Exporting to the world – Indian Auto Manufacturer Mahindra

Our October 2002 issue featured a story on the unique development of the then little known brand ‘Scorpio’ by Mahindra*. These 5 years have been an exciting journey for the Scorpio, a vehicle that has since traversed across continents. The journey that started with it winning accolades for it’s unique development model, it’s abilities as a vehicle (Car of the year) and it’s design, is on full throttle and the vehicle looks forward at conquering new markets.

Making of the Scorpio, marked the beginning of innovative thinking for a company that was traditionally identified as a ‘Jeep’ manufacturer. (The company’s origins date back to 1945 when it began import and assembly of Willys Jeep kits in India. Nine years later, the company collaborated with Willys Overland Corporation and its successor, Kaiser Jeep Corporation and American Motor Corporation and began with the manufacturing of Light Commercial Vehicles in 1965.)

Today, Scorpio is the flagship brand of the company and drives the company’s overseas growth. The Scorpio is known as ‘Mahindra Goa’ in the European market.
In the domestic Indian market the company remains the market leader with a market share of 49% in the utility vehicle segment.

The company’s global ambitions have constantly been challenging its abilities to deliver world class quality at competitive costs. “Company’s technical prowess is proven by negligible import content in our vehicle and by the design and development of a totally, from ground upward, new contemporary SUV — Scorpio,” says Dr. Pawan Goenka (President, Automotive Sector).

With its ability to offer ‘Value for money’ propositions, Mahindra has been able to differentiate itself in the global market place and become a niche player in international markets. It’s lineage of diesel engines also works as a strength for it.
Currently M&M exports their SUV & Pickup to countries in Africa, Asia, Europe, Australia and Latin America. With South Africa as the beachhead, the company also exports to many other African countries.

In line with its strategy of product expansion and globalisation, the company entered into partnership with Renault SA, France, to manufacture the mid size passenger car Logan for the Indian market. The company also announced their foray into commercial trucks and buses in partnership with American giant International Truck and Engine Corporation, USA.

The Mahindra Brand driven marketing strategy of “being proactive”, “smelling an opportunity” and “customer centricity”, characterizes global quality, ruggedness, durability, reliability, easy maintenance and operational economy. The company is sure to garner more success in the global marketplace.

About the Mahindra* Group

The Mahindra Group is a US $4 billion* conglomerate with significant presence in key sectors like farm equipment, infrastructure, information technology and financial services. Forbes has ranked the Mahindra Group in its Top 200 list of the World’s Most Reputable Companies and in the Top 10 list of Most Reputable Indian companies.

Mahindra & Mahindra Ltd. is the flagship company of the Group and includes the automotive business, or sector as it is officially called.

Automotive Industries interviews Pawan Goenka, President, Automotive Sector, Mahindra & Mahindra Ltd

AI. M&M has plans for entry to the US market. Why do you think that this is important for the company?

Dr. Goenka. U.S. is the largest market for SUV & Pickups with a set of evolved customers. For us as niche players, being successful in this market is undoubtedly an opportunity waiting to be conquered. Achieving success in this highly competitive market would definitely mean a lot to us as a company.

AI. How are the joint-ventures with Renault and the International Truck and Engine Corporation coming along?

Dr. Goenka.

Mahindra Renault. Our Joint venture investment is 125 million euros. Based on a debt equity assumption of 1:1, Renault invested 49% of the equity. The progress being made by the JV is something to talk about. More than 95% of the planned investments have been made. All the activities are on time. Manufacturing facility ready and we are gearing up for the launch as announced in the first half of this year.

ITEC JV. We have recently announced plans to set up a world class green field plant in western India to manufacture commercial trucks through this joint venture with US-based truck major International Truck and Engine Corp. This JV will produce medium & heavy commercial vehicles which would be designed and developed with in-house capabilities. Production is expected to commence in two years. The factory will have the capacity to produce a wide range of commercial vehicles, and will include cab assembly, vehicle assembly, and a paint shop. The vehicles will have 90 percent local content from the start due to the strong availability of quality parts and materials from Indian suppliers.

AI. How much have exports been as part of the overall revenues? Can you provide the percentages and the dollar figures over the years?

Dr. Goenka. We have had encouraging growth in our export performance. Exports as a percentage of total auto sector sales have grown in recent years. In F-06 we had the export revenue at around 5% of the total sales of automotive sector. We export to Europe, Africa, Australia, Latin America & SAARC and of course we still have a long way to go.

AI. What in your opinion are the differentiating factors of M&M as a company?

Dr. Goenka. Our ability of offering a “Value for Money” proposition as well as our diesel engine lineage is the USP and this helps us differentiate from others in the global market-place.

AI. Coming back to U.S.A; Are you ready with the products in terms of safety, emission etc to enter the U.S market.

Dr. Goenka. We are in the process of getting ready with the specific requirements of USA. Our products will definitely meet all these requirements when we launch.

AI. What are the challenges you are facing in entering U.S market?

Dr. Goenka. In a way every new market is a challenge in its own way since the customers have different expectations and also the regulatory environment is different. We have already started selling in Europe and will soon be starting in Australia. The US therefore is a logical progression. In a way it’s different because while these other regions follow the Euro based norms, the US has its own different safety and emission norms.

As a manufacturer, our challenge is to give the right product for the market based on our ability of offering a “Value for Money” proposition.

AI. Is there some sense of responsibility or fear or foreboding since there is currently no Indian manufacturer selling in the US.

Dr. Goenka. Yes, there is a sense of responsibility towards the customer, since he is the one who would be investing his money to buy our vehicles and we would not want to disappoint him. We have taken up the challenge of being the first Indian Automotive manufacturer to sell a vehicle in the US market and therefore we also in a way take on the responsibility for creating Indian automotive brand in USA. By the way, this challenge is not new to our group as Mahindra is already a player in the small tractor segment in the US