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Mahindra's Bold U.S. Plans

Posted by: David Kiley on October 25

mahindra-scorpio-sidecar.jpg


In writing on Mahindra and Mahindra this week, I ran into considerable resistance to their plans to launch three vehicles into the U.S. in 2009—a two-door pickup, a four-door pickup and an SUV.

Marketing consultants and auto analysts aren’t enthusiastic. Consultant Dan Gorrell calls it an almost impossible marketing play, though he also said that relatively small sales goals—18,000 in 2009 and 45,000 in 2010—makes it a more reasonable gamble. John Humphrey of J.D. Power and Associates says that Mahindra is a dynamic company, but he wonders, “Why now, and why the U.S.?” Humphrey points out rightly that with a stagnating U.S. auto market, every sale Mahindra scores will have to come from an established rival. Too, while Mahindra bests the likes of Honda in India for Sales Satisfaction, as tracked by Power, it is still below industry average in Initial Quality.

Dealers who are investing, of course, have a different view. And the people at Global Vehicles, the U.S. distributor appear to know what they are doing. Charleston, SC dealer Manly Eubank, a long-time Ford dealer, has bought a Mahindra franchise, as well as a Mahindra tractor franchise. Steve Taylor, a Cadillac and Kia dealer in Toledo, in the shadow of the Jeep plant that builds Wrangler and Liberties, is spending more than $1 million on a stand-alone facility.

John Perez, CEO of Global Vehicles, Mahindra’s U.S. distributor, is a former dealer, and dealer consultant. He also invested in the first Coke bottling plant in Romania. Global’s president Bill Goetze is an extremely experienced sales and distribution executive who was at Subaru of America at the time of its founding, and with Mazda for two decades.

I’m not surprised, though, at the skepticism. After all, with Ford so down on the mid-sized pickup market Mahindra is entering, it hasn’t upgraded the Ranger since Bush 41 was president. And then there is the “Mahindra” name. A fellow auto writer of mine says they’d be better off going with a non ethnic sounding name. Who wants to buy an Indian SUV or pickup” he asks.

Could be that it’s very few people. But it’s hard to ignore Mahindra. It’s a major company in India, and good enough at what it does that Renault is in a venture with the company to build its Logans, and Navistar has it building trucks for it. It used to built the Escort for Ford, and it has been building military vehicles since 1949.

After my deadline, I had some e-mail with Dr. Pawan Goenka, a mechanical engineer who earned a doctorate at Cornell and spent 15 years at GM. He heads Mahindra’s auto sector.

————

DK: Do you have any serious concerns that the vehicles you plan to launch in the U.S. won’t be ready for a mid 2009 launch.?

PG: As of now all the development work is on schedule and we are not anticipating any delays.

DK: You are coming with clean diesel vehicles. Are you also putting a trap of some kind to limit the NOX? What technology?

PG: We are targeting to launch our vehicles with T2B5 emission levels which are the most stringent emission levels anywhere. We are working with the best technology providers to bring a clean diesel engine into the US market. It will not be appropriate for me to reveal exactly what technologies we are planning to use.

DK: Of course you know from your GM days how treacherous the pickup and SUV market is in the U.S. Do you have many worries about the consumer acceptance of an Indian brand few have ever heard of?

PG: In early days when Japanese or Koreans launched their products for the first time into US, they had similar problems. Working with our partner Global vehicles, we have a very aggressive launch plan to introduce M&M and the Indian Auto Industry to the American consumers. Launching a new brand is never easy. However we have aspirations to become a global SUV and Pickup brand, and we can not lay our claim to be global without success in the US market.

DK: Why did you choose to distribute through Global vehicles rather than start your own subsidiary as you did with Mahindra tractors? What is the advantage of this arrangement? You could have hired people experienced with setting up a dealer network, etc. by hiring them, and thus retaining control over the launch process?

