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M&M targets SUV market in US

From The Financial Times| June 06,2007

Mahindra&Mahindra hopes to sell more than 10,000 of its Scorpio sport utility vehicles in the US by the end of the decade and will launch the SUV in the UK this year, the head of the group’s carmaking division told the Financial Times.

As part of India’s first foray into the world’s largest car market, the company plans to begin selling the SUV in the US in 2009.

M&M is launching sales of pick-up trucks to Australia this week and will begin assembling SUVs from kits in Brazil later this year.

“Our stated goal is to be known as global specialist players in SUVs and pickups,” Pawan Goenka, head of the group’s automotive unit, said.

The Mumbai-based industrial group also makes light commercial vehicles and is a leading exporter of tractors to the US.

M&M has been exporting SUVs to South Africa – its biggest foreign market – and has limited sales in Italy, France and Spain, where the vehicles are sold under the Goa brand.

The company is modifying its SUVs to meet US safety and emissions standards and will offer them in three variants under a still-undecided brand name.

The US market for truck-based SUVs – as opposed to crossovers, which are growing in popularity – has shrunk from a peak of about 1m a year to about 800,000.

Some of China’s emerging carmakers have begun limited exports to European and other foreign markets but none yet sell in quantity to the US. Italy’s Fiat and France’s Renault and PSA Peugeot Citro?n do not sell in the US for strategic reasons. M&M aims to sell “definitely above” 10,000 units a year in the US, Mr Goenka said, and about 1,000 in the UK.

“The Scorpio will be low-cost,” Anand Mahindra, the group’s vice-chairman and managing director, said.

The SUV would be priced $1,000 to $1,500 cheaper than comparable SUVs offered by General Motors, Ford Motor or Toyota, he said.

As American and European carmakers struggle to contain rising costs, India’s growing car industry is positioning itself as a hub for cut-rate automotive manufacturing, engineering and components supply.

Renault manufactures the Logan, its low-cost global car, in India in a joint venture with M&M.

India’s Tata Motors is developing the world’s cheapest subcompact car, due to be priced at just over $2,000 in its cheapest version when it debuts next year.

M&M says it invested only about $120m to design, develop, tool and launch the Scorpio, less than one-quarter the amount a US carmaker might spend. “We’re not going to go out and say, ‘this is the onslaught of the next Toyota’ but we want to be a globally competitive brand in the SUV business,” Mr Goenka said.


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