SsangYong might not be a big hitter in the Europe but, outside of South Korea, the UK is one of its largest export markets. Mike Vousden sat down with Nick Laird, SsangYong UK’s Managing Director, at the launch of the new Korando to understand what sets the new SUV apart from its predecessor and to learn what the brand is doing to push itself into the mainstream.
What does the new Korando do that the old one didn’t?
Go deeper with GlobalData
The new Korando is an all-new design from the ground up with a brand-new petrol powertrain and an upgraded diesel one. Historically, the vehicle was really well received by people who tow and, therefore, it’s been mainly a diesel-engine-focused vehicle and quite four-by-four focused.
The new vehicle is much more broad in its capabilities, much more relevant to a modern C-segment SUV crossover buyer, and therefore we’re expecting it to appeal to a much broader set of people, therefore it has to be broader in terms of its capabilities.
So we’re expecting this vehicle to appeal to more buyers, and therefore larger in volume and, hopefully, to try to reset what SsangYong means to people in the market.
What did SsangYong used to mean to people, and what would you like it to mean in the future?
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSsangYong has always been a reasonably niche purchase and many of our products have been focused at the country market. The Tivoli, the new Korando and a couple of upcoming vehicles that I can’t talk about yet are much more focused at the urban and suburban market. By that, I don’t necessarily mean the centre of London, but just a much more urban buyer than we’ve historically sold to.
We want SsangYong to be known as a proper challenger brand. So to grow volume and to be better understood and known in the market than it is today. We know that to do that the basics have to be right which is the product, the price and the value equation, but also that what we stand for doesn’t have to be quite as niche and quirky as it was in the past.
That’s interesting because whilst quirkiness can put some people off, it can also be the thing that draws some people in. So are you going to keep an element of that in your range?
Yes, if we look to challenge the big players head on, we will lose because they all do it very well themselves. We need to look for ways to grow in the market that are at the edges and around the side so that we’re not competing with the big guys head on. That means that we are able to position the range and the company in a slightly different way with perhaps a little more humour, a little more personality and a little less corporate.
You launched the Tivoli a little while ago with the longer Tivoli XLV joining a little after. Are there plans to introduce more vehicles under the Korando name?
It’s currently not the plan to do that. There is a battery-electric vehicle coming in about 15 months’ time on the same chassis as the current Korando, so there will be more than one vehicle on the same platform.
So no seven-seat option for example?
We don’t think the vehicle has the wheelbase to do that, although we do think there is space in the market for a seven-seat crossover vehicle. But you’ll have to wait until later for more details on that.
The Rexton is available with five or seven seats but it’s a much larger car. It’s a body-on-chassis vehicle whereas the new Korando is a unibody type. Clearly there are roughness and toughness advantages that the body-on-chassis comes with, but it also comes with an inevitable weight penalty – and modern CO2 targets are likely to drive these types of vehicles out of the market.
We’ll look to keep Rexton going for a few more years yet. As the CO2 targets become more tough, it’ll become more difficult to keep it in the range unless we’re able to find a low-CO2 way of doing it, or if we’re able to sell enough battery-electric vehicles so the fleet average becomes manageable.
The Korandos we’re testing at Blenheim Palace today are all diesel and this powertrain will probably be a strong part of the mix that you sell in the UK. The market is beginning to move towards hybrid and electric, and away from traditional fuels, so what was the thinking behind keeping a diesel in the Korando range?
The models we have here today are the diesel autos, which are the first models the factory has produced. By the end of the year, we’ll have diesel and petrol, manual and auto, four-wheel drive and two-wheel drive available in the UK. We’ve tried to keep the number of derivatives down to what we believe the market is interested in to keep complexity down for the customer and the dealer.
We do think there is a market for diesel in the medium-term. We think there is a definite segment of buyers out there for whom a diesel powertrain with its lower running costs makes sense for some years to come – but, certainly, there’s a move towards battery-electric. For us, we believe we’ll see a move away from a primarily diesel mix to a much more balanced mix between petrol and diesel, so we are seeing momentum towards petrol. In time, we’ll see a move towards hybrid and electric.
