M&M hopeful of doing well with its pick-ups and SUVs in the US market

Will US buyers take to diesel-powered M&M UVs and SUVs? Mahindra believes they will

Starting next year, Mahindra & Mahindra Ltd. (M&M) is hopeful that its utility vehicles and pick-up trucks will do well in the US market. Despite the shrinking market for SUVs and pick-up trucks in America, M&M believes it can still do well with a small pick-up, and later, a midsize SUV.

Pawan Goenka, President – Automotive Sector, M&M, has earlier admitted that the company did, in the passing, consider acquiring GM’s Hummer division, But Goenka also said that the acquisition will probably not make much sense for M&M. That indicates that M&M will probably go it alone in the US market, with Mahindra-badged vehicles.

M&M, which plans to start selling its pick-ups in the US from 2009, will offer only diesel-engines to begin with, and add hybrid vehicles to its lineup within the next two years. Goenka believes that since diesel engines generally offer better fuel economy than petrol engines, M&M vehicles will right away have an edge over the competition in the US market.

M&M also understands that what works in South America and Africa etc. is not likely to work in the US, since customers there would be more demanding. But the company is said to be already spending millions of dollars towards reworking and refining its vehicles to adapt them to US requirements.

To start with, M&M hopes to be able to sell at least 10,000 vehicles per annum in the US, which would allow the company’s US operations to break even. Mahindra's distribution partner in the US, the Atlanta-based Global Vehicles USA, has already signed up about 300 dealers through which M&M vehicles would be distributed.

The Mahindra name, in the US, is associated with tractors – M&M is one of the biggest players in the US market in that space. But to rework its brand image, M&M will be spending more than US$50 million per year, on advertising. Whether M&M will really be able to get US customers out of their Ford F150s and Dodge Rams and into Scorpio-based UVs remains to be seen…

Mahindra USA tops NAEDA survey

The Mahindra Group has announced that its 100 percent subsidiary, Mahindra USA has been rated highest in overall satisfaction amongst tractor manufacturers in a survey conducted by the North American Equipment Dealers Association (NAEDA).

NAEDA is the apex dealer association in the USA, and the survey comprised of 36 criteria, with the results being based on feedback from 1,309 tractor dealers in the US. ‘The US is a very important market for M&M's Farm Equipment Sector, and to top NAEDA's survey in overall satisfaction is a great honour,’ said Anjanikumar Choudhari, chairman, Mahindra USA.

Among others, the NAEDA survey took into account product quality and availability, parts quality availability, technical support, warranty procedures, manufacturer response to dealer needs and advertising and marketing support.

M&M's Farm Equipment Sector (FES) is among the top three farm equipment manufacturers in the world, and the company is the leading player in the Indian tractor industry.

M&M: Domestic sales up by 8.17% in June

Mahindra & Mahindra (M&M) has announced an increase of 8.17% in its domestic sales for the month of June. The company sold 18,179 units in June this year, against 16,805 units in June 2007.

M&M’s total sales, including exports, grew 8.78 % to 19,371 vehicles, against 17,807 units in the corresponding period last year. Exports for the month stood at 1,192 vehicles, an increase of 18.96% on the 1,002 units in the year-ago period.

In the passenger car segment, Mahindra-Renault sold 12,662 units of the Logan in June, compared to 12,977 units sold during June last year.

M&M to invest Rs 200 crore in First Choice Wheels

Mahindra & Mahindra, bullish on the growing used car business in India, plans to invest Rs 200 crore in First Choice Wheels, its used car business division. M&M also hopes to take First Choice public within the next three years.

‘By 2013, our plan is to have 300 outlets across 92 cities. This could entail an investment of Rs 200 crore,’ says Vinay Sanghi, CEO, First Choice Wheels. ‘As of now, we are looking at debt and internal accruals, apart from the recently raised funds to finance our expansion. At the same time, we are also looking at an IPO in three years time,’ he adds.

First Choice currently has 70 outlets in 40 cities. M&M currently has a 73 percent stake in FC and even after the IPO, it will continue to be a majority shareholder in the company. With a significant presence in north, south and west, FC is now looking at expanding in the eastern part of the country. ‘We are looking at 10-12 cities in East, including Kolkata, Ranchi, Guwahati. We need to have stronger presence in the region,’ says Sanghi.

