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Mahindra May Use Navistar Plant to Make Scorpio, Editor - 2010-01-08
WSJ.com
NEW DELHI -- Mahindra & Mahindra Ltd. may use
one of Navistar International Corp.'s factories in
the U.S. to assemble its pickup trucks in the
world's biggest automobile market, a senior
Mahindra executive said.
Mahindra--India's biggest sport-utility vehicles
maker by sales--will likely decide on the plan by
December, Pawan Goenka, president of the
company's automotive division, told Dow Jones
Newswires in an interview.
The Mumbai-based company initially plans to
introduce a pickup, based on its Scorpio platform,
in the U.S. in March by importing it as fully-built
units from India. Deliveries will start in the April-
June quarter, he said late Thursday at the ongoing
New Delhi Auto Expo.
"Once we decide to assemble in the U.S., we would
look at Navistar's facilities to see if there's
something available which is right for us and if
that works out," Mr. Goenka said. "We will
certainly give priority to using Navistar's
facilities."
Mahindra and Navistar--via its International Truck
and Engine Corp. unit--currently operate two
joint ventures in India. Mahindra Navistar
Automotives Ltd., the first joint venture, was
formed in November 2005 to make trucks and
buses in India for the local and overseas markets.
A second pact to make diesel engines for the
vehicles was signed in 2007.
Mahindra plans to position the Scorpio pickup as a
cheaper and more fuel-efficient option in the U.S.,
where the government is promoting purchase of
such vehicles, to compete with bigger rivals
General Motors Co., Ford Motor Co. and Toyota
Motor Corp. The pickup will be sold via
Mahindra's U.S.-based distributor, Global Vehicles
Inc.
"Our distributor has 300 dealers who will sell our
vehicle," Mr. Goenka said.
In addition to the Scorpio, Mahindra produces
vehicle models such as the Bolero and Xylo. It also
makes tractors, three-wheeled auto rickshaws as
well as the Logan sedan via a joint venture with
French car maker Renault SA.
Mr. Goenka said Mahindra doesn't plan to buy a
factory in the U.S. for assembling its pickups and
will instead opt for contract manufacturing of the
vehicle.
Contract manufacturing of pickups will be a costeffective
option for Mahindra as "the investment
won't be more than a few million dollars," he said.
In addition to the U.S. plans, the company is
investing between 7 billion rupees ($153 million)
and 8 billion rupees in developing a new sport-utility
vehicle that will be introduced in India by
December 2010 or January 2011. The new SUV
will be positioned above its existing model S
corpio, which is sold between 696,000 rupees
and 1.14 million rupees at showrooms in New
Delhi.
"It (new SUV) is a global platform," Mr. Goenka
said. "We would expect to see a higher penetration
in the overseas market (with the new SUV) than we
currently have for our passenger vehicles."
Mahindra exported only 1,177 SUVs during April-
December 2009, a 40.5% decline from a year
earlier. That compares with a 30% rise in industry
exports of cars and SUVs from India during the
same period to 330,565 autos, according to the
Society of Indian Automobile Manufacturers.
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