Mahindra Seeks Expansion into South African Market Amid Increased Competition from Chinese Rivals

Mahindra Seeks to Upgrade South African Plant Amid Rising Demand for Affordable Vehicles

Mahindra & Mahindra Ltd., India's second-largest automaker, is at an advanced stage of assessing plans to upgrade its South African plant, according to people familiar with the matter. The company is looking to capitalize on rising demand for affordable vehicles in the region.

Mahindra has been working with the state-owned Industrial Development Corp. (IDC) to assess the feasibility of setting up completely knocked-down (CKD) production at its facility near the port city of Durban. The company currently assembles semi-knocked down vehicles at the plant. If the plan is implemented, it will represent an upgrade in local manufacturing capability and indicate deeper investment in the domestic market.

The growth in South Africa's mid-market segment has attracted Chinese and Indian rivals, including Chery Automobile Co. and Suzuki Motor Co., which have eaten into the market share of companies such as Ford Motor Co. and Mercedes-Benz Group AG. Expanded local facilities may allow Mahindra to sidestep potential import tariffs being weighed by President Cyril Ramaphosa's government to spur domestic auto manufacturing, the largest component of the nation's factory output.

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Mahindra's plan may also help the company boost sales and compete with other manufacturers, including Toyota Motor Co., which remains the nation's biggest seller of cars. Chery, China's top car exporter, has agreed to buy Nissan Motor Co.'s plant in South Africa, while Mercedes is considering sharing its manufacturing plant in the nation with Great Wall Motor Co.

Mahindra manufactures its Pik Up light trucks at the facility, which were popular with local farmers and are also used by police in neighboring Mozambique. The company opened its assembly plant in 2018.

India's Tata Motors Passenger Vehicles Ltd. has also resumed selling cars in South Africa after a lengthy hiatus. Tata ships the cars from India.

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