In a bid to get greater access to the South American market, Mahindra & Mahindra will form a joint venture with a local player in Brazil for its tractor business. This is in addition to its earlier announced move to acquire a tractor distributing firm in the country.
Speaking to BusinessLine , Mani Iyer, President and CEO, Mahindra North America, said: “We are very serious about South America and have tall plans in terms of launching products and localisation. We have already made investments in acquiring distributors there. As we are very new to that market, we will look for a joint venture based in Brazil.”
Mahindra has identified Mexico, Brazil, Argentina and Chile as the four key South American markets for its tractor business. “We have learnt a lot from the US and will use the expertise we have gained, to be among the top-three in the new markets,” Iyer said. “Brazil will be the centre for our South America rollout.”
Mahindra is currently the number-three tractor brand in the US with sales of nearly 25,000 units a year, just behind regional strong players Kubota and John Deere. The company expects to double its revenues to $1 billion by 2020, up from $600 million now. In addition to tractors, Mahindra also sells utility vehicles in the US.
To achieve this growth, Mahindra is spending millions of dollars in advertising to improve its brand awareness and will continue to spend more. While it also has rolled out attractive warranty and insurance schemes for its users, the one thing that has worked in Mahindra’s favour is, it has been able to brand its products as the ‘toughest tractors in the world’. “Rivals can copy when it comes to schemes and offers, over a period of time, but building a tractor that’s tougher than Mahindra at current price points can never be done by our competitors,” said Cleo Franklin, Chief Marketing Officer and Vice-President (Strategic Planning), Mahindra North America.
The company is also undertaking a major revamp of its product portfolio with as many as 40 new launches this year, including upgrades of existing models. “We have never done a revamp of this scale before. This is part of our strategy to stay ahead of competition and bring features that our customers have been asking of us,” said Franklin.
Mahindra has unleashed an aggressive campaign to reach out to consumers, including women and millennials. To meet localisation needs, the company has invested in setting up assembly units in the country and is now looking to invest in a greenfield manufacturing facility for tractors in the US in the next 3-5 years. “We already have invested a lot — brand, technology, distribution points, dealers and people. The number of products being made for the US market alone is very high. It will call for more localisation,” Iyer said.
Mahindra has nearly 550 dealers in the US, which will be scaled up to around 750 over the next 2-3 years. It also has five distribution centres in the country and one in Canada. The tractor maker is in the process of opening up distribution in Mexico.
(The writer is in Houston at the invitation of M&M)