PG: We see several decades of automotive distribution experience coming to us through GV. I do not believe that we could have just hired a few people and done the same. We are very impressed with the type of talent pool that GV has put together to help launch Mahindra into the USA. We are working very closely together. M&M is focusing on getting the product ready and GV on getting the distribution plan and network ready. The launch process is jointly agreed to, and we do not see any process risk. In India we have a very high focus on customer centricity in our sales and service model. We expect to bring the same approach to USA.

DK: Have any of the people you know in the U.S. auto industry, or people you are doing business with, (i.e. Carlos Ghosn) advised you against trying to market pickups and SUVs in the toughest, most over-built market in the world for these vehicles.?

PG: The US market is a difficult market for any segment. We believe we are ready. Of course there are people who are apprehensive about our strategy but we do believe that we have a good value proposition for the US consumer.

DK: Management at Mahindra said in an interview earlier this year that Mahindra sees itself becoming the next Land Rover, albeit at lower price points. That is a specialist in SUVs and pickups. Ford is shopping Land Rover, but M&M appears to have taken a pass. Why?

PW: Our stand with Land Rover is a topic of very high media interest. We have since the beginning maintained a stance of "no comments". It will not be appropriate for me to change it now.

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Reader Comments

Todd Neidorf

October 25, 2007 05:54 PM

Good stuff. Very good quotes.

Noz

October 25, 2007 07:24 PM

It is very clear that the appeal, other than possibly to some Indians now living here in Barbaria, has to be low cost. Very low cost/high profit margins for greedy dealers.

I visualize these vehicles as utilitarian, rural/farm-orient-ed, and the market is very small. The first pickups from Japan were slightly modified mini-trucks that could be found on the farms there--small, tough, sharp-turning, stiffly sprung, hideous seats, weak but willing engines and strong gear-trains. Very long lived if it were not for the tendency to rust as if there was no tomorrow. Also, the pickup beds were designed for use, not style, as is the case today, the hooks on the outside, etc.

I can almost imagine Mahindra doing fairly well in so-called 'third-world' countries, this, while hating that phrase. For the most part, in America pickups are just gas-swilling toys with nice soft car interiors. Even those used here in the Wild West on corporate farms are designed to accommodate the pot-bellies and soft tails of what so many big farmers have become. Not all, mind you... I know of what I speak...


bigdawg

October 26, 2007 06:45 AM

Even with very limited sales, having the vehicles on the road will build name recognition. This could easily lend credibility and produce sales for their tractor business. Also, those who have purchased their diesel tractors may be some of the first in line for the small trucks. With fuel prices steadily on the rise a small truck with a diesel engine might just be the product that takes the segment by storm. The SUV.....well, it's no wrangler.

Frank A

October 26, 2007 08:26 AM

Count me among the skeptics. They are entering an incredibly competitive segment in the most competitive market in the world. They will obviously sell on price, but how much cheaper will they be than the current crop of trucks/suvs? Then their is the quality question. How well built can we reasonably expect these trucks to be? My guess is they will be where Hyundai was their first couple of years in the US, not a very promising prospect. One other point to consider is how loyal truck buyers are. A Chevy or Toyota fan would not be caught dead in some else's truck, no matter what they cost.

Nikhil

October 26, 2007 08:41 AM

"And then there is the “Mahindra” name. A fellow auto writer of mine says they’d be better off going with a non ethnic sounding name. Who wants to buy an Indian SUV or pickup” he asks."

Be ready to hear more asian "ethnic" names. If asians have no problems with "western" names (which include ethnic Italian, german, Spanish names) why the hell should you have with Indian names???

When will you realize that the center of universe is no longer Europe or US???

Noz

October 26, 2007 06:48 PM

Nikhil is oh so right with his comment on the name Mahindra. Nothing wrong there! Most of us now pronounce Japanese car company names fairly well, and chinese names are baby talk. We could bitch and moan over Thai or Polish names... but the marketing firms would make them easier if only for self-preservation.

I wish Mahindra the best of luck in trying to break into our market, but I really have to wonder just where they came up with the idea that they wanted to be another Land Rover!?!? Why set the bar so low? The reputation of that outfit is just about subterranean at this point from a reliability standpoint.

