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Rediff.com  » Business » M&M to ride on ex-Chrysler dealers

M&M to ride on ex-Chrysler dealers

June 22, 2009 10:36 IST

Mahindra & Mahindra's ambition of driving into the fiercely competitive market of the United States may get a fillip as some erstwhile dealers of Chrysler have agreed to sell its vehicles in response to feelers sent by M&M's designated distributor: Global Vehicles.

This will help M&M secure a stable line of dealerships fairly quickly, which otherwise is time-consuming and painstaking. Chrysler LLC last month decided to terminate business with 789 dealers -- nearly 25 per cent of its total dealership -- as part of its restructuring process.

Mahindra is moving into the US at a time when recession has forced companies to slash jobs, pushing auto sales to the lowest in three decades. The drop has been so substantial that China has now overtaken the US as the world's largest automotive market.

However, M&M will face competition from Chinese brands like Cherry Automobile Company and Geely Automobile Holding also. M&M's vehicles may appeal to customers seeking low-on-pocket personal transport, say analysts.

"We are not in the business of appointing dealerships ourselves; that is done by our distributing partner, Global Vehicles. Our partners had approached some Chrysler dealers and they have agreed to sell M&M vehicles.

However, the number is not too big," said M&M president (automotive sector) Pawan Goenka.

M&M earlier planned to market its two- and four-door pick-up trucks in the US by the end of this year, but now that may not happen before early next year. Although not a single vehicle has been sold by M&M in the US so far, its partner Global Vehicles has appointed 330 dealers so far.

Besides, the M&M brand already has a presence in the US through its tractors: Medium- to high-powered.

"Although we are close to our target number of dealers, we are still short by 15 to 30," said Goenka. Apart from the pick-up trucks, M&M will gradually introduce its flagship vehicle, utility vehicle Scorpio, in the US. The company will consider setting up an assembly line if the demand is sufficient.

Although the pricing of M&M trucks is still a secret, newly appointed dealers say they expect the 2.2 litre model to be priced at $13,000-15,000. Sources say the company hopes to sell 45,000 trucks in the first 12 months, a figure M&M won't comment on.

Swaraj Baggonkar & Rohin Nagrani in Mumbai
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