Mahindra is displaying some of its models here at the Paris auto show that began Sept. 23.
The company in India holds a combined 73% share of the utility and van segment and 27% of the tractor market. It currently sells 250,000 Scorpio SUVs worldwide annually. First-quarter net profits jumped 145% to $23 million. (See related story: Mahindra Scorpio Drives Into World Markets)
Mahindra has sold 200 units of its Goa/Scorpio and Bolero SUVs in Italy year to date, where its European distributor, Eurasia Motors SpA, is headquartered. By December, the auto maker intends to have a distributor in France, quickly followed by Spain, Poland and other Eastern European countries.
In the U.S., where the company already imports agricultural tractors, "we are talking to someone" about importing SUVs (from India) beginning next year, says Pravin Shah, vice president for overseas operations at Mahindra & Mahindra. However, he says, "nothing is signed yet."
Mahindra Goa/Scorpio SUV
Mahindra is the second Indian auto maker to enter Europe's competitive
market. Tata Motors Co. Ltd. builds cars for U.K.-based MG Rover, and it has been exporting cars to Europe in its own name for several years. (See related story: Tata Plans 50% Hike in Car Production)
Mahindra has marketed tractors in the U.S. since 1994, with complete-knocked-down-kit facilities in Texas and Georgia. It learned the tractor business from a joint venture with International Harvester Co. and modern car making from Ford Motor Co. in a 1995 joint venture to build the European version of the Focus for the Indian market.
Two vehicles form the core of Mahindra's lineup: the Goa/Scorpio SUV, introduced two years ago, and the Bolero, an older vehicle with three versions: a basic Rover Defender-style SUV and single- and double-cab pickup trucks.
The vehicles have been homologated for France with the help of engines provided from Renault SA and PSA Peugeot-Citroen.
The Goa/Scorpio tops the Mahindra range. Developed with Western partners for $150 million, it launched in India in July 2002 and now leads its segment.
Mahindra began making SUVs in 1945, with a license to produce the Willys Jeep. In 1995, the company formed a JV with Ford to make the
European version of the Focus, and in that operation "we learned a lot of the Ford processes," Shah says.
Partners for the Goa development include Lear Corp. for seating; Visteon Corp. for exterior components; Samlip of Korea for the suspension, Behr GmbH for heating, ventilation and air conditioning; and (Ford’s) Kenwood for the audio system.
Mahindra's own diesel engine, a 2.6L, 4-cyl. direct-injection turbodiesel, was developed with AVL of Austria.
The Goa/Scorpio uses a Mahindra 5-speed gearbox and a BorgWarner Inc. transfer case for 4-wheel-drive versions. Renault SA provides a 116-hp 2.0L multiport fuel-injected gasoline engine.
The Bolero uses a 90-hp PSA Peugeot Citroen DW10 TD common-rail turbodiesel used in the Peugeot 307. The engine is delivered to Italy, where Eurasia Motors installs it in engineless Boleros arriving from India.
In India, Mahindra is selling 20,000-22,000 Goa/Scorpio vehicles annually and 14,000 Boleros, says Shah. When established, the company expects to add 5,000-6,000 units in Europe.
Rival Tata has been exporting a few cars to Europe for several years but has yet made a significant impact. Shah says Mahindra has learned from Tata's experience that the selection of a dealer network is critical.
"The person who is hungry to do business, he will be our distributor," says Shah, who notes a central parts warehouse will be established in France from the start that can provide replacement parts anywhere in the country within 24 hours. "Spare parts will be competitively priced to meet the expectations of the market," he says.
Mahindra also has a CKD factory in Uruguay, which is a member of South America’s Mercosur common market dominated by Brazil and Argentina. Exports are planned, or already started, to Costa Rico, Honduras and other Central American areas, as well as the Near East, the Gulf States and Iraq.
Exports to South Africa were announced two weeks before the Paris show.
Shah says Mahindra is India’s market leader in the SUV segment. The company is the 10th largest industrial company, with turnover of $2 billion a year.
In India, Mahindra has built up a reserve of more than $500 million to buy up component businesses and consolidate them in a confederation that will have strong central functions and shared services to do contract manufacturing for other OEMs, says Ananda Mahindra, vice chairman and managing director.
The auto maker already has in place, at a cost of $175 million, Mahindra Industrial Park Ltd., a special economic zone near Chennai for developing vendors and other businesses.
It also has tied up with Indian Oil Corp. to develop hybrid fuels, hydrogen cells and other alternative energies.
– with Sudhakar Shah in India