Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit

TusharK · 6th November 2017, 13:06

Thanks to Ravi Nair for bringing this to our attention!

Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit-mahindra.jpg

Mahindra is planning to set up a new assembly plant in Detroit, making it the first Indian manufacturer to set up such a facility in the U.S. The company is expected to make an announcement regarding the same during a press conference scheduled for November 20, 2017.

The 4,00,000 sq.ft. facility is expected to come up on Rex Road in Auburn Hills. It will be the first new automobile plant in the region for 25 years.

According to a report published in July 2017, Mahindra has invested US$ 1.5 billion to set up a new manufacturing plant in Detroit. The new facility is expected to employ 3,000 people and expected to generate US$ 2.5 billion in revenue. According to media reports, the company plans to build off-road utility vehicles at the new facility.

Mahindra's technical centre and North American headquarters is situated in Troy, Michigan. The company also has a 2,50,000 sq.ft. warehouse in Pontiac.

Mahindra has been trying to enter the U.S. passenger car market for a long time now. While the company has a large distributor base for tractors in the country, it has not launched a passenger car yet. Recently, it bagged a prototype contract for US Postal Service delivery vehicles.

Source: Automotive News

ajmat · 6th November 2017, 13:41

Sounds impressive but things are up in the air until they have the long term contract.

Remember - land in those areas is dirt cheap and low hassle. Add to that local grants and sops to create jobs make it pretty easy to set up. The fun will be handling unions and ensuring rules, regulations, liability etc are observed,

anjan_c2007 · 6th November 2017, 17:47

Quote:

Originally Posted by TusharK

Thanks to Ravi Nair for bringing this to our attention!

Attachment 1693100

Mahindra is planning to set up a new assembly plant in Detroit, making it the first Indian manufacturer to set up such a facility in the U.S. The company is expected to make an announcement regarding the same during a press conference scheduled for November 20, 2017.

Source: Automotive News

Its a dream come true for M and M who were struggling to get into the US market with the Scorpio Getaway, till a few years ago.

In fact while on a visit to India last fortnight ( Oct 25, 2017) Mr Rex Tillerson, the US Secretary of State had made a statement that Mahindra will be having its own assembly plant in Detriot , Michigan.

aargee · 6th November 2017, 22:58

Quote:

Originally Posted by ajmat

The fun will be handling unions and ensuring rules, regulations, liability etc are observed,

My reply is on lighter side, if Mahindra can handle labor union in India, they can handle anywhere else in the world

aaychat · 7th November 2017, 10:00

If the new TUV300 design is anything to go by, what they really need to invest in is a new design lab. New manufacturing plants focussed on market expansion is fair but ultimately, if they do not make big strides on the design and quality front, they will not be successful.

Learn from Hyundai. Studying their America experience can be really valuable for Mahindra.

GTO · 7th November 2017, 10:50

Detroit is perhaps the worst location now to open a new factory, but Mahindra hasn't chosen it for costs or productivity - it's to send a message to the Americans. Similar to how Toyota opened up a pickup truck plant in Texas!

Mahindra could have some sales potential at the bottom-end of the market, in particular with cheap pickup trucks for use on farms.

VW2010 · 7th November 2017, 12:57

And Mahindra may get govt backing and financial support to set up the market in Detroit(dead city).

It is a bold move backed with some research and potential to build a market. They already have their plants set at cheaper cost locations and can build a hybrid model.

Serves both the American economy and their own P&L as their revenue shifts to better currency.

Latheesh · 7th November 2017, 13:16

Quote:

Originally Posted by GTO

Mahindra could have some sales potential at the bottom-end of the market, in particular with cheap pickup trucks for use on farms.

Yes, their farm equips have decent brand image in the US market. I know at least couple of people who own Mahindra tractors in the US.

OrangeCar · 7th November 2017, 16:12

Very bad move, IMO.

American Market: Highly competitive. Size of the market is pretty stagnant, even though the market is big. The most developed market with mature products. Does M&M have a product for this market? I am afraid not!

American Needs: I would broadly classify the market into two categories. One, which goes by legacy. Hardcore Chevy fans, Dodge fans - they don't care if they are fuel guzzlers, or if they are not refined. M&M will not be able to be part of this 'cult' culture. The other one, is the sensible group that looks for resale value, low maintenance costs, high fuel efficiency etc. such as Hondas, Toyotas, Hyundais. Does M&M fit in this category? Nope! Now, there is a new category coming up - electric. M&M is still new and does not have a decent product with considerable range.

American Regulation: US regulation is pretty strict. And penalties are huge. Will M&M be able to face any litigation due to its inherent niggles or part failures? Something like XUV500 alloy wheels giving away! If I recollect correctly, M&M had faced a litigation from one of its distributor really long ago, when they first tried to enter the market. This is the scariest part for me. American consumers wont take niggles and part failures lying down. Activist consumers will chew you, and will be supported by well established regulators.

