South Korea’s Ssangyong Set to Make Push into US Market

For SUV model could be on sale by late 2019.

by on Mar.08, 2016

Ssangyong's first model built under Mahindra ownership, the Tivoli Air SUV.

The U.S. car market has been getting a bit more crowded lately, as new brands like Tesla and Faraday Future have entered the fray against more established manufacturers, and Apple and Google reportedly get ready to launch their own car lines.

Now, another brand is eyeing the market, the Korean-based Ssangyong Motor Co. Owned by India’s Mahindra & Mahindra, it may make its “make or break” bid as early as 2019, CEO Choi Johng-sik said.

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But a report by the Reuters news service cautions that there may be some disagreement between officials at Ssangyong headquarters in Korea and their bosses in India that could delay or scuttle the venture.

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Mahindra itself has repeatedly postponed its own entry into the American market after scuttling plans prior to the Great Recession to bring a compact pickup truck to the States. It went as far as setting up a preliminary distribution network before pulling back.

Ssangyong – which means “Double Dragon” in Korean – was part of a so-called chaebol, or conglomerate that was largely broken up during the Asian financial crisis in 1997.  The carmaker went through a series of changes, and a number of financial crises, in the following year. It was briefly run by Korean rival Daewoo, then acquired by China’s SAIC. Deep in debt, Ssangyong Motors was put into receivership in 2009, and was taken over by Mahindra in February 2011.

Ssangyong plans to enter the U.S. with a larger model than the new Tivoli Air.

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Like Mahindra, Ssangyong focuses on light trucks, though the emphasis is on sport-utility vehicles. The Tivoli is the first new model developed under Indian ownership, and CEO Choi discussed plans for a U.S. entry during the launch of the Tivoli Air model, a compact SUV.

“We think the U.S. project will make or break our company,” he told reporters, “so we’ll have full discussions with Mahindra.”

An entry into the American market, he suggested, could come with the debut of a midsize SUV to be called the SIV-2, which is due out sometime in late 2019 or early 2020.

Apparently, there are some significant issues to be worked out. In a separate conversation with Reuter’s Mahindra’s Executive Director Pawan Goenka said a U.S. launch by Ssangyong is “somewhat on the back burner.”

But both officials appear to agree that one of the Korean brand’s priorities must be the launch of production in China. Despite a recent slowdown in its economy, the Chinese automotive market remains the world’s largest.

According to Choi, Ssangyong is in discussions with both Geely Automobile Holdings and Chery Automobile Co, as well as an unnamed Chinese military truck manufacturer about possible production ventures. Neither Geely nor Chery would comment.

The Seoul-based Ssagnyong currently produces all of its products at South Korean plant. With the addition of a plant in China, and another in Russia, it hopes to boost output to 500,000 vehicles annually.

That could help the company finally reverse years of losses. Choi said Ssangyong is hoping to finally turn an operating profit for 2016. It would be the company’s first since 2007.

Entering the American market could prove fruitful for a company with Ssangyong’s focus. Sales of light trucks, in general, now account for about 60% of new vehicle sales, and demand for utility vehicles is expected to soon surpass demand that of sedans, according to various industry analysts.

But setting up a dealer network and funding a marketing campaign to simply build brand awareness would be costly, those observers caution. Even well-funded ventures – from start-up Fisker Automotive to Toyota’s youth-oriented Scion – have struggled and, in many cases, been forced to abandon the market in recent years.

(Trucks rule US market. Click Here for the story.)

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