Mahindra & Mahindra to invest $900 million (Rs 4,951 crore) to develop platforms with SsangYong Motor
Utility vehicle major, Mahindra & Mahindra (M&M) is investing $900 million ( 4,950 crore) over the next four years to develop three new platforms and six engines in collaboration with its South Korean subsidiary SsangYong Motor Corporation, a top executive said.
M&M president for the automotive division, Pawan Goenka, said that the company would invest an additional 5,000 crore for developing products indigenously till the end of 2014.
"We have plans to bring in several new products to be developed jointly by both the companies and would meet this expenditure partly through fresh equity, internal accruals and external commercial borrowings," he said.
M&M had acquired 70% stake in SsangYong Motor in March 2011 for $463 million and Goenka is also the chairman of the South Korean firm.
SsangYong had launched its first sports utility vehicle in India, the Rexton, on October 17. The vehicle will be assembled by M&M at its Chakan unit with parts sourced from the South Korean firm.
The company will also invest another 200-250 crore over the next three years in its local commercial vehicle subsidiary, Mahindra Navistar Automotives Ltd (MNAL) and Mahindra Navistar Engines Private Ltd (MNEPL). M&M has already announced plans to buy out Navistar Group's stake in both the ventures.
It is exploring opportunities to launch a 16-tonne bus and a commercial vehicle in the intermediate segment investments for which would be made separately. "The joint venture has incurred significant losses, but we are committed to support operations. We will invest in new and upgrading the existing products. We are also looking at going beyond the current portfolio and revisiting two gaps in our product range, a decision on which will be taken over the next two to three months," Goenka added.
M&M had declared plans to buy out its US partner's 49% stake in the joint venture MNAL and MNEPL for 175 crore in December last year. The company had so far invested over 800 crore on new products and engines for the Indian market. It had sold 8,535 units between April and December of the current financial year, a decline of 10.21% over last year. Pitted against bigger rivals like Tata Motors and Ashok Leyland in the domestic market, Mahindra Navistar is targeting sales of 40,000 to 50,000 trucks in the next three to four years.