With its impending expansion, First Choice will have company-owned as well as franchise outlets, the split being about 70-30.

M&M aim for 300 First Choice outlets across India

Mahindra & Mahindra has raised Rs 80 crore through a private placement agreement with Phi Advisors, which will help the M&M expand its used car business. M&M’s First Choice Wheels, India’s largest chain of multi-brand pre-owned cars, is now looking at setting up a chain of 300 franchise outlets across the country.

First Choice Wheels is a part of Mahindra’s after–market sector, a new business vertical that aims to replicate the new vehicle ‘eco-system’ in the pre-owned vehicle space. ‘Our vision is to corporatise the pre-owned used car business, which is a pioneering effort by the Mahindra Group. First Choice is at the threshold of its next phase of growth and the infusion of funds and a partner like Phi Advisors would help transform the company into a truly pan-Indian player,’ said Rajeev Dubey, President – After-market Sector, M&M.

‘First Choice has gained the first mover advantage as the leading organised player in the pre-owned car market. With an excellent team and systems in place, we are targeting 100,000 vehicle sales per annum by 2013. With this funding, we will increase our reach to over 300 outlets. This will include 30 Franchise Super Stores, each of which will have a stock of over 200 cars on display,’ said Vinay Sanghi, CEO – First Choice Wheels.

The pre-owned car market in India, which currently stands at 1.5 million cars per year, is expected to grow exponentially in the coming years. Analysts reckon that the Indian used cars market will be worth Rs 50,000 crore in five years from now, and this will create the need for organized peripheral businesses to support the pre-owned car industry.

Phi Advisors may pick up stake in Mahindra First Choice

Phi Advisors, an India-based PE fund, may pick up an approximately 10% stake in Mahindra First Choice (MFC), M&M’s used-car business division. M&M is said to be offering equity in MFC in order to raise funds – if the deal goes through, Phi Advisors could be investing up to Rs 80 crore in the company.

If Phi Advisors picks up 10 percent, it would leave M&M with a 60% holding in MFC. HDFC (9%), Sah & Sanghi (11%) and Goldman Sachs (3.68%) also hold stakes in MFC, which is a part of M&M’s after-market sector.

M&M is also said to be looking at the possibility of global tieups for MFC, to expand its used cars business. Mahindra First Choice hopes to have more used-car superstores across the country, which would stock up to 100 – 200 cars each. The company, which currently sells around 10,000 cars per annum from its 70 outlets, hopes to increase its sales by ten times over the next five years, and increase the number of its outlets to around 120.

Mahindra Tractors announces on-the-spot loans in eight States

Mahindra & Mahindra Ltd. (M&M) has tied-up with Mahindra Finance to provide on-the-spot tractor loans to farmers through its dealerships. The ‘On-the-Spot-Loan Mahotsav’ is being held across Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra, Punjab, Haryana, Gujarat and Rajasthan. The Loan Mahotsav will end on the 7th of July.

Anjanikumar Choudhari, President – Farm Equipment Sector, Mahindra & Mahindra Ltd., said ‘The on-the-spot tractor loan scheme is an opportunity for our valued customers to purchase Mahindra Tractors at attractive rates in a tough market. At Mahindra, we are committed to increasing rural prosperity and this initiative is part of that endeavour.’

‘Quick processing of documentation and single-window clearance will allow farmers across the country to purchase tractors with minimum time delay. Moreover, Mahindra Finance’s vast rural network will ensure that even customers in the farthest reaches of the country can avail of this scheme,’ said Ramesh Iyer, Managing Director, Mahindra Finance.

Mahindra is the third largest tractor company in the world. It is also the largest manufacturer of tractors in India with sustained market leadership of 25 years. It designs, develops, manufactures and markets tractors as well as farm implements.

The company has also found significant success in the international markets. Mahindra (China) Tractor Co. Ltd. manufactures tractors for the growing Chinese market and is a hub for tractor exports to the USA and other western nations. M&M has a 100% subsidiary, Mahindra USA, where it assembles 14 products for the American market.

