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Mahindra finds South Africa a very lucrative market

Snapshot: Ashok Thakur, CEO of Indian automotive manufacturer Mahindra and Mahindra South Africa, explains why Africa is such an attractive new market

Until 2004 Mahindra sold only a modest number of vehicles in Africa. After the start of operations in South Africa, Mahindra embarked upon extensive market development in other parts of Africa. This included many countries in North Africa, and completely knocked-down (CKD) assembly operation in Egypt. Now that they are actively targeting the region, they have to continuously improve their products to stay competitive in a tough marketplace. 

Mahindra’s success in Southern African markets is based upon giving customers quality and reliability together with after-sales service, all at a reasonable price. In a market where it is not uncommon for drivers to cover considerable distances (often as much as 70,000–80,000 km per year), mostly in harsh conditions, cars should have off-road capability, durability and quick, accessible service to keep them in good shape. To deepen their roots in Africa, they have been trialing the assembly of cars imported in kit form. The logical next step for Mahindra would be to start production in South Africa, something that has been under consideration for a while. However, to make such a commitment, the economic and political landscape needs to be right, so they are looking towards automotive industry growth back to the pre-recession levels. Costs are also considerably higher in South Africa than in India, due to higher wages, energy and in some cases commodities. So even taking into account a 25 percent import tariff, it still makes business sense to produce vehicles in India and import them to South Africa.

Although Mahindra is one of the fastest growing motor vehicle brands in South Africa, they are encountering stiff competition from longer-established companies with wide distribution networks. Nevertheless, with the launch of their new XUV500 passenger vehicle, they are optimistic that they can raise awareness over the next 3 to 5 years and fulfill their ambition to become one of the top five car brands in the African market.

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