India's Mahindra says not pursuing Hummer

MUMBAI Mon Aug 18, 2008 4:55pm IST

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MUMBAI (Reuters) - Mahindra & Mahindra Ltd (MAHM.BO), India's top utility vehicle maker, is not interested in buying General Motors' (GM.N) Hummer brand, but will instead focus on its own models for the key U.S. market, a senior official said.

"There has been a lot of speculation. I want to say categorically we are not pursuing Hummer," Vice Chairman Anand Mahindra said at a news conference.

"We are pursuing our own models strategy and we do not want to tarnish our lean warrior strategy," he said, referring to Mahindra's plans for a line-up of eco-friendly vehicles.

Earlier on Monday, a source told Reuters China's Hunan Changfeng Motor Co 600991.SS had held preliminary talks with General Motors, and that the Chinese sport utility vehicle maker had backed off, underlining the difficulty the U.S. firm faces in offloading the gas-guzzler at a time of high fuel prices.

GM, also struggling against a downturn in the North American auto market, has explored a sale of Hummer with potential buyers in Russia, as well, sources have said.

Russian billionaire Oleg Deripaska's car unit, Russian Machines, last week also denied it was seeking to buy Hummer.

Mahindra, which earlier this year lost the race to buy the Jaguar and Land Rover luxury brands to larger rival Tata Motors Ltd (TAMO.BO) (TTM.N), plans to launch a small pickup truck and an SUV in the U.S. market, starting in the second half of 2009.

Mahindra declined to comment on whether the company would stick to its timeline for these launches, given falling sales of pickup trucks and SUVs in the U.S. market.

CHINA TRACTOR JV

Mahindra, also India's top tractor maker, said on Monday it would take a 51 percent stake in a joint venture with Chinese tractor maker Jiangsu Yueda Yancheng Tractor Manufacturing Co, taking it a step closer to claiming top spot in the world.

Mahindra, which already makes tractors in China through Mahindra China Tractor Co. Ltd, a venture with Jiangling Motors Co Group, will invest about $26 million in the venture, which will acquire Yueda's tractor operations for $50 million.

"The formation of this joint venture is a significant step in our plans for the China market," Anjanikumar Choudhari, president of Mahindra's farm equipment sector, said in a video conference.

"Along with our current operations, we will have a much larger scale and a cost-effective manufacturing base on which to build up our business in China and for overseas markets."

Yueda is No. 3 in the Chinese market, the fastest growing market for tractors, and one where consumers are shifting to more powerful tractors, Choudhari said. Yueda's portfolio of tractors from the 16-125 hp range will help address the demand.

Mahindra will consider merging its China operations at a later date, he said, without giving more details.

Mahindra, which last month bought the assets of motorbike and scooter maker Kinetic Motor KNTM.BO, will have a capacity of about 170,000 tractors with the new venture, which will bring it very close to leader Deere & Co (DE.N), if not overtake it.

"For a long time the Mahindra Group has aspired to become the No. 1 tractor manufacturer in the world," Mahindra said.

"I believe, with our new alliance, we would be able to achieve that goal more rapidly."

Shares in Mahindra, which has a market worth of $3.2 billion, ended down 2.6 percent at 568.10 rupees in a weak Mumbai market.

($1=43.3 rupees)

(Reporting by Rina Chandran; Editing by Ranjit Gangadharan)

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