M&M to make China a hub for tractor business

NEW DELHI: At a time when multinational auto companies are making India a hub for exporting, domestic heavyweight Mahindra and Mahindra plans to  make China the main base for catering to export commitments of its tractor business. The move by the company comes at a time when it is eyeing the top position in tractor sales globally.

Anjanikumar Choudhari, president of Mahindra’s Farm Equipment Sector, said China was emerging as an important market for Mahindra’s tractor business and could develop as the sole base for meeting tractor export commitments. “Certainly, this is something that is part of our long-term plans,” Choudhari told TOI when asked whether China could become the main manufacturing base for export models.

Mahindra has been rapidly expanding operations in China, the second-biggest tractor market globally after India. The company currently has two joint ventures in China, the last one formed in August this year when it signed a new venture with Yancheng Tractor. Yancheng, that sells tractors under the brand name of Huanghai Jinma, has product portfolio ranging from 16 HP to 125 HP. The company is also a leading exporter of tractors from China with a footprint in more than 60 countries, including the US, South America, Russia, Europe and Africa, making it all the more attractive for Mahindra to shift export production there.

Choudhari said the company could strike cost advantages in China once its new venture with Yancheng was completed. “The legal formalities are likely to take another 2-3 months. Once they are wrapped up, we will stabilize production and consider measures related to cost advantages,” he said.

He said the company will also shift production of some of the models of Mahindra that are currently being exported. However, he added that a "lot of development work” was required before shifting the entire export production to China. “It is a long process. The challenge in China is to achieve consistency in vendor quality. We have to work upon this first,” Choudhari said.

Anand Mahindra, V-C & MD of the Mahindra Group, had also highlighted the long-term plans from China during the acquisition of Yancheng. "The JV between M&M and Yancheng Tractor will further combine Indian entrepreneurial and managerial skills with Chinese competitiveness and efficiency. I am sure this formidable combination will contribute substantially towards realising our ambition to be the leading tractor manufacturer in the global market,” Mahindra said.