India calling as low-cost Mahindra arrives

INDIAN auto manufacturer Mahindra will enter the Australian new-vehicle market next year and build a long-term business based on low-cost vehicles, starting with a one-tonne utility that should massively undercut the established Japanese brands.

Having made a multi-million-dollar investment and forged a distribution deal with NSW dealer group Tynan Motors, Mahindra could emerge as early as March with its Scorpio Pik-Up – which is described as a "serious, no-frills work machine" and is expected to be priced from the low-$20,000s.

Mahindra announced the Australian deal on Monday, just days after outlining its plans to sell vehicles in the US from 2008. It also intends to introduce an SUV based on the same platform as the Pik-Up and, longer-term, budget-priced passenger cars such as the next-generation Renault Logan.

Mahindra has a "controlling partnership" to produce the Logan in India and to export to right-hand drive markets.

The Tynan Motor Group has formed an importation and distribution company, TMI Pacific, and the Mahindra franchise will be sold primarily through rural dealerships in NSW, followed by outlets in Victoria and Queensland.

A national network extending to the west coast should be in place by December next year, by which time dealer numbers are expected to total around 50.

TMI Pacific general manager Rob Lowe told GoAuto this week that 500 to 600 vehicles a year would be considered a successful start, even though Mahindra management in India has reportedly foregone specific sales targets for a long-term partnership.

"We haven’t finalised a number or target and India has not said to us: ‘You need to sell X amount.’ They’re prepared to take small steps and build the product, and they don’t want to go in there with big boots and then in two months later disappear," he said.

"Mahindra have a philosophy that they want to undercut their competitors by a minimum of about 15 per cent – as a starting point – but I think even comparing oranges to oranges, they realise that they’ve got to establish a name and reputation in the market.

"And they understand that the perception of vehicles out of India might be different to what the reality is – and that it’s going to take some time to build it.

"At the end of the day, the product is going to have to carry the load itself." Built from the ground up by Mahindra, the Pik-Up is a Toyota HiLux-style utility offered as a 2x4 and 4x4 and in various body styles including two-door single-cab, four-door dual-cab and cab-chassis configurations.

Standard equipment across the range is expected to include air-conditioning, power steering, electric windows, an alarm, CD audio, side steps and central locking. All vehicles will be backed by a three-year manufacturer’s warranty and a national roadside assistance scheme.

TMI Pacific has also undertaken to ensure parts availability, promising to fly in any item from India "overnight".

The main options will be dealer-fit accessories such as bullbars, tonneau covers, driving lights and, on the cab-chassis, aluminium or steel trays. A driver’s airbag and ABS brakes are not expected until at least 2008. Its light-commercial vehicle status also precludes the Pik-Up from compliance with rigorous Australian Design Rules required for passenger cars.

Left: Scorpio.

Driving either the rear wheels or all four wheels is a Euro IV emissions-compliant 2.5-litre common-rail four-cylinder diesel engine, producing about 74kW of power at 3800rpm and 235Nm of torque at 1800rpm.

A five-speed manual is the only gearbox on offer for now, while a four-cylinder petrol engine offered in some markets abroad is also off the list because it fails to meet Australian emissions standards.

Expected to make up the majority of Pik-Up sales in Australia, the 4x4 offers electronic on-the-fly 4WD activation and low-range gearing for dedicated off-road ability. Short front overhang for good approach angles, excellent ground clearance and a robust separate-chassis construction featuring a coil-spring front and leaf-spring rear suspension set-up will further aid the vehicle’s 4WD aspirations.

The tray length – which measures 1725 cubic mm for the single cab and 1125 cubic mm for the dual-cab – is also claimed to be best-in-class.

Mahindra’s emergence in Australia is the culmination of 18 months of work in securing an Australian distributorship. Employing Tynan as consultants, Mahindra sought advice on specification and Australia’s unique consumer and environmental requirements, which ultimately shaped the line-up being readied for sale here.

Known more for its tractors than passenger vehicles, Mahindra produces around 150,000 vehicles a year, five per cent of which are destined for export markets.

"Our exports have been growing by more than 70 per cent, year on year, although from a small base," said Mahindra executive vice-president of international operations, P N Shah. "Exports are currently only around five per cent of our total volume but our aim is to reach 20 per cent in the next few years.

"We are currently exporting to Africa, Europe, South East Asia and SAARC (South Asia Association for Regional Co-operation) countries, among others." Recalling feedback that he received after a Pik-Up prototype was put through its load-carrying and farm-duty paces in rural NSW recently, Mr Lowe quoted one farmer’s reaction to the Indian brand’s lack of recognition in Australia: "Dogs don’t know the difference, mate!"