OPER/046IBS Center for Management Research Project Scorpio – The Making of India’s First Indigenous Sports Utility Vehicle This case was written by Shirisha Regani, under the direction of Sanjib Dutta, IBS Center for Management Research. It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. 2005, IBS Center for Management Research. All rights reserved. To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: [email protected] www.icmrindia.org right from concept to commercial production. in 2003. were applied in judging the winner. It also kept suppliers involved throughout the life of the project. 2002. Several parameters. 2003. vice chairman and managing director of M&M.” said Anand Mahindra (Mahindra).” -Rajesh Jejurikar.3 Analysts said the main reason for Scorpio‟s remarkable success in the Indian automobile market was that it catered to a previously neglected niche.1 “Scorpio was a journey towards creating a new category and a new market. vice chairman and MD of M&M.OPER/046 Project Scorpio – The Making of India’s First Indigenous Sports Utility Vehicle “Project Scorpio was not a top-down strategy nor one man's vision. became the second auto company in India to receive the prestigious National Award for Research and Development. While it was designed as and looked like an SUV (with its sporty looks and sturdy design).” Business India.” The Economic Times. March 18. status of in-house Research & Development. scientific and technological advancement of the project. “Scorpio‟s low-cost drive. “Mahindra Scorpio wins national award for R&D. Prasad Sangameshwaran. which was another manufacturing rarity.” Business Standard.2 SCORPIO MAKES A MARK In November 2003. 1 2 3 “Betting big. and the „Product Launch of the Year‟ award given by the Business Standard Brand Derby. The award was presented by the Department of Scientific and Industrial Research. under the Government of India‟s Ministry of Science and Technology. 1 . In addition. it was a bottom-up programme. Scorpio fell between a passenger car and an SUV. marketing. The National Award was just one of the major awards that came Scorpio‟s way since it was launched in mid-2002. in 2002. „Scorpio‟. automotive sector of M&M. the „Best SUV of the Year‟ by BBC Wheels and the „Best Car of the Year‟. the company used a newly developed engine in a new car design – something that even the most well-established car manufacturers hesitate to do. environmental consciousness. Therefore. Within a year of its launch. 2003. which allowed M&M to design and produce Scorpio according to customers‟ preferences. For instance. vice president. also from BBC Wheels. the vehicle also won the „Car of the Year‟ award from Business Standard Motoring. a major automobile and farm equipment manufacturer.” -Anand Mahindra. it was also the winner of CNBC and Auto Car‟s „Car of the Year 2003‟ award (generally considered to be the Oscars of the Indian automobile industry). and use of imported technology. June 10. Another significant aspect was the adoption of an innovative and flexible manufacturing system. Scorpio‟s target market straddled both passenger car buyers as well as SUV fans. November 12. like financial inputs. The award was given in recognition of its achievement in manufacturing India‟s first indigenously developed Sports Utility Vehicle (SUV). it also offered all the comfort and elegance of a passenger car. “Scorpio is the result of extensive R&D. Mahindra and Mahindra (M&M). M&M created a number of firsts in the making of Scorpio – and ran a number of risks as well. Alternative Fuel. Army. Scorpio was designed to be an urban UV. worked against it. and Export. In the same year. In 1994. The Division also diversified into manufacturing industrial engines in 2003.321 units. CL. and infrastructure development. Three Wheeler. Sumo. Over the years. M&M‟s Farm Equipment Division made tractors and other farm implements. (By the late 1990s. The UV brands manufactured by M&M included Pick-up. During the same period.000 units (one lakh) between 1994 and 1997. reliability. this prize was considered the equivalent of the Nobel Prize in the area of Quality Management). 