11/10/21, 3:31 PM m&m: How M&M made Thar a product, price and branding combo, and drove beyond

e beyond off-road purists - The Economic Times

AUTO

How M&M made Thar a product,

price and branding combo, and
drove beyond off-road purists

Image credit: auto.mahindra.com

Synopsis

M&M wanted to make a vehicle that not only offers good off-roading capabilities but also has the
sophistication of a modern SUV. Keeping this in mind, it built the new Thar, which has received 78,000
bookings in a year since launch. Interestingly, 50% of the demand has come from metro cities. How did
M&M make Thar’s product positioning work?

Fortis fortuna adiuvat.

The Latin proverb — or fortune favours the brave in English — could be an apt
match for a tagline of Mahindra & Mahindra (M&M).

When most automobile pundits were busy writing obituaries of 4x4 vehicles in
India, the Anand Mahindra-led automaker made a brave move. On October 2,
2020, it rolled out the all-new Thar, an affordable lifestyle off-roader — a first in
India.

The market responded with a loud ‘yes’ and M&M received 15,000 initial bookings.
In a year since its launch, the company has received 78,000 bookings for the Thar,
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11/10/21, 3:31 PM m&m: How M&M made Thar a product, price and branding combo, and drove beyond off-road purists - The Economic Times
with the waiting period going up to 10-12 months for some variants. The latest
Thar, based on Mahindra’s all-new body-on-frame structure, was the second
highest-selling product in the M&M portfolio in August and continues to build on
it.

“The Thar is an iconic brand, and we will have a range of products to offer in
different segments,” says Veejay Nakra, CEO, automotive division, M&M.

So, what makes M&M so confident about the Thar and how did it chalk out its
product positioning?

The incarnation

Thar, in its earlier avatar, was popular only with motoring enthusiasts and off-
roading lovers. But during a consumer-insight study, M&M discovered that buyers
wanted not only a good off- roading vehicle but also one that is equipped with
latest features, comfort, premium feel, and the sophistication of a modern SUV.
Based on this feedback, the new Thar was developed — with elements of the
earlier design but with a wider girth, an entirely new chassis, engines, suspension,
body interiors, and trappings.

While the first-generation Thar was a pure off-roader, the new-generation vehicle
has been designed more as a lifestyle SUV with great 4x4 capabilities. “This has
helped M&M attract not only off-road purists, but also a portion of SUV buyers,”
says Ammar Master, senior manager, Asia Pacific Vehicle Forecasts, LMC
Automotive.

Nakra attributes the success of the Thar to being “a superb product at a great price
under a great brand. So, it’s a combination of product, price, and brand
communication”. The rise in personal mobility needs in the post-pandemic world,
with consumers preferring SUVs, has also worked for the Thar.

According to independent market analyst Mahantesh Sabarad, Thar is primarily

doing well because there is no comparable peer in that particular product
segment. “India, too, is graduating to the SUV culture — whether compact or large
h h hi l hi h i hb f li
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ones. For a change, M&M has a vehicle which is much better from a quality
perspective than its earlier offerings,” he says.

While the previous Thar sold mostly in Kerala and the rugged terrains of
Rajasthan, it is now selling pan-India, with metros contributing a large chunk,
points out Nikunj Sanghi, managing director of JS4Wheel Motors, an M&M dealer
in Alwar, Rajasthan. Sanghi says the customers are non-Mahindra buyers who are
flocking to book the Thar for its SUVish look and off-roading capabilities.

“Thar is a unique product with a totally new styling and design. It’s a one of its
kind in the entire SUV segment. It has appealed to the younger generation, and
that has defined the success story,” agrees Mitul Shah, head of research at Reliance
Securities.

Shah believes the profit margins for Thar should be better than the overall blended
margins and that of the average automotive products of M&M.

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11/10/21, 3:31 PM m&m: How M&M made Thar a product, price and branding combo, and drove beyond off-road purists - The Economic Times

The 4X4 off-roader was initially launched in October 2010 and gave a tough fight to
the 4X4 Maruti Suzuki Gypsy. The Thar drew its lineage from the Willy’s CJ3A Jeep,
which was launched by M&M in 1949 under a licence agreement with Jeep. Later,
in the mid-80s, M&M brought the MM540 off-roader after its disassociation from

Jeep. The Thar came after subsequent evolutions and has carried forward the
Mahindra legacy.

The new Thar has achieved a four-star safety rating from the Global NCAP (New
Car Assessment Programme).This provides additional confidence to potential
buyers.

Other SUVs look like off-roaders but are not designed to be driven off the road. A
higher ground clearance is simply to negotiate bad roads and has nothing to do
with off-road capabilities, says a motoring specialist who didn’t wish to be named.
The Mahindra Adventure division has been organising off-road drives for the last
10 years and is therefore able to belt out an effective off-roader.

