Howes: Mahindra Auto marrying Silicon Valley to Detroit
Auburn Hills — If there’s a third way to run an automaker, India’s Mahindra Group is pushing to find it right in the shadow of the global auto industry.
Mahindra Automotive North America, nestled in an Oakland County industrial park hard by I-75, isn’t a Silicon Valley start-up, but its CEO served as an engineering director of Tesla Inc.’s iconic Model S. Nor is it an instantly recognized automotive brand outside its native India.
All of which seems to suit perfectly the guy whose name is on the building. Anand Mahindra is executive chairman of the Mumbai-based group with interests in autos, mobility, farm equipment, information technology, financial services — and if his hunch is right, a new North American auto brand not too many years from now.
“What I’m intrigued about is what exactly is the model of the car company of the future,” he said Monday at the official opening here of the first assembly plant to locate in southeast Michigan in 25 years. “People who are not experimenting with new ways of doing things are going to be dead.
“Nimbleness and agility find a way. How many people told Elon Musk, ‘You don’t have a hope in hell of getting into the auto business?’ We have to be open-minded enough. Even the cost of acquiring knowledge is going down.”
And that spells opportunity — for the traditional auto industry players smart enough to embrace the shift, for iconoclastic innovators like Tesla’s Musk from Silicon Valley, and for upstarts like Mahindra trying to leverage traditional automotive engineering expertise, meld it with a start-up culture and chart a third way.
Seventy years ago, the Indian automaker began assembling the Willys Jeep under contract. Now it owns South Korea’s SsangYong Motor Co., a virtual unknown in the United States that could figure in Mahindra’s automotive future here. It recently spent less than $100 million to acquire Italy’s Pininfarina SpA, the legendary auto design house now developing a premium electric vehicle for its new parent.
Mahindra is partnering with Ford Motor Co., struggling for profitability in India, to develop mobility services and electric vehicles suited for buyers and conditions in a country on track to be the world’s second-largest market after China. It’s bidding for the contract to build the U.S. Postal Service’s next-generation delivery vehicle. And it is expanding in the lucrative U.S. market, first with American-built farm tractors sold through 550 dealers and now with an off-road utility vehicle called Roxor that is designed, engineered and assembled in Auburn Hills.
“We’re now about getting a greater share of global revenue and profits,” Anand Mahindra told The Detroit News in an interview. “It’s about growth. It’s not about coming in on a mission to get endorsements. The tractor business over here proved to us that we could play with the biggest fish in the world. You can’t get a bigger 800-pound gorilla to fight with here than John Deere.”
Mahindra is seeking a third way to automotive credibility in the United States. Where the Japanese and South Koreans spent decades slowly building their brands, and the Chinese are demonstrating a willingness to buy their way into the big leagues, Anand Mahindra is pursuing both, cautiously.
Enter the market “asset-light,” as he describes it. Experiment, and leverage the brands and DNA from throughout the organization. Use the technical talent and engineering “toolkit” available in India, Pininfarina and Ssangyong to develop “something that might actually be a footprint for the future.”
Waging such an improbable battle takes people. Enter Mahindra Automotive North America CEO Rick Haas. A Ford veteran with tours in South America and later in India with Mahindra, in between he helped lead the engineering team that delivered Tesla’s Model S to deep-pocketed consumers, in the process creating an enviable brand halo now struggling through difficult times.
His concept: adopt the freewheeling cultural tics of Tesla and other Silicon Valley start-ups and marry them to the linear design, engineering and manufacturing cred embedded deeply in Detroit’s automotive culture and the talent it continues to produce.
The intended result: an arm of Mahindra that would develop vehicles for both North American and foreign markets (a compact minivan designed here is scheduled for production in India). It would move with the speed of Silicon Valley, and it would execute with the technical rigor proving to be (if Tesla’s widely publicized problems are any indication) more exemplified by Detroit than California.
Too early to know whether he’ll be able to pull it off. Mahindra started here with seven employees. It’s expected to have 250 in three locations by the end of this year — 105 of whom are expected to staff the assembly operation, with the others working in the adjacent tech center and a warehousing operation in nearby Pontiac.
Mahindra so far has invested $230 million here. It expects to invest another $600 million over the next few years, and it projects that it will employ up to 700 in its operations by 2020. Small numbers, those, by traditional Detroit standards. But that’s not the point, really.
Betting on Michigan, its business environment, its work ethic and the skills embedded in its automotive talent is the point. And it’s detailed in what Mahindra actually is doing here, namely targeting the world’s richest market for growth and using local folks and local real estate to do it.
“There’s growing interest in locating, growing and expanding in North America, and Michigan is the place you need to look at,” Lt. Gov. Brian Calley told The News. “You see tons of opportunity now that businesses right here in Michigan are doing so much better. This is the strongest automotive supply chain in the world. It’s a classic win-win.”
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.