If you were the CEO of a foreign car company and you wanted to break into the bustling U.S. auto market, how would you do it? Would you:
A) Approach the expansion slowly, thoughtfully, and strategically, building on your success in related businesses?
B) Boldly state that you're going to show America how its done with a killer lineup of trucks and SUVs, find an importer, build a network of dealerships, milk that importer and those dealers for boatloads of cash, then take the money and run?
MAHINDRA VERSION 1.0
In the wake of the Great Recession, Mahindra thought that the time was right to enter the U.S. auto market. The mega-company already sold tractors and other commercial vehicles here, so it seemed reasonable to expand sales using the passenger trucks and SUVs it launched in India a few years earlier.
So, Mahindra picked an importer, Global Vehicles, and began lining up dealerships to sell the coming onslaught of Mahindra-branded vehicles, which Americans would surely buy by the dozen.
Alas, the dream never came to pass. Some say that Mahindra got cold feet, terrified by the sight of so many auto brands shuttered in the wake of the global financial meltdown. Others insist that Mahindra never acquired the cash necessary to carry out its scheme. And still others claim that Mahindra was upset with its U.S. dealers, who -- shockingly -- insisted that the automaker stick to its word and deliver vehicles on time.
Mahindra's official party line was that strict U.S. auto regulations made breaking into the market too challenging. (Considering India's car laws, there's probably some truth to that.)
Ultimately, numerous suits were filed against Mahindra, but the company prevailed. A couple of years later, the bad taste lingers in many American mouths, but Mahindra is undaunted, gearing up for another assault.
MAHINDRA VERSION 2.0
Last year, Mahindra opened two small facilities in Michigan -- one dedicated to engineering research and development, the other to building GenZe-branded scooters and e-bikes. Though the latter are far cries from passenger vehicles, Mahindra says that they'll help test the waters for larger product lineups.
The company hasn't said when or if it will begin selling passenger vehicles like those it sells in India and elsewhere. It hasn't said whether those vehicles might be imported or built in the U.S. And it's still debating whether to brand these hypothetical rides with the Mahindra marque or that of its subsidiary, South Korea's Ssangyong.
In other words, this time around, Mahindra isn't going to overplay its hand.
It's easy to dislike Mahindra. No one appreciates a person or company that backs out of a deal -- especially when that deal has involved the expenditure of so many hours and dollars.
On the other hand, Mahindra had the smarts to realize what another would-be player, Coda, did not. Mahindra knew that it didn't have the goods to go big, so it went home.
In the short term, we give Mahindra a 50/50 shot at entering the U.S. auto market and less chance of actually succeeding.
Why so pessimistic? One word: desperation.