle has left behind strong competitors such as Skoda Yeti and Ford Endeavour, available in the above mentioned price bracket.
Leading Indian utility vehicle manufacturer Mahindra & Mahindra has a controlling stake in South Korean auto company SsangYong Motor Corporation, purchased for Rs. 2100 crore. Local assembly through Mahindra & Mahindra has allowed the company to sell the Rexton at a lower price than Honda CR-V (Rs. 20.40 lakh) and Ford Endeavour. It is being manufactured at Mahindra's manufacturing facility in Chakan (near Pune), with the help of Completely Knocked Down (CKD) parts from Korea.
The Rexton is the first among many vehicles planned for the future, such as Korando and Rodius. SsangYong sells 450-500 units of the Rexton every month in India, which is currently priced between Rs. 18.40 lakh and Rs. 20.60 lakh (ex-showroom, Mumbai). Other vehicles in the premium SUV category include Mitsubishi Pajero, Mitsubishi Outlander, Honda CR-V, Renault Koleos, Nissan X-Trail and Hyundai Santa Fe. In total, this segment has seen a growth of 15.5 per cent from April 2012 to February 2013. As per reports, 22,057 units have been sold this year, as against 19,100 units in the same period of the previous year. Interestingly, Toyota dominates 66 per cent of this segment with the Fortuner SUV, as per data available from Society of Indian Automobile Manufacturers (SIAM).
Mahindra & Mahindra has managed to sell its flagship vehicles XUV500 and Scorpio in the same showroom as the Rexton. Sales executives were strictly advised not to treat SsangYong as a step child. This experiment did work well for the company, despite having seen that joint ventures have historically not worked well for manufacturers, a case in point being Fiat and Tata Motors.
Supporting the initiative by Mahindra, Pawan Goenka, President (automotive and farm equipment sectors) for Mahindra and Chairman of SsangYong Motor Company said, "We sold Mahindra Renault from our showroom and did not have any problem. I think the difference is that we own the product (of SsangYong), so whatever P&L (profit & loss) happens is our P&L. it's not a third party's P&L. That makes the difference. Our sales team does not treat the SsangYong product as a step child. To them a Rexton is as much a Mahindra product as XUV500."
Mahindra feels that the strong brand value of the company has helped it negating market challenges. It is one of the few companies that sold in impressive numbers during the last fiscal and registered positive growth. Industry experts believe that the company has the right platform to launch premium products from the SsangYong Motor Corporation on the Indian turf.
