Trans-Atlantic Partnership Makes In-Roads Into MexicoMon, 09/01/2014 - 16:35
“Partnerships are the future of the automotive industry as the right collaborations will evidently make companies stronger,” states Alejandro Sandoval, Director General of Sandoval. As automotive competition heightens in Mexico, alliances enable companies to offer better quality products at fairer prices. This is the vision that spurred the creation of a most unexpected alliance: Mansons, a rubber parts supplier nestled in the heart of Mumbai, India, and Mexico’s Sandoval, which provides springs for suspensions. While most partnerships in the Mexican industry are sought out in North America, Mansons’ Director, Gautam Khanduja, says that he saw links that resonated between the two cultures. “India and Mexico are similar as countries and cultures, their people have similar thought processes, and face similar governmental issues and policies.” He even attributes the ease of the collaboration to common approaches to logistics and fleet culture. “Fleet structure is also fragmented, since it is largely driven by single owner-operators.” In terms of logistics, scheduling the movement of cargo can be challenging with distances and infrastructure being major sources of concern. “Mexico and India have similar working mechanisms even in how products are used and abused. Overloading in trucks is a rampant problem in India, as it is in Mexico.” Sandoval reflects this same belief, saying, “At the end of the day we handle business basically the same. We find areas where we can converge.”
This alliance proved to be symbiotic in nature given that both companies are leading suppliers in the heavy-duty industry. Both have complementing product portfolios since where Sandoval’s expertise revolves around springs and clamps for suspension of all types of vehicles, Mansons focuses on an array of components like suspensions, axles, and anti-vibration devices. For Sandoval, the alliance was based on Mansons’ good quality and reasonable pricing. “Mansons is known worldwide as a manufacturer. It sells its products to many OEMs and Tier 1s, and it has knowledge of exportations,” Sandoval explains. As for Mansons, its decision was based on Sandoval’s simple distribution model. “When choosing partners around the world, we base our decisions largely on the potential partner’s historical data, its strength as a domestic player, and its ability to carry our product out into the market,” Khanduja describes. With 50 years of experience in India, Mansons is well aware of the importance of such a strong domestic presence. “Sandoval is driven to deliver better products to the Mexican market and, with 60 years under its belt, we chose it as a partner,” Khanduja adds. In terms of identifying opportunities, Mansons focuses on two areas: OEM and aftermarket. According to Khanduja, the Mexican aftermarket sector is fragmented, leaving a wide market share open to independent players. “Our idea is to form an equal balance between aftermarket and OEMs and create business for both companies,” Khanduja explains. Once news of the alliance hit the market, the first reaction both companies obtained regarding this alliance was curiosity. “Customers asked what products we provided and looked to ensure the highest quality,” adds Sandoval. According to Khanduja, sales by experience became the best idea. “We tell customers to try out our products such as parts for suspensions and see if they work properly,” Khanduja tells. “We do not need to go around bragging about whom we supply to, by namedropping OEMs or brands.”
Business alliances provide latecomers like Mansons the chance to adapt far more quickly to the quirks of the local industry. Khanduja admits that in the past, Mansons was not ready to step into Mexico’s market, as 60% of its revenues came from Europe with only a small percentage coming from the Americas. “Entering Mexico required careful planning. We had to ready a special team to cater to the Latin American market as Mexico was a primary country we wanted to be established in.” Given this successful entry, Mexico is now seen as Mansons’ gateway to Latin America. “It has given us access to acceptance in smaller countries and it will play a pivotal role in taking our products to the rest of the region,” says Khanduja. The adaptation period to Mexico turned up some curious discoveries. “One thing we knew was that most vehicles in Mexico are American. But the further south you go in the continent, the more you begin to see European brands appear,” Khanduja points out. Therefore, once the first objectives of establishing the brand and sales force in Mexico are fulfilled, the partnership will exploit available opportunities through such discoveries. “We can do many things, even open manufacturing facilities in Mexico or India. It all comes down to how much we can take advantage of this alliance,” Sandoval explains.
This unusual alliance has raised some eyebrows as it goes against the conventional industry practices, where European or American brands tend to be perceived as being strongest. “It is true that a German auto parts manufacturer may have the reputation and the quality, but it may not have the right pricing for Mexico,” explains Sandoval. Khanduja adds that as low-cost manufacturers, both Sandoval and Mansons have faced the same problems. “Customers ask us why we did not partner up with a German company. As I mentioned, our partners’ domestic experience is vital to us.” Both men agree that this alliance was not one about Mexico and India, but about two companies with complementary products and business strategies. As the world shrinks and price wars in the automotive industry continue, alliances and synergies offer great potential to both parties.