2 . Sumo sold 100. and Kaiser Jeep Corporation. Hard Top. American Motors Corporation. but most of them were variants of the basic Jeep model and used many of the same components and designs. The company soon diversified into the manufacture of tractors for agriculture and light commercial vehicles (LCVs). and operational economy in the Utility Vehicle (UV) market. this status was threatened when it began to face increased competition in the 1990s. it diversified into automobiles in the 1950s. M&M manufactured several other UVs under different names. MM. Nashik and Igatpuri (all in Maharashtra) and Zaheerabad (in Andhra Pradesh). In contrast. durability. all based in the US. (Awarded by the Union of Japanese Scientists and Engineers (JUSE).) M&M‟s Jeeps were immensely successful and the company‟s vehicles came to be identified with high quality. which remained with M&M. M&M was a global conglomerate with a presence in many sectors including automobiles.Project Scorpio – The Making of India’s First Indigenous Sports… BACKGROUND M&M was set up in 1945 to manufacture general-purpose utility vehicles for the Indian market. with the exception of the Farm Equipment and Automotive Divisions. Established in 1945 to manufacture steam locomotives. Analysts said M&M‟s image as a maker of rugged vehicles. M&M diversified into other businesses through alliances and joint ventures with Indian as well as foreign companies. easy maintenance. UK. trade and finance related services. M&M had ISO-9002 certified manufacturing plants at Mumbai. on which work started in 1997. However. aimed at different segments of the UV market. farm equipment. when the company began offering a multi utility vehicle (MUV) under the „Jeep‟ brand in India. LCV. Telco followed up the launch of Sumo with two other vehicles. in collaboration with Willys Overland Corporation. By the early 1990s. The Automobile Division traced its roots back to the 1950s. Over the decades. with its better looks. M&M realized the potential of UVs in the urban market and made a conscious decision to develop a vehicle designed for urban use. it was strongly focused on developing its own manufacturing facilities and capabilities and it began manufacturing vehicles indigenously by the end of the 1960s. information technology. the M&M Group embarked on an organizational restructuring exercise arising from a Business Process Reengineering program. more suitable for travel on rough terrain than on urban roads. Voyager. The result of this was that all the divisions of the Group were spun off as separate entities. which combined ruggedness with 4 Tata Engineering and Locomotive Company (now Tata Motors) is one of the largest manufacturers of commercial vehicles in the world. Although M&M received an initial impetus from its foreign collaborations. appealed to an urban market. MaXX. By the late 1990s. it became the first tractor company in the world to receive the prestigious Deming Application Prize. the company began manufacturing LCVs in collaboration with Rubery Owen. Sierra and Safari. Commander. ruggedness. M&M became an established brand name in the UV market and enjoyed near monopoly until the early 1990s. In 1965. and secured a significant presence in many major business sectors in India and abroad. Telco4 introduced a new UV model in 1994 under the brand name „Sumo‟. M&M‟s UVs sold only 26. The outcome was Project Scorpio. and the newcomer quickly snatched market share from M&M. It was not as big a success as M&M had hoped it would be. Table I Market Share in UVS (January – October 2004) Company Sales (units) Mahindra & Mahindra Ltd Market Share (%) 88. M&M launched Bolero in 2000 and the vehicle received mixed reactions.071 49.490 3. Even as M&M was working on Project Scorpio. It was in this scenario that M&M launched Scorpio in June 2002. M&M‟s share price had zoomed to Rs 400. and the Toyota tag added to its appeal.94 Toyota Kirloskar Motor Ltd 30. As a result. at the cost of M&M‟s brands like Armada and Armada Grand (which M&M had launched in 1993 without much success). M&M posted a 30 percent increase in sales income over that of the previous financial year. The company also simultaneously developed Bolero.07 Hindustan Motors Ltd GM-Tavera Source: www. By December 2003. After Scorpio entered the market.046 4. In the financial year ended March 2004.98 5. Qualis was thought to be even better looking than Sumo. Scorpio was an immediate success. Qualis began selling 25.27 billion in the financial year ended 2002 to Rs 25. It was to be designed on par with world class UVs like the Toyota Land Cruiser and Mitsubishi Pajero.com THE SCORPIO PROJECT The Scorpio project was very important for M&M.000 vehicles per year.795 23.Project Scorpio – The Making of India’s First Indigenous Sports… comfort and aesthetic appeal. Despite its efforts to counter competition.06 Bajaj Tempo Ltd 8. (Refer Table I).5 Telco 42. M&M‟s sales stagnated by the early 2000s and its share price touched an all-time low of Rs 100.690 2.347 16. 