M&M to drive into US ahead of Chinese companies

Mahindra & Mahindra Ltd, India’s largest maker of sport-utility vehicles, is betting its diesel pickup trucks can beat the Chinese to the US market.

Early next year, Mumbai-based Mahindra plans to start selling small 2- and 4-door pickups with a diesel engine that meets California’s strict exhaust rules.

“Once you establish the brand, volumes will come,” Pawan Goenka, Mahindra’s president in charge of the automotive business, said in a June 16 interview. “There is a hole available to us which is not populated.”

Mahindra’s trucks will arrive in the US even as recession and job losses have pushed auto sales to the lowest in three decades, triggering bankruptcy filings for General Motors and Chrysler. A weak economy and cheaper diesel prices may help the Indian automaker win buyers seeking a bargain, said industry analyst Eric Noble.

“It’s not a bad time to launch a durable, value-oriented brand,” said Noble, president of Car Lab, an Orange, California-based consulting firm for automakers. “There’s no real competition in compact trucks with a diesel powertrain.”

With a brand that’s “totally unknown” to US customers, an Indian auto maker will face the same challenges Hyundai, Toyota and Honda faced when they entered the world’s largest economy, said Puneet Gupta, a New Delhi-based analyst at CSM Worldwide Inc. In India, Mahindra makes Scorpio and Bolero SUVs.

“It’s a big challenge,” Gupta said. “Selling a very cheap vehicle may not work. Selling in a matured market may also spoil your reputation if your product is not up-to-the expectations of customers there.”

Plans for US models from China’s Chery, first announced in late 2004, failed because of disagreements with its US distribution partner Visionary Vehicles LLC.

Chrysler LLC also abandoned plans to sell Chery-made cars in the US. Geely, China’s biggest privately owned carmaker, hasn’t met its initial goal of selling cars in the US by 2008 amid talks with Ford Motor on buying its Volvo Car unit.