India’s Mahindra and Mahindra group is planning major investment and an unprecedented influx of new models for its troubled Korean offshoot, SsangYong Motor, in an effort to help it survive. There will also be increasing collaboration between Mahindra and SsangYong on powertains and platforms.
Mahindra took a 70% stake in SsangYong in 2011 at a time when the Korean company was on the cusp of liquidation. Last year SsangYong sold a record 141,000 cars – but that has to be measured against the capacity of 250,000 at its sole assembly plant at Pyaeongtaek, in South Korea. Clearly, there is chronic under-utilisation of the factory.
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That is expected to start changing this year with the launch of the Tivoli – a B-segment SUV along the lines of the Nissan Juke and Renault Captur. SsangYong expects to increase total output to 160,000 in 2015, and to be building the Tivoli at the rate of 100,000 annually the following year.
Mahindra has pledged to pump US$1bn into the Korean company over the next three years on top of the $700m it has already invested. There will be at least one new model every year for the forseeable future, and “greater synergies” between Mahindras and SsangYongs, according to the Korean company’s president and CEO, Yoo Il Lee.
The two companies are developing six new powertrains, and it seems inconceivable that Mahindra will not make use of the new platform SsangYong has created for the Tivoli. It will also be the basis for a small Korean MPV, similar to Hyundai’s ix20 and Kia’s Venga, to be launched next year. There are joint purchasing and sourcing arrangements between Mahindra and SsangYong, and the collaboration will continue, said Lee.
And SsangYong will eventually make the move into North American markets, with their potentially rich pickings, for the first time. Lee said the first stage of a feasibility study has already been completed but there are two more stages to go through.
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By GlobalData“I cannot tell you when, but we have to go, definitely,” he admitted.