5 Toyota re-entered the Indian market with the Qualis. another urban UV. and its sporty looks and powerful performance appealed to a great number of people.18 Maruti Udyog Ltd 3. By the end of 2004. (Refer Exhibit I for financials). It was banking on Scorpio to help it shed its image as a manufacturer of vehicles for rural use and to break into the urban market. it went all out to ensure that nothing was left to chance in making Scorpio a one-of-a-kind vehicle in the Indian market. chose to buy Scorpio instead.27 318 0. The launch proved to be the much-awaited turning point for M&M.mahindra. to combat increasing competition. M&M‟s auto sector revenue increased from Rs 18. 3 . Within two years of its launch. but it did help the company establish a stronger presence in the urban UV segment.11 billion in the financial year ended 2003 – a spectacular growth of 37 per cent. with a share of nearly 50 percent. its markets took another hit with the launch of Toyota‟s Qualis5 in 2000. many people who would otherwise have bought a passenger car. M&M was a market leader in the overall UV market. Therefore. The traditional market for UVs was very small in India. The idea behind IDAM was “It is easier to make what you can sell than to sell what you have made” 7. as it offered all the benefits of a car plus the thrill of an SUV.com 4 . A significant aspect in the manufacture of Scorpio was the use of Integrated Design and Manufacturing (IDAM). along with other UVs in the market.mahindrascorpio. looks. C segment (luxury cars) and D and E segments (super premium cars). Analysts said that the sharing of the new facilities would help M&M upgrade its entire production line. There was also a paint shop set up in collaboration with Durr of Germany. Therefore. trouble -free product and encompassed the entire value chain from pre-production to final sale. set up with help from Fukui of Japan with dies imported from Fuji.000 price range. was a dynamic manufacturing system. which appealed to the urban buyers. Pre-production M&M conducted a thorough survey of the market and of customer preferences and perceptions to derive inputs for the design and features of Scorpio. the market for UVs was only about 15 percent th e size of the automobile market. it was decided to position Scorpio in the C segment. and many people began to purchase Qualis for personal use. generally not found in fleet cars.000 units on a two-shift basis. and interiors of Scorpio all created an image of high luxury. accessories. To meet the expectations of car buyers as well as SUV buyers. It aimed to streamline the delivery of a world class. which was developed in collaboration with Lucas Engineering6. Scorpio competed with all the cars in the C segment. the assembly lines were designed to be subsequently used for Bolero. The plant was set up at an estimated cost of $120 million and had a production capacity of 40.Project Scorpio – The Making of India’s First Indigenous Sports… M&M set up a new plant at Nashik in Maharashtra to manufacture Scorpio. USA. The Indian automobile market was divided into various segments – A segment (entry level small cars). 6 7 Later renamed Computer Sciences Corp.) UVs were generally used by car rental agencies and taxi service providers for commercial purposes. the B and C segments were the fastest growing in the late 1990s. zero defect. Scorpio was designed as an exclusively personal vehicle and the company even went on record saying that it did not intend to target the commercial UV market. Scorpio was designed to fall between a passenger car and an SUV. The company also found that it was the segment in which customers were most likely to buy a UV instead of a car. The design. This changed in the early 2000s with the launch of Qualis. But some of the facilities were exclusive to Scorpio. Three new world class lines were set up at the plant by M&M‟s suppliers to manufacture components: a completely automated press shop. very few were bought for personal use. B segment (semi luxurious cars). Many of the newly created facilities were also to be used for other products in the M&M range. and a state-of-the-art Trim Chassis Final (TCF) line with a world class tester line. which covered the Rs 500.000800. This approach was called „car plus‟. which ensured that the final product was of high quality. while the Asian average was 40 percent. IDAM. (Refer Exhibit II for Scorpio‟s specifications). Of these. For instance. for vigorous testing of various aspects of the vehicle. which allowed the manufacturer to produce what the customer wanted in a flexible manner. The entire system was fully automated and workers were trained in continuous improvement. (In the early 2000s. built in collaboration with Fori Automation. through quick product development. IDAM was the foundation of the Mahindra Product Development System (MPDS). an automated line for producing jigs and fixtures in the body shop developed with Wooshin of Korea. www. Flexible manufacturing also allowed a large number of variants in the product mix. Lear (USA) for seats and interiors. Some of Scorpio‟s suppliers were: Fukui (Japan) for the press shop. Meritor (UK) for locking system and Bridgestone (USA) for tyres. 