Mahindra’s fortunes signal an Indian automotive sector in rude health
A few weeks ago Mahindra SA launched its refined new XUV300, which hinted that some sort of renaissance was occurring. We spoke to Rajesh Gupta, CEO of Mahindra SA, to get a better understanding
While focus has largely been on China, the Indian automotive industry has been quietly stacking up against the best of them.
Mercedes-Benz, Hyundai, Toyota, Suzuki and Ford all have some of their ranges built to exacting global standards from inside Indian manufacturing facilities. Thus the Mahindra XUV300 or indeed any vehicle product from that area ought to be world class.
I met with Rajesh Gupta, the recently appointed CEO of Mahindra SA, at the company’s brand new head office in Centurion.
Phuti Mpyane: I recall with clarity when Mr Mahindra arrived in SA to launch the Bolero range. Much has changed since then. Could you expand on this?
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Rajesh Gupta: Much has changed in the way the company operates. It’s now very well defined and is with established businesses, compliances and financial practices and the work/life balance of employees. Everything is neatly designed now. There is an air of positivity and contentment in the work force. It’s the ideal that is needed to thrust our new mantra of "Mahindra Rise".
PM: I do also recall that the quality of the Indian made Mahindra product was less than satisfactory.
RG: Yes, there has been a huge transition of the Indian automotive sector that has happened with the coming to end of the licence Raj in 1991. Prior to 1991 there was a cap in the terms of the number of units a brand could produce in line with Indian government legislation. Indian globalisation started after 1991, the country opening up to foreign multinationals but there was an initial gap in what the huge masses could afford versus what was being produced and brought in.
Naturally the Indian buyers started appreciating the levels of quality offered by foreign brands as the country’s GDP grew and purchasing power increased. Somewhere around 2007-08 is when it all come together nicely. This is when the process of learning and development by multinationals in the Indian low cost production, pricing processes and market buoyancy intersected successfully.
And all the locals, Mahindra and Tata included, started following the progression which also spilled out into the global export arena, which as you will notice that many of the cars that are currently sold in SA and elsewhere are actually produced and sourced from India.
PM: It’s been quite a transition from being an exclusive player in the commercial bakkie segment to the personal car sector.
RG: Yes. A bit of reflection is needed here. Our product development is a little different from the norm. The company started with production of the Willys Jeep many decades ago and this has emanated into our lifestyle 4x4 offering known as the Thar. After this the very first product we did in a very refined format was only in the year 2000 with the Bolero SUV, which is not sold here.
Then in 2002 we launched Scorpio, again a more refined form of personal vehicle and followed up with the launch of XUV500 (five-double-O) in 2011. So the next launch you will see is the new XUV500 signalling that we have now completed a cycle. So the pace of development is fast changing and we can now offer what any best player out there can offer. Now the product design and appeal is in line with what the market wants as seen with the XUV300.
PM: Could we charge the level of refinement seen in the XUV300 as the benchmark for any Mahindra product going forward?
RG: Yes, you will see a lot of new improvements but the domestic organisation is currently busy with upgrading to EURO 6 engine development regiment. Once this roll-out is completed you will see an all new Thar, a completely new Scorpio and XUV500. We expect to launch these sometime in 2020.
PM: While still on SA, how have you found working with the country’s dynamics in terms of legislation and expectations?
RG: The crisp, shorter version is that it comes from the board and the vision behind which was communicated to me was: “Go and make SA our second home outside India.” There are many good reasons to set up in this country.
We have a commitment to groom ourselves as a true South African company, and we intend to create a complete ecosystem. By this I mean we are taking it step by step to becoming a homegrown setup, from capability to manufacture, having a supplier chain that can facilitate local production and a certain number of exports very much like some of our counterparts like Toyota, Ford, Mercedes-Benz and BMW currently do.
That has to happen sooner or later. Our assembly plant is in place (KZN) and soon we will roll out our localisation aspect with the expected arrival of the negotiations delegation next month. The aim is to localise 40% of our production. We are also looking into the viability of setting up our passenger range SKD operations, perhaps the KUV series.
Then we have our other businesses portfolios like the tractor and construction business to nurture simultaneously. These businesses will now get into their second phases where we will amplify the volume and growth.
At the time of this article going to print Ford had made an announcement that the India manufactured Ecosport range would soon use engines provided by Mahindra.