[4x4addict]

@chennai-indian:

Japanese offered the American consumer something that they didn't have before, i.e an extremely reliable and fuel efficient car. Hyundai after falling flat on their face came clawed back with a 10 Year/100K miles warranty? What do think will be the USP of Mahindra to want to make the American customer buy a Scorpio or XUV500?

As you are well aware, Diesel is more expensive than petrol in USA.

[chennai-indian]

@4X4addict

Japanese cars were not "reliable" from the get go. That reputation was built over time. As for Hyundai, yes, the 10year /100 K warranty helped - what makes you think M&M cannot do something similar? Why are we so eager to write off a company like M&M? Yes, they will fail initially but to reach a destination, you have to start first.

[NullRock]

Originally Posted by 4x4addict

@chennai-indian:


As you are well aware, Diesel is more expensive than petrol in USA.

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Agreed. But diesel gives better mileage then gas. Also the diesel is not too expensive then gas. Its just a matter of 2 or 3 cents.

[NinadJoshi]

I say let a Mahindra SUV/Pick-up make it to an American dock first and let us then pick up this thread.

As of now, fact is Mahindra has repeatedly missed shipping dates and not offered any plausible explanations for it. In fact it does not even have a 2012 EPA certification as of today, so it is unlikely a Mahindra will run on American tar this year.

If Mahindra itself isn't interested, why should we bust our keyboards on it ?

[Harbir]

Originally Posted by chennai-indian

@4X4addict

Japanese cars were not "reliable" from the get go. That reputation was built over time. As for Hyundai, yes, the 10year /100 K warranty helped - what makes you think M&M cannot do something similar? Why are we so eager to write off a company like M&M? Yes, they will fail initially but to reach a destination, you have to start first.

Japanese cars were not reliable but then neither were american cars at the time. Furthermore, they didn't start to matter in the US market until they suddenly started producing cars that were better engineered, better built, more efficient and higher quality than anything else.

DO you expect mahindra to do that?

As for Hyundai, its the exception, not the norm. YOu also need to remember the car makers that didn't last in the US market due to low grade engineering, quality, or uncompetitive product. Car makers that failed in the US market:

1. Fiat
2. Alfa Romeo
3. Renault
4. Peugeot
5. Citroen
6. Rover (despite their car being a UK manufactured but poorer quality version of the successful Honda/Acura Legend
7. Daewoo
8. Diahatsu
9. Isuzu
10. SAAB

Jaguar had also crashed and burned until its product and manufacturing was overhauled by Ford.

GM and Chrysler both became bankrupt because of bad product that could only be sold with huge discounts, and survived only because the US government wanted to preserve the jobs they provided.

Suzuki has never made much of an impact in the market.

So against this backdrop of extremely harsh market and competitive conditions, you ask us not frankly discuss the quality of work that Mahindra will take to the US and the chances such work will have in that market?

Mahindra SHOULD try to go to the US market. But it needs to develop products for the developed world. Even if they are not up to the mark right from the start, Mahindra still needs to put its best foot forward.

Showing up with vehicles that are merely OK even in the Indian market is a recipe for disaster.

Toyota doesn't think the Innova or the fortuner are worth selling in the US, but mahindra wants to sell the scorpio and the XUV500 and we shouldn't even be voicing our skepticism!

Originally Posted by NullRock

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Agreed. But diesel gives better mileage then gas. Also the diesel is not too expensive then gas. Its just a matter of 2 or 3 cents.

Not correct. The national average price of diesel at present is 31 cents a gallon more than regular gasoline.

Over 160,000 km, a petrol Jetta SE costs just $1500 more than the diesel TDI (which is the equivalent model in terms spec) after the differences in purchase price, fuel price and fuel efficiency are calculated. Considering that for the 1500 you get a 170hp petrol which is more powerful, smoother, and quieter, at worst, its a wash because you pay more and get more.

In the US, it is very hard to make an economy argument for diesel. Americans are not diesel crazy.

