In a move to increasingly synergise operations with subsidiary Ssangyong Motor Company (SMC), homegrown auto major, Mahindra & Mahindra (M&M), is looking at commencing production and sales of its products in Korea.
Pawan Goenka, president (automotive and farm equipment divisions), M&M, said, “We are integrating operations with SMC, we have decided to develop all new platforms jointly with our Korean subsidiary. A new product based on a new platform will not be out till 2015. In the meantime, we have decided to bring Rexton to India and are now looking at assembling XUV500 in Korea.”
While Ssangyong products would be retailed under the Korean brand in India, the company is yet to decide on branding Mahindra products in Korea. The first product from the Sangyong portfolio, premium sports utility vehicle Rexton, would hit Indian roads towards the end of this year. The Korando C is expected to follow suit in 2013. M&M is investing close to Rs 100 crore for setting up a body shop to produce the Rexton at its plant in Chakan, Maharashtra.
“We want to synergise our operations with that of Ssangyong in sourcing, manufacturing and distributing products to better profitability from resulting economies of scale. The purchase head at SMC is an expat from India and two-three resourcing deals are already underway,” added Goenka.
Mahindra & Mahindra, which currently straddles the UV segment in the country with Bolero, Xylo, Scorpio and the newly launched XUV500, is looking at leveraging SMC’s strong research and development capabilities to develop products to expand its portfolio for global markets.
The company, which had acquired 70 per cent stake in SMC in November last year, is jointly developing two new platforms with the Korean utility vehicle maker – one each in India and Korea. The acquisition made for Rs 2,100 crore was the largest outbound deal recorded in the domestic automotive industry.
While M&M has no plans immediately to enter the United States by leveraging SMC’s distribution network in the country, the company has initiated talks with Sangyong’s distributor in Russia Solaris to assemble Mahindra products.
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Goenka informed, “Russia is the second largest market for Ssangyong after Korea. As many as 600,000 SUVs are sold there annually. We are in talks with our partner to decide on what product platforms make sense for the market. If the negotiations materialise, we will start assembling Mahindra products in Russia from completely knocked down kits in two years.”
SMC, which posted a volume growth of 40 per cent, sold between 1,13,000-1,140,000 units in 2011. The company has fallen short of sales target of 1,20,000 units, due to the slowdown in its largest market Europe. SMC is now looking at boosting volumes in emerging markets of India, Russia and China to more than double sales to 300,000 units by 2015-16.
The Korean car maker, at present, has 1,300-strong dealer network in 98 countries. SMC’s line-up comprises a luxury sedan, four SUVs and a multipurpose vehicle.