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Indian automaker outsources to Detroit

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Indian automaker outsources to Detroit

July 21
09:38 2015

Many companies outsource work to India — but a major Indian company is outsourcing key automotive engineering work to the U.S. even though it does not sell vehicles here. In an interesting twist, when Mahindra & Mahindra wanted to expand its global vehicle development capabilities, it recognized there was insufficient talent in India. Executives looked at creating a technical center in Germany, Italy; England, and California, among others, before deciding Detroit was the true epicenter for automotive development and testing, said Richard Haas, CEO of the Mahindra North American Technical Center, now located in Troy.XXX MAHINDRA_3PICKUP TRUCKS_.JPG

Today the center has a staff of about 80, mostly engineers with plans to grow. Mahindra also has an electric scooter manufacturing plant in Ann Arbor, Mich., that will launch production in November. The two facilities have a combined investment in Michigan of about $30 million. And Mahindra is in the running for a $5 billion contract with the U.S. postal service to supply 180,000 vehicles a year for five years. Someday the Mumbai-based automaker could sell SUVs and pickups in the U.S., although past goals to do so by 2010 did not come to fruition, in part due to issues with the company it selected as a distributor.

But the importance the company places on Detroit know-how is evident in the fact it established a $5-million technical center in Troy to come up with future products that might not be sold on this continent. Analyst Stephanie Brinley of IHS Automotive said having a presence here will also help Mahindra eventually break into the U.S. market, as well. And Mahindra specializes in trucks and SUVs, which are Detroit’s specialty.

Mahindra started as a steel trading company in 1945 and branched out into carmaking with a license to make Willys Jeeps for the India market. Mahindra still makes the Jeeps which are sold in India as the Thar. The SUV has not changed much from the original Jeep, with a diesel engine, manual transmission and choice of two- or four-wheel drive. Fiat Chrysler Automobiles plans to start selling Jeeps in India this year. Mahindra officials are not sure what the ramifications will be. “It’s a bit awkward,” said Haas.