SsangYong bets on SUVs to drive into US market

Portfolio, strong US demand for the segment bode well, says Pawan Goenka

The board of Mahindra & Mahindra’s (M&M’s) wholly-owned subsidiary SsangYong Motor Company (SYMC) will meet in early 2018 to take a call on the latter’s entry in the US market.  SYMC Chairman Pawan Goenka said, “SYMC’s board is scheduled to meet sometime in February.”

An entry in the US would mean the Korean automaker is ready to enter the big league. “Success in the US market is very prestigious for any brand. If it can succeed there, it enhances the image globally,” said Goenka. He also pointed out that while the US is a difficult market, SYMC’s sharp focus on sports utility vehicles (SUVs), and the strong demand and growth for SUVs would bode well for the firm. 

“SsangYong is almost at the end of making a final decision. The board of directors has already reviewed the US plans once, and we will have one more review. After that, we will take the final decision,” he said. The company, he added, has done a lot of work over the past two years for the US entry. 

If the board indeed goes ahead with the plan, this will be the second critical step taken by Mahindra in the US auto market, where it doesn’t have a presence so far. On November 26, the Anand Mahindra-led firm opened a $230-million plant in Detroit, the world’s automobile capital. 

SYMC currently has five platforms, and over the next four years, it would be adding two more models on the existing platforms and one on a new platform, which is under development. 

Goenka said SYMC has always developed products with an eye on global markets. While the firm has been doing well in the Korean market, there have been some challenges in the export markets lately. “That is what we are addressing right now,” he said adding the company was working towards getting exports back to where they were two years ago. 

SYMC’s exports stood at 52,290 units in 2016, down from 72,011 units in 2014. 

Puneet Gupta, associate director at IHS Markit, a sales forecast and market research firm, said that while SYMC’s plans to enter the US show Mahindra’s aspirations to build a stronger brand globally, the US ride may not be easy as customer expectations may be too high and competition is stiff. “It may be tough to crack this nut,” said Gupta. 

Meanwhile, Mahindra and SsangYong are also working on electric SUVs for India and Korea. The first of these vehicles are expected to be launched in the first quarter of 2020, Goenka said.

Mahindra had acquired the troubled Korean auto firm in 2011. Since the acquisition, the Mumbai-headquartered firm has been investing in new product development and entry into newer geographies. 
 

In calendar year 2016, SYMC sold 155,844 units, its highest sales since 2002, led by new model launches such as Tivoli.