CHANGE IN MAHINDRA & MAHINDRA (m&M) is usually worth Rs 650 crore. That’s a fraction of its Rs 23,493 crore turnover, but the amount seems to be gaining ground within India’s leading utility vehicle and tractor manufacturer. It’s a recurring sum when one talks about the turnaround in its fortunes. The company invested Rs 650 crore in a five-year project, starting 1998, to build the Scorpio, its runaway success in the SUV segment. A decade later, it spent a similar amount to build the XUV500. Bookings for the XUV500 opened twice and sold out in a week on both occasions. Its new R&D facility—the Mahindra Research Valley (MRV) on the outskirts of Chennai—has also been designed and built at, wait for it, Rs 650 crore by renowned architect Charles Correa.
The mandate from Anand Mahindra, vice chairman and managing director, M&M, has been to design products that will keep the cash registers ringing. Mahindra’s latest investment, in that sense, is merely an indication of how he wishes to pursue styling as a selling point for his vehicles in the years ahead. “When I come here [MRV], I feel safe about the future,” he says.
Spread over 125 acres and in the works for more than six years, the MRV is expected to be the test bed for the company’s new products and ideas. Given that M&M’s earlier products did well without the facility, did it need to put this effort and money into building a separate R&D centre?
Rajan Wadhera, CEO of technology and product development, M&M, explains, “Earlier, our engineering department had an overbearing influence on the products we developed. Now styling pushes the capabilities of engineering.”
A decade after M&M launched the Scorpio, Mahindra’s new investment reflects his confidence in automotive styling and design. There’s talk of global automotive companies including Suzuki, Nissan, and Renault designing cars specifically for the Indian market. (While Mahindra is confident, he wants to ensure that the company adheres to international standards in quality and engineering.) “The elements of styling and design will spell the success of any car model,” says Dilip Chhabria, chairman and MD of DC Designs, India’s oldest automotive design firm.
Till the mid-’90s, M&M’s vehicles were known for being rugged and hardy. In fact, their models were mostly used in Bollywood flicks for high-speed car chases between cops and baddies. That was till Pawan Goenka, the M&M president (automotive and farm equipment sectors), decided to tweak the Armada, an unwieldy model by modern standards. Goenka, who came from General Motors to head R&D, decided to make cosmetic changes to the headlight and trim. The Rs 30 crore exercise resulted in the Bolero, whose USP when it was launched around August 2000 was its cabin quietness. To date, the Bolero is the bread-and-butter model for the company. Last year, nearly a 1 lakh Boleros rolled out of M&M’s factories.
When Mahindra first got a draft design of the Scorpio back in 1997, things were not looking good for the company. The Sumo, a competing product of then arch-rival Tata Motors, sold a total of 1 lakh vehicles between 1994 and 1997, a record for any utility vehicle model.
Even in 2002, when Mahindra launched the Scorpio, it had to compete with Toyota’s Qualis, which clocked sales of 25,000 a year. That year, Mahindra sold 55,920 utility vehicles, down from 76,954 in 1998. Profits slipped during the period from Rs 251 crore to Rs 103 crore and the stock was down 84%.
IT WAS LATE 1996 when Goenka was put in charge to find out what customers wanted in a utility vehicle and to start on a clean slate. He translated those requirements into the Scorpio. When Wadhera commissioned market research a little over a decade later, he found that customer tastes had not changed much: They wanted a vehicle with great design aesthetics, international styling, lots of comfort, a smooth ride, and, of course, a low price. Wadhera’s baby was the XUV500. However, between the launches of Scorpio and XUV500 there were subtle changes in M&M’s understanding of the styling and engineering of the product.
M&M’s progress to bring out new products differs from its bigger rival, Tata Motors, which set up a full-fledged R&D centre in the mid-’60s under Sumant Mulgaonkar. From the facility in Pune, Mulgaonkar led the Tatas to start designing own cars and stave off Japanese competition in light commercial vehicles. It tested its new models in-house for aspects such as noise, vibration, and handling, and even simulated road conditions. Journalists were invited to witness the Indica’s first crash test, when it was launched. The Scorpio, on the other hand, was not crash tested initially after its launch, a mandatory requirement in countries with tougher norms, such as Germany and the U.S.
