In 2008, Brazilian market was still seeking affordable SUVs and pick-up trucks, to cater to which Mahindra joined hands with a local company, Bramont. Mahindra Scorpio was the first product to launched in Brazil, through a quite complex route.
Mahindra Scorpio discontinued in a market like Brazil, which is similar to India, comes as a surprise.Most of the body parts which are imported from India were welded, assembled and painted by Usiparts, in the state of Minas Gerais, which is over 500 km away from the port. Then the shells were supplied to Manaus, capital of Amazonas state, to integrate powertrain components (engine, transmission and axles). Then the units were sent back to Uberlândia, also in Minas Gerais, from where the cars were distributed to various parts of the nation.
Logistics cost involved in the entire import and assembly processes turned out to be unmanageable, beyond being unprofitable over the due course. Especially because demand was slow. Mahindra’s passenger car portfolio included Scorpio, pick-up and MOV (Mahindra Off Road Vehicle) which was launched just last year.
In mid-2014, the Brazilian government enforced a new law, which taxes automakers who import and assemble cars, in order to encourage local development and manufacturing. This hit Mahindra-Bramont pretty hard and the Indian automaker started contemplating on setting up a production plant there. If a plant was setup there, like many global auto OEMs have, Brazil could have been the hub for South American operations. Mahindra has only one manufacturing plant outside of India, which is in Egypt.
But it didn’t pan out to be a promising proposal, following which Bramont pulled the plug off its assembly plant recently. The collective facilities had capacity to roll out 5,000 cars per annum, but since 2008 only 4,000 Mahindra cars have been sold.
However, Mahindra tractor business in Brazil is unaffected and Bramont will continue with that.
Via – Just-Auto