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Automobile

Mahindra reboots U.S. plans with new Detroit assembly plant

Facility to manufacture off-road vehicles

MUMBAI (NewsRise) -- Mahindra & Mahindra opened its first vehicle assembling plant in Detroit, as India's second-biggest maker of mini vans and sport-utility vehicles seeks to tap the U.S. market after a previous attempt failed to take off.

The facility that houses Mahindra's new North America headquarters will manufacture off-road vehicles designed and engineered by Mahindra Automotive North America, the company said in a statement on Tuesday.

The Mumbai-based automaker's latest foray comes after a plan to sell a pick-up truck based on its Scorpio sport utility vehicle in the U.S. was abandoned at the beginning of this decade amid a legal battle with its dealers. In 2013, Mahindra opened a technical center in Michigan to design, engineer and develop new vehicles. The company, which has been selling tractors in the U.S., also operates a greenfield tractor assembly plant there.

The new facility is part of a $230 million investment in Southeast Michigan that also includes a recently-opened warehouse and logistics operation in Pontiac, and an existing prototype operation in Troy, Mahindra said. The company also plans to invest another $600 million in its facilities by 2020 that will create an additional 400 jobs in the U.S.

Mahindra has now 250 employees in Detroit, once the cradle of global automobile industry.

The Mahindra assembling unit will be the first automotive investment in 25 years in Detroit that has declined since the second half of last decade amid rising competition from cheaper manufacturing hubs in Mexico and China.

The new facility "represents our company's growing presence in North America and locally in the Metro Detroit area," said Anand Mahindra, chairman of Mahindra. "We are committed to growing the Mahindra brand in North America and Michigan."

According to a Reuters report, the company is also testing autonomous tractors, trucks and cars, and is inching closer to bringing electric vehicles to the U.S. It is considering when to begin U.S. sales of the vehicles, the agency quoted Mahindra as saying in an interview.

In September, Mahindra tied up with former partner Ford Motor in a bid to access to the American company's technology and global distribution networks to expand into new markets in the U.S. and China.

Selling in the U.S. market will be one of the toughest tests for Mahindra in gaining global recognition for its vehicles. A success in the U.S. will also help partly insulate the automaker from intense competition at home from new and existing players such as Maruti Suzuki India, Tata Motors, and Jeep.

Over the past one year, Mahindra had been grappling with slowing sales and shrinking market share amid fewer vehicle launches and rising competition as several automakers introduced new SUVs in India. Sale of industry-wide SUVs expanded 30% in the year ended in March, outpacing a 3.9% rise in overall car sales.

Mahindra lost its dominance in the nation's SUV market to rival Maruti Suzuki, whose compact models Vitara Brezza and Ertiga wrested market share away from the entrenched rival.

Shares of Mahindra rose 0.7% in Mumbai trading on Tuesday. The benchmark S&P BSE Sensex gained 0.4%

--Dhanya Ann Thoppil

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