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Pressure on for SsangYong Australia to succeed

Hot seat: SsangYong’s Australian arm will feel more pressure to succeed than other markets due to its factory backing.

First wholly owned subsidiary means extra pressure for SsangYong Australia success

10 Dec 2018

SSANGYONG executives say the brand’s reintroduction to Australia comes with additional pressure to succeed, as it is the only SsangYong operation outside its native South Korea to be made a wholly owned subsidiary.
All other SsangYong operations around the world operate under a distributor model, with Australia the first in what the company’s management hopes is many more company-backed subsidiaries.
SsangYong models were previously imported and sold by Ateco Automotive between 2012 and 2016 and prior to that it was sold through Sime Darby Motors Group.
Speaking to GoAuto last week at the re-launch of the brand, SsangYong Australia general manager Tim Smith said there was added expectation for the brand given the extra investment required from Korea for a factory-backed operation.
“It means a lot of expectation, a lot of reporting, it is a fair bit of pressure, but good pressure if there is such a thing,” he said.
In terms of sales, SsangYong Australia is targeting up to 3500 sales in 2019 and five-figure numbers by the end of 2022. It will launch with four different models which will be expanded next year and further in the future.
Mr Smith said that expanding the number of subsidiaries would end up benefiting the brand as it would help SsangYong better determine what practices and models work for the market.
“I believe in that system – I don’t believe in it being 100 per cent subsidiary – but like all good franchise networks, like McDonalds, they have skin in the game,” he said. 
“They have restaurants that they own, because they need to know themselves what works and what doesn’t work at an operational level. 
“And head office need to be like that as well, so they need to start to see, ‘OK, if we did it this way, and this operation does it this way what are we learning?’ And their brethren, Kia and Hyundai, do it successfully.”
He added that one of the major benefits of being a subsidiary instead of a distributor was that he can communicate with high-ranking executives in Korea, which helps speed up processes, such as working directly with the head of research and development on ANCAP crash safety testing.
“It gives us direct access to the decision makers. I report directly to the global head of export, who reports to the global COO,” he said.
“So three or four of us have a lot of conversations around how things are going, so having access to those kinds of people – and they want to see this succeed – it’s a good thing.
“So to have access to these people directly, it’s questions answered quickly, it escalates things to the most senior levels, it gives me a whole bunch of waves of support which, particularly on product issues that are manufacturing based, it gives me quicker insights than say maybe a distributor would. So that’s the good thing.”
He said the only real downside to working as a subsidiary was the increased level of oversight and reporting required to justify decisions and processes.
SsangYong general manager marketing export team DK Lim said the decision to create a subsidiary in Australia was due to the brand’s desire to expand further into international markets, and that its product portfolio closely mirrored Australian tastes, namely pick-ups and SUVs.
“The reason is that … the factory capacity is just 250,000 so SssangYong didn’t have to sell lots of vehicles because only 250,000 is a very small number,” he said.
“So they just hired a lot of distributors in the world, but SsangYong knew that especially the Australian market is very important, and our vehicles really appeal with Australian tastes. 
“So if you’ve got a focus to a prospective market then we need to make a subsidiary. So that’s why we made our subsidiary first in Australia.”
He added that if the Australian operation is successful, the brand would look to implement factory-backed businesses in other global markets.

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