5 . luxury is a very important parameter International vehicles define image SUVs like Pajero. the company identified the best vendors in the field for components supply and collaborated with them on product design and development. The findings of this survey were then developed into product specifications and formed the basis of Scorpio‟s design.Project Scorpio – The Making of India’s First Indigenous Sports… The B and C segments were also thoroughly analyzed to obtain details about customer expectations from a car and their perceptions about different features. Vijay Nakra. After styling themes were prepared. Strategic Marketing. Kenwood for audio systems. 8 QFD is a tool to translate customer requirements to engineering specifications. Fuji (Japan) for the dies. Some of the findings of the segment analysis are given in Table II. * * * * * * * * * Source: Rajesh Jejurikar. It is generally in the form of a product planning matrix or „house of quality‟ and is applied in the initial stages of production to ensure that the final product reflects the needs of customers. Samlip (Korea) for suspension. The idea was to make a vehicle that was tailored to the needs of the market. It also contracted with Renault of France for Scorpio‟s petrol engines and AVL from Austria for the diesel ones. Visteon (USA) for exteriors. M&M‟s internal team and external engineering consultants were only responsible for the initial styling. March-April 2004. Land Cruiser and Prado are seen as urban vehicles for the rich and famous Consumers aspire to own these vehicles as the image of these vehicles has become very desirable The Key Consumer Insight that emerged from all the consumer analysis and which was used for strategy development was “Consumers want to consume premium imagery at prices affordable to them”. including Qualis. M&M also benchmarked a number of world class SUVs. Wooshin (Korea) for the body shop. chassis and frame design and vehicle integration. Suppliers did not play just an ancillary role. Durr (Germany) for the paint shop. “Project Scorpio: A Tale of Category Creation”. BEHR (Germany) for air-conditioning. Fori Automation (USA) for the tester line for final assembly. Table II Expectations and Perceptions of B and C Segment Buyers Size matters – big size stands for status Consumers seek the latest technology Image is important but at affordable prices There is sheer thrill and passion in driving an SUV Power of the vehicle makes a statement Along with the others. M&M‟s supplier list included some of the top companies in the world in their respective areas. body engineering. Supplier Involvement Scorpio was one of the few vehicles to be built with complete supplier involvement from beginning to end. they were partners in the Scorpio project. Key buying factors were analyzed using a Quality Function Deployment (QFD) process8. All other aspects were turned over to the suppliers. against which Scorpio was pitted directly. For instance. M&M played the role of an integrator. Critical dies like those for exterior panels were given to Japanese manufacturers. when the company sent auto designers to the UK to 9 10 “Betting big. “One of the traditional problems in product development has been that people keep their functional blinkers on. Analysts estimated that if the company had sourced all the dies from one supplier. with people from different areas working on one team. M&M also followed an innovative sourcing system.K. but without compromising on quality. the company went to different sources. Suppliers said that the Scorpio project moved fast because M&M stuck to its hands-off policy and did not constantly change product specifications. The suppliers could decide how many vents to put in and at what velocity the air would be delivered. “Scorpio‟s low cost drive.10 To avoid this. For instance. sometimes even allowing them to employ unconventional and unproven processes. with each team having cross. M&M only told suppliers that the vehicle had to be cooled from 40 degrees to 27 degrees in 13 minutes. Fuji was then given charge of the total management of dies coming from all the suppliers. instead of sourcing all its dies from a single supplier. June 10. a company dealing with a supplier of air-conditioning. in contrast to the narrow approach that would result from having functional teams. resulting in a product that was developed indigenously.functional strengths. It stayed hands-off in areas related to component supply and gave its suppliers complete autonomy. it would have spent an additional Rs 400 to Rs 500 million than the Rs 1. 