Noz

October 26, 2007 06:49 PM

Nikhil is oh so right with his comment on the name Mahindra. Nothing wrong there! Most of us now pronounce Japanese car company names fairly well, and chinese names are baby talk. We could bitch and moan over Thai or Polish names... but the marketing firms would make them easier if only for self-preservation.

I wish Mahindra the best of luck in trying to break into our market, but I really have to wonder just where they came up with the idea that they wanted to be another Land Rover!?!? Why set the bar so low? The reputation of that outfit is just about subterranean at this point from a reliability standpoint.

Noz

October 26, 2007 06:58 PM

And there is another thing, this one regarding diesel engines. The US has been a laggard in their further development due to our cheap/subsidized gas prices for lo these many decades. Every car company in Japan has been making diesels for many years, and certainly this has been the case in Europe. With the mandated low-sulphur fuel FINELY available here in the US, and various oil companies crowing about 'their achievement', the door is opening for additional players in the diesel vehicle market.

Thus the Mahindra may well have competition HERE that did not exist last year. World-wide this is an olde story. A tough row to hoe is what I am suggesting...

G

October 28, 2007 01:21 PM

Exactly right Nikhil, even if Europe or the US doesn't accept Mahindra, they are not growing markets anyways. I could see this selling in South and West Asia (Middle east).

Donavan

December 17, 2007 12:54 PM

Forget about product, market, and economics if Mahindra want to have any modicum of success in the US they first need to put a dynamic leader at the helm of the US company. Bill Goetze is not that man. He will not put his name on any decision that has not been run up the flag pole enough times to erase him from liability for the results of the decision. Leadership and motivator are two characteristics that are not used to describe Goetzes' talents. Mahindra needs someone to take them to the next level in their development in the US. That could be their biggest challenge in the US market.

John

December 23, 2007 01:55 AM

http://www.youtube.com/watch?v=tUiKHnSUvLo&feature=related

Here is an interesting video i found on Youtube.

GAP

February 6, 2008 02:51 PM

If you do not want Mihindra, then you have plenty of choices of domestic and import pick-ups and SUVs. How many of these present US companies offer a low priced, diesel powered utilitarian product? Mihindra will be supported by non-V8 thinking/driving market.(California) Why does the American driver have to be accept limited choices when it comes to vehicles. (Europe does not) Yes, the US market is declining. This is not due to having exceptional vehicles with superior product reliability. The US manufacturers force feed their poor product offerings to the market. Mihindra, fills a niche that no other manufacturer is ready to fill. The name is meaningless. Proof? Why do Japanese and Korean name brands sell cars in large quantities? Are you saying that if you stamp "Ford, GM or Chrysler on the a vehicle it will sell more than another brand with a different name? Mihindra, and all the other vehicles coming to the US market, will be judged on more important factors than the lack of illiteracy of the US driver.

Guy

April 11, 2008 03:50 PM

This vehicle is already for sale and being purchased in Australia among other Western countries. As for American manufacturers, we see how well they are doing pushing overpriced products down American throats and paying lobbyists to keep tariffs on imported goods to maintain market share. Bring it on and let the market decide

Jinu

July 1, 2008 09:35 PM

As long as the gas price go up like rocket there will be a huge demand for such SUVs and pickups. This is a vehicle that offers 30-40mpg and costs around 20-25 grant. I dont believe that it is wrong move from mahindra.Name or ethnicity doesnt matter...all that matters is the dollar in ur pocket.

moin kazi

June 15, 2009 01:33 PM

hi how r u
we r loking for mahindra scorpion blue in colour. with bank installment or your company installment.
will u mind to send quotation on my mail add. thank you.

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About

Want the straight scoop on the auto industry? Detroit bureau chief David Welch and auto beat veterans David Kiley, Dexter Roberts and Ian Rowley bring daily scoop, keen observations and provocative perspective on the auto business from around the globe. Read their take on such weighty issues as Detroit’s attempt at a comeback, Toyota’s quest for dominance and the search for an efficient car.

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