[andromeda]

Harbir is spot-on in saying things will be not be easy for Mahindra in the US car market. Note that is being the world's largest car market is also a very saturated one. I'm sure M&M very well knows this and will not be looking at the numbers, at least initially. Believe they want to have a token presence in the US market which will enhance their brand recall (Tata got it easily when they acquired JLR from Ford ).


Yes a lot of good brands like Fiat, Renault, Peugeot had to bite the dust, take losses and pull out of the US market. VW in itself was pretty much struggling a couple of years ago due to below par quality of their 'imported' Jetta & Passat. They had to pull up their socks (start local assembly to address quality issues) due to their aim to be the world's largest car maker. Hyundai's first innings in the US market was a disaster. They could take losses and survive for a second attempt because they were a huge conglomerate (shipping, construction, etc..) which could afford to bail out the automotive division.

Coming to specifics, the diesel passenger market in the US is very niche mostly due to the price differential with gasoline (it's down to 30+ cents now) and emission laws that prioritize particulate matter. I own a full-size SUV in Sequoia V8, 4.7L that returns a paltry 10 MPG. But full loaded, I still feel it's under-powered on freeway speeds (on-ramp, passing, etc...). Note that this is a tad bigger than the Scorpio and an 8-seater with 3 front facing rows.

If M&M brings in Scorpio, the full-size SUV segment has only a handful of competition in Armada, Expedition, Yukon, Tahoe, Sequoia & Suburban that run gasoline. This segment is also the one that gets the least sales numbers, thanks to the gas prices. M&M can try and create a niche diesel vehicle in the market. But initially they would need to spend a lot of money (ads, undercutting competitors by pricing,..) since most SUV buyers are folks who 'upgrade' from other cars (NOT first-time car owners).

Top-Ranked SUVs | U.S. News Best Cars

XUV might be a better launch for M&M in the US market since this latest offering has "decent" comfort, feature rich and better safety package (not sure about the crash test safety ratings though). But it will be a brutally competitive mid-size SUV segment which already has around 2 dozen players !!

[lurker]

there is a large or one can even use the term 'niche' customer base in Southern US (basically the ex-confederate states-ones who rebel) who are pretty pissed with the entire Japanese/American choices given to them. They feel both the Japanese/euro imports and American companies are squeezing the American customers either on maintenance or on buying cost or various intangible costs and they feel the need for non-Japanese/Euro & non-American choices in the car/SUV market. In fact this redneck crowd wants *Chinese* and *Indian* car manufacturers to enter the American market in order to destabilize the cosy equations between the existing players. They really feel that they are being taken for a ride. Whether Indian companies like Mahindra will really be able to cater to this market and whether they will be able to rock the boat wrt pricing is something in the realm of speculation. But this crowd does buy a lot of Mahindra tractors, so their inputs could have been instrumental in Mahindra taking this decision. But can this base by itself sustain an assembly line is something only Mahindra can take a call on. Maybe they are still unsure about the same.

So this is not all about quality, though that will be expected of Mahindra, providing they deliver on that front. It's more about introducing non-Japanese/non-European choices into the US market and to check if these new entrants can threaten the existing cost structure for the consumer.

[Harbir]

Originally Posted by lurker

In fact this redneck crowd wants *Chinese* and *Indian* car manufacturers to enter the American market in order to destabilize the cosy equations between the existing players.

I must be living under a stone but this is the first time I've heard of such a thing.

I've heard of ford vs chevy wars, but the actually desire for the indians to come in to destablize the cozy equations? wow.

[m8002?]

Agree with Harbir. The general feeling is that the rednecks are more prejudiced than the northerners. And i doubt if people not liking Europeans will take that easily to the Asians. Its stretching a lot to think they are eagerly awaiting the knights from Asia to slain the european and japanese players.

[lurker]

It's more like they are so fed up with their govt and the automobile cartel that they are waiting for anyone to take up the gauntlet and put the local manufacturers and imports under pressure. This was the strong feeling over there some half-a decade back.

I know it's ironical, but that's how it is, moreover Mahindra already has a tractor customer base from whom they get direct feedback and most of it is Southerners.

