‘For M&M to be truly global, we need a second home market’

Pawan Goenka looks thoughtful when the topic veers around to the need for auto-makers to go global.

The Managing Director of Mahindra & Mahindra then throws up a couple of questions to elaborate on the subject. “Is it for business growth? I don’t think so because India has ample growth opportunity. Is it for technology access? Perhaps not so, because technology is also easily accessible,” he explains.

From Goenka’s point of view, there are two obvious benefits that accrue from going global. One, a lot more competitiveness sets in because the levels across segments are a lot more intense outside India than within. Two, it helps the brand since customers look for global brands more often than not “no matter where you are”. They look to see in which other part of the world it has succeeded and this by itself becomes an attractive reason to buy the brand.

“Globalisation becomes important from the brand development point of view and the perspective of people changes significantly,” says Goenka. It is also his view that succeeding in a market like the US puts a brand in a different space than merely pulling it off in India.

Work abroad and return

“I always tell youngsters seeking my advice that they should always work in the US for five years to get fresh perspectives and then come back. But those who have never left the country would always have something missing that they have not been exposed to,” says Goenka. He knows what he is talking about having spent years in the US before choosing to return to India. In the same way, this kind of globalisation is important for a brand like Mahindra too. Clearly, there is still some way to go even while the company has made some significant acquisitions like SsangYong in Korea and Pininfarina in Italy.

Likewise, the intent to grow in the US market has taken off in the form of Mahindra Automotive North America (MANA) in Detroit, which has collaborated with teams in India for the Marazzo multi-purpose vehicle to be launched next week. All this, however, does not mean that the global target has been achieved. On the contrary, there is still a lot of work ahead to make it a reality.

“For us to be called truly global, in all fairness, we need to have what we often internally call a second home market. This means another market where we are a significant player,” explains Goenka.

‘Not there yet’

He is candid enough to admit that Mahindra is still “not there yet” in the auto business and needs to develop one or two markets where it can emerge a significant player. This ideally should be on the lines of its small tractor business in the US, where it has made a mark but that remains just a solo region in the world map where Mahindra as a brand has significance.

“We are still very small in other places and there is more reason to develop a second home market,” observes Goenka. In the auto business, there is only Nepal, Bangladesh, Sri Lanka and other neighbouring countries. Press him further and the Mahindra MD replies that “South Africa perhaps could be our second home market” considering that business is reasonably good there.

To that extent, there is tremendous work to make the global dream a reality even though the intent is in place. Auto-makers like M&M also have to contend with the fact that the global landscape is changing rapidly. No longer do things work in a predictable pattern, with a host of mobility disruptions underway right from the likes of Uber to electric and connected cars. Things are no different back home in India where the industry will now need to factor in big ticket changes like Bharat Stage VI emission norms, which become a reality in April 2020 as well as a host of clean fuel alternatives. “Most of what is happening is for a good cause and you cannot find fault with the need for cleaner and safer vehicles or better fuel efficiency. The only thing we get concerned about is the timing of doing these things since they do take time,” says Goenka.

Addressing challenges

For instance, it is fine to address one issue but becomes a daunting challenge handling half a dozen more almost simultaneously. As he says, not everything can be deemed “very urgent” though it is now increasingly clear that auto-makers need to be prepared for many scenarios in order to remain stronger a decade from now.

“There is no way you can make a five-year plan, which is linear. Any (five-year) plan will need to have many branches that come depending on what happens three or six months from now,” says Goenka. In the process, one will end up “changing course or going through a very turbulent river” to move on ahead.

There is really no choice by the end of the day. “This has to be done and if you cannot do it, you are out of the game. There is nobody who can say I am safe for the next 10 years — nobody!” reiterates Goenka. Hence, to tide over this, manufacturers create options since change is inevitable and they will have to cope with it.

This also explains why many of them are forging alliances to stay ahead of the race. This is particularly evident in Japan where Toyota and Suzuki have joined hands while Nissan has taken a controlling stake in Mitsubishi. Why, even old foes, Honda and Yamaha are jointly working on small scooters for Japan and there is every likelihood of the partnership getting stronger.

Alliances

M&M, likewise, is back with Ford (they were partners for the Escort two decades earlier) and a host of options are being discussed. The Indian SUV-maker is also deepening its bond with SsangYong, which it acquired in 2011. A lot of work is being done on powertrains and the results will be known in the coming months. “On the vehicle side, we have S201 on the X100 platform and G4 Rexton, which is coming next year,” says Goenka.

There is some work happening on the next platform too but this is clearly a more difficult exercise because of different requirements for the Korean and Indian car markets. Goenka is visibly pleased with the progress made with Pininfarina, which has seen some collaborations happening with the design teams in Italy and India. While a lot of work was done on the Marazzo, the more interesting initiative was with the Furio commercial vehicle range.

It was perhaps for the first time that the Italian design firm had worked on a truck globally where insights were sought from end-users in locations like vegetable markets at unearthly hours in the morning.

The Pininfarina team is now working on a tractor for Mahindra, which will be something to look forward to. Goenka will have reasons to feel optimistic about the road ahead.

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