Goldman Sachs to pick up 3.68% stake in M&M for Rs 700 crore

American fund house major, Goldman Sachs will be investing Rs 700 crore towards picking up a minority stake in Mahindra & Mahindra. The investment will be made via Goldman Sachs’ Cybrentity Goldboot Holdings, which is based in Cyprus. The proposal has been cleared by M&M’s board of directors and the Foreign Investment Promotion Board (FIPB).

In this deal, Goldman Sachs will be buying 93.95 lakh unsecured and compulsorily convertible debentures (FCDs) of face value Rs 745 each, adding up to Rs 700 crore. Later, by converting its debentures into equal number of equity shares over a period of 18 months, the company will have a 3.68 percent stake in M&M.

M&M plans to use the money it gets from this deal towards boosting its automotive and tractor businesses.

M&M may consider launching Dacia Sandero in India

The Dacia / Renault Sandero hatchback looks ideal for the Indian market. Will M&M bring this car to India in 2009-10? Yes, we think so!

While the Mahindra-Renault Logan sedan has gotten off to a relatively slow start in the Indian market, M&M is not about to give up anytime soon. In fact, according to some reports, the company may soon be looking at the Dacia Sandero hatchback, which could come to India by 2010.

First shown at the Geneva Motor Show this year, the Sandero was designed as an inexpensive hatchback for Europe. The car is also being sold in the South American market as the Renault Sandero. The Sandero is based on the same B0 platform as the Logan, which should make it reasonably easy for M&M to launch the car in India.

It’s a widely accepted fact that any auto manufacturer in India who aspires to go for large volumes must have a value-for-money compact hatchback in its lineup. And the Sandero could be just that car for Mahindra.

Abroad, the Sandero is available with a range of 1.4- and 1.6-litre petrol engines, as well as two 1.5-litre common-rail diesels. For India, M&M could possibly look at the 1.4 petrol and 1.5 diesel engines, both tuned for maximum fuel-economy and perhaps with the option of LPG or CNG compatibility.

With its spacious cabin, rugged build quality and comfortable ride, the Mahindra-Renault Sandero, if priced at around Rs 4.5 lakh, should be in a good position to take on cars like the Hyundai Getz, Chevrolet U-VA, Maruti Swift and Fiat Palio.

GM's Hummer up for grabs, Tata or M&M might want to buy the brand

Not your usual, small, fuel-efficient family car, eh? But this, and a few other vehicles that are very similar to this, is all that Hummer makes...

Indian automotive companies seem to be on a big-time acquisition spree right now. After the Tata JRL deal, the next big thing may be GM’s Hummer, with its huge, cult-status MUVs and SUVs.

In the face of fuel price hikes worldwide, the market for very large utility vehicles, SUVs and American-style pick-up trucks is shrinking already. And in response to that, GM, which wants to start making smaller, more fuel efficient vehicles, has decided to sell the Hummer brand.

The merchant bankers who’ll be handling the sale of Hummer are said to have approached Tata Motors and Mahindra & Mahindra, though it remains to be seen if either company would be interested in taking things forward.

It also isn’t clear how either Tata or M&M will benefit from buying Hummer, since the worldwide market for large, fuel-guzzling UVs is expected to shrink and perhaps even disappear over the next decade…

External links:
GM: Trucks out, cars in! (on CNN Money)

Logan sales continue to be poor, Mahindra-Renault to launch LE version in July

With its dated styling and poor interiors, the Logan hasn't been selling well in India. Is that why Mahindra-Renault is launching an LE variant next month?

Next month, M&M will be launching a Limited Edition version of the Logan sedan, which will be aimed specifically at higher-end customers.

To be launched in July, the Mahindra Renault Logan LE will be fitted with a new CD player, better upholstery and snazzier interiors. The LE will also be fitted with safety equipment like antilock brakes (ABS) and airbags.

The Mahindra Renault Logan was launched in May 2007, but due to its dated styling and rather chintzy, low-rent interiors, the car hasn’t been able to take on the competition from Honda, Ford, Hyundai and Maruti etc.

Mahindra Renault only managed to sell 1,531 units of the Logan in May 2008, down from 2,786 units in May last year. The question is, with so many other cars that are better built, more refined, more contemporary looking, and boast of better fit and finish, can a tarted-up Logan really be successful in the Indian market? We think not!

