India’s Mahindra Doubling U.S. Investment Over Five Years
By Mike Spector
July 17, 2017
Company chairman says ‘cycle seems to be very much in favor’ of robust American economy
Mahindra & Mahindra Ltd. EQM&M 0.05% plans to double its bets in the U.S. over the next five years, spending $1 billion in an effort to strengthen the Indian company’s brand as President Donald Trump pressures companies foreign and domestic to steer investments toward America.
“We believe in America,” Chairman Anand Mahindra said Monday during a discussion with reporters and a separate interview with The Wall Street Journal in Midtown Manhattan. He played down Mr. Trump’s rhetoric on trade, investment and immigration, pointing to encouraging business conditions in the U.S.
“For the moment, the cycle seems to be very much in favor” of a robust U.S. economy, Mr. Mahindra said. He added that he is “not the expert” on whether attractive economic conditions resulted from previous Obama administration policies or the current White House.
Mahindra’s plan, which builds on $1 billion invested in the U.S. to date, would double the company’s American employment to roughly 5,000 people, executives said. The Mumbai-based conglomerate, which executives refer to as a federation of independently run businesses, manufactures sport-utility vehicles and faces competition in its home market from established auto makers rushing to India.
Its efforts are also small when stacked against established auto makers. In the U.S., Toyota Motor Corp. plans to spend $10 billion over the next five years.
While its auto sales are far smaller in the U.S., Mahindra is ramping up more, recently establishing an engineering center outside Detroit and a nearby factory expected to start building a utility vehicle in October.
Mahindra is currently bidding to replace the U.S. Postal Service’s fleet of delivery trucks. Winning that contract would significantly add to Mahindra’s $1 billion investment plan in the U.S., executives said.
Mahindra’s U.S. presence is heavily tilted to established tractor and information-technology businesses, which will receive funds from the $1 billion investment alongside its North American automotive business and other ventures.
Mr. Mahindra said tough immigration stances such as those Mr. Trump espouses “sometimes play out over a generation” in terms of impacting business conditions.
“In the long run, America should be cautious in not losing that advantage it has built up” with immigrants contributing to startups and new technologies, he said. “In the short run, America remains a powerhouse of innovation.”
Mr. Mahindra is turning some focus to electric cars. He pointed to “staggeringly low” future prices he reviewed for batteries needed to power them that support the gasoline-engine alternatives taking a larger foothold in coming years. Manufacturers are investing billions of dollars in electric cars in part because of stringent future emissions regulations.
Self-driving technology, meanwhile, is likely to take time but take hold more quickly in utility vehicles such as the company’s tractors, he said.
“Tesla’s glamorous,” Mr. Mahindra said, referring to the Silicon Valley electric-car maker that has pushed aggressively with autonomous-driving features in, for now, expensive vehicles. “Tractors will get autonomy first,” he said.
Mr. Mahindra doesn’t expect the U.S. withdrawal from the Paris climate accord to significantly alter the company’s emissions-curbing efforts.
“America is not just Washington, D.C.,” he said. State efforts will “prevent it from getting off the climate change agenda.”
India’s goal to sell only electric vehicles by 2030, meanwhile, is “aspirational” but commendable, Mr. Mahindra said. Millions of Indian households using conventional vehicle engines in coming years is “a nightmare for the globe, not just India,” he added.