Mahindra & Mahindra: the new Tata Motors?
By: Glenn Brooks, Tuesday, June 01, 2010, AutomotiveWorld.com
Outside India, relatively few consumers have heard of Mahindra & Mahindra (M&M). It might be one of the leading global players in tractors and agricultural machinery, but its vehicles sell in only small numbers. That may be about to change.
Until a few days ago, the Mahindra brand was in danger of becoming best known for a long-running series of delays that have bedeviled its entry to the US new vehicle market. Those troubles, which are almost resolved, have been pushed aside by M&M's surprise purchase of EV specialist REVA. Next, sources claim, is a bid for Ssangyong Motor Company.
The Indian conglomerate, which had turnover in excess of US$6bn in fiscal 2009-2010, employs more than 100,000 people globally. The automotive division's strengths in the home market are mostly restricted to three-wheeler LCVs, pick-ups and SUVs, while a joint venture to assemble the Renault Logan was recently dissolved following disappointing sales.
A compact SUV codenamed W201 is due for launch
Following the separation that will take until year-end to be finalized, the Logan will be relaunched, but this time as a Mahindra (currently it is badged, rather clunkily, 'Mahindra Renault'). The car, which was not designed with the Indian market's dimensions-based tax brackets in mind, will be shortened and its price lowered to a more competitive level. Renault will continue to supply imported engines.
With M&M learning from the mistakes of the past, the future seems certain to contain strong growth via not only acquisitions but thanks to various new vehicle launches at home for the Mahindra brand. A new pick-up, the Thar, along with a compact SUV, project W201, are both due for launch later in 2010, while replacements for the Bolero, Scorpio and Pik-up should follow from 2011/2012.
Mahindra-REVA has two electric city cars almost ready for launch
Mahindra's ongoing brand push into new markets with its existing light truck range should mean that by early 2011, modest but ever-improving results will be forthcoming. The firm has worked hard to re-engineer the existing Pik-up and Scorpio models for a US launch in Q4, with a determination to get the quality and brand launch right first time.
As for the newly renamed Mahindra-REVA subsidiary, this has two small EVs almost ready for market; one of the main attractions of the buy-out. However, REVA has lost an important revenue stream following its acquisition: General Motors India now says it will terminate a contract under which the Bangalore-based battery-car maker would have helped to bring an EV version of a small Chevrolet to market.
GM India's cancellation of the REVA-lead e-Spark project is undoubtedly Mahindra REVA's gain: it's not hard to imagine the electricification of some of M&M's mini-trucks such as the Gio and forthcoming Maxximo. The latter will be manufactured at a new plant in Chakan near Pune, while REVA has a state of the art facility at Bommasandra in suburban Bangalore nearing completion for its forthcoming NXG and NXR electric cars.
We are probably seeing the start of an ambitious global growth strategy
Comparing Mahindra to where Tata Motors was five-to-ten years ago makes sense but where it will be in five-to-ten years' time is perhaps more interesting. Having worked hard to stop the losses at Jaguar Land Rover and to solve the problems associated with Nano production bottlenecks, Tata, in contrast to M&M, hasn't really been able to focus on a push for its own brand outside India.
In summary, Mahindra may still be a small player, but its recent bold moves suggest we are probably seeing the start of an ambitious global strategy for growth, a major part of which will be via acquisitions.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Published on Tuesday, June 01, 2010
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