All in all, I feel M&M is grossly under prepared to be entering the world's most advanced auto market. Risks are way too high. I wish they first concentrated on their home market India. Gain market here (they have less than 10% market share in their own market!). Then get adventurous. Otherwise you will be damaging your brand name in US - for ever!

And investors in M&M stock, please take note of this potential investment going sour.

Mad Max · 7th November 2017, 16:29

While it would be interesting to see how they navigate the notorious Detroit union cartel, it could be potentially an export-based plant providing a base to Mexico and the Caribbean countries. I'm sure with Trump as the leader, they are going all out to protect their market and this could be a brilliant move to get building quickly with government protection.

What's interesting to see would be their revenue vs. margin. Typical labor laws compounded with high commercial insurance requirements brought almost all of the major companies to their knees. M&M has to sell like hot cakes elsewhere for the next 4-5 years to compensate for the initial burden.

One other benefit I see is the sourcing components such as transmissions / electronics from local American plants and then transferring them to other country products through internal transfers / accounting. So what may cost x if directly sourced from the US could be lower if bought in the US and then transferred to India. In other words, impex jugaad.

chpk · 8th November 2017, 01:30

Quote:

Originally Posted by OrangeCar

Very bad move, IMO.

I think M&M would have definitely discussed those points. This might just be a PR stunt to throw some weight behind their USPS prototype contract or they might be even considering a product from Ssangyong and nothing from Mahindra's stable. Look at Hyundai/Kia, they are what they are today only because of the ultra competitive market in USA.

ashutoshb · 20th November 2017, 19:34

Mahindra USA has a press conference scheduled to take place in Detroit, later today.

They have this website https://comingsoon.mahindrausa.com

It appears they are going to launch new tractors and ab Off road Utility Vehicle.

They also published a teaser video of the Off road UV on 17th November, 2017:

https://www.youtube.com/watch?v=rEPEQY8bW8g

A screen grab of the video is below:

ritz3645 · 20th November 2017, 20:17

Mahindra sells tractor's in US. Wish Mahindra take over the discontinued Saturn brand, do production in India and global sales including India. It is a tested brand.

Thermodynamics · 20th November 2017, 21:18

Quote:

Originally Posted by GTO

Detroit is perhaps the worst location now to open a new factory, but Mahindra hasn't chosen it for costs or productivity - it's to send a message to the Americans

Quote:

Originally Posted by OrangeCar

Now, there is a new category coming up - electric. M&M is still new and does not have a decent product with considerable range.

M&M were one of the earliest to launch EV in India. Our limited infrastructure makes little business sense. I Guess, this initiative could give them a base if they want to continue their vision for EV. This could give them access to a market that is and will be better equipped to support EV in near future.

ashutoshb · 21st November 2017, 04:12

They are going to build the Thar there. That too, around 12,000 a year.

Strangely, the press release doesn't mention anything specific related to it. It only says they will build an 'off-highway vehicle'.

However, the local media gives more details.

Detroit News says that, it will be called the Roxor. How it looks, won't be revealed till the end of this year.

Detroit Free Press says that it will be an all-terrain jeep-like vehicle, to be called the Roxor, which will be a variant of the Thar.

Now, why the 'off-highway' tag? My best guess is the strict crash norms for on-highway / on-road vehicles in the US, which the Thar wouldn't have passed.

6th November 2017, 13:06	#1
TusharK Senior - BHPian Join Date: Jul 2017 Location: Pune Posts: 6,250 Thanked: 55,622 Times	Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit Thanks to Ravi Nair for bringing this to our attention! Mahindra is planning to set up a new assembly plant in Detroit, making it the first Indian manufacturer to set up such a facility in the U.S. The company is expected to make an announcement regarding the same during a press conference scheduled for November 20, 2017. The 4,00,000 sq.ft. facility is expected to come up on Rex Road in Auburn Hills. It will be the first new automobile plant in the region for 25 years. According to a report published in July 2017, Mahindra has invested US$ 1.5 billion to set up a new manufacturing plant in Detroit. The new facility is expected to employ 3,000 people and expected to generate US$ 2.5 billion in revenue. According to media reports, the company plans to build off-road utility vehicles at the new facility. Mahindra's technical centre and North American headquarters is situated in Troy, Michigan. The company also has a 2,50,000 sq.ft. warehouse in Pontiac. Mahindra has been trying to enter the U.S. passenger car market for a long time now. While the company has a large distributor base for tractors in the country, it has not launched a passenger car yet. Recently, it bagged a prototype contract for US Postal Service delivery vehicles. Source: Automotive News
	(13) Thanks

6th November 2017, 13:41	#2
ajmat Team-BHP Support Join Date: Feb 2004 Location: Bangalore Posts: 14,858 Thanked: 27,925 Times View My Garage	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit Sounds impressive but things are up in the air until they have the long term contract. Remember - land in those areas is dirt cheap and low hassle. Add to that local grants and sops to create jobs make it pretty easy to set up. The fun will be handling unions and ensuring rules, regulations, liability etc are observed,
	(5) Thanks

