Mahindra charts possible paths onto U.S. roads

Ian Thibodeau
The Detroit News
Jacob Myers,19, installs tires on a 2019 Roxor at the end of the assembly line at the Mahindra automotive plant in Auburn Hills.

Auburn Hills — Mahindra Automotive North America's first U.S.-built Roxor rolled off the line here about a year ago, and already top officials at one of southeast Michigan's newest manufacturers say they'll soon need more capacity.

The off-road vehicles they build here aren't street-legal. But they're selling much faster than the Mumbai-based company expected, a testament to Roxor's rugged Jeep-like demeanor and the company's ability to offer the units in a wide array of colors.

The Indian automaker is also considering entering the U.S. market with a small minivan one day, said Pawan Goenka, managing director of parent Mahindra and Mahindra Ltd, in an interview with The Detroit News. 

One thing is certain, he added: Mahindra is striking a chord in the United States with its small footprint, making it more likely the lucrative market is sure to attract a larger presence from India’s largest producer of SUVs in the future.

But there's still more work to be done. This also isn't the first time Mahindra officials have said they want to sell vehicles here, only to abandon its plans. The automaker currently builds roughly 30 Roxor off-road utility vehicles a day at the 150,000-square-foot factory in Auburn Hills. They're made for recreation, hauling over rough terrain, grounds-keeping and beach patrols, traversing everything from sand to forest floors.

For now, the automaker is working on introducing itself to would-be American buyers. The Roxor isn't on any U.S. highway — at least not legally. It was meant to test the U.S. appetite for Mahindra's product. But at the Detroit auto show this year, Mahindra North America CEO Rick Haas, a veteran of Ford Motor Co. and Tesla Inc., fielded lots of questions about the brand. People wanted to know more, though most didn't know anything about the company to start.

"People were asking 'Who is Mahindra?'" Goenka said. "We have to do more work to make sure people don't ask that."

Continuing partnership talks with Ford could help with that, Goenka said. Mahindra and Ford are partnering in India and emerging markets such as South Africa on SUVs and electric vehicles. Ford hopes to expand its share of the growing Indian market, and the Blue Oval's global position could help Mahindra grow its brand outside its home country.

A year after the first Roxor rolled off the line here in Auburn Hills, the automaker has several potentially lucrative paths into the United States.

It's still a contender for a contract with the United States Postal Service to build a fleet of new delivery vehicles. If Mahindra wins the contract, it would have to open a new plant in the United States to fill the order. If that happens, it could lead to a larger U.S. presence for the maker of India's most-popular SUVs. 

The 2019 Roxbox concept vehicle will be manufactured later this year, according to Mahindra.

Goenka and company would launch with a capable, durable vehicle, if they decide there's a place for Mahindra in a shrinking and increasingly competitive U.S. vehicle market. Mahindra would launch "tough, rugged" vehicles that would be less expensive than other U.S. brands — but not cheap.

"If we try and play that game of coming in with an inexpensive vehicle, then we are playing a commodity game," Goenka said. "And that's not a game that's fun. Then there's no reason to come to the U.S. to play that game.

"There's enough market outside the U.S. and we are growing quite well. Why would we come to the U.S.? To help build the brand. And I don't think it will help build the brand by launching cheap products."

Mahindra currently builds "niche" vehicles in the U.S. A mainstream product would take a similar approach, Goenka said. Street-legal vehicles would be highly capable, rugged off-road vehicles, he said.

That's met with skepticism by some. The U.S. auto market has killed many new brands. Some, such as Tesla Inc. and even the Plymouth-based Rivian Automotive, have made an impact by offering innovative products — though each face long, tough roads as automakers with more capital and larger footprints inch into the electric vehicle space. 

A Mahindra military vehicle is on display in the lobby of the company's Auburn Hills facility.

Meantime, U.S. sales are slowing, and every automaker playing in the U.S. market is offering bigger, tougher, more expensive SUVs and trucks while they kill passenger cars. Chinese automaker GAC Motor continues to promise they're coming to the U.S., though it recently pushed back the launch date to 2020 because of trade tensions between the United States and China. And Mahindra has said before that it might launch a vehicle here.

"They have been looking at this for a long, long time," said Michelle Krebs, an industry analyst with Kelley Blue Book. "It takes an immense amount of capital. It's always more than they expect. They need to have a compelling product that meets American standards. There are a lot of unknowns."

The U.S. market isn't completely alien, though. India's auto market has shifted heavily to SUVs and crossovers in recent years. And other foreign automakers have found success here. South Korea's Kia Motors Corp. is one of the most recent examples. European brands also have found traction. 

For Mahindra, there are many variables that could determine the Indian automaker's future in one of the world's largest auto markets. If it happens, Goenka said the U.S. market would get a product that could sell in other global markets that might slot into a segment other automakers don't have — like, say, a small van. 

"The desire to come to the U.S. has gone up," Goenka said. "But still it's a long journey. We are nowhere near saying we're ready for the U.S."

Twitter: @Ian_Thibodeau