Mahindra & Mahindra’s Price Cut: A Planned Move, Not Linked to Uttar Pradesh’s EV Policy

In a recent statement, Mahindra & Mahindra (M&M) clarified that the price cut of its XUV700 variants is not related to Uttar Pradesh’s electric vehicle (EV) and hybrid vehicle policy. The company had announced the price cut in February 2024 as part of its business strategy to drive growth. The move was aimed at bringing the average price point down to make the model more attractive to customers.

M&M had already started this effort with the launch of the AX5 select variant in May 2024 and introduced a limited-edition 3rd anniversary celebration variant for the higher-end XUV700. The company realized material cost savings earlier, which were incorporated into its business plan. The price cut is a well-thought-out action to increase sales and growth.

The XUV700 is a popular model, with around 6,000 units sold every month, accounting for 15% of M&M’s overall SUV sales. The top two trims of the model, AX7 and AX7L, contribute to around 50-60% of the total sales. Axis Capital, a domestic brokerage firm, has rated M&M as “add” with a target price of Rs 3,150, citing its positive outlook on the company in the sector.

Uttar Pradesh, the second-largest car market in India, has waived registration fees for strong hybrid and plug-in vehicles, reducing their cost of ownership by 10%. EVs are taxed at 5%, while hybrids face a 43% tax. Maruti Suzuki’s shares rose significantly following this development, with cars priced above ₹10 lakh seeing a 10% registration charge eliminated. This has resulted in price reductions of ₹1.5 lakh to ₹3 lakh, depending on the model and variant.

M&M believes that hybrid vehicles are an interim solution and that the company is ready to offer high-quality products for all consumer needs. The company’s statement emphasizes that the price cut is a planned move, not a reaction to Uttar Pradesh’s EV policy. The move is aimed at increasing sales and growth, rather than responding to the policy changes.

Key Points:

• M&M’s price cut of XUV700 variants is not linked to Uttar Pradesh’s EV policy.
• The move is part of the company’s business strategy to drive growth.
• The company realized material cost savings earlier, which were incorporated into its business plan.
• The XUV700 is a popular model, with around 6,000 units sold every month.
• Uttar Pradesh has waived registration fees for strong hybrid and plug-in vehicles.
• Maruti Suzuki’s shares rose significantly following the policy change.
• M&M believes that hybrid vehicles are an interim solution and is ready to offer high-quality products for all consumer needs.

Historical Context:

The Indian automotive industry has been witnessing a significant shift towards electric vehicles (EVs) and hybrid vehicles in recent years. In 2020, the Indian government announced its plans to promote the adoption of EVs by offering incentives such as subsidies, tax benefits, and relaxed regulations. Since then, several automakers, including Mahindra & Mahindra, have been investing heavily in EV technology and launching new models.

In 2022, the Uttar Pradesh government announced its EV and hybrid vehicle policy, which aimed to promote the adoption of eco-friendly vehicles in the state. The policy included measures such as waiving registration fees for strong hybrid and plug-in vehicles, reducing their cost of ownership by 10%. This move was seen as a significant step towards promoting sustainable transportation in the state.

In the context of this policy, Mahindra & Mahindra’s price cut of its XUV700 variants in February 2024 can be seen as a strategic move to increase sales and growth. The company’s statement emphasizes that the price cut is a planned move, not a reaction to the Uttar Pradesh EV policy.

Summary in Bullet Points:

• Mahindra & Mahindra’s price cut of XUV700 variants is not linked to Uttar Pradesh’s EV policy. • The move is part of the company’s business strategy to drive growth. • The company realized material cost savings earlier, which were incorporated into its business plan. • The XUV700 is a popular model, with around 6,000 units sold every month. • Uttar Pradesh has waived registration fees for strong hybrid and plug-in vehicles. • Maruti Suzuki’s shares rose significantly following the policy change. • M&M believes that hybrid vehicles are an interim solution and is ready to offer high-quality products for all consumer needs. • The company’s statement emphasizes that the price cut is a planned move, not a reaction to the policy changes. • The XUV700 is a key model for M&M, accounting for 15% of its overall SUV sales, with the top two trims contributing to around 50-60% of total sales. • Axis Capital has rated M&M as “add” with a target price of Rs 3,150, citing its positive outlook on the company in the sector.