SsangYong Motor Company, the fourth-biggest auto manufacturer in South Korea, is exploring new markets like China, India and the African continent in a desperate bid to take its brand outside its home market. The company is innovating new products and developing frugal manufacturing means with the help of its new promoter Mahindra & Mahindra (which owns 70 per cent in SsangYong). Yoo-il Lee, president and chief executive officer, SsangYong Motor Company, shares his expansion plans with Swaraj Baggonkar. Edited excerpts:
What are the key steps taken by SsangYong to revive its brand name?
After finalising the merger with Mahindra & Mahindra, we are conducting a thorough internal review to resurrect Ssangyong's brand image. The key initiatives are being carried out as of this moment by the post-merger integration project team to forecast Ssangyong's vision and to fix mid/long term growth development of the company. This process is expected to be finalised by the end of July.
The board of directors from Ssangyong and Mahindra are fully aware of the importance of implementing the future vision and creating the synergy to enhance both companies' brand images towards existing and potential customers, giving them the new, positive Ssangyong brand to relay on our vehicles. A thorough action plan is being review and this would soon be implemented across domestic and overseas markets.
In the Korean market, in which SsangYong enjoys a strong brand loyalty, it lately came under intense competition, which led to a fall in sales. Sales have started to pick up yet again. How does the company plan to keep the momentum going?
Ssangyong is well known as the SUV (sports utility vehicle) specialist, manufacturing durable and safe vehicles. Since the establishment of Ssangyong Motor Company, we had a strong brand loyalty but came under a court receivership that led to a drop in sales in 2009-2010. The sales have gradually picked up in 2011 due to the launch of Korando, along with a facelift of the model of Chairman H & W.
To maintain this sales increase, we will first reinitiate the brand recognition through marketing activities. Second, customer relationship is crucial and the utmost point in the rise of sales. We will develop a customer-oriented programme to attract current and potential customers through active customer interaction and implement their opinions in our future vehicle development.
Third comes the sales network competence for dealership personnel. We will strengthen and expand the dealer network and provide educational programmes for sales personnel. As for the mid/long term growth development, Ssangyong and Mahindra will maximise its synergy by creating a product portfolio to establish marketing infrastructure.
Following this marketing activity, the domestic market share, which is currently 13 per cent, would be projected at 20 per cent in the domestic market.
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How would SsangYong look to grow outside South Korea?
As of this moment, Ssangyong Motor Company comprises 91 distributors and 1,071 dealerships across the world. The key markets include Europe, Russia and Central America. In 2012, markets, including China, India and Africa, are expected to expand even more. This will boost the sales of Ssangyong Motors.
In China, we currently have two main distributors and they are expected to start sales by the end of this year. For Central America and Africa, an aggressive market development strategy would be established in collaboration with Mahindra & Mahindr. In countries like South Africa and Egypt, completely-knocked down businesses would be established.
When would SsangYong look to enter the US market?
To establish a market in North America would take time due to the strict regulation of safety and carbon dioxide standards.
SsangYong has a strong line up of SUVs. It also has a luxury sedan, Chairman. When do we see the company coming out with a small car?
Currently, Ssangyong Motors does not have any plan to develop small line-up vehicles. As of this moment, our key objective is to become an SUV specialist.
When do you see SsangYong regenerating profits?
Ssangyong has recorded stable business by regaining competitiveness in the market and reducing its operating deficit. However, we still do not have enough production capacity to turn the tables around. We strongly believe that in 2012, we will swing back to sound and good profitability.
India is a new market for SsangYong. It will have to depend fully on mahindra & Mahindra's infrastructure for sales. What numbers do you hope to achieve initially and later?
Regarding establishing a new market in India and using Mahindra's infrastructure for sales, the terms have not yet been discussed. The actual sales figures and goals are still predetermined.
What role would India play in the overall expansion plans of SsangYong?
Mahindra & Mahindra is the major share holder with 70 per cent of Ssangyong. The role in the overall expansion plans of Ssangyong is still being discussed by the board of director at Mahindra Group.
What kind of joint products can be expected from the SsangYong-M&M combine in the future?
As of this moment, Ssangyong and Mahindra are developing future products by creating a synergy to minimise investment costs.