Manufacturing the Mahindra way: India's largest SUV maker turns the design, development and testing reigns over to its suppliers. Could mainstream OEMs be next? - original equipment manufacturers - Cover Story

Automotive Industries, Oct, 2002 by Andrea Wielgat

India's Mahindra & Mahindra may have done the unthinkable.

The company has broken the unspoken rule that says automakers must design, engineer and test their own vehicles while spending hundreds of millions of dollars in the process. Along the way they can divvy up contracts to suppliers who will build the components for them.

Mahindra, instead, tried something suppliers had been suggesting for years. The company built a brand-new vehicle with virtually 100 percent supplier involvement from concept to reality for $120 million, including improvements to the plant. The new Mahindra Scorpio SUV had all of its major systems designed directly by suppliers with the only input from Mahindra being performance specifications and program cost.

Design and engineering of systems was done by suppliers, as was testing, validation and materials selection. Sourcing and engineering locations were also chosen by suppliers.

It's a concept that saved costs for both Mahindra and suppliers. But is it a concept that could be used in the U.S., Europe or Japan?

Yes, say both Mahindra and suppliers.

Mahindra & Mahindra is India's largest sport-utility vehicle maker and ranks about 25th in terms of the world's automakers. It started building Willys Jeeps for the Indian market in 1954 and eventually built its own SUV--the Scorpio--based on the Willys Jeep.

Up until about eight years ago, Mahindra was the only SUV maker in India. Now the company holds about 50 percent share of the segment.

When Mahindra sat down six years ago to talk about the next generation Scorpio, it had a big decision to make, says Pawan Goenka, executive vice president product development for the auto sector, and farmer manager of General Motors engine research department at its R&D center in Warren, Mich.

"We were at a crossroad as to which direction we as a company wanted to take far our future in terms of our products," Goenka says. "The Indian auto industry was changing with many multi-nationals coming in,"

Those global companies were coming to India in search of local partners. Many had talks with Mahindra, but in the end the auto-maker decided to move forward alone.

"After a lot of soul searching we decided we did not want to become an Indian subsidiary of a large multi-national," he says. "We wanted to grow ourselves into a global player for sport-utility vehicles in the low and medium segments."

Having decided the company wanted to remain independent and become a global player, Mahindra then had to decide what to do about products. It was clear current products were based on ancient technology that could not see the company through to the new millennium in India and certainly not globally.

"We had two options. At that time we did not have the expertise to do a brand new product. But to develop that expertise was an option," Goenka says.

"The second was to go to one of the boutiques in Europe and let them do the product development. This option was very expensive and therefore we thought the only way we could manage it was to do a new product on our own and that's what we decided to do."

Still, Mahindra had very little experience at product development at that time. They had never done a major facelift, let alone a new product.

"It was a very high risk decision but a decision that we took all the same," Goenka says,

After performing market research, styling and features for the new Scorpio started taking shape. The company was also starting to realize they didn't have the expertise to develop the vehicle and there wasn't enough time to hire new people and train them to do the product,

"That's when we decided the only way we could do that was to leverage the strength of the suppliers who were available in India in global product development," Goenka says.

At this time, circa 1996-1997, Tier One suppliers were realizing that the supply contract volumes that brought them to India weren't materializing. Their large, newly built facilities were not being used to capacity.

"They had capacity they wanted to utilize and we were able to tap into that need of theirs and sign up with major suppliers to do system development for us," Goenka says.

As the process was defined, the company went looking for suppliers to help.

Working with the former Lucas Engineering (now Computer Sciences Corp.) and its Integrated Design and Manufacturing (IDAM) process. Mahindra developed its Mahindra Product Development System (MPDS) that streamlined the development of the new Scorpio.

But they had to be top notch, says Alan Durante, president of Mohindra's auto sector.

"When we decided on seating, we looked at the best" Durante says.

What would suppliers have responsibility for on the new Scorpio?

Mahindra, its 120 people and outside engineering consultants were responsible for the initial styling, body engineering, chassis and frame design and the vehicle integration.

Everything else was turned over to suppliers.

"Mahindra wanted to have world class product from suppliers that knew how to compete with the best technology and quality on a global basis," says Tim Manganello, president and chief operating officer for BorgWarner, which supplied the transfer case and other content on the Scorpio.