6 . a former General Motors researcher. the Scorpio team was divided cross-functionally. In contrast.15 billion (approximately $25 million) it actually spent. automobile manufacturers give detailed specifications of what they expect from the component to be supplied. As a result. “Even if we pretended to know how to design the A/C system we would not be as efficient in it as somebody who did that for his livelihood. A cross-functional division was required to ensure that every aspect in the making of the Scorpio was well balanced and took on a holistic view. where people were divided by function. which had to deliver a velocity of air flowing at five meters per second‟. The remaining were given to tier two. when contracting with suppliers. This move kept suppliers more committed and involved. 2003. which gave the project the necessary freshness. 2002. Only suppliers can perfectly match performance with system costs. who was brought in to head the Scorpio project.Project Scorpio – The Making of India’s First Indigenous Sports… Typically.” Business Standard. This brought about a great degree of decentralization and resulted in better management of resources and higher quality. so that they did not have to wait till the Scorpio project was complete to make money.” Business India. Unlike the traditional departmental structure. After involving some of the best companies in the world. M&M believed that this increased Scorpio‟s manufacturing quality and lowered the final vehicle cost by nearly 10 percent. it was paid an extra fee. Fuji was responsible for the overall quality of all the dies supplied by all the suppliers and for this additional responsibility. they will invest and you don't have to. M&M also gave its suppliers component supply contracts for other vehicles in its portfolio. Prahalad‟s advice that “If you give right vision to your suppliers. would tell the supplier that it wanted „four vents of 10 square cm. Team Scorpio The team assigned to Project Scorpio comprised 120 people led by Goenka.” said Goenka. In addition. as long as they met the cost targets specified by the company. Fuji and Miyazu.” said Pawan Goenka (Goenka).”9 Many of M&M‟s suppliers set up their facilities at the company‟s plant. Prasad Sangameshwaran. M&M developed heterogeneous teams for Scorpio. For example. M&M‟s supplier relations were governed by prominent management consultant C. tier three and tier four suppliers. The average age of the team was 27. March 18. which made the project more efficient and lowered costs. along with a reasonable amount of experience. The teams were also given sufficient autonomy and were required to take ownership of their work.50 billion) – just about one-fifth the amount that global automobile majors spent on a similar project. the teams were asked to find out what customers wanted as well as other vital information like prices of components. The vehicle‟s road-worthiness was also tested for nearly two years before its launch. M&M built 74 vehicles only for testing. Instead of giving centralized directions. Initially the company offered three models – two of diesel and one of petrol. “Scorpio from M&M. and there would be little reworking to be done after a design was finalized. We at M&M have anticipated the potential of the SUV segment and believe that the strong value proposition the Scorpio offers would make it a winner. The vehicle created a lot of interest in the market. etc. each component and combination was vigorously tested to ensure that only the best combination of form and function remained. and there were few changes made once a team was formed. when it was finally launched. THE LAUNCH AND AFTER Scorpio was launched on June 20. Finally the complete vehicle was put through the NOVA-C (New Overall Vehicle Audit-Customer) system to measure the overall quality of the production process itself. the vehicle. others were interested in gauging the performance of India‟s first indigenous SUV. These vehicles were tested constantly using the Simultaneous Testing & Examination Process (STEP). 