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HM may make Mitsubishi Pajero at Chennai plant

Our Bureau

CHENNAI, Dec. 5

HINDUSTAN Motors is considering the option of manufacturing Mitsubishi Pajero at its Chennai car plant, for which it has conducted a ``dip stick'' study, according to company officials.

When asked whether the company planned to make other Mitsubishi models, the officials said the Pajero was one of the options under consideration.

At a press conference today at the Tiruvallur car plant, where the Mitsubishi Lancer was being manufactured, Mr B.K. Chaturvedi, President, Hindustan Motors (HM), said it would be possible for the company to manufacture the Pajero with minor modification s to the existing assembly line.

Mr S. Vasudevan, General Manager - Sales & Service, said that the company had done some ``dip stick'' surveys to assess what the demand for the Pajero would be. There was a clear demand for the vehicle, but it would not be possible to estimate the volume . Pajeros were still imported.

He said there was a big gap between the Lancer category and the Mercedes Benz category. There could be slotting done in this gap, he said.

Asked if the survey also covered the price of the vehicle, Mr Vasudevan said the perception of those surveyed was that the Pajero would cost about Rs 20 to 23 lakh, and they felt that the Pajero should be priced at Rs 22 lakh. There were five variants of the Pajero in the Rs 25-33 lakh price range. The company would take a decision on manufacturing the Pajero depending on the automobile policy.

Mr Chaturvedi said the JD Power Asia Pacific 2000 India Initial Quality Study had found the Lancer the best premium mid-size car. The Lancer was the first model in the country to record lower than 100 problems per 100 vehicles and had achieved 84 problem s per 100 hundred vehicles. This had been achieved even when there had been increased localisation, he said.

According to Mr G. Shyam Sundar, Vice-President, HM, the localisation is expected to increase from the present level of 56 per cent to 60 per cent by March 2001 and 70 per cent by March 2002.

He told Business Line later, that after March 2002, the body panels would continue to be imported. HM's Indore plant, where engines for the Lancer were being manufactured, would achieve a localisation of 65 per cent by March 2002.

The indigenous parts used in the Lancer included instrument clusters, seats, harness, carpets, battery and air-conditioner. HM planned to localise bumpers, door trim and some chassis parts in the next phase. It would invest around Rs 14 crore in tooling for the bumper and door trim over the next two years.

Mr Shyam Sundar said that HM was likely to source the tooling for the bumpers from Thailand and was also in talks with Visteon, which has a factory at Maraimalai Nagar adjacent to Ford India's plant, for the bumpers.

Mr Chaturvedi said there was no export obligation on HM. As per the agreement with Mitsubishi, HM could export to Sri Lanka and Bangladesh.

Mr Shyam Sundar said that two cars had been exported to Sri Lanka last month. HM could export only to the SAARC countries, which were price-sensitive markets. HM was also asking Mitsubishi for permission to export to the African market and it was likely to be allowed to export to Brunei, which though a small market was a wealthy country.

Mr Chaturvedi said the project would break even if it achieved a sales volume of 10,000-11,000 cars and achieved increased localisation. This year, HM would make 8,500 Lancers.

On QRs getting removed next year, Mr Chaturvedi said if car imports got liberalised, HM would have access to a whole range of models, with which it could leverage the existing network. Mitsubishi also had a stand-alone used car business, and this would a lso be an opportunity for HM if the Government permitted import of second hand cars.

Asked about the HM's agreement with Proton, the Malaysian car company, Mr Chaturvedi said the status continued to be exploratory in nature and nothing concrete had emerged. ``It has not been totally shelved, but we are still searching for a common meetin g ground,'' he said.