- Published: Monday, 17 July 2017 12:47
The group has deployed $1.5 billion in the US to generate $2.5 billion revenue, employing 3,000 people. The plan is to double all three figures over the next two-three years.
“We are looking at opening (the plant) this year. That's a major milestone where an Indian automotive company is opening up manufacturing in a resurgent Detroit. I think that's a wonderful twist of history,” Mahindra told ET in an interview in New York on Saturday.
The off-road utility vehicles, designed at the company's North American Technical Centre, also in Detroit, will help it shift away from third-party original equipment manufacturers (OEMs) that build small units on the group's behalf.
“It's an interesting niche of a few thousand in a year. So we won't be mass producing in the beginning. These categories of vehicles are unique to the US but are not approved for the highways,” said Pawan Goenka, managing director of the Mumbai-headquartered company.
Later this month, the group is expected to take a final call on approving the global launch of luxury electric sports cars along the lines of Tesla Inc. under the Pininfarina brand.
“The board will take up the issue this month. Once approved, it will take four years for a full-blown commercial launch,” said Goenka. “But it will be predominantly a non-India play.” Turin-based Pininfarina is the Italian design and engineering house majority-owned by Tech Mahindra
Apart from Tech Mahindra, there are currently four key pillars of operations for the diversified Mahindra Group in the US--planes made in Australia and sold in North America (five-seven sold annually); tractors, where it’s ranked third despite being a late entrant; Generation Zero Emission (GenZe) two-wheelers that focus on electric mobility; and on-road vehicles and off-road utility vehicles.
“I believe America will be one of the most rewarding places to invest. Trump's policies on immigration which have been criticised will play out with negative consequences almost five-ten years later but it doesn't take away the attractiveness of America,” said Mahindra. “We are talking about doubling our $1.5 billion bet over the next two-three years.”
He outlined key focus areas with investments going into both new and existing businesses such as product development in the Detroit factory and tractors, including electric and autonomous ones, besides manufacturing. He also cited investments in the ride-sharing industry and capex behind the new utility vehicles project. Mahindra Partners, the $900 million in-house investment arm, has already invested in urban mobility firm Scoot Networks in San Francisco that offers smartphone-activated electric motor scooters and mini cars. GenZe is also supplying electric scooters to Post Mates' two-wheeler delivery fleet in New York City. This will be stepped up significantly from the 50-100 on the road today, he said.
Interestingly, Mahindra is also ready to launch electric Peugeot Scooters--another of its acquisitions--in Europe in the near future, though no firm launch date has yet been finalised.
As a group, Mahindra has been slow to break into the key market, bogged down for years in a legal dispute with estranged distribution partner Global Vehicles USA. It had developed a Scorpio for the US market, including a pickup truck but decided to drop those plans. It’s now looking to ride the new mobility megatrends of the millennial shared economy.
Even though the matter is “behind us and there is nothing pending,” Goenka admits that the strategy going forward will be far more cautious. “We have to look at US through a different prism than what we did 10 years ago. We have to be careful about selecting the right brand, focus on the right differentiator and distribution channels. Compared to Mahindra, Ssanyong may be an easier entry brand to leverage on,” he said. Mahindra owns the South Korean brand.
Mahindra predicts that millennials will increasingly opt for ride-hailing solutions for commuting and there will be a near total shift toward electric vehicles in that segment. To exploit such opportunities, the group is putting most of its energy behind electric cars.
“I don't believe the ride-sharing industry will be ruled or dominated as a monopoly or even an oligopoly, like the way it is in browsers or online shopping between Google, Facebook or Amazon. There will be multiple companies in ride sharing in different geographies and they will be segmented to tap the different needs of the customers,” said Mahindra. “We expect to invest in that space heavily to provide the mechanism of transport as well as offer transport solutions.”
Mahindra and cab aggregator Ola entered a strategic alliance last year to supply and finance vehicles for more than 40,000 drivers by 2018 with a successful pilot in Nagpur. Mahindra is looking at similar alliances on a national scale. The partnership, he said, is not exclusive and “we are free to partner, invest in others we deem fit. And we are open.” Electric vehicle maker Mahindra Electric Mobility Ltd, formerly Reva Electric Car Co., is part of the group.
(Source: The Econonomic Times)