[4x4addict]

It is amazing that people bring up the Tractor analogy to predict that Mahindra will succeed with passenger cars in USA. Kindly do your research before pointing to Mahindra's tractor market. Mahindra caters to the bottom end of the Tractor market used by recreational farms and not big farmers. It caters to a market which big names like John Deere etc have no interest in and there is virtually no competition.

Pick up trucks on the other hand is the bread and butter of the North American car market. If you guys don't believe me look at the sales number of the Ford F150 and Chevy Silverado compared to the Honda Accord/Toyota Camry sales figures.

American's are not really interested in frugal diesel pick ups. They like big engines in their pick ups and towing capacity is very important for them.

Given the same price and similar mileage, can you tell me any reason why you would buy a Mahindra pick up over a Toyota Tacoma or Chevy Colorado?

[Harbir]

Originally Posted by lurker

It's more like they are so fed up with their govt and the automobile cartel that they are waiting for anyone to take up the gauntlet and put the local manufacturers and imports under pressure. This was the strong feeling over there some half-a decade back.

I know it's ironical, but that's how it is, moreover Mahindra already has a tractor customer base from whom they get direct feedback and most of it is Southerners.

to me it sounds like "Dil behlane ko, ghalib, yeh khayal bhi achha hai"

How many tractors has mahindra sold? how many of those buyers are going to forgo a chevy or a ford to buy a mahindra? And what about all the mahindra tractor owners who drive toyota trucks? And have you priced out how little ford pick up trucks cost and how competitive their fuel economy is with diesel mahindras?

PS. I made no comment about southerners attitudes towards foreigners, nor do I call them rednecks. I simply said I don't believe that ford and chevy country is itching for indian pick ups because they hate the japanese and europeans.

[lurker]

Originally Posted by 4x4addict

American's are not really interested in frugal diesel pick ups. They like big engines in their pick ups and towing capacity is very important for them.

Given the same price and similar mileage, can you tell me any reason why you would buy a Mahindra pick up over a Toyota Tacoma or Chevy Colorado?

Originally Posted by Harbir

I don't believe that ford and chevy country is itching for indian pick ups because they hate the japanese and europeans.

they were very interested in frugal pickups during the days when gas price crossed $110, because it really started pinching then. Now the gas prices are back down, but then people are now more conscious of the options as well as smaller displacement engines. A lot of people felt that gas guzzling SUV were big liabilities during those days.

there are some folks who are very satisfied with Mahindra tractors and then there are some who aren't and then keep grumbling about Indian company etc.

[volkman10]

U.S. Automobile Dealers Sue Indian Truck Manufacturer For Fraud And Conspiracy

U.S. automobile dealers from across the country filed a lawsuit yesterday accusing the Indian truck manufacturer Mahindra & Mahindra, Ltd. and its U.S. counterpart of fraud, misrepresentation, and conspiracy.The lawsuit alleges that Mahindra duped hundreds of U.S. auto dealers and walked away with more than $60 million in cash and trade secrets

Mahindra told the dealers that its light trucks and SUVs were ready for delivery to the U.S. market," said Diaz. "However, Mahindra intentionally delayed certification of its vehicles after obtaining the dealership fees and trade secrets, and began pursuing other partners in the U.S. and elsewhere in clear violation of their commitments.

According to the lawsuit, Mahindra began laying the groundwork to enter the U.S. market and build a nationwide dealer network in 2004. In a high-profile move to court the U.S. dealers, Arun Jaura, a senior Mahindra executive, attended an Atlanta automotive show in 2007 where he repeatedly proclaimed, "I love America!"

Over the next two years, Mahindra continued to reassure the U.S. dealers that its certification process was on target, while in fact it was delaying submitting its documentation to regulators as a pretext for terminating its agreements, Diaz added.
Mahindra repeatedly failed to live up to its obligations," Diaz explained. Now, after spending millions of dollars on behalf of Mahindra, the U.S. dealers have nothing to show for their time and energy other than a series of false promises.

