Mahindra & Mahindra is betting big on its tractor business in the US where it expects to double its revenues to $1 billion in the next three-four years. 

“We want to double the revenue (of Mahindra North America, which sells tractors and UTVs in US and Canada) in the next three-four years. We were a little over $500 million last year (FY16). The plan is to double the revenue to $1 billion,” Mani Iyer, President & CEO Mahindra North America, told BusinessLine . 

The company is looking at aggressively growing in not just the US but also expanding into Americas.

“Mahindra North America will soon expand its operations to Mexico. We are currently only in the US and Canada. We will expand our operations to Mexico and Central America. Eventually, we plan to expand to South America,” Iyer said.

Exports, currently, contribute a small percentage of revenue for Mahindra tractors, which is the largest tractor company in the world. In the US, the company started its operations in 1994 and has moved from the fifth position in 2008 to becoming the third largest player in 2016.

“We had one assembly and distribution centre in Houston, Texas, which we expanded in 2012. Then we opened four more distribution centres in the US. We now have one each in Tennessee, Pennsylvania, Kansas and California. We have also invested heavily into our supplier partners,” Iyer said.

Mahindra North America currently sources its tractors from Mahindra factories in India, Japan and South Korea and assembles them in its five factories in the US. 

Utility vehicle market

Mahindra is also tapping into the utility vehicle market in the US, which is bigger than the tractor market. The tractor maker entered the space in 2014 through a strategic partnership with an Arkansan-based UTV company Intimidator.  “We have doubled our UTV product line to 13 over the last 1.5 years. UTV market is a larger market than the tractor market in the US. We are very serious in becoming among the top 5 in UTVs as we are among the top 3 in tractors. We will soon integrate Mahindra engines into UTVs,” Iyer said.

The US is still the third largest market for Mahindra tractors after India and China. It sells close to 80,000 tractors a year. Mahindra North America contributes about 24,000 tractors a year and has grown 4.5 times over the past five years. 

The company now looks at doubling its sales in the US through expansion within the US and the Americas. In the UTV segment, it expects to grow to 10,000 units a year from the current 2,500 units it sells. 

To achieve this growth, Mahindra is spending millions of dollars in advertising to improve its brand awareness. It has spent over $100 million in the last five years on marketing and will continue to spend more.

It is also looking at acquisitions that could help it start manufacturing locally. 

The US is also acting as an innovation hub for Mahindra where high competition is forcing the company to introduce newer technologies and features which can then be taken to other parts of the world.

“The US EPA norms among the most stringent in the world — gives us a platform to go more green in India. Even the usage, the features, the ergonomics and the expectations of the customer are more in the US than it is in any other part of the world. It just prepares you to take some of those advancements back to the country and continue being the market leader,” Iyer said.

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