7th November 2017, 10:00	#5
aaychat BHPian Join Date: Jul 2016 Location: Pune Posts: 61 Thanked: 250 Times	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit If the new TUV300 design is anything to go by, what they really need to invest in is a new design lab. New manufacturing plants focussed on market expansion is fair but ultimately, if they do not make big strides on the design and quality front, they will not be successful. Learn from Hyundai. Studying their America experience can be really valuable for Mahindra.
	(2) Thanks

7th November 2017, 10:50	#6
GTO Team-BHP Support Join Date: Feb 2004 Location: Bombay Posts: 70,497 Thanked: 300,308 Times View My Garage	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit Detroit is perhaps the worst location now to open a new factory, but Mahindra hasn't chosen it for costs or productivity - it's to send a message to the Americans. Similar to how Toyota opened up a pickup truck plant in Texas! Mahindra could have some sales potential at the bottom-end of the market, in particular with cheap pickup trucks for use on farms.
	(5) Thanks

7th November 2017, 12:57	#7
VW2010 Senior - BHPian Join Date: Dec 2010 Location: electricity Posts: 2,763 Thanked: 3,412 Times	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit And Mahindra may get govt backing and financial support to set up the market in Detroit(dead city). It is a bold move backed with some research and potential to build a market. They already have their plants set at cheaper cost locations and can build a hybrid model. Serves both the American economy and their own P&L as their revenue shifts to better currency.
	(2) Thanks

7th November 2017, 16:12	#9
OrangeCar BHPian Join Date: Oct 2016 Location: Bengaluru Posts: 254 Thanked: 1,336 Times	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit Very bad move, IMO. American Market: Highly competitive. Size of the market is pretty stagnant, even though the market is big. The most developed market with mature products. Does M&M have a product for this market? I am afraid not! American Needs: I would broadly classify the market into two categories. One, which goes by legacy. Hardcore Chevy fans, Dodge fans - they don't care if they are fuel guzzlers, or if they are not refined. M&M will not be able to be part of this 'cult' culture. The other one, is the sensible group that looks for resale value, low maintenance costs, high fuel efficiency etc. such as Hondas, Toyotas, Hyundais. Does M&M fit in this category? Nope! Now, there is a new category coming up - electric. M&M is still new and does not have a decent product with considerable range. American Regulation: US regulation is pretty strict. And penalties are huge. Will M&M be able to face any litigation due to its inherent niggles or part failures? Something like XUV500 alloy wheels giving away! If I recollect correctly, M&M had faced a litigation from one of its distributor really long ago, when they first tried to enter the market. This is the scariest part for me. American consumers wont take niggles and part failures lying down. Activist consumers will chew you, and will be supported by well established regulators. All in all, I feel M&M is grossly under prepared to be entering the world's most advanced auto market. Risks are way too high. I wish they first concentrated on their home market India. Gain market here (they have less than 10% market share in their own market!). Then get adventurous. Otherwise you will be damaging your brand name in US - for ever! And investors in M&M stock, please take note of this potential investment going sour.
	(4) Thanks

7th November 2017, 16:29	#10
Mad Max BHPian Join Date: Nov 2007 Location: Bangalore Posts: 941 Thanked: 1,448 Times	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit While it would be interesting to see how they navigate the notorious Detroit union cartel, it could be potentially an export-based plant providing a base to Mexico and the Caribbean countries. I'm sure with Trump as the leader, they are going all out to protect their market and this could be a brilliant move to get building quickly with government protection. What's interesting to see would be their revenue vs. margin. Typical labor laws compounded with high commercial insurance requirements brought almost all of the major companies to their knees. M&M has to sell like hot cakes elsewhere for the next 4-5 years to compensate for the initial burden. One other benefit I see is the sourcing components such as transmissions / electronics from local American plants and then transferring them to other country products through internal transfers / accounting. So what may cost x if directly sourced from the US could be lower if bought in the US and then transferred to India. In other words, impex jugaad.
	(3) Thanks

20th November 2017, 20:17	#13
ritz3645 BHPian Join Date: Jun 2012 Location: Traveller Posts: 149 Thanked: 285 Times	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit Mahindra sells tractor's in US. Wish Mahindra take over the discontinued Saturn brand, do production in India and global sales including India. It is a tested brand.
	() Thanks

21st November 2017, 04:12	#15
ashutoshb Senior - BHPian Join Date: Jul 2006 Location: NOIDA Posts: 1,755 Thanked: 4,287 Times View My Garage	Re: Mahindra to open 4,00,000 sq.ft. assembly plant in Detroit They are going to build the Thar there. That too, around 12,000 a year. Strangely, the press release doesn't mention anything specific related to it. It only says they will build an 'off-highway vehicle'. However, the local media gives more details. Detroit News says that, it will be called the Roxor. How it looks, won't be revealed till the end of this year. Detroit Free Press says that it will be an all-terrain jeep-like vehicle, to be called the Roxor, which will be a variant of the Thar. Now, why the 'off-highway' tag? My best guess is the strict crash norms for on-highway / on-road vehicles in the US, which the Thar wouldn't have passed.
	(3) Thanks