Mahindra & Mahindra mulls upon building an assembly plant in Southeast Asia

Tuesday 13 December 2011, 12:26 PM by

In a bid to explore new arenas and unearth their potential in the best possible way, Mahindra & Mahindra, India's largest utility car maker, has decided to give rise to an assembly plant in Southeast Asia. With this, the company aims to proliferate in markets like Thailand, Indonesia and Malaysia.

The upcoming plant would operate to serve the needs of the whole of Southeast Asian region, and is expected to become functional in the next two years. The development plan undertaken by the company is believed to emerge as a force, in future, which would push the company to new highs and confirm its presence in the market as a global player.

Pravin Shah, Chief Executive, international operations, automotive & farm equipment sectors said, "SEA markets are important, big markets for M&M's overseas growth and for expanding our global presence. We are at present in talks with various parties and evaluating the various possibilities for setting up base with appropriate business model."

The Asian Free Trade Agreement has provided M&M with the much needed boon as a host of opportunities, to operate in trade block markets, have come its way. The agreement favours M&M even as the member countries have lowered the duty structure by about 0-5%. "The company is exploring Indonesia, Thailand for the automotive business, and from the tractors perspective, Thailand, Malaysia and Myanmar is on the radar," Shah added.

Mahindra & Mahindra mulls upon building an assembly plant in Southeast Asia | CarTrade.com
Mahindra assembly plant

The Southeast Asian market would eventually widen its ambit and strengthen its position by offering varied products ranging from Mahindra & Mahindra's utility vehicles to pick-ups, SUVs by Ssangyong and Mahindra tractors. Joining the league would be Chinese tractor joint ventures Jiangling & Yeuda Tractors.

At present, M&M makes its vehicles available to Malaysia and expanding its market base in the ASEAN region is very much there on the cards. As a matter of fact, the primary ASEAN markets have the bandwidth to produce more than 700,000 units of utility vehicles and pick-ups per year, along with 55,000 units and above of tractors.

M&M has envisaged that over the coming four to five years, this region would contribute for at least 15-20% of its total export volumes. The company has chalked out strategies that would aid in doubling up the overseas earnings to the tune of $1 billion by 2013. M&M would also strive to add weight to its volumes and achieve a two-fold increase of 100,000 units, which excludes the products of Ssangyong .

During the fiscal year 2011, M&M managed to export 17,000 units of utility vehicles and pick-ups, along with 11,000 tractors. Since then, the company has recorded a significant rise of 69% in its automotive exports, whereas the tractor exports witnessed an escalation of 16%.

Thus, it seems that Mahindra & Mahindra does not wish to bank on its automotive assembly plants in Brazil and Egypt only and thus, mulls upon taking a big stride towards enhancing its image in the market.

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