Would-be U.S. Mahindra dealers file suit

[arjun_crsce]

Last week five automobile dealers from the USA, filed a lawsuit accusing India’s largest manufacturer of utility vehicles Mahindra & Mahindra (M&M), of fraud, misrepresentation and conspiracy. The lawsuit brought about by law firm Diaz Reus alleges that M&M duped hundreds of US auto dealers and walked away with more than $ 60 million in cash and trade secrets. I spoke to Michael Diaz, the managing partner of Miami-based Diaz Reus & Targ, who leads the plaintiffs’ legal team and this is what he had to say about M&M’s US fiasco. “It was a bag of false promises.” .

But before we get into the details of the case, here’s some background on M&M’s attempt to crack the US utility vehicle market.
2004: Bolstered by its success in selling tractors in the US, M&M chalks out plans to become India’s first automobile manufacturer to sell utility vehicles there
2004: M&M’s details plans to launch the Scorpio pick up (three models) and a truck (diesel) in the US. The sales pitch was pretty clear- cheap pick up trucks with a claimed fuel efficiency of 30 miles to a gallon.
2006: Before the product was ready, M&M thought it would be a good idea to test the market. They got into a distribution tie-up with Global Vehicles, whose job was to find dealers who would invest in setting up a Mahindra dealership.
2008: Global Vehicles had found 350 such dealers interested in selling the Mahindra pick up.
2008: M&M spent the next three years trying to launch the truck. It never happened.
2010, June: Global Vehicles sued M&M for taking too long to launch the pick up truck.
2010, September: Global Vehicles which was under fire from dealers that it had set up for Mahindra placed a $ 30 million order on M&M to supply the pick up trucks. M&M rejected the order saying it was invalid because its contract with Global Vehicles had ended in early 2010.
2010: Global Vehicles and M&M head to the courts.
2010: Even while it was fighting Global Vehicles in court, M&M maintained that the trucks would be launched by end 2010 after meeting the necessary regulatory clearance and that it was looking at launching the product directly with dealers.
2011, February: Much later than it had anticipated, M&M received the emission certificate from the US Environmental Protection Agency (EPA). The Mahindra TR40 crew cab model with a four-cylinder diesel engine and automatic transmission was rated by the EPA at 19/21 mpg city/highway. A far cry from the claimed 30 mpg.
2011: M&M’s plans to enter the US market go cold. While it was fighting the case against Global Vehicles, there is no communication with dealers as to when the pick up will be launched.
2012, March: M&M says a London arbitration panel has ruled in favor of M&M and dismissed claims by Global Vehicles that an exclusive US distribution agreement established in 2006 was violated.
2012, June: Five dealers from New Hampshire, Florida, California, New Jersey, and Washington sue M&M and Mahindra USA.
Back to the Present: The case
M&M says, “We cannot comment on this as the matter is in the courts but we would like to state that some dealers had earlier filed a suit against Mahindra and Global Vehicles in the US District Court in Missouri. The Missouri Court dismissed all claims against Mahindra in that suit. Significantly, the Missouri Court also ruled that Mahindra could not be held liable for any action of Global Vehicles with respect to its dealers.”
Carlos F. Gonzalez, Partner at Diaz Reus response to this is – “Mahindra’s comment is inaccurate and misleading. The Missouri case was dismissed strictly on procedural grounds and the Plaintiffs there had every right to re-file the case if they so desired. It was dismissed because the Court chose not to exercise jurisdiction over Mahindra, a foreign corporation. The Missouri dismissal, because it was purely procedural, did not address Mahindra’s wrongdoing. The lawsuit here is not based on actions by G.V., (Global Vehicles) but on the fraud perpetrated by Mahindra. G.V., for example, had no control over Mahindra’s decision to delay homologation. And G.V. had no control over whether Mahindra truly intended to make good on its promises to the dealers. Finally, this case is not connected with the arbitration of any claims that G.V. has or had,” he said.
Diaz Reus says it expects more dealers to join the lawsuit. Damages are being claimed on three counts, only one of which is the actual amount that was paid by the dealers in order to get the franchisee. “We can trace that dollar directly to Mahindra’s pockets,” says Mr. Gonzalez. Second is the value of public relations and brand building program that dealers undertook to create awareness around Mahindra. These include getting the dealership ready right up to the point of painting the facility in red and white, colours of Mahindra’s corporate logo. And third is the value of trade secrets that they say,Mahindra has misappropriated.
