No, Seriously: Mahindra Is Planning Another Run At The U.S. Market

April 14, 2015

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?

If you're Indian automaker Mahindra & Mahindra, you'd choose Plan B. According to Detroit News, however, Mahindra is planning another go of it, and this time, it's using Plan A. 

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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.

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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. 

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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.

Mahindra seems desperate, and like desperate people, desperate companies often make bad decisions. Mahindra is so obsessed with being a world player in the auto industry that, at last count, it was seriously considering an ownership stake in Saab -- a brand that hasn't been profitable for decades despite countless people who've sworn that they can "fix" it.

Mahindra's best chance for success -- perhaps its only chance -- is to focus on electric vehicles like the E20 model pictured above, which launched in India in 2013. As Tesla has shown, the shift from fossil fuels to electricity has opened the door of the U.S. auto market, and for now, it's possible for new companies to get their feet in that door.

Of course, to do so, Mahindra will have to have the right product (as Coda did not). What that product might be and when it might appear is anyone's guess.


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