Assembling a new strategy in SA and gearing up for all of Africa
INTERVIEW
Mahindra sent one of its big guns out for the launch of its new PikUp in the form of the company’s head of international operations, Arvind Mathew. He arrived with a message that Mahindra is moving into a higher gear, not just in SA but in Africa too.
The big news is that the company plans to assemble some of its products in SA from 2018.
“We are seriously looking to manufacture pick-up trucks locally. We have board approval, now we have to execute,” he told us.
That implementation will be quick, with Mathew saying that he has given local executives just six months to find a site and perform an opening ceremony.
This means that the company will not move to full production, but rather semi-knockdown (SKD) kits, essentially vehicles built in other international plants which then have some parts removed for re-assembly in SA.
Strategically, he says assembly is not the best idea because it is cheaper to import the vehicles, but he points out that you cannot put a price on being a “local brand”.
It is likely that the company will source a site for assembly in Durban, but he does not rule out a partnership with a car maker that has production facilities in SA.
Mathew would not be drawn on whether any discussions are taking place, but Mahindra recently signed a global memorandum of understanding with Ford in part to expand its presence in emerging markets.
BAKKIE FOCUS
Initially the company will focus on assembling bakkies, but as it expands its product portfolio, it will also look at assembling passenger vehicles and tractors.
Mahindra is the largest tractor manufacturer in the world and Mathew sees great potential for the vehicles in SA and Africa. The company will first look at sales of tractors before assembly though. It has already homologated its 80hp and 90hp tractors for the market and will begin sales soon.
This is all part of the company’s move into new segments, but he says Mahindra also wants to increase its presence in the passenger car market. He says the company is not really known for its passenger vehicles, in spite of a major increase in its product portfolio in the past couple of years.
He promises more dealerships in and out of SA and says the company will also enter the rental and leasing markets, — these represent an opportunity to “get product out and provide free test drives”.
Beyond its existing range, will Mahindra look at its electric vehicles (EV) for SA? It already has a number of EV models and was one of the first manufacturers to participate in the international Formula E racing series.
Mathew says he has no plans to sell EVs in SA and questions their general use in the passenger car market at the moment. He says that unless you are a serious “tree-hugger” you won’t buy an EV, at least not yet.
“For you and me, it’s not worth it,” he says, adding that they make sense as taxis and cargo movers for urban delivery companies and brands like Amazon. In part his view is because of the price of batteries, but he says the costs will come down and when they do, he says there will definitely be a market for passenger EVs.
RANGE WAR
He questions the range war taking place between manufacturers such as BMW, Renault and Volkswagen and the perceptions of many people.
He says there is no need to target a range of 500km. “Give people 150km, few do more than that.”
That view is questionable given that existing EVs can mostly achieve 150km but sales remain low, mainly due to the range-anxiety issue. But he says range anxiety is not caused by the range of the vehicle, but the lack of charging infrastructure.