Mahindra’s mess

The case of Mahindra & Mahindra, an Indian company that planned to sell small pickup trucks in the United States, shows how hard it can be to break into the world’s most lucrative automotive market:

…We may be the country that invented the double down, and a place where the Ford F-150 is the top-selling vehicle, but the U.S. government has among the most stringent emissions and safety standards for vehicles in the world. In fact, there are many who say that the 2016 standards will be even more strict than those in Europe. Regardless, just because a vehicle is considered safe and clean for Europe doesn’t mean it can be sold instantly in the U.S.; in addition to the high costs of certification—we’re talking numbers in the millions of dollars—there are many instances where the evaluation criteria between the U.S. and Europe are simply different rather than harder or easier to meet. In Mahindra’s case, the company actually received EPA certification for its diesel engine in 2010 for the 2011 model year, but an EPA spokesperson told us that Mahindra did not submit a certification application for the 2012 or 2013 model years. …

[…]

Unless an automaker is landing on U.S. soil with an established dealer network in place, as was the situation when BMW launched Mini here a decade ago, car companies need to recruit distributors and dealers to handle all of the logistics and sales on the ground. It’s a huge commitment—and an expensive one—for a dealer to be willing to set up a showroom, buy parts, train technicians, and pay to market a brand and vehicle that are unknown and untested in the U.S. market. Mahindra recruited a U.S.-based distributor, Global Vehicles, to recruit and sign dealers for the Indian-made pickups. Global recruited about 350 hand-raisers—mostly current car dealerships—with potential interest in a Mahindra franchise. In 2006, the two companies signed a Letter of Intent. Dealers say they were actually supposed to chip in half the cost of bringing Mahindra’s trucks up to U.S. emissions and safety standards. In 2010, the deal fell apart (although exactly what happened is disputed) and a number of the dealers took Mahindra to court. …

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s