M&M acquires controlling stake in Engines Engineering S.p.A

Mahindra & Mahindra Ltd. (M&M) has signed an agreement with Engines Engineering S.p.A., agreeing to acquire 100% stake in Engines Engineering S.r.l, the new legal entity which will be formed by transferring the business of Engines Engineering S.p.A. The transaction is subject to receipt of necessary approvals.

Hemant Luthra, President, Mahindra Systech, said ‘Continuing its vision to create ‘an art to part’ entity, M&M through Systech has been looking at acquisition of a reputed design house. Systech’s engineering services business has grown by a factor of ten in the last four years and continues to grow at the same pace as it provides its unique domain knowledge in the field of automotive and aerospace design.’

‘Demand for offshoring of engineering services has been growing rapidly. Acquiring a design house like Engines Engineering provides us the perfect vehicle to penetrate into markets of Europe, China and Russia. It also gives us the impetus to scale up the business, have access to market & technology along with management skills. Mahindra Engineering in India has over 1,000 engineers in India which provide high end cost effective solutions and can support the offshore needs and technical skills of Engines Engineering,’ said Luthra.

Alberto Strazzari, Chairman of Engines Engineering S.p.A, said, ‘Engines Engineering has been operative for the last three decades and I am keen to partner with M&M to fuel growth. I have a great comfort level with M&M, having worked together with them for the last two years. Our relationship has now been strengthened and we can combine our technological strengths, customer base and lower cost engineering excellence to fuel growth in Europe and India.’

Anand Mahindra, Vice Chairman and Managing Director, Mahindra Group, said ‘I am delighted to welcome Alberto Strazzari and his management team into the Mahindra family and look forward to harnessing their expertise in increasing the depth of our Engineering and Design Services offering. This will accelerate the growth of Mahindra Engineering Services in what we believe is the next great opportunity for India and enable it to leverage its engineering talent for the benefit of customers across the world. Engines Engineering helps us combine the Italian flair for design with Mahindra’s domain expertise and bring it to the doorstep of its European customers. Mahindra Systech has the mandate to build globally competitive businesses in selected verticals and this acquisition greatly enhances its capability to do so.’

Based in Castenaso, near Bologna, Engines Engineering’s revenues were approximately US$12 million in the last fiscal. EE is in the business of two-wheeler design and developing of motorcycle prototypes. The company was originally founded in 1979 by Alberto Strazzari, who currently holds an 85% stake in EE.

Engines Engineering has done design-related work for European motorcycle companies like Benelli, Beta, Ducati, Gilera, and Malaguti, and also for Japanese companies like Honda and Yamaha.

M&M farm equipment sector records 26% growth in tractor sales in May 2008

Mahindra & Mahindra’s Farm Equipment Sector (FES) posted a strong performance in May 2008. M&M Ltd., Punjab Tractors Ltd. and Mahindra Gujarat Tractors Ltd. together sold 11,879 tractors in the domestic market in May 2008, a growth of 29% over the corresponding month last year.

During this fiscal, FES’ cumulative sales grew by 19% in the domestic market while total sales including exports grew by 26% in May ’08, and 16% cumulatively.

‘After a steady start in April, sales in May have been driven by the success of new models launched at the end of last year as well as the very successful re-launch of the Arjun series. As a result, M&M Ltd.’s tractor sales this month have grown by 19% in the domestic market. The total sales of Punjab Tractors have shown excellent improvement with a growth of 76% over May 2007 and a cumulative growth this fiscal of 78%. Mahindra Gujarat Tractors has also improved total sales in the month by 31%,’ said Anjanikumar Choudhari, President – Farm Equipment Sector, Mahindra & Mahindra Ltd.

M&M records 32.3% cumulative growth in May 2008

Mahindra & Mahindra has announced that its sales, including exports, grew by 32.3% in May ’08, with total sales of 40,683 vehicles as against 30,748 vehicles in the corresponding period last year. Domestic sales in May ’08 stood at 19,296 units as against 17,079 units in May ’07, a 13% increase.

Mahindra began the year on a positive note with a spectacular 58.5% increase in domestic sales in April ’08, and this upward trend continues with strong growth in May ’08.

Mahindra Renault also sold 1,531 units of the Logan in May 2008, while M&M’s automotive sector clocked exports of 1,357 vehicles in May ’08 as against 802 units in the corresponding period last fiscal.