2002.” The Hindu. In all.Project Scorpio – The Making of India’s First Indigenous Sports… work with styling consultants on the design of Scorpio. Each team had a leader. Such stringent financial control ensured that Scorpio was one of the lowest priced SUVs in the Indian market. If a team decided to purchase a higher quality component which cost more. The teams knew exactly how much they could pay for any component that they required. „Testing & Validation‟. Some of the teams in Project Scorpio were „Design & Development‟. At the production stage. This was in contrast to some other automobiles that were launched first and had their problems ironed out later (such as Telco‟s Indica). This ensured that whatever designs were decided on had no manufacturing difficulties. the purchase was approved only if it showed other areas where the cost could be made up. there were 19 crossfunctional teams working on Scorpio. quality and performance. “We are extremely proud of the Scorpio and are sure that it would make customers and car makers think seriously about the sports utility vehicle segment. (Exhibit III for cost break-up). Mahindra said. June 24.” 11 11 Tutu Dhawan. All the teams were given cost targets. Extensive testing was also required because Scorpio was a completely new vehicle – with all its parts being designed exclusively for it and not being carried over from some older model. And M&M did not have to go to the trouble of having to recall the vehicles after they were sold to correct problems. At Scorpio‟s launch. „Manufacturing‟ „Vendor Development‟ and „Marketing‟. Testing and Validation Scorpio was one of the few vehicles in the Indian market that was launched only when it was completely ready. was complete in every way. While this delayed Scorpio‟s launch by nearly two years. the 20-member team included even some manufacturing specialists. who was responsible for the work of the team. 7 . Some were fascinated by Scorpio‟s sporty looks. 2002. details of suppliers. This was called “designed to cost”. which they then broke down to individual component levels. The teams were then made responsible for delivering on all parameters of cost. It also allowed M&M to manufacture Scorpio at $120 million (approximately Rs 5. Within the first week of its launch. it did not have the powerful appeal of Scorpio nor did not bestow a feeling of pride of ownership as Scorpio did. on looks and appeal. and by late 2003. and this created a positive image for M&M in the market.Project Scorpio – The Making of India’s First Indigenous Sports… His expectations were fulfilled when Scorpio became the preferred SUV in the Indian automobile market. A review of customer opinions in 2004 showed that most of Scorpio buyers were happy with their purchase. By 2004. Scorpio also had plush interiors (a rarity in SUVs) and more space than many of its competitors. was equally critical and should not be underestimated. no unexpected manufacturing defects emerged in the Scorpio after it entered the market. Auto analysts also said that Scorpio was the best looking SUV in India and that owning and driving a Scorpio improved a person‟s image and made him seem classy. which was done completely by M&M. technology. the Scorpio would have been a handsome man in his mid thirties – mature. and so M&M did not subject Scorpio to crash tests. which effectively differentiated it from other SUVs. (A study showed that soon after its launch.” claimed Goenka. 75 percent of Scorpio‟s sales came from passenger car users. 8 . many Qualises were employed by fleet operators as cabs and rental cars. and many felt that the company had the responsibility to crash test the vehicle. performance. over 1000 units were booked. whether it was sourced from Indian companies or foreign ones. “UV Race. that it was not crash tested. Analysts said that Scorpio‟s interiors had the looks and feel of a luxury car. Scorpio‟s popularity had a positive effect on M&M‟s performance and in fiscal ended March 2003 (the fiscal when Scorpio was launched).”12 Many also said that Scorpio was comparable to the best global SUVs. While crash testing was mandatory in many countries. 2002. Supporters also said that vehicle integration. but Scorpio escaped that trend. capable.” Business India. and had to rely on external sources for support. the company‟s total income rose by 22 per cent. Analysts also compared Scorpio favorably with its closest competitor. M&M had begun exporting the Scorpio in 200314. the vehicle‟s crash worthiness was unknown and this served to put the vehicle at a disadvantage vis-à-vis many of its competitors. One serious limitation with Scorpio was. there was no harm in using it. June 10. “Betting big. it was sold in the Middle East as well. you can be sure people will not ignore Scorpio. was producing 3000 vehicles a month. The project was not without its share of criticisms though. Therefore. balanced and only slightly obese. driving comfort and value for money. Leading automobile magazines and auto analysts in the country gave Scorpio top ratings on aspects like style. power. The vehicle was also priced aggressively and was one of the cheapest SUVs in the Indian market. Besides. It was launched in Italy in December 2003. (as were many other SUVs in India). being used primarily as a personal vehicle. Some criticized the amount of outsourcing that went into the making of Scorpio and the collaboration with foreign companies. They said that M&M did not have the capability to produce a vehicle in-house. They said while Qualis delivered what it promised and was generally a reliable vehicle. However. M&M had to increase production levels. By 2004. as most of Scorpio‟s sales came from existing passenger car buyers. 