It’s interesting to note that, of the manufacturers that have all of those options available, which of those options customers prefer and which they don’t. SsangYong is at a size where we can’t invest in all the options, but one of the advantages of our size is that we’re able to get vehicles to market faster than a lot of the big players. Quite often SsangYong will wait and see which of the drivetrain options feels like it has the best traction with customers, and then invest in that, rather than invest in many options in one go.
So the Mahindra tie-up gives you some flexibility in terms of access to components and powertrains…
…yes and design expertise also. Agreed – there is a lot of collaboration going on behind the scenes between SsangYong and Mahindra on design, on supply chain, on purchasing. There are increasing ties between the two companies to leverage the best bits of SsangYong and how SsangYong manages so well for a small company – the output per engineer and per designer at SsangYong are absolutely superb, properly world-class, but we’re still a small company. Mahindra comes from the other end of the scale where their volumes are large. It’s a challenge for the team in Korea and India to see how they can pick the best out of both companies.
It’s interesting also to note that the Indian market has similar aspirations to western Europe in terms of CO2. So India is coming from further behind in terms of its emissions legislation generally, and is very ambitious in terms of how it wants to get to a certain fleet CO2 target just like Europe and the UK.
What are SsangYong’s plans for hybrid and electrified powertrains?
There is a plan to launch a full-BEV version of Korando in just over a year’s time. There are also hybridisation plans in the model lineup but I’m not able to discuss those yet.
There was a vehicle shown at the 2018 Geneva Motor Show called the eSIV. It was the design model for the Korando electric vehicle. When that vehicle comes to market, the market will already have a number of full-EVs available. What we’re trying to do is make the Korando electric vehicle look just like an ICE vehicle with as little change as possible so it feels accessible and feels ‘everyday’ rather than something sci-fi that’s less accessible. The vehicle will look and feel and drive as much like something the customer knows as possible – so it’ll look much more like a Korando rather than something that’s out of Star Trek.
And are there plans to launch a smaller vehicle for the European market?
We would love to have a sub-Tivoli-sized vehicle for the European market. Europe is driving really hard in terms of the fleet average CO2 emissions. So we think there’s a real opportunity on a sub-Tivoli-sized vehicle that’s a bit more fun, a bit more quirky and has a bit more character to it. We’re examining that with the guys in Korea to see if there’s a business case for a vehicle like that.
SsangYong has a great deal of heritage in SUVs. Do you plan on staying in that segment, or will you look at other segments in the future?
The company has a general ethos of keeping to what it does well. We believe you need to become and expert in what you do – SsangYong has a long expertise in SUVs and crossovers, so I think the company will stay true to those roots.
I personally believe the SUV segment will continue to grow and, therefore, we’ll be selling into a segment that’s continuing to enjoy success rather than being squeezed in the margins. It doesn’t feel strategic for us to be in the wrong segments over the next 15 years or so.
How has SsangYong UK been preparing for Brexit?
There are three potential impacts out of Brexit and a number of ways those might impact us. They are: tariffs, exchange rates and general economy.
On general economy first. There are a lot of stories out there that the economy may get worse. Our market share is relatively small – we have a lot more to gain by getting our own plans in order and growing market share than we have to fear as a result of a poorer economy. I think the more we get our plans, marketing, pricing and advertising in the right place, then we have more to win than to lose.
The second one is taxes. There has been an agreement in principle between the UK and Korean governments for a nil-tax regime on cars – exactly the same as it is today for the European Union, so that would present no change.
The third one is the exchange rate, which is probably the most volatile of the three. We buy cars in sterling but they’re produced in a factory in Korea by people who are paid in Korean won. Whether we or the factory have it, there is an exchange rate impact and the weaker sterling is, the harder it is to make money by selling cars in the UK.
I had believed, until recently, that the market had properly priced in uncertainty and, therefore, the pound was relatively weak. I believed that, once we knew what was happening, the uncertainty would go away and sterling would strengthen, to our advantage.
I’m not a market trader but it was interesting to see sterling slide a little on recent announcements. In the medium term, if it still goes down, I’ll be more concerned. I’ve seen in past roles how much markets hate uncertainty and volatility because you can only plan for what you know.
How might those plans change, if at all, if we end up with a No-Deal Brexit?
If you look at the economy in a No-Deal Brexit, most of the forecasts are suggesting it will get a little smaller, but I think we have more to win than to lose.
