[NinadJoshi]

The Mahindra XUV, assuming it overcomes all the required engineering, manufacturing and performance requirements to make it into the US market, will find itself in a very niche albeit almost non-existent bucket, namely the 'mid sized diesel powered non-luxury SUV'. The last I looked, there was only one vehicle that fell into this genre, which was the VW Touareg. Dimensionally not very different than the Mahindra SUV, the Touareg however features a 3L Diesel that has a much higher power output, and at a rated mpg of 19 city / 28 hwy, not to mention a brand name behind itself.

Since ther is no particular preexisting and populated segment in the US market that Mahindra's XUV fits in, its first and biggest task would be to create a segment for its XUV. I do not know what it would take for an American to consider an unknown 2.2L diesel mid/compact SUV that purportedly gives ~35 mpg on the freeway (citing Mahindra's claim of 15.1 kmpl).

There are diesel variants of SUV's from BMW, Mercedes and Audi, but their market cap is extremely miniscule. Moreover, these brands and Mahindra are, and will be, in different price-performance quadrants anyway.

I for one will be very proud if Mahindra do manage to pull this one off successfully. But right now it sounds more ambitious than practical.

[Harbir]

Thats a very astute point. You also have to keep in mind that americans are averse to the smell of diesel fuel. Most pumps do not sell diesel. diesel is more expensive than petrol there.

Diesel passenger vehicles are purchased there only by a very tiny fraction of the population, and they are typically VW and mercedes enthusiasts who have a decades long relationship with tdi VWs or d mercedes (respectively) and who buy these cars because they like the character of the diesel and are convinced that the durability, efficiency and longevity of the diesel is worth the extra cost of the vehicle and the fuel.

Most other people are averse to diesel because of the smell of the fuel, the rattly unrefined nature of the engines, the need to hunt for pumps that sell diesel, the additional cost of the vehicle and the fuel,

Americans aren't going to love diesels just because INdians and europeans do. In India and europe, diesel is made economically viable for passenger vehicles by taxation policies that favor diesel (subsidized in india for agriculture and freight, diesel cars taxed low in the europe due to low CO2).

Another factor to keep in mind is that american emissions regulations are not CO2 focused. THey are focused on particulate matter (soot) and acid rain causing gases (SOx and NOx), and here diesels have a very hard time meeting tough american regulations. THis renders diesel vehicles extremely expensive in the US because they must come equipped with very sophisticated emissions control technology that reduces the soot, SOx and NOx emissions of the diesel to the same level as the petrol.

So NinadJoshi's point is very valid. people who expect mahindra to just go prancing into the american market waving the tiranga are in for a rude shock.

The detroit autoshow has been featuring chinese cars in downstairs pavillion in Cobo Hall for some years now and they range in design and quality from approximately where the indica is to somewhat better than the XUV500. THey are yet to be taken seriously enough by the americans to encourage the chinese to try to start selling the cars there, mostly because of the poor design, quality, engineering and pricing that does not justify what you get compared to the offerings of the US, japanese and korean companies.

[eq24]

Contrary to all that is being said, I had a good read on some American forums, particularly auto blog. A lot of Americans are eagerly awaiting the Scorpio pickup. I however don't think all who are waiting will buy but some will. It is this segment mahindra needs to woo and woo in such a way that marketing and PR are carried out through them. IMHO only peer marketing can help them in the initial stages. And ya all this while they have to make sure that those Scorpios are as niggle free as possible.

[rohanjf]

I remember reading somewhere that USA has different emission policies for pick up trucks and passenger vehicles. That pretty much explains why Mahindra wanted to get into utility business first. That also means, XUV5OO will have to work much harder to be in American roads, compared to Scorpio pick up trucks.

[Harbir]

This has ceased to be true as of 2009 when the emission standards for passenger cars and light duty trucks (SUVs, pick ups, minivans) became the same under Tier 2 regulations of the 1990 Clean Air Act, which covers all vehicles with the gross vehicle weight rating of 4.5 tons or less (this is the maximum rated weight of the vehicle including passengers, cargo, fuel, etc).