2002. 12 13 14 Bijoy Kumar. (Refer Exhibit IV for Scorpio‟s ratings vis-à-vis competition).13 Scorpio‟s success was supported by aggressive and ubiquitous advertising with the base line „nothing else will do‟. July 13. however. others said that when good technology was available for a good price. “If Mitsubishi‟s Pajero (considered to be one of the best looking SUVs in the world) and Scorpio are standing next to each other. and many of them had traded in their passenger cars or older SUVs to switch to it. Business Standard Motoring wrote “If it were a human. Analysts said that M&M‟s strategy of not positioning Scorpio as a UV was the right one. interiors. Unlike many other cars. Qualis. Considering the growing demand. while only 25 percent came from existing UV users).” Business Standard Motoring. it was not required by law in India. As Businessworld wrote. “Scorpio started out as a definition of M&M's product development capability and ended up being the essence of the organization‟s new confidence. January 12. Scorpio‟s instant success made its competitors nervous. However. M&M had a 49. M&M stuck to its original design.5 percent.8 percent to 22. was relaunched in 2004 in a new format as Sumo Victa.Project Scorpio – The Making of India’s First Indigenous Sports… Despite its shortcomings. while that of Scorpio grew from 15.7 percent market share in UVs. 2004.” Businessworld. and repositioned as a personal vehicle. Scorpio proved to be a milestone for M&M and the Indian automobile industry. Toyota also announced its plan to launch a new low cost model of its Qualis. “Play the Game. the once popular SUV which had become synonymous with car fleet services. In fiscal 2004. In the first quarter of fiscal 2005. other than making minor modifications. One of the major manufacturing advantages that Scorpio had was that M&M did not diverge from its original plan through the five years that it took to develop the vehicle. many companies had launched SUVs and the perceptions of customers had undergone a change.9 percent (although in actual numbers Qualis sold more units). Sumo.” 15 15 Radhika Dhawan and Anuja Byothra. Qualis‟s share in the UV market slipped from 38 percent to 30. During that period. 9 . 50 392.34 635.956.21 157.91 8.13 638.78 576.432.90 515.51 34.485.75 7.56 4.25 350.43 .95 3.087.872.330.455.538.20 38.94 mn) transferred from Revaluation Reserve Other expenses Less : Cost of manufactured products capitalised Profit before provision for contingencies and taxation Less : provision for contingencies Profit before exceptional items & taxation Less : Exceptional items Profit before taxation Less: Provision for tax . Commitment and Finance Charges Depreciation .623.680.121.70 46.54 3.78 294.654.65 25.437.43 1.45 4.393.51 4.37 6.92 33.57 1.Deferred tax (Net) Profit for the year Less : Adj.00 3485.Current tax .239.99 1.455.35 1.87 868.com 10 2004 2003 60.12 36.453.00 150.109.55 46.002.mahindra.38 5.88 36.98 1.15 1.174.00 261.470.73 4.651. 6.43 1.34 4.44 3. pertaining to previous years (net of current and deferred tax) Balance of profit for earlier years Balance profit for earlier years Add : Investment allowance reserve account written back Total of Profit and Loss Account Balances shown above Deduct : Debenture Redemption Reserve (Net) General Reserve Dividends paid Income tax on dividends paid Proposed Dividends Income Tax on Proposed Dividends Balance for 2003-04 and earlier years carried to Balance Sheet Source: www.653.93 1.239.854.21 0. 6.34 3.03 1.76 191.044.62 mn (2000 : Rs.81 7.428.30 5.012.28 45.91 4.00 0.net of Rs.06 133.967.970.Project Scorpio – The Making of India’s First Indigenous Sports… Exhibit I Annual Financials PROFIT AND LOSS STATEMENT (For the year ended 31st March in Rs. Million) Sales & Other Income Expenditure Material Excise Duty (Net) Personnel Interest.528.00 123.77 81.231.610.812.33 5.381.51 323.18 9. The diesel version offered a torque of 26 kgm at 1800 rpm with an output of 109 bhp at 3800 rpm.52 11 .7 kgm at 3800 rpm. Gearbox & Performance Engine displacement 2609cc Max power 109bhp Max torque 26. one of petrol and two of diesel. It could comfortably accommodate 7 to 9 people. and green.0kgm Valve gear 2 per cyl. Comfort & Space