Wednesday, December 21, 2011

Mahindra Press Release Full of Holes

Mahindra & Mahindra Ltd hastily issued a press release on Saturday in response to the Mahindra Planet post from Thursday regarding the possible assembly of Mahindra pickup trucks in a Navistar-owned facility in Alabama.  Interestingly, Mahindra is falsely stating that MP believes that Navistar will be producing Mahindra TR20 and TR40 pickups.  It is MP’s understanding that Mahindra will produce these vehicles (build all components in India) and that Navistar will be the assembly partner and possible distributor for Mahindra vehicles in the USA.  This would be a partnership similar to the one Mahindra established in Brazil in 2008.  Brazilian company, Bramont, assembles and sells Mahindra pickups exclusively for the Brazil market. Mahindra produces the vehicles, Bramont assembles and distributes them. Read this article: Indian Mahindra Starts Production in Brazil

Never mind the fact that Mahindra also purposely accidentally misspelled the names of it’s own pickups as "T20 and T40", or that Navistar will not confirm or deny that they are involved in this project.  Very strange don’t you think?  Here is the Mahindra press release:
MUMBAI, India, December 17, 2011 /PRNewswire via COMTEX/ -- "There have been reports in certain quarters of media and online space stating that Navistar USA will produce Mahindra's T20 and T40 pick ups in Alabama, USA in 2012, which are completely baseless & incorrect. If & when there are any material developments, Mahindra & Mahindra Limited will communicate them directly and transparently."
Sources: As hyperlinked

Thursday, December 15, 2011

Revealed: US Mahindra Pickups to be Made in Alabama Beginning 2012

Mahindra Genio DC (TR40 US)

2013 Mahindra TR20 and TR40
Mahindra Planet has been working to confirm that a 2-million-square-foot facility in Muscle Shoals, Alabama which was recently leased by Navistar, will begin assembling Mahindra TR20 and TR40 compact diesel pickup trucks beginning in the first half of 2012 and sell them in the United States as 2013 models soon after.

Despite the infamous fallout and between Mahindra & Mahindra Ltd (Mahindra) and US importer/distributor, Global Vehicles (GV), Mahindra Planet understands that Mahindra has continued to work with Navistar to locate a suitable assembly location for Mahindra vehicles in the US.  Mahindra Planet was tipped regarding this potential news shortly after Navistar announced that they were signing a 10-year lease for the facility on September 27th.

A US Mahindra Truck Plant
The mile-long facility in Northwestern Alabama (about 70 miles west of Huntsville) will be leased by Navistar (International Trucks) beginning January 1st, 2012.  The 10-year lease was officially signed on October 24th.

A Navistar press release on the announcement does not disclose what product will specifically be produced at the former rail car manufacturing plant.  However, the company intends to make the facility a cornerstone of a planned expansion strategy.  The Alabama Trucking Association references state-filed documents which state that the purpose of the lease is for Navistar to engage in its “business of motor vehicle and related product manufacture and assembly”.

Requests for comment by Navistar, Mahindra, and Global Vehicles have gone unanswered.  However, sources near the project have stated that engineers from India have regularly visited the facility over the last 2 years, and that Navistar plans to assemble a pickup truck with a diesel engine from India there.  Navistar’s press release states that “Navistar intends to finalize its initial operating and product plans for the facility in the coming months, and expects to disclose those details by year end.”

Mahindra Genio SC (TR20 US)

The Navistar-Mahindra Connection
Navistar and Mahindra & Mahindra Ltd have a long-standing business relationship which reaches back to 1963 and continues to this day with a shared engineering and manufacturing joint-venture which produces Mahindra-Navistar heavy trucks for the Indian market.

Mahindra has repeatedly been rumored to be searching for an appropriate assembly facility in America since 2008.  Mahindra stated in January of 2011 that despite their dismissal of former import partner, Global Vehicles USA, they were open to partnering with Navistar to find a suitable location for assembling Mahindra Pickups specifically for the US market.

