In today’s Finshots, we talk about how Mahindra became India’s biggest SUV company and also the 2nd biggest car maker.

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The Story

Just 25 years ago, Indian roads looked very different, and by Indian roads, we mean the cars that drove on them. It was either a hatchback or sedan, and rarely, an SUV (Sports Utility Vehicle). And even those hatchbacks were mostly made by either Maruti Suzuki or Hyundai India. These companies became household names in the car market by capitalizing on one standard belief: India was the land for small cars. And because of that, homegrown car makers like Mahindra and Tata Motors, who were largely into SUVs, trucks and tractors, struggled to rise through the ranks.

But things have flipped. In February this year, Mahindra took the 2nd spot, outdoing Hyundai in terms of overall domestic vehicle sales. And by Q1FY26, the trend was cemented — Mahindra sold 1.52 lakh SUVs out of 2.47 lakh total vehicles (a 27% revenue market share). Meanwhile, Hyundai’s total sales slipped to 1.8 lakh units, down from 1.92 lakh a year earlier. And its SUV sales slipped from 1.01 lakh to 90,531 units.

So how did Mahindra capture the SUV market better than anyone else?

Well, it comes down to three things: The turning point, the numbers and the strategy.

We’ll start with the turning point for cars in India. Owning an SUV is seen as a status symbol. It has a stronger presence on the roads, safer to drive and the ideal choice for India’s aspirational goals. Plus, what we’re seeing isn’t just the rise of the SUV market, but also a decline in the hatchback and sedan segment. And the entry point to this segment is something unique to India: the compact SUV. It has blurred the lines between hatchbacks and SUVs. Which makes Mahindra’s SUV-first approach on par with where the market was moving.

Plus, there’s a tax twist. In India, SUVs longer than 4 metres attract a higher GST plus cess. But because compact SUVs fall just shy of 4 metres (and engines smaller than 1200cc) , they’re comfortably taxed lower.

That’s why cars like Mahindra’s XUV3XO that are less than 4 metres are such a hit among customers. It’s one of the best selling cars in their fleet, which saw sales rise from 54,726 units (FY24) to 100,905 units (FY25) in a year. So yes, with Mahindra already being an SUV-first company, the shift played right into its hands. It’s the space that automakers are competing for aggressively. And Mahindra plans to build on its success with the NU_IQ platform, which will allow it to capture more of the compact SUV segment by using the platform for both – its electric as well as internal combustion engine (ICE) vehicles.

Oh, and there’s also a policy advantage that worked in Mahindra’s favour. India has tightened the fuel economy standards for cars through CAFE or Corporate Average Fuel Efficiency norms. The idea was simple: an automaker can sell big, heavy fuel consuming SUVs if it wants, but it has to balance them with smaller, more fuel-efficient cars so that its average across all cars sold in a year doesn’t cross the government’s set limit for CO₂ emissions. Now, because of this, smaller car makers like Maruti Suzuki and Hyundai India were caught in a twist. But for Mahindra, an SUV heavy portfolio meant less effort to balance CAFE scores and focus on EVs.

Now, the numbers that tell the bigger story.

Of the total 4.3 million cars dispatched in India in FY25, 2.79 million cars were SUVs and MPVs (Multi-Purpose Vehicles). That’s 65% of the market and a huge shift in preference from a decade ago, when SUVs made up 21% of all passenger car sales. So car makers with non-SUV portfolios saw themselves on the wrong side of the shift. Sure, they released their own compact SUVs, but for customers, they still felt like a hatchback trying to be an SUV. Mahindra, on the other hand, was able to capitalize on this shift in demand by offering more options, like the Scorpio-N, Thar (rugged SUVs for adventure seekers), XUV3XO (an entry level SUV), and XUV700 (for a larger family). That’s an option for every type of customer across the SUV ladder, all from one manufacturer.

And how did it pull all this off while its competition played catch up?

The strategy sealed the deal. Mahindra didn’t just build a range of SUVs but also backed that up with execution. Not long back, they had issues on the assembly line because of which some models had waiting periods of nearly 2 years after booking. Now that’s a lot of time to wait for a car, and it gives customers enough time to go window shopping for the next best option. So Mahindra reduced it by upping their production capacity. Some cars like the XUV700 had wait times of 1-2 years, now reduced to 1-5 months or less based on the variant. It achieved this by adopting a manufacturing method called ‘Single Piece Flow’ – a lean manufacturing method that boosts efficiency by increasing productivity, reducing waste and shortening production lead time.

And it shows in the results. In the recent quarter, the company’s net profit soared by 24% to ₹4,083 crores, driven up by margins from SUVs and tractors. And now, Mahindra is pushing into EVs. Its BE.6 and XEV 9e have already sold more than 12,000 units within months of launch, showing strong demand.

So yeah, Mahindra’s rise to India’s 2nd-largest carmaker isn’t just luck. It’s the result of spotting a shift, sticking to its strengths, and doubling down on what customers actually wanted.

And maybe this isn’t just Mahindra’s win, but a telling milestone of how India’s car preferences have shifted gears over the years.

Until then…

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