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SUVs way forward for automakers


Tata Motors, the country’s third-largest car maker, witnessed an overwhelming response for its Indigo three years ago when it sliced the size of the sedan to make it cheaper. The Indigo CS, which became one of largest selling models from the Tata Motors stable, sold more units per month (4,000-5,000) than an average compact car during its initial months, thanks to the lower duties it attracted.

Customers lapped up India’s first compact sedan, then priced attractively at Rs 3.79 lakh (ex-showroom Delhi), or Rs 50,000 cheaper than a regular Indigo, for it offered the space of a sedan but at the price of a hatchback.


Gauging success of the Indigo CS, several manufacturers such as Mahindra & Mahindra (M&M), Maruti Suzuki and Hindustan Motors are now preparing to explore this space further. To start with, M&M, the country’s largest SUV manufacturer, is gearing up to launch a cheaper version of the multi-seater Xylo.

The Mumbai-based company will launch a mini Xylo in the next few months, which will offer almost as much seating capacity as a regular Xylo. The sub-4 metre mini-Xylo will have two rows of theatre-style seats with space for five occupants and two jump seats that can be folded away.

The government defines a compact car which is not more than four metres in length and is powered by either a 1.2-litre petrol or a 1.5-litre diesel engine.

M&M has retained most of the features of the Xylo, but some bits are now built to a cost to ensure the mini-Xylo has a starting price that could retail for about Rs 5 lakh. This would make it nearly Rs 2 lakh cheaper than the base version of the Xylo.

Visually, the only difference can be found at the rear, with the shortened length and wraparound tail lamps placed higher. A four-wheel drive version of the mini-Xylo is also being prepared and is expected to be launched some time after the regular two-wheel drive version.

The mini-Xylo will be powered by a 1.5-litre, 3-cylinder diesel engine that is derived from the mHawk family of engines that currently powers the Scorpio SUV. The engine is expected to generate about 70-75 peak power.

Although officially M&M officials refused to speak on the vehicle but insiders say it is aimed creating a new segment catering to the lower-end of the demand spectrum. While the regular Xylo attracts an excise duty of 22 per cent, the mini Xylo will carry a duty of only 10 per cent due to its smaller dimensions.

In addition, its not just the Xylo which has gone under the hammer for a makeover. M&M is working on two other models that would benefit from the lower duties under the four-metre definition.

The company will launch a shorter version of the Verito (formerly Mahindra Renault Logan) sedan next year that will be at least Rs 50,000 cheaper than the present version, priced at Rs 4.82 lakh.

Rajesh Jejurikar, executive vice-president, M&M (automotive sector), said, “I can only say at this point that the new Verito will be launched next year. We are yet to finalise a date for it. Both the regular Verito and new Verito will co-exist in the market.”

An all-new shorter SUV from M&M is also on the anvil, scheduled to be launched in 2013. This model would share the mini Xylo’s engine or an engine with an even smaller capacity that is being produced by Mahindra.

Expected to be priced in the region of Rs 3.5-4.5 lakh, this mini SUV, which will be under four metres in length, may become the cheapest SUV in India rivalled only by the five-seater Premier Rio.

The country’s biggest car maker, Maruti Suzuki, doesn’t want to be left behind, either. The company is readying the launch of a shortened version of its best-selling sedan Swift Dzire, which is scheduled to hit the market before the year-end.

“The new compact DZire, which will be cheaper by Rs 40,000-50,000 than the regular sedan, will run on the same engines currently powering the DZire and will be produced at the Manesar plant,” said a Maruti official.

Excise duty on these cars is the lowest at 10 per cent, while all other passenger vehicles are charged an excise duty of 22 per cent.