US Manufacturing Justification
Assembling the compact diesel pickups in America from India-made parts allows Mahindra to avoid the 25% Chicken Tax imposed on complete vehicles imported to the United States.  This has been a key part of Mahindra’s strategy to offer their compact diesel pickup trucks at a low price in order to successfully enter the highly competitive US light truck market.  Assembling the TR20 and TR40 in a "right-to-work" state like Alabama also has the potential to keep manufacturing costs low.

Navistar’s involvement, and the location of the new facility close to existing plants will (in Navistar’s own words) allow them to “capture synergies and efficiencies given the close proximity to Navistar’s two engine plants in Huntsville.”

Mahindra and Global Vehicles Await Arbitration Verdict
Global Vehicles and Mahindra & Mahindra are still awaiting an arbitration decision which will determine the fate of their tumultuous relationship and indicate which company will ultimately control import and distribution of Mahindra vehicles in the United States.  Despite the lack of a rendered verdict, it appears that Mahindra is moving forward with US-assembled pickups and will be producing vehicles here no matter the arbitration outcome.

If Global Vehicles retains distribution control, they will continue to service the nearly 350 dealers which they have established franchises with nation-wide.  If Mahindra is granted control of distribution, they may be able to utilize Navistar’s distribution resources, establish their own relationship with the dealers already set up by Global Vehicles, utilize their tractor distribution through Mahindra USA, or a combination of all three.

EPA Certification
WardsAuto reported in September that Mahindra has not submitted a formal application to the Environmental Protection Agency for a 2012 model-year federal emissions certification as they had for the 2011 model-year back in late 2010.  Mahindra still has until the end of 2011 to file for a 2012 model-year certificate.  However, it is more likely that Mahindra will wait until the beginning of 2012 to file for a 2013 model-year certificate for pickups they intend to sell as 2013 models.  The EPA has not returned MP’s request for comment.

WardsAuto also reported that “Mahindra & Mahindra has identified itself to the National Highway Traffic Safety Administration as a vehicle manufacturer and submitted the necessary information to sell its vehicles in the US”.  Mahindra Planet confirmed with the NHTSA that although no additional paperwork has been filed recently by Mahindra, any manufacturer may begin moving forward with their business plans without approvals or submitting crash test data.

Return of the Scout?
Alabama Govenor, Robert Bentley has stated that the lease agreement with Navistar has the “potential to be one of the largest economic development projects in the United States and will transform northwest Alabama”.

While not necessarily the return of an International-branded light truck like the old International Scout, this move will make Navistar and Mahindra a player in the North American light truck market (remember that Navistar no longer has to abide by a non-compete agreement with Ford).  It could also be a stepping stone for the entry of Mahindra’s recently unveiled XUV500 which was arguably designed purposely for the US market and is experiencing great success in India.

Mahindra XUV500
US Jobs
To take full advantage of state tax incentives used to lure Navistar to the Alabama facility, Navistar must employ at least 1,800 workers by the end of 2015.  Local news reports have stated that Navistar intends to eventually employ 2,200 workers at the facility and fully optimize the manufacturing capabilities of the plant. 

Navistar’s Secret
Despite their promise of creating over 2,000 new US manufacturing jobs and the Alabama govenor’s comments about this being one of the largest economic development projects in the US, Navistar is being curiously tight-lipped about what will actually be made at the facility.  Since the arbitration decision has not yet been made (word is that that a decision may not be made until after the New Year begins), an official announcement on what will be produced there has still not been made.  There is a correlation here.

Mahindra Is Not Dead
Mahindra Planet is convinced that plans are indeed in place to manufacture Mahindra vehicles in the US in 2012.  We believe that American Mahindra fans have something to look forward to in 2012.  Stay tuned as we learn more.

Sources: As hyperlinked
Photos: Mahindra & Mahindra Ltd.