In a No-Deal Brexit, the UK government has said that it’ll continue to have a fleet CO2 target, but that it’ll be calculated slightly differently. That might be a major impact for us as a manufacturer and we would need to talk to the government about how to mitigate some of the effects that result from SsangYong being relatively larger in the UK than it is in Europe in terms of market share. There are some unusual one-off impacts that we would need to take care of.
Overall, we think we have a really strong product that is aimed at the value end of the market so we’re not ‘worried’ about a No-Deal Brexit in terms of being able to manage our own position.
SsangYong was bought not too long ago by Mahindra. What benefits have you realised as a result of that relationship?
There are a number of R&D activities happening as a result of the two companies working together. We’ve not seen the full extent of some of them yet but we will do over the next 12 months and beyond, for example the BEV we were just talking about.
There is also a much tighter IT integration between the two companies as a result of Mahindra owning a large IT operation called Mahindra Rise. That is helping to boost some of the capabilities of SsangYong around the IT and technology space.
We’ve not seen a lot of that come out yet but I know that a lot of work is happening in the background that will lead to some interesting outcomes – for example, a 1.2-litre engine for Tivoli and possibly Korando. This would be a lower CO2 engine and one that’s more attuned to where the current market is. There are a number of options being considered for that engine but one of the front runners is a Mahindra engine.
The benefits we expect in the future are much larger than those we’ve seen to date. Mahindra has been very respectful as an owner of SsangYong and has kept a good distance to allow us to develop our own products and portfolio in its own way.
There are potential benefits we could see if we’re able to get some commonality of supply for example. You’d be buying things in bigger volume so you get a better price with no difference with product.
Would supply of lithium-ion batteries be one of those areas?
There are a number of discussions going on behind the scenes about how to structure both the suppliers and the supply chain for electric vehicles, and it’s also interesting to note that a couple of the top global vendors for batteries are Korean – you have Samsung, LG, SK Innovation and so on.
Interestingly, it may end up being the Korean supply base that ends up providing much of the global power base. But yes, absolutely, Mahindra are clever enough to leverage global capabilities – they are a highly sophisticated, well-led organisation who will go wherever in the world is right to get the right long-term supply arrangement.
You currently sell around 4,000 cars per year in the UK, where would you like to get to?
Our aspiration is to grow to 10,000 cars per year. We believe the product roadmap is coming through to do that. Our strength in the UK at the moment is the product range – it’s modern, it’s new, it’s fresh and entirely credible.
What we find when a lot of people get in the cars is they say “wow, I wasn’t expecting that”. So we deliberately used the tagline ‘Surprisingly SsangYong’ because the word ‘surprised’ is the word that comes out most often when people first get in the car.
The thing we know we need to work on is our awareness because our product range is not as well known as we would like. We need to do that by being strong with the press, strong on TV and in advertising, and also to have really good relationships with our dealers.
Quite often, we’ll work with a dealer who’s been in their local area for twenty, thirty, maybe forty years. They have a loyal following – people buy cars from them because of who they are. So, to some degree, we borrow the local dealer’s relationship in their part of the world and that’s fine by us.
We need to work in cooperation with our dealers and believe in them because, if you’re a growing challenger brand, people might not know who you are and buying a car is a large purchase with angst and risk. If you’re about to go and talk to someone you trust, and touch, feel and drive the product, that’s important to buyers.
While there are some markets where a more distant selling approach makes sense, for our main buyers that’s not the case. As we move towards a more urban model, there may well be some areas – the centre of London, Paris or Tokyo for example – where just physically finding facilities is extremely expensive so we’re unlikely to pick up dealers in those areas, and so a different model may be required.
That about wraps it up, but is there anything else you’d like people to know about SsangYong as you launch the Korando?
It feels to me that it’s a real coming of age for SsangYong. The product range is sophisticated in a way it’s never been before and the new Korando is the last piece of that jigsaw.
We feel there’s huge potential for this product and we don’t want to underplay that potential – we think it’s a very credible vehicle that’s in the right place at the right time in the market. That, combined with its battery-electric cousin, could be a very powerful combination over the next few years.
See also: New SsangYong Korando kicks off UK sales assault