At present, most of the mid and compact SUVs like the Hyundai Creta and Venue,
Kia Seltos and Sonet, and Maruti Suzuki Vitara Brezza lack off-roading capabilities
as they are front-wheel drive vehicles and mostly used for city commute. Thar’s
four-wheel drive is being seen as a bonus for weekend getaways. Cities like Delhi,
Bengaluru, Chennai, Hyderabad, and Mumbai have now become large markets for
the new Thar.

Almost 25% bookings are for the petrol trim with 50% demand coming for the
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11/10/21, 3:31 PM m&m: How M&M made Thar a product, price and branding combo, and drove beyond off-road purists - The Economic Times
Almost 25% bookings are for the petrol trim with 50% demand coming for the
automatic-transmission version. “This shows there is an all-new buyer profile
who’s looking at the Thar, with 50% demand drawn from metro markets and 40%
customers being millennials,” affirms Nakra.

The challenges

While Thar has become a

"The Thar is an iconic brand, winner for M&M with
and we will have a range of average monthly sales of
3,000-3,500 units, it
products to offer in different
doesn’t have the
segments." playground all for itself.
— Veejay Nakra, CEO, automotive division, M&M Force Motors recently
launched the 2021 Gurkha
at INR13.59 lakh (ex-

showroom). However, the Thar carries a stronger brand name. Then there is the
Jeep Wrangler, a more premium SUV in a higher price bracket. Maruti Suzuki is
slated to launch Jimny in India in early 2022. While Jimny could be Thar’s closest
rival, Nakra brushes off the challenge, saying, “The Jimny is smaller in size and
space”.

But Jimny could well start at a lower price point of INR9 lakh. While the new
Thar’s introductory pricing began at INR9.8L for the petrol variant, M&M later
increased the prices to INR12.78 lakh–INR15.08 lakh to match the steep rise in
commodity prices. Maruti Suzuki has started manufacturing and exporting the
three-door Jimny from India. Suzuki is expected to unveil its five-door Jimny
globally next year. But which of these models will be introduced in India is still not
clear.

Nakra believes that Thar sales could have been higher had it not been for the
semiconductor chip shortage that has deeply impacted the diesel trims that use a

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larger number of chips. However, Thar has been clocking higher numbers
compared to the Scorpio and Bolero, as chip shortage has curtailed production of
the company’s traditional SUVs.

The Thar is different, more refined, and feature-packed than the earlier edition,
says Arun Malhotra, former chief, sales and customer care (automotive) at M&M.
“The customer has evolved and is buying a car like Thar as a second vehicle for
leisure driving on a weekend. This has become a large emerging segment in India
which has purchasing power and is buying the Thar as a status symbol. For M&M,
it helps build on the reputation of being an authentic SUV manufacturer,” he adds.

But a complaint though is that while the Thar is a four-seater, the rear cabin
becomes cramped when bags are put there during long journeys for lack of space in
the luggage compartment.

Justifying this, Nakra says, “It’s always a compromise because the GST laws govern
that the vehicle be a sub-4 metre that leads to trade-offs. So, it’s clearly a trade-off
between comfort, space, and luggage”. For someone looking for a family vehicle,
other Mahindra products are available, he adds.

The road ahead

Analysts and industry experts have a unanimous view about Thar’s future.

“I would think Thar will be a high-contribution product going ahead and will
incrementally add more to M&M’s profitability,” says Sabarad.

Shah of Reliance Securities believes that going ahead, the demand for Thar should
remain strong and the success story will continue for the next one-two years.

While the current Thar is sub-4 metre, a larger version with five doors is planned
for 2023.

“We forecast Mahindra to sell about 30,000-50,000 units of the Thar annually
through the long term”, predicts Master of LMC Automotive. Being a two-door

version (third is the tailgate), the Thar is not attracting all SUV buyers currently.
“The development and launch of a five-door version will be a step in the right
direction, although we think that most buyers would then choose the five-door
model instead of the two-door version,” he adds.

According to him, the sales of the Maruti Suzuki Jimny in India would be lower
than that of Mahindra Thar since the latter has a strong brand loyalty, and hence it
would be difficult for Jimny to wrest buyers from the Thar. Globally, Jimny sales
are pegged at 40,000-50,000 units annually over the long term.

Apart from India, the previous Mahindra Thar was sold in South Africa and had
annual sales of 100-200 units. The model is likely to return to South Africa, with
sales projected to average about 150 units per annum.

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However, M&M is currently not focused on exporting Thar because of high

demand in the domestic market. Considering the production constraints, the
company is struggling to ramp up output quickly to meet the order backlog in
India.

Like the XUV700, which received 50,000 bookings in three hours and has an all-
wheel drive variant, upcoming Mahindra SUVs are likely to be equipped with 4X4
features. This will make them more attractive to prospective buyers compared to
rivals.

M&M has indicated that it will be bringing nine new models by 2026 across
multiple segments in both internal combustion engine platforms as well as pure
electric. While Nakra didn’t confirm or deny the possibility of an electric Thar,
having multiple engine options could make it a bigger winner for M&M.

(With inputs from Ami Shah; research support by Rochelle Britto; and graphics by
Mohammad Arshad)

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