ATLANTA — On hand here for a U.S. sneak preview of impending new vehicles from India are representatives of more than 200 dealerships who will sell them. The price of entry: $125,000 per franchise. The preview's box-office take: $25 million so far.
Producer of the exclusive show is Global Vehicles USA, an importer based in Alpharetta, GA. The star attractions are an SUV and pickup trucks produced by one of India's oldest auto makers, Mahindra & Mahindra Ltd.
The grand ballroom of an airport hotel is lavishly decked out as Global Vehicles CEO John A. Perez, a veteran of 36 years in auto retailing, opened the event.
Perez compares the excitement for the India-built vehicle launch to that generated when Toyota Motor Corp.'s luxury division Lexus arrived in 1990.
“This is a better opportunity for franchise-seekers than Honda was in the 1970s,” says Perez, a native of Cuba who is a former Georgia dealer and dealership management consultant.
Show goers watch lavish videos touting Mahindra's Scorpio and Bolero SUVs and trucks for the fast-growing India market.
Then Global Vehicles President William D. Goetze welcomes the signed-on Mahindra dealers, many of whom he knows from sales staff stints with General Motors Corp.'s Chevrolet Div., Chrysler Corp.'s Chrysler Div. and Plymouth Div., Mazda North American Operations and Subaru of America Inc.
Goetze escorted Mahindra's first 12 U.S. dealers to India last year to see its production and research operations first hand.
Mahindra has been a U.S. tractor producer since 1994, with a plant in Tomball, TX. It is a partner with Renault S.A.-Nissan Motor Co. Ltd. in building a new assembly plant for Renault's Logan entry-level subcompact car in India.
“Mahindra is on its way to becoming a world-class full-line auto maker,” Goetze says.
Perez and Goetze tell the standing-room-only crowd that the first Mahindras imported for sale in the U.S. will arrive in early 2009. A western Subaru dealer tells Ward's that is about six months later than he was told when he originally signed the franchise agreement.
But it's worth the wait if arriving vehicles are of top quality.
“We don't need another Aro or Yugo,” he says, referring to two import disasters, one of which — the Aro SUV — Global Vehicles imported from Romania.
The issue of quality and creative research is implicit in remarks to the audience by Pawan Goenka, president of Mahindra's automotive sector, and Arun Jaura, its senior vice president. Both are trained engineers with doctorate degrees.
Goenka left a 14-year career with GM to join Mahindra in 1993. He oversaw SUV and truck development programs at GM.
Jaura was with Ford Motor Co. 10 years, working on the Escape Hybrid program before joining Mahindra, based in Mumbai, formerly Bombay.
Mahindra, which was licensed to build Willys Jeeps after World War II, has grown to include not only the vehicle division but also the largest non-bank financial services division in India and a network of parts manufacturing plants.
Mahindra had revenues of about $4 billion last year. It will build about 178,000 vehicles this year, most with diesel engines.
Dealers at the Atlanta preview are shown what their $125,000 investment will bring to their showrooms in about two years.
Vehicle displays include a 7-seat fullsize SUV with a 4-cyl., turbocharged diesel engine and new 6-speed automatic transmission.
Additionally, U.S. dealers will get 4- and 2-door Mahindra pickup trucks with the same turbo diesel engine as the SUV's.
The pickups currently sell for $21,000-$22,000, and the SUV is priced in the mid-$20,000 range in India, as well as Mahindra's export markets of Europe, Australia and South Africa.
Dealers at the Atlanta gathering come from 42 states.
They included Georgia's largest Ford dealer, Allan Vigil, of Morrow, an Atlanta suburb.
Mahindras are “truly competitive with Ford trucks in quality and price,” he says. “I've been a Ford guy for 30 years, and this is my first franchise outside Ford.”
Perez, brushing aside bad Aro memories of the mid-1990s, expects Mahindra's sales to be about 14,000 units in the first full year in the U.S. and 100,000 in 2011.
“The Indian population in this country will be a strong market going in,” he says.
Ultimately, Mahindra may build a U.S. plant. Perez already has met with the governors of Georgia and South Carolina on proposals for a Mahindra factory.
The first U.S. auto shows to display Mahindra's truck and SUV next year will be those in Los Angeles, Miami, Detroit, Chicago and New York.
Of the 200 dealers already franchised, 17 are from Florida. Only three are from California, possibly because diesel engines are not particularly popular in that state
Goetze plans to add another 100 dealers by the early 2009 launch.