But M&M’s bold strategy to invest all it had on the Scorpio seems to have worked better than Tata Motors’. Tata’s products such as the Indica and Nano were pathbreaking, but came with post-launch jitters. Indica became a favourite with cab drivers, but failed to cut ice with consumers who sought styling. Nor were they big money-spinners for the company. The Safari was never an SUV to be reckoned with, being severely underpowered for its size. Its latest utility vehicle Tata Aria has met with a lukewarm response.
In comparison, the Scorpio and XUV500 have been runaway successes. The Scorpio, in particular, played a key role in reviving M&M’s fortunes. “M&M has managed to read the minds of its customers well, but with global competition it will have to up the ante in areas such as engines and power trains,” says Hormazd Sorabjee, editor of Autocar India, the largest-selling auto magazine here.
When the XUV500 was pitched as a premium vehicle, Wadhera knew it would have to sport a monocoque chassis, a standard fitment in more modern cars. (A monocoque chassis is in the shape of the vehicle and the rest of the body just needs to be fitted on to it. This differs from a conventional ladder frame chassis, which has two long steel beams joined by other lateral pieces. The parts are then mounted separately on them. The monocoque lends itself to more robotised manufacturing.) The engine would have to be aligned east-west versus the traditional north-south of lower-end cars.
Fifty-odd designers in its factory in Kandivali, a suburb in North Mumbai, found it relatively easy to render the XUV500 on paper or on computer. However, M&M’s engineers took two years to fine-tune their skills to work with a monocoque chassis although they had picked up the rudiments of working with it in its venture with Renault to manufacture the low-cost sedan, Logan.
The stress was showing. The M&M engineers who were earlier never used to be pushed around had to come up with solutions quickly to what the designers rendered on paper. With an increasing portfolio—cars, an electric vehicle, two-wheelers, and trucks—M&M also needed to test its products quickly. “There is a great need to keep changing design elements in a vehicle so that it stays fresh in customers’ minds, and an in-house facility accelerates the process,” says Wadhera.
A designer from an European car company had once told Mahindra that Western companies are more conservative when it comes to designing cars. They wouldn’t make any overt statements like M&M, which used a lot of motifs to highlight the cheetah-like structure of the XUV500. The tattoo in the rear indicator lights would be a definite no-no.
“Mahindra has come a long way in design with its XUV but it needs to improve in quite a few areas like cursive quality,” says Jean-Philippe Salar, head of design at Renault Design Studio in Mumbai. (M&M’s vehicles are low on curves compared to the international trend now, which goes beyond flat sheets of metal.)
M&M has managed so far to surprise its customers with newer platforms like the XUV500. It has also taken far more risks than others, according to Chhabria. He believes the Indian market is just warming up to automobiles and there is a lot of room to experiment before companies draw up their styling strategies.
“From the ’50s to the ’70s, American car companies quickly launched a lot of models to gain customers,” he says. What he means is there was continuous excitement for customers. Refreshing design was a sort of luxury, which is not possible these days because of the costs involved.
THE URGENCY FOR M&M is clear as it aims for the next level in vehicle manufacturing. According to a company press release, M&M sold more than 220,000 passenger vehicles, including utility vehicles and the re-badged Renault car Verito, in FY12. The other player to reckon with in the segment was Toyota, that sells about 95,000 utility vehicles such as Innova and Fortuner per year. (Toyota’s products are priced higher on average, so the company’s market share value on average has risen faster than M&M’s.) Ford is also expected to launch its SUV, EcoSport. Suzuki, India’s largest player in cars, recently launched the Ertiga, a utility vehicle on an existing car platform at half the price of the XUV500.
Sorabjee feels that Ford and Suzuki will make products with more refinements in engine, power train, and driveability because of their long experience in making vehicles. The refinements should result in better co-ordination between the engine and the gearbox to ensure smoother drives as well as lower vibration and noise.
Wadhera says his M&M team has still not thought of what its vehicle DNA is likely to be. A core team headed by Mahindra and Goenka, among others, has yet to arrive at a consensus of what design features will make an M&M stand out. Under evaluation is a signature grille and some aspects of a muscular fender for all its SUVs. The company has already got several inputs from Korean utility vehicle maker Ssangyong’s design team on aesthetics and some minor hygiene issues. Wadhera refuses to divulge anything except that “our styling will continue to be aggressive”.