Johannesburg, March 18 Indian vehicle manufacturer Mahindra and Mahindra has increased its stake in the joint venture with its South African partner to 90 percent from 51 percent, and invested a further 30 million rands ($3 million) in the country's automotive business.
Mahindra South Africa, which launched its new multipurpose vehicle Xylo here last week, also expressed confidence in the South African auto market, though other manufacturers reported record drops in sales in the wake of the global economic downturn.
Vijay Nakra, chief executive of Mahindra South Africa, told the Business Report daily here that his group had hiked its stake in Africa Automotive Investment Corp, formed in 2004, over the past few months and would consider acquiring the remaining stake at an appropriate time.
He, however, did not spell out how much money was involved in hiking the stake in the joint venture, while denying speculation that the South African joint venture, like other local motor firms, was reluctant to make further investment.
"We are committed to the market and in these tough times we were clear that we needed to infuse capital into the business," Nakra said, adding his company had conducted a study on assembling vehicles in South Africa and was waiting for the right opportunity for the market to bounce back.
He said Mahindra's sales in South Africa, after peaking at more than 4,000 units a year between 2006 and 2007, had fallen in line with the overall drop in vehicle sales as the economic hard times hit home.
The company still viewed South Africa as its eventual production base for southern Africa, just as its Egyptian plant had become the base for North Africa. Nakra said contract-manufacturing pact with one of the established motor makers in South Africa was also an option.
The Xylo was the second vehicle from the Mahindra's stable to make its international debut in South Africa, said Pravin Shah, the group's executive vice president for international operations for automotive Sector.
"South Africa was also the venue for the first international launch of the Mahindra Scorpio pick-up range of products, which was specifically designed and developed for the overseas market and very well received by customers in South Africa," he had said at the Xylo launch here.
Mahindra South Africa has achieved significant growth here since it started operations in October 2004 and now has established a countrywide presence of over 30 dealers.
The company has also expanded into other sub-Saharan countries, exporting vehicles to Zimbabwe, Zambia, Botswana, Swaziland and Namibia. It is also well represented on the agricultural front with a range of tractors currently available in the country.