Mahindra and Mahindra Set to Tackle U.S. Market With Diesel Power

Michael Martineck
by Michael Martineck

Once upon a time, American stage magicians would assume Indian-sounding names, don turbans and claim to have mastered the mysteries of the Indian subcontinent. Automaker Mahindra & Mahindra (M&M) looks set to revive the country’s rep for astonishing feats. While industry pundits are busy anticipating Chinese automotive exports, M&M are about to sell their products stateside, preparing to enter America’s value-for-money, entry-level market. Will it be magic or a massacre?

Ironically enough, the brothers Mahindra got their start by adapting an American product to the Indian market. After WWII, they set up their namesake company to franchise Willys Jeep production for India’s surface-challenged roads.

Mahindra & Mahindra eventually dropped their American partner, built their own SUV and expanded into light duty trucks, three-wheelers and pickups. The company now operates eight Indian production facilities, 49 sales offices and 780 dealers.

Last year, the Indian conglomerate– including telecoms, financial services and property development– banked roughly $39b in revenues. (For comparison, BMW’s revenues for the same period were around $64b.) In recognition of their size, solidity and importance to the Indian economy, Mahindra & Mahindra is set to replace motorcycle maker Hero Honda Motors on the Bombay stock market’s 30-stock sensitive index (a.k.a. Sensex) in July.

M&M may be a force to be reckoned with in India, but Automotive News ranks them number 34 on their list of global vehicle makers. All in, Mahindra produces fewer vehicles per year than Ford [still] sells F-150s. No wonder many auto analysts have discounted the Indian tiger’s chances of successfully cracking the world’s largest automotive market– especially when weighed against the aspirations of the Chinese dragon.

Yes but– China’s joint partnerships remain focused on the epic struggle for market share within their friendly neighborhood military dictatorship. Meanwhile, M&M is gearing-up for international expansion.

Earlier this year, Mahindra joined forces with Renault / Nissan to build India’s largest automotive production facility. The Indo – French operation is a flexible factory, looking to produce 50k vehicles this year. M&M claim the plant has sufficient capacity to increase throughput to 400k vehicles per year.

Two weeks ago, the automaking duo released a local version of Renault’s “world car.” It’s unclear how the Logan DLE 1.5-liter dci will fare against the almost identically powered industry leader, the Ford Fiesta 1.4-liter Duratorque ZXI. But the 547,064 IDR ($13,476) Logan undercuts the popular Ford by around 90k IDR ($2217). In a country with a $979 annual per capita income, that’s a compelling difference.

The cut-price Logan may well join Mahindra and Mahindra’s Scorpio as another value-priced product doing battle outside its home market.

Five years ago, Mahindra began selling their diesel and petrol-powered SUV to Malaysia, South Africa, Russia, Italy, France, Spain, Portugal and Western Europe (where it’s known as the Goa). Sales and reviews have been strong; the vehicle is now in its second generation, complete with a Lotus-tuned suspension. M&M believe the Scorpio and its derivatives are ready to fulfil their American ambitions.

The Indian carmaker is no stranger to the U.S. market. After severing an eight-year franchise agreement with International Harvester in 1971, Mahindra and Mahindra began building their own line of tractors. In 1994, M&M started selling farm machinery in the United States.

With US assembly facilities in Tomball, Texas and Calhoun, Georgia (and a third site under construction), the company estimates it will sell 10k tractors this year. And M&M is no cheapo tractor builder. In 2003, their U.S. ops received the Deming Application Prize for Total Quality Management; the only tractor company to achieve this honor.

To sell their automotive products stateside, Mahindra turned to Global Vehicles. The Georgia-based company is notorious for trying– and failing– to import the Romanian-built Cross Lander. Global v2 says they’ve sold 160 Mahindra dealerships for $125k apiece. They’re looking to add another 340 M&M dealers by the end of this year, with sales starting in early to mid ’08.

Last month, 500 potential M&M dealers gathered in Atlanta to see the Indian automaker’s five-model U.S. line up: a two-door pickup, two four-door trucks and two five-door SUVs.

Mahindra’s expected to price these products in the low 20’s. Their SUV will butt heads with Hyundai’s Tuscon ($17k – $22k) and Kia’s Sportage ($16k – $22k). Unless the Indian machines bring a raft of standard features and a matching warranty to the party, it’ll be an uphill battle. M&M’s small pickup will encounter far less resistance, as American and Japanese automakers have neglected and/or abandoned the segment.

M&M’s secret weapon: diesels. All five US products will offer an optional diesel engine. Renault’s oil burners are some of one of the best in the biz: torquey, smooth and frugal. If Mahindra found a way to make their diesel powerplants U.S.-compliant, their products will find a ready audience, and establish a beachhead in the world’s most competitive automotive market. Now THAT would be some trick.

Michael Martineck
Michael Martineck

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  • Rastus Rastus on May 31, 2007

    Just remember, people...we HAD a "M&M" least in spirit. It's name is/was Isuzu! But NOOOOOOO...HELL NO....GM destroyed THAT company too!!! Strong, fuel-efficient, rugged-as-hell trucks! And lest you forget, turbo-diesels WERE their forte'. I have been saying for years...if I could buy a small turbo-diesel P/U which got 40mpg, I'd be on it like white on rice. What an ideal "commuter" car! Leave it to GM to screw the pooch on that one too. The destruction of Isuzu was/is a total disgrace. They did NOT try to be everything to everyone....but they sure had a pretty good following. But hey, they too (isuzu) will be more than happy to sell you a re-badged "Trailblazer"...or is that a Saab whatchamacallit?? Pathetic.

  • Martin Schwoerer Martin Schwoerer on May 31, 2007

    Very interesting article! One thing I think deserves being pointed out. India is the world's biggest democracy. Big difference to China! Thus, the concept of Western companies working with India, and Western consumers buying a car from India, is much more acceptable for people who care about such matters.

  • Bd2 I wonder how TTAC is celebrating this JuneTeenth? Rolling around naked in hyundai flavored mud somewhere like they usually do?
  • Wjtinfwb I'd like to see a Ford/Mazda relationship restarted. Both companies have some car guys keeping the flame alive and could develop a sports car slightly bigger than a Miata and pick and choose from each other's parts bin to put together some attractive powertrain combo's. Even a Mazda 3 AWD with the 300HP EcoBoost 2.3L, manual and AWD from the Focus RS would be welcome. Even better, a factory Miata V8 with the 480 HP Coyote (i know it wont fit...) and a manual gearbox. And how about a CX-5 with a 2.7L EcoBoost V6 with AWD and an chassis tuned for sport. Lots of possibilities.
  • Blueice Patient 28, sorry, but it is Oktoberfest. Bring a kegof Kraut beer and we will 50% you.
  • Bd2 Probably Toyota, Hyundai is killing them these days.
  • Wolfwagen If Isuzu could update this truck and keep the cost between $25K - $30K they would sell like ice pops on dollar day in a heat wave.