So what are these trade secrets? “Everything from building showrooms to accounting software to in house branding and inventory tracking including several other offerings which the dealers did in anticipation of being able to sell the vehicles,” adds Mr. Gonzalez. Diaz Reus says that M&M cannot walk away from the US because it had signed contracts with the dealers and promised that the vehicles will be delivered- but that’s not what happened.
There is little doubt that M&M were serious about their US entry back then. Dr. Pawan Goenka, head of M&M’s automotive vertical, addresses dealers at the Atlanta Auto show in this video. His quote just as the Punjabi bhangra gets over says it all. “I don’t think I deserve a standing ovation yet. We will reserve that after the successful launch of our products in India…I mean USA.”
Mr. Gonzalez says these and other promises made by M&M’s brass misled the dealers. “In the USA contracts mean something…promises mean something. We have had quite a few cases where large companies try and squash the little guys only to find that the judge and jury look at it as a very different world,” he says. Despite everything that has transpired in the last six years, despite all the claims and counter claims, one fact even today stands out tall. This is that the M&M pick up truck never reached the US. Why?
Six years and no Pick up?
M&M does not want to comment on what happened. But I did speak to one senior M&M executive who spoke off record. According to him M&M had built the Euro V diesel engine to enter the US market. This was a huge product technology challenge for the company. “We had roped in many US suppliers, there was an Indian R&D team put in place. We designed the Scorpio engine to meet Euro V emission norms, the mechanism and body work was all done. However, in the last two years, the R&D team had been dismantled. But it was a very important project for Dr. Goenka. And every year this project is still there on the board. So in export strategy there is Australia and South Africa. And then US,” he said.
Rebecca Lindland, Director of research at IHS Automotive, a consultancy and forecasting firm describes the debacle as a perfect storm for Mahindra.
To begin with M&M found itself in the middle of the recession. So the pick up truck which made good business sense in 2006 was perhaps the worst product in 2010. If you look at the mid SUV segment in the North American market alone, in 2005 this segment saw volumes of 1.3 million units. In 2009 the segment had crashed to 2, 17, 000 units. “This segment had crashed. And Mahindra is an unknown brand competing in a niche which was under tremendous fire at the time and everybody was buying crossovers. It really was a recipe for disaster,” she says.
The Mahindra experience shows how difficult it is for an unknown brand to find its feet the US market. In the last couple of decades, two such brands which have worked- Hyundai and Kia. “Others from China like Geely, Cherry and BYD Auto, have also been unsuccessful in the US,” adds Lindland. Adding to the problems are M&M’s issues with safety and fuel efficiency. “The product was terrible. With a safety rating of 2 out of 5, you might as well forget about launching it in the US. And I think fuel efficiency was perhaps the least of their concerns,” she adds.
The 3 star safety rating is only for vehicles starting 2012. Before that it was 2 star

Read about M&M’s pick up safety rating here:
http://www.ancap.com.au/results?Search=1
Lindland says the impression she got from the M&M and Global Vehicles fiasco is that GV was more of an agent acting on behalf of Mahindra. “They were based on what Mahindra was telling them and I don’t think they really had any say in the type of vehicles. So that doesn’t mean that Mahindra is not responsible for what’s happened with the dealers,” she says. Gonzalez says that, “The dealers relied on Mahindra’s statements and representations. Funds provided by the Plaintiffs went into Mahindra’s pockets. Mahindra’s approval process for dealership showrooms and signage designs required that each dealer spend money to design their dealership to conform to Mahindra’s “DNA.
So what happens next?
Diaz Reus says that the copy of the lawsuit has been sent to M&M and its US subsidiary. There are two ways from here. One is that M&M can move the courts to dismiss the petition. Second, M&M will answer the complaint. The firm is expecting M&M to dismiss the case. “After that the discovery begins, where we use various avenues to find facts and put together the evidence. And we are quite confident of our position here,” says Gonzalez.

Read the article at http://forbesindia.com/blog/business...the-us-failed/