Synopsis: Mahindra & Mahindra shares fell 6.4% to Rs.2736 after announcing a temporary price cut of up to Rs.2 lakh for the XUV700 AX7 variant. This move aims to boost sales but reflects broader concerns about weakened SUV demand.
Shares of Mahindra & Mahindra (M&M), the flagship automotive and farm equipment company of the Mahindra Group, experienced a significant decline of 6.4% in early morning trade today, dropping to Rs.2736 per share. This sharp fall comes on the heels of the company’s announcement of a temporary price reduction of up to Rs.2 lakh for its top XUV700 variant, the XUV700 AX7.
Price Reduction Details
M&M has introduced new pricing for the XUV700 AX7 Petrol-MT 6-str, now priced at Rs.19.69 lakh, down from Rs.21.54 lakh, marking a reduction of Rs.1.85 lakh. This price cut, which is effective for a limited period of four months starting July 10, aims to boost sales and make the feature-rich AX7 trims more accessible to buyers.
Strategic Move
The new pricing has been launched ahead of the XUV700's third anniversary. M&M states, “The Mahindra XUV700’s fully loaded AX7 range, now starting at Rs.19.49 lakh, will enable more people to experience its unmatched driving experience with cutting-edge premium features.”
Industry Trends
In addition to M&M, Tata Motors has also implemented price cuts on its SUVs, the Harrier and Safari, effective until July 31. Analysts view these price reductions by major players as a sign of weakened demand in the segment. This trend is attributed to reduced inquiries and postponed vehicle purchases, exacerbated by extreme heat waves affecting consumer behavior.
Company Performance
Despite the current market reaction, the XUV700 has become the fastest Mahindra vehicle to achieve over 1.5 lakh vehicle sales within 30 months of its launch. In FY24, M&M saw significant growth in its SUV revenue market share, which increased by 130 basis points year-on-year to reach 20.4%. The company sold a total of 459,877 units (SUVs) during FY24, marking its best-ever sales performance.
Key brands such as Scorpio, Thar, XUV700, and Bolero continued to be strong performers for the company in the UV segment, helping strengthen its UV product portfolio and attract lower tax rates.
Conclusion
The price reduction strategy by Mahindra & Mahindra, while intended to boost sales, has led to a significant drop in its share price. The market's reaction suggests concerns about weakened demand in the SUV segment. Investors are advised to monitor the company's performance closely and consider expert advice before making investment decisions.
