Daily Management Review

India’s Mahindra Takes Second Chances At U.S. Auto Market


India’s Mahindra Takes Second Chances At U.S. Auto Market
Indian auto major Mahindra & Mahindra (Mahindra) is taking a second shot at trying to be successful in the US market after about a decade since its first failed attempt. Last time, Mahindra had attempted to make it big in the US market with its low-cost pickup truck which failed and resulted in law suits by deals who demanded compensation of their franchise fees.
A more cautious "pay-as-you-go strategy" is being followed by Mahindra this time in the US, said the company’s North American chief executive Rick Haas. Mahindra is relaunching its brand with the Roxor which is a vehicle that resembles a vintage Jeep rather than starting off with a truck or passenger car, Haas said.
Haas told the media that the Roxor model, 3000 of which have already been built by Mahindra and priced at $15,000 each, it being used to communicate to customers and dealers alike in the US that the company is "acutely aware of our previous experience" in the US and that it is possible for the Indian automaker to offer a reliable product prior to the launch of some of its mainstream models for use on American roads.
"Getting burned makes you cautious," Haas said.
Mahindra joins a few European and Asian auto brand that are getting ready to enter the US market and is expecting to not only gaining through sales but also through boosting of their credibility which in turn can increase sale in their home countries
Plans for establishing beachheads in the world's second-largest market by sales have been announced by France'sPSA and China's Zotye and GAC. Pickup trucks, SUVs and crossovers are some of the most lucrative segments in the US.
However, according to most industry executives, the US market has matured and is most likely to slow down in demand. Moreover, the market already has intense competition with more than 40 auto brands and 300-plus models on offer.
"There's not a line waiting out the front door of every potential newcomer to North America of people saying 'I cannot wait for a new car to show up here today,'" said Larry Dominique, North American head of PSA, which has also taken a cautious approach to relaunching here.
The Peugeot brand will lead its U.S. return, PSA announced last month. This brand had been forced to leave the market because of failures about three decades ago.
In order to crack the nuances of the US auto market, new entrants must stand out in a crowd, say analysts and auto executives, in a manner in which Tesla has managed to portray itself.
Mark Wakefield, head of the North American automotive practice for consultancy AlixPartners believes that it would not be enough to just offer a cheap car. It would be a challenge for new entrants to deliver the higher quality of vehicles and the expensive safety features that US customers as well as US regulators demand.
"If you fail to deliver on that then you're a pariah in the market," he said.