Mahindra is developing a smaller version of the Xylo as can be seen from these exclusive spy pictures sent in by Autocar India reader Chandra Prakash Godara. The mini Xylo which is undergoing hot weather testing in Rajasthan will be less than four-metres in length and will come with a diesel engine under 1.5-litres to qualify as a ‘small car’ to avail of a substantial 12 percent saving in excise duty.

The mini Xylo uses a shortened version of the present Xylo’s body-on-frame chassis and the current 2.5 CRDe engine has been downsized as well. The engine capacity has been reduced from 2.5-litres to under 1.5-litres by eliminating one cylinder (the mini-Xylo will have a three cylinder engine) and reducing the bore and stroke. The mini Xylo will only have two rows of seats and hence a maximum seating capacity for five passengers.

The junior Xylo will be aggressively priced and we estimate it to retail for around Rs 5lakh when it goes on sale sometime in 2011. This new model could crack open a new segment which is presently occupied by the low key Premier Rio, the only SUV in the sub-4 metre category.