M&M eyes assembly line unit in US before foray

Written by fe Bureaus | Mumbai | Updated: Aug 30 2009, 05:04am hrs
Mahindra & Mahindra (M&M) is looking to acquire facilities for assembly line production in the US as it sets to enter the market early next year. The company will initially introduce its pick-up truck in the US, to be followed by sport utility vehicle Scorpio by 2010-end.

"We are looking at both the options of acquisition and setting up facilities for assembly line production in US. However, acquisition seems a more feasible option," said RN Shah, executive vice-president of international operations, automotive sector, Mahindra & Mahindra (M&M). He added that the company would sell its products as completely built units (CBU) in the US. "We have to eventually look at assembling products to avoid the import duty of 25%," he said. In a full year of operation in the US, the company hopes to achieve a sales figure of 1,000 units.

M&M shares were up marginally to close at Rs 825.80 on the BSE on Friday.

M&M has already spent around $80 million on readying its products for the US market, and would spend up to $100 million. Last financial year, the company saw a drop in its exports by 38% to 9,000 units from 13,000 units in 2007-08. The company exports Scorpio to markets in Africa, Latin America and Europe. Bolero is exported to the African market.

In July, the company's total sales stood at 22,463 units against 18,407 units during the same period last year. Regarding export plans for Xylo, a multi-purpose vehicle, Shah, said, "Currently, Xylo is going to South Africa and neighbouring countries. Our focus is to expand in the right-hand drive market first and then prepare for the left-hand market."