By Parveen Chopra, IANS
New York : Indian automaker Mahindra & Mahindra plans to export sports utility vehicles (SUVs) and pickups to the US by next year, becoming the first Indian company to enter the world’s biggest auto market.
The Mumbai-based company has signed an agreement with Global Vehicles USA Inc of Atlanta in Georgia, which will import and distribute Mahindra vehicles.
Mahindra is thus set to become the first Indian company to break into the North American auto market, the largest in the world, following up on its managing director Anand Mahindra’s statements last year on expanding overseas.
Mahindra plans to enter the US market by offering three vehicles – two pickup trucks and one SUV expected to come with a base price in the mid-$20,000 range – that use diesel engines built by a major German auto supplier.
Mahindra’s pickups will be assembled in Ohio starting next year, Global Vehicles’ CEO Johan Perez has said. The company is in final stages of pencilling in a US assembler.
Mahindra will send “semi-knockdown” kits for the pickups from India, which workers in Ohio will use along with some additional parts from local suppliers to construct two-door and four-door pickup trucks. Production starts in March 2009 in India.
By assembling pickups from kits in Ohio rather than ship them as completed vehicles from India, Mahindra will be able to avoid a 25 percent tax that is tacked on to pickup trucks imported to the US from outside North America.
Global Vehicles has signed up 300 US dealers so far, representing all 50 states. The first Mahindra-branded dealer is set to open in March in Chicago.
Mahindra has a sales goal for its first full year of 45,000 trucks, Perez said after speaking to dealers at a convention in San Francisco Monday.
The SUVs (Scorpio) Mahindra plans to sell here by 2010 will be shipped as whole vehicles from India, he added.
Mahindra will offer the option of hybrid-electric diesel engine for its pickups and SUVs a year after launching in the US. Perez said the vehicles will be priced higher than conventional models, but the premium will be about half of the premium that established automakers tack onto their hybrid vehicles.
Diesel vehicles, which are not popular in the US due to tough regulations and the high cost of diesel fuel, are capable of posting 30 percent better fuel economy, industry analysts estimate. By combining a battery-powered motor to the engine, the fuel-economy is likely to improve further.
Perez believes US buyers will embrace diesels now because of a growing demand for fuel-efficient products. He adds that to meet US regulations on diesel vehicles by 2009, Mahindra’s team of engineers in India and Michigan is working with consulting support from German engine component supplier Robert Bosch GmbH and Austrian powertrain (an engine and transmission combination) developer AVL Powertrain Engineering.
Perez says he and his investment group would have spent $65 million by 2009 to bring Mahindra to America.
His Global Vehicles has set apart an advertising budget of $30 million annually for Mahindra vehicles and hired a company named StrawberryFrog to handle the account.
Mahindra’s SUVs are going to be positioned as competitors to vehicles like Chrysler’s Jeep Grand Cherokee and Ford’s Explorer, while the pickup trucks will compete in a segment dominated by Detroit’s Big three auto makers – General Motors, Chrysler and Ford.
The US market is not new to Mahindra & Mahindra. Its wholly owned subsidiary, Texas-based Mahindra USA, has been selling tractors here since 1994 after assembling them at its plants in Tomball, Texas, and Calhoun, Georgia.
Mahindra is the only Indian company among the top three tractor manufacturers in the world.
With over 60 years of manufacturing experience, Mahindra & Mahindra is part of the $6-billion Mahindra Group, one of the top 10 industrial houses in India.
The group has a leading presence in key sectors of the Indian economy, including financial services, trade and logistics, automotive components, IT and infrastructure development.
The group’s real estate arm, Mahindra Lifespace Developers, Tuesday signed an agreement with the Sri Lankan Investment Board to develop a mixed-use special economic zone (SEZ) near Colombo in Sri Lanka.