The governments in the past never pushed for local manufacturing, as a result vehicles are imported with a import duty in the range of 200-300%, making them extremely costly.
By Pritish Raj
Mahindra & Mahindra has set up an assembly plant in Colombo, Sri Lanka, as part of its initiative to push more volumes in the international market, at a time when domestic demand has been weak for the past one year.
The Mumbai-based automaker will from Saturday start assembling compact SUV KUV100 at the new plant, with a production capacity of 5,000 units per annum.
In collaboration with Ideal Motors of Sri Lanka, the plant has been built with an investment of over Rs 80 crore. The resultant entity has been christened Mahindra Ideal Lanka. While Ideal Motors will own 65% of the joint venture, M&M will own the remaining.
Pawan Goenka, managing director of M&M, said the company would roll out more products over the next three years from the plant. “This is the first passenger car assembling plant in Sri Lanka. Sri Lanka is a key strategic market for us and we are now fully equipped to deliver products customised to local needs, on time,” Goenka said.
Annually, about 30,000-35,000 cars are sold in the island nation, of which only 20% account for the new car sales. Largely an import-driven market, the country is dependent on imported used cars, locally called reconditioned cars.
The governments in the past never pushed for local manufacturing, as a result vehicles are imported with a import duty in the range of 200-300%, making them extremely costly. For instance, a Mahindra Scorpio, priced at around Rs 15 lakh, will be sold in Sri Lanka for around Rs 40 lakh.
Mahindra Ideal Lanka will localise four components — batteries, tyres, seats and exhaust — to lower down the cost to some extent. Spread over 10 acre, the plant in Sri Lanka will employ around 200 people. It was inaugurated by Sri Lanka PM Ranil Wickremesinghe.
Travel for the story was sponsored by M&M