M&M launches its Pik Up and Scorpio in Turkey

Mahindra & Mahindra Ltd. (M&M) has announced the introduction of the Mahindra Pik Up and the Mahindra Scorpio in Turkey, in partnership with ILCE Otomotiv Servis ve Ticaret A.S., a group company of the ILCE Group.

‘We are delighted to launch our international range of vehicles in Turkey which, with its vibrant and rapidly growing automobile market, is of strategic importance to us. Mahindra vehicles have carved a niche for themselves in Italy, Spain, South Africa, Egypt, Brazil, other South and Central American and Australian markets. I am sure that Turkey will be no exception. The ILCE Group, with its extensive dealer network and in-depth knowledge of the Turkish auto industry, will also contribute in large measure to our success,’ said Dr Pawan Goenka, President - Automotive Sector, Mahindra & Mahindra Ltd.

‘Introducing the Mahindra Pik Up and Mahindra Scorpio range in the local market is in tune with our objective of offering customers world-class vehicles which incorporate quality and technology of an international standard,’ said Ilhan Cetinkaya, founder, ILCE Otomotiv Servis ve Ticaret A.S.

Established in 1982 by Ilhan Cetinkaya, one of the most respected figures in the Turkish auto industry, the ILCE Group is active in the finished motor vehicle logistics and transportation fields as well as the automotive industry. Currently, ILCE Automotive has tied up with Mahindra & Mahindra Ltd. as its distributor of LCVs and tractors. The company also manufactures Mahindra tractors within Turkey. As of May 2008, ILCE is operating at 10 sales points in 8 cities and has 22 service centers in 19 cities.

M&M Q4 profit down by 6.4pc

Mahindra & Mahindra (M&M) has announced a 6.4% drop in the company’s fourth-quarter profit, attributed to rising input costs, especially of steel and aluminium. In fact, the company expects a further rise in input costs this year, of up to 12%.

‘Volatility in steel prices and rise in the prices of crude is a concern for the industry. We will have to monitor how the cost will change and what way it can be passed to consumers on a regular basis,’ said Bharat Doshi, executive director (finance and corporate affairs), M&M.

During Q4 of the current fiscal, M&M’s profit went down to Rs 221 crore, while the figure was Rs 236 crore for the same period last year. Net sales for Q4 in FY08 grew by 15.5 percent, to Rs 3,148 crore. The company saw a 44.48 percent growth in sales of its utility vehicles in April, with 17,679 vehicles being sold. The company also increased its market share in the utility vehicle segment from 46.6 percent to 51.5 per cent during the quarter.

For FY08, the company reported a net profit of Rs 1,103 crore, a rise of 3.3 percent over the corresponding period last year. Net sales for the year grew by 14.7 percent to Rs 11,503 crore. M&M’s operating margin for the period dropped from 12.5 percent to 11.6 percent.

In the farm equipment segment, the company sold 90,509 tractors in 2007-08, a drop of 4.7 percent against the previous year. However, it maintained its market share of 29.9 percent.

M&M's consolidated net profit for the current fiscal rose 4.9 percent to Rs 1,571.12 crore, while consolidated net sales for the company grew by 35 percent to Rs 23,774.79 crore, as income from subsidiaries grew in the period. M&M has earmarked a capital expenditure of Rs 2,000 crore for FY09, which it plans to fund through internal accruals.

M&M to buy controlling stake in Kinetic

As anticipated, M&M has gone ahead and signed a term sheet with the Pune-based Kinetic, and will be picking up a 76 percent stake in the company’s two-wheeler manufacturing division, which is currently valued at about Rs 120 crore.

M&M is, reportedly, in the process of doing due diligence of Kinetic’s books and assets and if things go well, the final deal could be struck in the next two months.

Though senior officials from both companies refuse to comment, the likelihood of M&M picking up a controlling stake in Kinetic would be quite high. Kinetic needs more money for R&D, product development and marketing activities, while M&M wants to get into the two-wheeler segment in a big way. This deal, if it goes through, could be beneficial for both parties.

