After spending a lot of years in the UV arena, Mahindra has now decided to launch a hatch version of Xylo which will compete against various other competitors in the A2 segment.

According to the sources close to the development, the product is expected to be a sub Rs 5-lakh sports-utility vehicle that will take on the compact carts in the Indian market.

While the Mahindra official spokesperson declined to comment on the issue, but the source highlighted the fact that the product will be 35-40% cheaper than the existing base model, that will be launched by 2011 in the Indian market.

It is believed that the motive will be to get the overall length of the product to lower than 4 metres so that it attracts a lower excise duty of 10% compared to 22% for bigger cars and utility vehicles.

However, the run of Mahindra in the segments other then UV in passenger cars has not been very fruitful as its JV agreement with Renault for Logan fell flat on the ground. Moreover, Mahindra is also working on the new Logan that will be launched by 2011 in the domestic circuit.