Mahindra ‘lowers’ XUV500 to ditch SUV tax

A taller ground clearance is one of the reasons SUVs are so popular in India. Even if you look past the aesthetic advantages a higher clearance provides – a more commanding driving position and a more powerful road presence – there’s also the fact that it simply works better on our typically terrible roads.

So when the government announced at this year’s Union Budget that there would be an additional three-percent duty levied on SUVs, it seemed like a low blow to carmakers and car buyers alike. It was as if it was milking something just because it was popular. What’s more, one of the government’s defining factors for the SUV classification was ground clearance, with anything taller than 170mm making the grade. The other two were engine size (greater than 1500cc) and overall vehicle length (greater than four metres).

The good news is that failing to meet any one of those criteria would leave a car exempt from the tax, and as we reported a little while back, Mahindra has been working on exploiting this loophole with its range of SUVs by lowering their ground clearance. We have now learned that the popular XUV500 is the first Mahindra to have its clearance reduced, and as a result, prices have dropped across the range. Previously rated at 200mm, the XUV is now lower by 40mm, and the new 160mm clearance comfortably ducks under the government’s 170mm limit. The W6 trim is now Rs 27,000 cheaper than before, while the W8 trim is Rs 33,000 cheaper. Continued..

So just what did Mahindra have to do to lower the XUV and meet the new clearance regulation? Absolutely nothing.

In a move that highlights how flawed the government regulation really is, all the company had to do was use the Indian system of measuring ground clearance – which simply measures from the lowest point on the car to the ground. Mahindra had previously used the European ‘Arc’ method of measurement, which typically gives the higher value, which in turn looks good on the spec sheet of a tough SUV.

By simply using the Indian system of measurement, the XUV’s clearance was automatically re-rated to 170mm, but then Mahindra went a step further and added a stone guard to the underbody, purportedly to protect the engine. This lowered the car’s lowest point by a further 10mm, safely clear of the cut-off.

Mahindra is reportedly working on dodging this additional excise duty with the Scorpio and the Bolero as well, but whether this shrewd method will work on these conventional SUVs remains to be seen. Perhaps the other restrictions on length and engine size would be easier to get around. However what is clear, just as it was when the sub-four-metre small car excise benefit was announced, is that for every loosely defined (and in this case, absurd) government regulation, innovative carmakers will find a way around.

However, according to the industry, the government is soon going to get wise and plug this loophole too.