External links:
An interview with Uwe Achterholt, Head - Automobile Vertical, KPMG

M&M may buy stake in MV Agusta

From left: Claudio Castiglioni, owner of the legendary MV Agusta, and Anand Mahindra, the man who may buy a controlling stake in Cagiva and MV Agusta

Some time ago, we had reported that Tata Motors might be picking up a stake in the legendary Italian superbike manufacturer, MV Agusta. Now, while Tata may or may not still be interested in the deal, Mahindra has also evinced interest in the Italian bike manufacturer.

M&M, which has already bought a controlling stake in the Italian automotive design house, Stile Bertone, may now at buying a majority stake in MV Agusta. With little money for new bike research and development, low production and limited sales, MV Agusta has been in financial trouble for some time. The owner, Claudio Castiglioni is looking for potential investors/partners, and Mahindra might just fit the bill.

Another ailing Italian bike manufacturer, Benelli was bought out by a Chinese company some time back, and with Chinese money helping in the development of new models, Benelli seems to be back on track. It could be a similar story with MV Agusta, if the Mahindras do pick up a stake in the company.

It’s earlier been said that M&M has been looking at getting into the bike segment, but the UV maker has been looking at the low-cost, entry level motorcycles segment, while MV Agusta only makes high-end, high-performance superbikes that are some of the most expensive two-wheelers in the world. So, there seems to be no immediate synergy between the two companies. However, if Mahindra does pick up a stake in MV, it will immediately provide the company with a foothold in the global motorcycle market.

M&M may buy Kinetic's two-wheeler manufacturing division

Mahindra & Mahindra (M&M) is, reportedly, in talks with Kinetic, with a view to acquiring the Pune-based two-wheeler manufacturing company. M&M has been interested in getting into the two-wheeler segment for the last five years, and now, rather than getting into the segment on its own, the company is exploring this acquisition route.

After it split from Honda, Kinetic has not been doing very well, despite getting into international tie-ups with SYM of Taiwan, Hyosung of Korea and Italjet of Italy. Kinetic’s pathbreaking initiatives in the Indian two-wheeler market – in the context of being the first company to explore the CBU segment with its Comet and Aquila bikes, and getting in bigger scooters like the Blaze – have not been very successful.

Things may change at Kinetic if the company is bought over by Mahindra, since the latter are certain to bring in better management skills (Kinetic remains a family-owned and managed company today.) Though both companies deny it completely, both are said to be in the final stages of due diligence. If things go through, M&M is expected to pick up a majority stake in Kinetic, for anything between Rs 80 crore to Rs 100 crore.

Mahindra launches Pik Up Double Cab in Paraguay

The Mahindra Pik Up Double Cab is going places...

Mahindra & Mahindra Ltd. (M&M) has announced the launch of its Pik Up Double Cab in Paraguay, in partnership with the Rieder Group.

‘The Mahindra Pik Up Double Cab is part of our global range of vehicles and has been successfully launched in several markets in South America, including Peru, Chile and Brazil. With its stylish looks and rugged nature, the Pik Up is well suited for the international market and I am sure that the vehicle’s unique value proposition will also appeal to customers in Paraguay.

We are also pleased to partner with Motomarket of Rieder & CIA.S.A.C.I., one of the country’s most respected business groups and we are sure that their keen understanding of the market and extensive dealer network will contribute to the success of the Mahindra Pik Up in Paraguay,’ said P N Shah, executive vice president , International Operations, Mahindra & Mahindra Ltd.

‘We are delighted to be associated with Mahindra & Mahindra which is recognized as a prestigious auto brand across the world. Over the past few months, M&M has established a significant presence in South America and we are sure that the Mahindra Pik Up will emerge as the diesel offroader of choice in Paraguay as well,’ said Jose Rieder, Director of the Rieder Group

The Mahindra Pik-Up is a tough, workhorse of an MUV, which is available in 4x2 and 4x4 variants. The vehicle is ideal for farm, commercial and recreational use.

Mahindra Pik-Up Double Cab – Technical details:

2498cc, four-cylinder, turbocharged, intercooled, Euro II-compliant engine

100bhp@3800rpm, 24.5kgm of torque at 1800rpm

Five-speed manual transmission

AC, power steering, power windows, central locking and audio System

ABS and alloy wheels are optional

The Rieder Group, established 73 years ago, has interests in cattle farming, timber and telecommunications. Besides Mahindra, the company is also the distributor for Volvo, Renault and Valtra. It has 35 sales agencies and authorized workshops across Paraguay.