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Indian truck maker Mahindra making inroads at local dealers

December 15, 2008
First came the European cars. Next the Japanese and, in the 1980s, the Yugoslavs (well, that didn't last long) followed by the South Koreans.

Chinese car companies are already casting a shadow at the door of the $430 billion U.S. new-car market as domestic automakers continue their once-unthinkable hemorrhaging of market share. But hold onto your dupatta, now the Indians are coming.

As in motoring through Mumbai in a Mahindra pickup truck or — closer to home — motoring through Mooresville in a Mahindra "Appalachian" pickup.

Take a moment to visualize that, if you can.

Can't, you say?

Well, it's not hard to imagine for local Ford dealers John Pearson and Ray Skillman, who will be among the 300 domestic dealers of Mahindra trucks and SUVs when the company makes its U.S. passenger car debut as early as next summer.

Those who've heard of Mahindra — one of India's top 10 industrial conglomerates — likely know the name because of Mahindra's brand of farm tractors. They've been for sale in this country since 1994.

Mahindra has been cranking out compact pickups and SUVs at home for decades, honing its automotive expertise through joint ventures with established automakers. For example, in the 1940s, Mahindra was contracted to assemble the Willys Jeep made famous in World War II. In 1995, its assembly lines started cranking out the European version of the Focus subcompact for Ford Motor Co.

The Appalachian will be powered by a Mercedes-designed, four-cylinder diesel engine using so-called clean-burning diesel technology. A stump-pullin', gobs-of-torque diesel in a compact pickup truck is virtually unheard of in the United States. The Detroit Three offer full-size diesels, but they can cost $35,000 or more. The likely base price for the Mahindra pickup will be around $22,000.

"I think the diesel really puts it into a special niche that Ford does not meet at this time," said John Pearson, owner of Pearson Ford in Zionsville.

Pearson sees the Mahindra customer as someone young and budget-conscious who wants good mileage. He also thinks he'll sell them to businesses.

Neither Mahindra nor its U.S. distributor, Global Vehicles USA, based in an Atlanta suburb, have said how many miles a Mahindra will go on a gallon of fuel. Dealers say they've been told to expect somewhere around 30 miles per gallon on the highway.

"These are going to be people who want fuel-efficient trucks," said Skillman, who sees the Mahindra pickup serving a narrow niche. People who've owned the company's farm products are part of that niche.

"I could see people who have owned Mahindra products who say, 'Hey, that tractor I own is bulletproof.'"

The niche may be narrow, but then both Pearson and Skillman say there's relatively little cost to get into the Mahindra business. The manufacturer has not demanded that they build separate showrooms apart from their existing Ford stores.

That was a big draw for Skillman, who mutters that in previous years auto manufacturers were persnickety about their images.

"Everybody wanted their own little sand pile ... Basically these manufacturers have lost their minds," he said.

At first, anyway, Pearson said he might sell 10 units a month, with momentum picking up as Mahindra introduces a U.S. version of its diesel-powered Scorpio SUV. It's roughly the same size as a Ford Explorer.

The pickup styling is unique to this market. Think offspring of a 1998 Toyota RAV4 and a 1970s Japanese pickup.

Not everyone sees Mahindra as an obvious hit, at least not at a time when the nation's auto market resembles a smoldering crater.

The appeal "is not obvious," said Bruce Belzowski, associate director and an assistant research scientist at the University of Michigan Transportation Research Institute.

"Just having a diesel engine is not the answer. It sounds like they're starting off with a couple of strikes against them."

And despite the troubles facing the Detroit Three automakers, "loyalty to [Detroit] pickups is still strong," he added.

Indeed, one can only imagine the reaction in Eastern Kentucky when someone drives up in an Indian pickup with the "Appalachian" nameplate.

On the other hand, Mahindra might be a draw because it's new. Ford Motor Co.'s venerable Ranger pickup has hardly changed in 14 years.

Belzowski said having a dealer selling Mahindras alongside a tried-and-true brand like Ford could give Mahindra "a little more credibility."

Domestic car dealers, in particular, are trying to supplement sales amid the declining market share of the Detroit Three and want to get a foot in the door with whatever becomes the next big import brand.

Skillman is not unaware of the risks. In the 1990s, he briefly sold South Korea's Daewoo vehicles until the company decided to retreat from the U.S. market under its own name. These days, Daewoo makes cars for General Motors, which sells them in the form of vehicles such as the subcompact Chevrolet Aveo.

Back in the early to mid-1980s, local dealer Blossom Chevrolet sold the Yugo, a low-cost Soviet-era subcompact that became the butt of jokes. Not even the bombing of the Yugo plant by NATO could stop production and exports; rather, it was trade sanctions imposed against Yugoslavia that buried it.

In the mid-1980s, Hyundai roared onto the scene with its $4,995 Excel, giving Hyundai a grand entrance into the U.S. market. But quality problems soon surfaced and the company is still trying to shake off those early stumbles.

In recent years, local car dealer Dennis Reinbold got in line for what's expected to be a wave of Chinese car imports. In 2006, the dealer of high-end German and Japanese automobiles paid $2 million for the right to sell cars made by Chinese state-owned Cherry Automobile Co. That bought Reinbold a stake in Visionary Vehicles, an importation company founded by Malcolm Bricklin, who brought Subaru — and Yugo — to the United States.

Market conditions have helped frustrate Cherry's entry and it's unclear when the first Camry-size Chinese sedans will start rolling stateside.
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