It gets more complex though. There is an average emissions level that all manufacturers must meet. but they are allowed to sell vehicles that produce higher emissions than that average, which must be offset by vehicles that produce lower than the average. however, how dirty the emissions of a vehicle can get at its max is still very tight. For example, the dirtiest allowed soot emissions are only double the level allowed to the absolute cleanest vehicles (not counting zero emissions electric or hydrogen fueled vehicles). It is extremely tough for a diesel engine to produce only twice as much PM as the engine of something like a chevrolet Volt or a toyota prius.

All of this means that the break that mahindra might have been counting on for light duty trucks is no longer available, and that its vehicles will have to meet the stringent emissions regulations and since it does not have hybrids and other ultra low or zero emissions vehicles, it will not even be able to use the maximum allowed emissions per vehicle to achieve the maximum allowed fleet average emissions, so its vehicles will have to meet the fleet average.

Mahindra is a rich company and they can buy the technology needed to make their vehicles comply with the emissions regulations, if they can't produce it themselves. thats not the problem. the problem is whether they can make it economically viable.

[zenx]

The same "US market" has tolerated boats like the Ford Taurus/Mercury Sable and the very loosely glued together Chevy Cavalier (hatchback). There must be others, but the comment on these is from personal experience! The Sable actually felt like an old gen diesel in terms of vibes and refinement, and the Cavalier - lets not even go there. And these were relatively new rental cars. Its not a monolithic one size/quality fits all market - so lets stop pretending that we 'understand' it

[Harbir]

Originally Posted by zenx

The same "US market" has tolerated boats like the Ford Taurus/Mercury Sable and the very loosely glued together Chevy Cavalier (hatchback). There must be others, but the comment on these is from personal experience! The Sable actually felt like an old gen diesel in terms of vibes and refinement, and the Cavalier - lets not even go there. And these were relatively new rental cars. Its not a monolithic one size/quality fits all market - so lets stop pretending that we 'understand' it

I think, sir, that you are looking for a fig leaf for Mahindra by spinning the american marketplace inaccurately.

The taurus/sable/cavalier you refer to are long gone from the market. In the last 10 years, they were mostly selling to fleets (rental cars, company cars, etc) or at HUGE cashback and discount offers. THe only way Ford, GM and Chrysler could move these piles of dung was by offering HUGE HUGE HUGE financial incentives.

Which drove GM and Chrysler into bankruptcy. Ford escaped only because its wise leadership saw what was coming and acted in advance to deal with it. They sold assets, issued debt, etc and created a large pool of liquidity and started a program of new product development, which saw them through the crisis suffered by detroit without having to collapse into bankruptcy.

To say that mahindras will sell profitably in the US today because at some stage companies on their way to bankruptcy managed to sell some junk cars at huge losses does not work.

What happened to the US automakers was directly a result of their selling junk like the cavalier. To offer those junk cars as an illustration of how mahindra can be successful is wierd to say the least.

[zenx]

Harbir, I did not claim to know that Mahindra will do well - on the contrary I think they should've waited for the XUV5OO v2 and then gone in hammer and tongs. (But thats just my opinion)

All I pointed out was that there's been various layers to the market, and its audacious for most here to claim to understand it and especially wrong to be dismiss their attempt based on that. Yes, they may be taking a (calculated) risk. No, they're not idiots and probably understand the market a little better than you and I.

I brought those examples up as - well - examples that its not always the absolute-best-in-every-respect that has found takers (The Taurus/Sable was fairly successful for a while) in the US market. I'm not sure of equivalents, but I'd be surprised if there are none! In the last decade, the US economy has had challenges, gas has become pricier; what the triggers for vastly heightened consumer expectations since then might be eludes me. In fact, evidence suggests that less durable, cheaper is gaining ground over all else. Most consumer electronics and gear with built in obsolescence stands testimony to the same.

[Sutripta]

Hi,
After their problems with US safety norms, has MM got product liability insurance?

Regards
Sutripta

[4x4addict]

Originally Posted by Harbir

I said it earlier, and I will say it again. Mahindra's products are not ready for the american market. Not even the XUV500.

Hi Harbir, Having lived in the USA for over 13 years, I totally agree with you. People who have not lived there will not understand that Americans don't care about diesels and low cost pick up trucks. Despite a slew of small low cost japanese pick up trucks, F150, Chevy, and Dodge far outsell them with monster V8 engines.

