Mahindra & Mahindra is in talks with potential Chinese partners to set up a joint venture to produce Ssangyong SUVs in the country, according to reports citing Reuters.
Mahindra is keen to tap into the fast-growing Chinese SUV market, which it currently supplies through its South Korea subsidiary Ssangyong, in which it has a 70% stake. A local assembly plant in China would make Sangyong SUVs more competitive there and would provide the company with additional potentially lower-cost capacity.
Mahindra is under pressure to grow its global automotive business. Ssangyong's combined domestic sales and CBU exports rose by just over 3% to 144,541 units in 2015.
Ssangyong recently built a joint venture plant in Russia, but the market here has slumped due to an economy struggling with low oil prices, economic sanctions and a depressed currency.
Last year it sold just 2,460 vehicles in China, down from 11,976 in 2014. It plans to assemble the new Tivoli SUV which will spearhead a new growth strategy in the world's largest vehicle market.
Prioritising on China could lead to a delay in expanding in the US, Mahindra executive director Pawan Goenka told Reuters. He was quoted as saying that it would make sense to expand operations in a market in which it already has a sales presence before entering a new market such as the US.
Furthermore, the company does not have a model that meets US standards at present and it would also need to develop a sales network from scratch.