Nashik: India’s top utility vehicle and tractor maker, Mahindra & Mahindra Ltd is open to more alliances but will avoid tying up with too many partners, its managing director said on 4 April.
Mahindra, which has forayed into cars with a joint venture (JV) with France’s Renault, also has an alliance with Renault and Nissan Motor Co. for a greenfield project in southern India to make 400,000 vehicles in seven years.
Mahindra holds 51% sharein a JV for commercial vehicles with Navistar International.
“We don’t want to be too promiscuous,” Anand Mahindra told reporters at the plant in Nashik, north west of Mumbai, where 50,000 Logan cars will be rolled out.
“Having too many conflicting alliances doesn’t help. Right now, our energy is focused on making the Logan a success,” he said.
The joint venture with Renault, in which Mahindra has 51%, has a non-compete clause that prevents the Indian company from tying up with other firms for sedans and station wagons, the segments in which the JV will be present.
But it does not preclude Mahindra from joining with other car makers for other segments, Mahindra said.
“Alliances have a strategic role in auto, as there are niche segments,” Mahindra said.
Mahindra’s JV with Renault and Nissan for the greenfield project is a manufacturing alliance that can be opened to another firm, he said.
“It is a completely secular manufacturing back-end for which the three companies have come together. Tomorrow, if there is some unutilised capacity and the three of us agree, we can offer it up to a fourth firm,” he said.
While alliances are the preferred route in autos--where Mahindra first had a venture with Ford Motor Co. when the U.S. car maker entered India more than a decade ago. Mahindra would opt for acquisitions in the tractors and farm equipment space, he said.
“In tractors, acquisitions help inorganic growth, so acquisitions may be more important because the goal there is to also grow volumes and market share,” he said.
Mahindra, the world’s fourth-biggest tractor maker said it aims to be the top firm. It recently bought 43.3% in Punjab Tractors Ltd, strengthening its leadership in India, the world’s top market for tractors by volume.