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Mahindra War Room 2013

Automotive - SUV Category Strategy Caselet

Mahindra Automotive & Farm Equipment Sectors (AFS) comprise businesses ranging from Automotive (including Cars, UVs, Trucks and Buses), Agri-business (including Seeds and Applitrac equipments), Construction Equipment, Powerol (Engines & Gensets) to Tractors. This caselet pertains to the Automotive Business of Mahindra AFS, and is one of the two optional caselets that may be chosen for this business. Founded in 1945 with commencement of discussions to manufacture of Willys Jeep, the Automotive business has grown to be among the oldest and the largest business of Mahindra Group, contributing to 54% of the Groups revenue. Mahindras Automotive Business spans Alpha range of 3-Wheelers, Gio, Bolero Maxxi Truck and Maxximo range of Small Commercial Vehicles, Verito, Vibe, e2O, Actyon and Chairman range of Cars; Thar, Bolero, Scorpio, Xylo, Quanto, XUV 500, Korando, Kyron, Rodius and Rexton range of Utility Vehicles, and Mahindra Trucks & Buses (including Ssangyongs products that may not have been launched in India yet). The Automotive business R&D efforts are concentrated at Mahindra Research Valley in Chennai, with Manufacturing facilities across 9 plants worldwide. In 2011, Mahindra acquired Ssangyong Motors of Korea and Reva Electric Car Company, surging ahead towards their Big Hairy, Audacious Goal of being among the Top 10 Globally renowned Automotive companies. Mahindra vehicles now ply both the paved and unpaved roads of Australia, Europe, Latin America, Malaysia, South Korea, and South Africa.


The SUV segment has attracted a lot of interest in the recent past. The share of SUVs in the Automotive Industry has increased from about 18-19% to about 23-24% in the recent past, drawing signicant interest from global Automotive players. Until a few years ago, the SUV category was dominated by Mahindra, Toyota, Tata and General Motors, but now there are several new players with more to come. Mahindra is currently the market leader in SUVs with a 48% share of the market in 2012-13. As competition in a category increases, the market share leader in that category is bound to lose market share, unless the category itself expands rapidly enough to even grow the leader. Maruti faced a similar situation about a decade ago, when several players entered the car market. How should Mahindras SUV Strategy evolve in this new market reality? Should Mahindra aim to: (A) Retain a 55-60% market share by launching new models and competing hard, OR (B) Secure a 40% market share more protably and maintain a more robust business. Scenario A would entail an investment of USD17 Billion in Product Development with a possible upside of USD 5Billion in prot, if Mahindra indeed manages to retain a 55-60% share of market. But Scenario B will require to add just one or two additional products and be a robust business with high protability. Evaluate both both scenarios in detail, with clear articulation of all implications of both alternatives, based on detailed Industry, market and competitor analysis, offerings, new products, volumes and so on. Evolve your recommended course of action and provide a detailed way forward on the SUV Category Strategy for Mahindra Automotive.
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