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Indian automaker Mahindra, eager to expand in US, hopes for corporate tax cuts

Key Points
  • Indian automaker Mahindra Group is opening an automotive manufacturing facility in Auburn Hills, Mich., promising to bring about dozens of jobs to the metro-Detroit area.
  • The company looks forward to corporate tax cuts, dismissing concerns that pre-NAFTA duties would impact business.
Mahindra North America CEO on US business

Indian automaker Mahindra Group is opening an automotive manufacturing facility in Auburn Hills, Michigan, promising to bring dozens of jobs to the metro-Detroit area.

With ambitions to build a more substantial and trusted presence in the U.S., Mahindra U.S. President Mani Iyer expressed full support of President Donald Trump's economic agenda, and dismissed concerns that U.S. withdrawal from the North American Free Trade Agreement would harm business as usual.

As an American subsidiary, the company stands to benefit from a corporate tax cut. Iyer promised the company would invest any money saved back into the economy.

"With the money, we would like to hire more people, put more dealers, create more jobs in the local communities, give it back to the community," Iyer said on CNBC's "Power Lunch" on Monday. "We do a lot of corporate responsibility initiatives, so all of this helps us to give back to the us economy."

When asked about whether corporate tax cuts would translate into increased wages, he said the company would invest in "skill development and training development, as well as adding more people and investing across centers in the U.S."

Although Mahindra Group is a major producer of pickup trucks, SUVs and commercial vehicles in India, in the U.S., it is known mostly for its tractors. The company ranks third in tractor production nationwide, but has expressed ambitions to begin producing on-road automobiles in the U.S. and globally.

Iyer didn't seem to think the U.S. pulling out of NAFTA would impact Mahindra's business in the U.S., emphasizing that since the company mostly exports products to Mexico, rather than importing supplies or completed vehicles, they wouldn't be subject to any damaging duties.

Expert: 'A pretty big deal' for automakers if US leaves NAFTA

Kristin Dziczek, of the Center for Automotive Research, believes the U.S. pulling out of NAFTA would be bad for the country's auto industry, especially for producers in the business of making pickup trucks.

Should the U.S. pull out of NAFTA, Dziczek said she would expect border duties to return to pre-NAFTA levels. Before the agreement, autos imported from Mexico to the U.S. were subject to a 2.5 percent tax and pickups were subject to a 25 percent tax

U.S. withdrawal from NAFTA would also disrupt supply chains, according to Dziczek.

"It is the basis of much of our trade, we build vehicles together," she said. "The free trade arrangement has really enmeshed supply chains here in the U.S. and Canada and Mexico."