Mahindra scrubbed plans to sell the Pik-Up in the U.S. - but could something else follow?
Is the long-delayed U.S. debut of Indian automaker Mahindra & Mahindra finally back on track?
Mumbai-based Mahindra &Mahindra Ltd. is opening a technical center near Detroit as part of plans to become a global automaker. The move comes several years after the maker originally promised to wade into the American market with its first light truck models. But lawsuits stemming from the canceled launch could pose an obstacle for Mahindra’s future plans.
Rajan Wadhera, chief executive officer for technology and product development for Mahindra’ automotive and farm equipment sectors, said the new office operated by Mahindra Engineering Services is the first automotive-oriented technical center the Mahindra Group has opened outside of India.
Mahindra selected the Detroit suburb of Troy for the site over rival locations in Illinois, Netherlands, Germany and Italy, he said.
“Because of its ties to the automobile industry and motor sports, Detroit is known as the Motor City around the world. We wanted to be part of that culture,” he said.
Besides doing work for its own products, Mahindra has already signed up General Motors, Navistar, Volvo and Bentley as clients for its engineering services, Wadhera added.
The company also discovered Southeastern Michigan is very competitive in terms of real estate costs and is the home to a very deep pool of engineering talent,” he said.
Mahindra, which started in the 1940s building copies of the World War II era Willys Jeeps, already is one of India’s top vehicle builders, but its goals aren’t limited to the home market, he said, stressing, “We want to become one of the world’s top 10 automotive brands by the end of the decade.”
Mahindra sells about 500,000 utility vehicles annually in India and other markets but plans to double that number to 1 million units by the end of 2016, Wadera said. It hopes to be selling 2 million vehicles annually by 2020, he added.
As part of its plan, Mahindra is planning to broaden its product portfolio by adding a variety of different vehicles, he said. It currently is working on electric vehicles with help from Sanyon, the Japanese battery maker. Last year, it acquired SSangyoung Motor Co. of South Korea, which also specializes in utility vehicles.
Mahindra dumped its original plans to sell vehicles in the U.S. by getting out of deal to distribute its vehicles in the U.S. through a company called Global Ventures. It had initially planned to sell both a compact pickup and a small SUV here. The decision to back out has triggered a series of lawsuits by the former partner and by various dealers that had signed on with the Indian maker.
For the moment, at least, it seems Mahindra will focus on engineering operations in the U.S., but some observers believe its new Detroit facility will ultimately serve to help it launch into the American market.
“We’ve already hired 70 Michigan residents,” said Prashant Kamat, chief executive officer of Mahindra Engineering Services, which will actually operate the Troy technical center.
“We should have 100 (employees) in the next six to eight months.” added Kamat, who indicated Mahindra also use the Troy technical center to learn more about product development in the auto industry and to develop new clients and partnerships.
Wadhera said Mahindra will also bring its own unique philosophy to Detroit. The philosophy stresses a “frugal” approach to engineering, which is aware of the need to reduce or hold down costs. “We are able to innovate while designing in value,” he said.
Michael Finney of the Michigan Economic Development Corp., said attracting Mahindra was important development for state’s efforts to diversify the local economy because it brings a new and growing enterprise. “It’s exciting to have been chosen,” he said.