Rear seat legroom (min) 62cm Rear seat legroom (max) 77cm Rear seat headroom 98cm Rear seat width 136.17 0-40kph 3.Project Scorpio – The Making of India’s First Indigenous Sports… Exhibit II Scorpio’s Specifications Scorpio was available in five colors – red. with an output of 116 bhp at 5500 rpm. Scorpio‟s specifications are listed below: Design & Engineering Height 1916mm Length 4475mm Width 1774mm Wheelbase 2680mm Front track 1450mm Rear track 1450mm Ground clearance 180mm Kerb weight 1910kg Interiors.6 DX. SOHC Top speed 140kph Acceleration (in seconds) 0-20kph 1. it was introduced in three variants.56 0-100kph 21.67 0-80kph 13. The petrol version of the vehicle was named „REV 116‟ while the diesel versions were called the Turbo 2.5cm Engine.40 0-120kph 38. and allowed the vehicle to accelerate from 0 to 60 kmph in eight seconds. black. Initially.6 and Turbo 2.65 0-60kph 7. The petrol version featured an electronic fuel management system that offered a torque of 18. The vehicle could comfortably seat 7 to 8 persons. blue. silver. com 12 .000km Price (Rs lakh ex-showroom. Mumbai ) 6.57 (DX) Note: Specifications may vary between versions Adapted from www.Project Scorpio – The Making of India’s First Indigenous Sports… Fuel Economy Highway (kpl) 10.indiacar.0 Equipment Exteriors Clear lens headlamps Yes Fog lamps No Sideview mirrors Yes Full wheelcaps Yes Interiors Power steering Yes Power windows No Central locking Yes Tilt steering No Tachometer Yes Alloy wheels No Electric mirrors No Stereo with four speakers Yes Rear seatbelts Yes Rear wash wipe Yes Digital clock Yes Seat back pockets Yes High-mounted stop lamp No Rear split seats Yes Warranty period 2 years or Warranty mileage 50.8 City (kpl) 8. Project Scorpio – The Making of India’s First Indigenous Sports… Exhibit III Cost Breakup of Project Scorpio Component Cost Dies $25 million Press shop $20 million Venders for tooling and rare oases engineering $20 million Body shop $11 million Prototyping and testing $10 million Model variants $10 million Assembly line improvement and testing $8 million Personnel overhead $6 million Consultants $5 million Plant infrastructure and utilities $5 million Total spent on developing the Scorpio $120 million Source: Wielgat. Andrea. October 2002. Vol.indiacar. Manufacturing the Mahindra way. 182. Automotive Industries.com 13 Toyota Qualis Tata Sumo Mahindra Bolero . Exhibit IV How Scorpio Compared with Competition Mahindra Tata Safari Scorpio Looks & Styling Engine & Performance Gearbox Space & Comfort Ride & Handling Refinement Fuel economy Value for money *One star indicates low score and five stars the highest Source: www. Issue 10. M&M sees early break-even for Scorpio. Business India. Sports utility vehicles. Automotive Industries. August 22. R. The Economic Times.com. March-April 2004. 182. 14. 6.July 20. 2004. Radhika Dhawan and Anuja Byothra. 8. www. Manmohan Reddy. Bijoy Kumar. Muralidhar. Business Standard. M & M versus Telco. 2002. 10. June 24. March 18. October 28. 5. www. 26. October 2002. We have lift-off.com. 15. Indian Express . Business Standard Motoring. Prasad Sangameshwaran. Business Standard. Gauri Shukla. M&M: Scorpio lacks sting. 2004. 2002. BusinessLine. June 22. C.Project Scorpio – The Making of India’s First Indigenous Sports… Additional Readings & References: 1. www. What’s the Score? Business Standard Motoring. Dilip Cherian. Rajesh Jejurikar. 2002. 12. The Makeover At Mahindra. 2. Scorpio’s low-cost drive. Vijay Nakra. November 12. 9. 2002.equitymaster.com. 2002. April 10.indiacar. C. Sauve Statement. January 12. Business Standard Motoring. 20. August 30. Crash testing for dummies (and why we don’t do it). UV Race. 19. 13. 2003. August 26. 2002. Bijoy Kumar. Parvathy Ullatil. Betting big. The Hindu. June 24. 2003. 23. 2003. M&M Aims to Hike Market Share To 45% in 3 Yrs with Project Scorpio. 2004. Subhadip Sircar. September 15. 14 . Subhadip Sircar. 22. www. Businessworld. June 10. 2003. Narayanan. Play the Game. 2003. 18. 4. June 23. April 10. 2002. 11. July 13. Andrea Wielgat. September 30.equitymaster. 2002. Manmohan Reddy. The Financial Express. June 17. Tutu Dhawan. The Indian Express. Manufacturing the Mahindra way. Mahindra Scorpio wins national award for R&D. 7.com. www. M&M: Two to tango. 2004. 25. Bijoy Kumar. The Financial Express. M&M to up Scorpio production.mahindra. 24. 2002. May 13. Tycoon Tattle. 16. Scorpion Sting. Issue 10. BusinessLine. June 29. 17. Mahindra & Mahindra: Will Scorpio help switch gears? BusinessLine. 21. Strategic Marketing. 2004. 2002.com.com. S. Project Scorpio: A Tale of Category Creation. Scorpio from M&M.Y. anyone? Business Standard.indiainfoline. www. BusinessLine. 3.domain-b. Vol. 2003.