What's Wrong With This Picture: Mahindra MIA Edition


Autoblog ran this picture purporting to show the locations of future dealers of Mahindra and Mahindra pickup trucks. This piqued our interest because we’ve been curious to see how the Indian firm’s plans to bring diesel-only compact pickups and SUVs to the US market would play out for some time. Over a year ago Mahindra said it would be delaying its US launch (originally planned for Spring 2009) until the fourth quarter of 2009 because, as Mr Mahindra himself put it “my family’s name is going onto this vehicle, and it’s not going to fail.” Well, here we are in the fourth quarter, and Mahindra is still calling the dots on the map “potential” outlets. They’ve also apparently pushed back the launch date again, to the first quarter of 2010. Automotive News [sub] reported way back when that Mahindra’s distributors (Global Vehicles USA) were asking for $200,000 in franchise fees. Maybe finding folks willing to pay that amount for the honor of selling diesel-only compact trucks and utes are hard to come by. Either way, it’s getting to be defecate-or-get-off-the-pot time.
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Over on the truck and SUV boards where I spend a lot of my online time, people are fairly drooling over the possibility of a small diesel pickup or SUV. But I'm skeptical. For one thing, there is a fair amount of a "grass is greener" aspect to the diesel lust. It's easy to lust after small diesels because we don't have them here, which means enthusiasts can obsess over the benefits (improved MPG, better torque, less maintenance) and remain ignorant of the downsides (smelly, smoky exhaust, noise, low power, and while maintenance is less frequent, it's generally more expensive, etc.) In the days when a 5,000lb SUV with a 290hp engine is considered "adequate" it's hard to imagine a ~180hp motor being acceptable to daily commuters. The second reason I'm skeptical is because breaking into the US car market is not something that is easy to do. Seems to me you have to do one of two things: Either offer something nobody else offers (the diesel could fill this role, although I predict once the gloss wears off most ordinary consumers will pass diesels by) or offer the same thing as everyone else but at a bargain-basement price. I also remain skeptical about the size of the 'we need a real compact truck' market. You hear people saying it a lot (on this site in particular) but the whole reason that compact trucks have gotten so porky as of late is because when US consumers had the choice of a smaller truck or a bigger one, they went for the bigger one almost without exception. In a free market system, the buyer is always right and if there was any kind of demand out there for a "real" small truck a la the original Toyota Hilux or the original Ford Ranger, someone would be making them now. I agree with the above posts, Mahindra might be better off waiting a few years and refining their product before bringing it to the US market.
I don't see enough demand in big truck country, aka Oklahoma and Texas, to support 20+ dealerships. Obviously, these won't be stand alone dealerships, but I don't see existing dealerships paying a $200k franchise fee to sell a few compact diesel pickups with thin margins (after the novelty factor and attendant "market value adjustment" wear off).
Well, I guess we'll see if I have any better luck today commenting on TTAC. (The last 3 or 4 postings I entered over the past week haven't shown up). Re: Mahindra; well, I'm pretty sure that this will work out about as poorly as the Isuzu diesel car episode did in the mid-1960's. A small, private, California importer started bringing in diesel (only) versions of the Isuzu Bellel, which was more-or-less a (poorly) rebodied Hillman. Isuzu even admitted as much, having previously had a license to build Hillmans in Japan for Japan. Tiny, private importer. Check. Diesel engines only. Check. Vehicles out of the mainstream in size. Check. Unknown brand in America. Check. Virtually untested nation of origin in America. Check. Yep, I suspect Mahindra will follow the way of "Trans-Alpac Corp, Burbank" in selling vehicles for a short time here then folding up and blowing away. Perhaps in a decade, after the fiasco, they'll be back selling vehicles rebadged as a major player. Just as happened to Isuzu.
Since Mahindra has been selling tractors in the US for 15 years http://www.mahindrausa.com/ and already has assembly plants over here why aren't they using the existing tractor distribution and sales network? They have have physical plant, systems and people who understand getting vehicles from ships to end users, and if you already have a diesel tractor, then a diesel truck is a logical future purchase.