Mahindra on hybrid: Firmly believe that it is an interim and costly solution

Mahindra said that there is no link between the recent price cut on certain variants of its flagship SUV, the XUV700, and the UP government's decision to waive the registration fee on hybrid cars.

Homegrown auto major Mahindra & Mahindra today said that hybrid is an interim and costly solution, and there is no link between the recent price cut on certain variants of its flagship SUV, the XUV700, and the Uttar Pradesh government's decision to waive the registration fee on hybrid cars.

The complete exemption on the payment of registration fee on purchase of any hybrid car in the state came into effect from July 1. The waiver applies to hybrid electric vehicles (HEVs) as well as plug-in hybrid electric vehicles (PHEVs).

Both HEVs and PHEVs use an internal combustion engine (ICE) and an electric motor powered by a battery. The major difference between HEVs and PHEVs is that the latter has a bigger battery, which has to be charged using an external power source.

On July 9, Mahindra announced special celebratory ex-showroom prices for the top-of-the-line AX7 range of the XUV700, aligning with the popular SUV's upcoming three-year anniversary. Launched in India in August 2021, the XUV700 recently reached the sales milestone of 200,000 units.

As part of the celebratory pricing, available for four months only, the Mahindra XUV700's AX7 range became affordable by as much as Rs 2.19 lakh, depending on the specific variant (seating, engine and transmission combination). The AX7 range now starts at Rs 19.69 lakh and goes up to Rs 24.99 lakh (ex-showroom).

"We wish to inform the stock exchanges that there is no linkage between the price cut on certain XUV700 variants and UP EV/hybrid policy as reported by some media. The announced price cut of XUV700 is a continuation of our business strategy execution that was articulated in our 14th February 2024 analyst meeting where we clearly outlined that we have to bring the average price point down to drive growth," Mahindra said in a regulatory filing.

"We kickstarted this effort with the launch of AX5 select variant in May 2024 and have also brought in a third-anniversary celebration variant for the higher-end XUV700 for a limited period of four months. 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," it added.

The demand for the XUV700 continues to be robust, and we have increased our manufacturing capacity in line with demand, Mahindra said, adding that our new XUV700 bookings in June were 23% higher than in May and there is no concern of unsold inventory as reported by certain news channels/newspapers.

The Mahindra XUV700 is by far the best-selling SUV in its segment and also one of the largest-selling SUVs in the country. It recorded sales of almost 80,000 units in FY24. The Mahindra XUV700 rivals the likes of the Tata Safari and the MG Hector Plus.

Moreover, the hybrid models like the Maruti Suzuki Grand Vitara, Maruti Suzuki Invicto, Toyota Urban Cruiser Hyryder, Toyota Innova Hycross and Honda City, that stand to benefit from the complete waiver of registration fee in Uttar Pradesh are not even direct or indirect rivals of the Mahindra XUV700.

"We firmly believe that hybrid is an interim and costly solution. And, we have the readiness to offer high-quality products for all solutions that our consumers desire," Mahindra said.

Mahindra, which is India's largest SUV maker in terms of revenue market share, does not offer any hybrid model. It sells ICE SUVS like the Bolero, Bolero Neo, Bolero Neo Plus, XUV 3XO, Thar, Scorpio Classic, Scorpio-N and XUV700. The company also has an electric SUV, the XUV400, in its portfolio.

In the Q4 FY24 earnings call, the company said that it plans to have seven EVs in its line-up by 2030. It will introduce a new electric SUV in Q4 FY25.