Mahindra relies on SsangYong to cut costs and gain access to the US.

The British magazine Autocar this week publishes an interesting interview with the chairman of the Indian group Mahindra, Anand Mahindra. The focus of the conversation is not on the manufacturer that takes its name from that conglomerate, but on South Korea’s SsangYong, owned by Mahindra & Mahindra since 2011.

Although SsangYong’s course appears to be gradually correcting, it still has to overcome a few obstacles in its recovery. The Indian executive predicts a return to profitability (the Korean brand is still losing money year after year) as early as 2017, but to sustain that process, the company must base its future on certain aspects that either confirm or contradict previous forecasts regarding its upcoming plans.

The Tivoli represents an important launch for SsangYong, but it needs more resources to recover.

The Mahindra chairman denies that SsangYong plans to launch vehicles other than SUVs.First, the Mahindra chairman has denied that the product range will move away from SUVs. Last month, Consumer Reports reported that SsangYong had registered the name Lucent with the US Patent Office, which, according to an unidentified source, was to be assigned to a compact or a saloon. With Anand Mahindra’s statements, it can now be clarified that either it will not be used, or it will be adopted by a model of another class.

Mahindra is clear on this point: SsangYong has specialised in building off-roaders, a type of vehicle that not only enjoys a favourable situation commercially, but also allows for firmer links between Mahindra’s and SsangYong’s offerings.

One of Mahindra’s plans is for the Indian manufacturer’s models to share more technology with the Korean ones.

Reducing manufacturing costs and moving away from an excessively low production level are among the priorities of both Mahindra and SsangYong.This latter point constitutes the second essential pillar of the Korean brand’s future. To return SsangYong to a positive economic situation, Mahindra plans to share far more platforms, engines, gearboxes and other technologies between both manufacturers, which will help reduce development and manufacturing costs. A single component or element will be used across multiple models of both Mahindra and SsangYong, regardless of the segment they belong to.

The third issue raised by Anand Mahindra is the expansion of the Korean brand: in 2014, SsangYong built 140,000 vehicles at its Pyeongtaek factory, roughly 100,000 below its maximum capacity. Although the new Tivoli represents firm support for the growth trajectory, it is still not enough. Above all, SsangYong’s dealers and sales staff will be required to learn how to attract new types of customers who are younger and more urban, in addition to the manufacturer’s traditional buyers.

Tivoli sales forecasts for 2015 will be less than half of those in the following years, according to the most optimistic estimates.

The Indian executive has confirmed the information revealed by Consumer Reports in December: the Mahindra group wants to return to North America with SsangYong.Anand Mahindra stresses that the global Tivoli sales target for 2015 is 35,000 units; from 2016 onwards, the figure they will pursue will rise to 100,000. The arrival of new products to consolidate the range will help make the goal of turning a profit more achievable within about two years, optimistically speaking.

One of the measures Mahindra has in mind to achieve this we already mentioned in December. The chairman of the Indian group confirms that they are very seriously considering introducing SsangYong into the US. The image of Korean cars has improved greatly in that country in recent years, and its chances of success are presumed to be greater than the resounding failure Mahindra suffered when it tried in the last five years.

With new SUVs, more shared parts and technologies, and an increase in production levels, SsangYong has an ambitious route ahead towards 2020, with which Mahindra will attempt to elevate it to a more important position in the global market.

Source: Autocar