Mahindra Takes Aim At The U.S. Market

Mahindra & Mahindra, one of India’s largest tractor conglomerates, may be bigger than Deere globally but the company has just begun competing on Deere’s U.S. home turf. In India, where four out of 10 tractors are Mahindra’s, farmers who can’t afford big investments, prefer the company’s no-nonsense equipment. American buyers expect more luxury in their tractors, so Mahindra has added automatic transmission, air-conditioning, cruise control, and sunroofs to its U.S. models to compete with the likes of Deere.

Mahindra’s tractors in the U.S. range from the 22hp Max 22, and sell for $12,690, to the new 100hp mForce, which starts at $51,875. Mahindra executives, who say they don’t want to compete on price, find other ways to lure customers away from market leaders Deere and Osaka-based Kubota.

Following the example of Hyundai Motor, which used especially long product warranties to gain acceptance in the American auto market, Mahindra offers a five-year warranty on its tractors in the U.S., compared with the standard two years offered by Deere. And in 2011, Mahindra launched a finance company for its American buyers that offers zero percent financing with no money down for 84 months. Deere offers zero percent interest on 60 month loans.

They have also rolled out a military appreciation program providing U.S. and Canadian veterans and their families with $250 rebates.

Mahindra had 8% of the U.S. market for small tractors by the end of 2012, according to the company, enough to rank third behind Japan’s Kubota and Deere. Franklin says that share reached the “high single- to low double-digits” in this year’s first quarter. Mahindra has more than 400 dealers, up from 250 in 2010, and plans to have as many as 650 by 2015. Japan’s Kubota has more than 1,100 dealers in the U.S.; Deere has 1,542 outlets across North America.

Not everyone’s sold on Mahindra’s strategy. Targeting small tractors won’t yield significant profits, says BMO Capital Markets analyst Joel Tiss, who calculates the market for tractors with 100hp or less is worth roughly $5 billion annually, or about 10% of the total. The U.S. will be “a long, long slog,” he says.