[NinadJoshi]

<<The same "US market" has tolerated boats like the Ford Taurus/Mercury Sable and the very loosely glued together Chevy Cavalier (hatchback).>>

ZenX, there have been quite a few massive failures in the US markets, completely agreed. The difference is that they came from brands that have had the capability to either re-haul the design, or absorb the losses of scuttling the failed vehicle program. In case of an unknown and small company (like Mahindra) that is trying to enter a foreign market, there is little possibility of a second chance. For example, a Mahindra XUV that gets introduced in the American market will not just have to have an excellent "defects per 100" rating right from its first production run, but will have to sustain it for an entire life cycle (~4 years before the model gets re-engineered).

Another thing to note is that introducing just one or two products may not help a manufacturer by much. Considering (and assuming) that Mahindra will play in the peoples segment (read as economy vehicles), it will have to introduce more than just one vehicle (model) to help get itself a presence. In addition, each model has to come with some sort or engine and trim choices.

Another possibility is that the company may (almost surely) have to begin its American episode as a 'leased' vehicle manufacturer. Nobody in their right senses is going to commit to ownership of an unknown vehicle. I'd rather have a 3 year 36,000 mile maintenance covered lease if I am not sure what I'm buying. Chances are Mahindra may become a fleet vehicle, or a student vehicle (a la Hyundai, Kia in their initial years etc), or just a novelty third vehicle in the garage.

The biggest challenge, as I maintain, will be the creation of the brand. The USA is a place with 1 car behind every 1.3 people, and if there is any segment to be exploited rest assured it has already been. For Mahindra to create a niche of its own, it has to come up with something really ingenious, really sustainable against the Big-3. (If Mahindra’s 2.2 Diesel ute hits bulls eye, how long do you think the Big3 from Detroit are going to take to capture that market segment with products of their own)? For Mahindra to produce fish that will swim in the existing pool, it has to have the financial-engineering-manufacturing-marketing power to compete with the 87 other brands that are operational in the USA. Chances are Mahindra will collaborate with an existing player, in which case it may never make it as a brand by itself. Either ways, it is a huge challenge.

Having said all that, I for one would like to see Mahindra score a 100,000 units in the US.

(btw, Ford Taurus has consistently enjoyed the status of the best selling American sedan for many years, third only to Toyota Camry and Honda Accord in its segment. You have to see the fully re-engineered Ford Taurus....as massive and awesome as it is, it has silently moved itself out and above the Camry-Accord segment, and sells as a large semi-luxury car).

[Ashley2]

I am in view with Harbir.
US Mission for Mahindra is still a long term in terms of reliability and the power train options/emissions that are native to US.
They may look try to leverage from their new Korean acquisitsion.

[Sanjunair5]

I, for one, do not understand why Mahindra wants to enter the US market. This is a fairly saturated market and not really growing. Entering a market like this is very different from a market like India which is still growing. First - a market like this can be very unforgiving there may not be a second chance, second - the incumbents will do everything to guard their turf, meaning the competition is going to be extremely tough, third - the product has to be innovative, unlike anything the market has seen before. Why did Fiat enter US market with Fiat, a niche product and not one of their volume products? Mahindra will find the US market an extremely tough one to crack even if their strategy is to capitalize on the loyalty earned through tractor sales.

Now, there are several other markets in the world which are still growing, less demanding, where a new entrant will find it easier to establish, one where a 'Made in India' tag will have a premium. Mahindra already has presence in many of these markets. Why dont they try to consolidate and expand in these markets?

[lurker]

Mahindra has enough customers in US for their tractors. I think they sell mostly in the south, where they have some brand recall due to their tractors. They have their own little following and I think it's more of a niche market.

[chennai-indian]

I have lived in the US and agree with most of the commenters here who are skeptical about M&M's chances in US. However, that being said, if M&M has decided to enter the US market, they will have to start sometime and now is as good as any other time. They will typically go through the following cycle (Japanese and Koreans went through this):

Amazement (How dare an Indian company attempt to enter here) > ridicule > reluctant acceptance > enthusiasm > complete acceptance

If M&M plays their cards right, they can may be compress this cycle to say 10 years instead of say 20 to 25 years that Hyundai did