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Mahindra SA plant to benefit local market considerably

Business Section

By Teetee Zwane - SWAZI OBSERVER-10-Jun-2009

IF indeed Mahindra South Africa’s plans to establish an assembly plant in that country materialise, this would offer clients of the local branch considerable cost benefits.

It has been reported that the Indian-owned vehicle maker has said it would soon make a call on whether to set up an assembly plant in South Africa, signalling its readiness to use that country as a launch pad into sub-Saharan African markets.

Mahindra Swaziland Dealer Principal Gerard Shields said even though he had received information to that effect, nothing had been confirmed as yet. He said as far as he knew, Mahindra SA was looking for a partner to establish the assembly plant with. “However, if an assembly plant for parts and vehicles is established in South Africa, it would be a huge benefit for Swaziland because production costs would go down,” said Shields. “As it is, the company’s vehicles and parts are imported directly from India and the importation costs are high. So, if these are assembled locally (SA) it would be a great benefit for consumers in Swaziland.”

Speculation is rife that the company would probably team up with an existing assembler such as Mercedes-Benz SA, BMW SA or Volkswagen SA rather than create a plant from the ground up. Reports stated that Mahindra SA CEO Ashok Thakur said such a partnership would help the company step into the market. He said if volume grew, the company would not shy away from committing investment. Thakur was reported to have said it made sense to make vehicles in SA and export them into African countries.

India-based parent company Mahindra & Mahindra operates in more than 25 African countries and vehicles are exported from India to those countries. The Indian group, which has a manufacturing plant in Egypt, also exports fully-built vehicles to South Africa, where it has about 34 dealerships. With a manufacturing facility, Mahindra SA, which began selling vehicles in SA in 2004, could export to Southern Africa Customs Union (SACU) countries Lesotho, Botswana, Namibia and Swaziland. The company is also said to have its eye on other southern and east African countries while west Africa could also be included.

Mahindra Swaziland has been operating in the country for just over a year, with its products including bakkies, SUVs, MPVs and recently launched; tractors. Mahindra guarantees after-sales support and 95% of its vehicle parts are readily available.

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