News - SsangYong
SsangYong will go to India
India’s Mahindra named as preferred bidder for South Korea’s SsangYong
13 Aug 2010
SSANGYONG has named Mahindra as the front-running car-maker to take a controlling stake in the troubled South Korean-based brand, which has committed to releasing its all-new Korando C compact SUV in Australia this year.
India’s largest maker of utility vehicles was named the preferred bidder for SsangYong, which continues to operate under bankruptcy protection and plans to sign a contract for the sale in November, the company said in a statement to the Korea Exchange this week.
SsangYong Motor Co, which hopes to sign a preliminary agreement with Mahindra & Mahindra Ltd by the end of this month, said it will begin talks with Indian rolling stock manufacturer Raghav Industries Ltd if negotiations with Mahindra fail.
The company’s stock exchange statement did not reveal how much the Mumbai-based company offered for its shares, but industry analysts said taking control of SsangYong would give Mahindra increased experience in building SUVs in the world’s second most populous nation.
The purchase should also give Mahindra, which exports only the Pik-Up utility to Australia, access to markets including Russia, which is already a SsangYong export nation, CSM Worldwide consultant Lee Jin Sik told Bloomberg.
“Korea is one of the world’s leading centres of automotive excellence and SsangYong brings with it a rich legacy of R&D and innovation,” said vice-chairman and managing director of Mahindra Group, Anand Mahindra.
Left: Mahindra Group vice-chairman and managing director Anand Mahindra.
“Mahindra and SsangYong will create synergy, which will make us significant global players. SsanYong has very strong competencies and capabilities in technology. We are committed to leverage this competency by investing in a new SsangYong product portfolio to gain momentum in global markets,” said the president of Mahindra’s Automotive and Farm Sector, Dr Pawan Goenka.
In a statement issued on August 12, Mahindra said its preferred bidder status will require it to enter into a memorandum of understanding with SsangYong, followed by a detailed due diligence process.
Mahindra said that it intends for SsangYong to continue to function as an independent entity with Korean management. It said “strong complementarities” between the SsangYong and Mahindra product portfolios would provide an opportunity to create distinct positioning for both brands.
“The wide sales and distribution networks and complementary product lines will provide access to many overseas markets for both companies,” said Mahindra.
“There is also an opportunity to introduce a premium portfolio of SUVs in the Indian market, providing a new growth avenue for SsangYong and further strengthening Mahindra’s dominant position.
“This strategic acquisition, when concluded, would make Mahindra and SYMC together a force to reckon with in the global SUV space.”
For its part, SsangYong, which was previously controlled by China’s SAIC Motor Corp, would receive an unspecified capital injection to remain viable after it sought bankruptcy protection in early 2009 following a cash shortage due to declining sales of its volume-selling utes and SUVs.
Crucial to SsangYong’s survival is the success of the new Korando, which employs a new six-speed automatic transmission produced in Albury, Australia by Drivetrain Systems International, which is now owned by Geely – the Chinese car-maker that plans to sell its first cars in Australia this year.
Australian SsangYong importer Sime Darby told GoAuto last month that exact local launch timing for the Korando C would be dictated by the appointment of a new suitor for SsangYong.
Sime Darby managing director Rob Dommerson said: “They are still talking (about launching the Korando C in Australia) in the fourth quarter.
“We’re not exactly sure when in the fourth quarter – one of the issues is that they want to get the M and A (merger and acquisition) partner on board, and clearly they need cash to do that and a partner will want to be involved.
“They would want to maximise their participation in the global launch. That’s why we don’t have a final date, but it will be in Australia by the end of the year.” Globally, SsangYong sold 43,881 vehicles – including 26,190 exports – in the first seven months of this year, up from 13,091 in 2009, when production was disrupted for 77 days while workers protesting job cuts staged a sit-in.
SsangYong markets seven models including two large sedans, four SUVs and a people-mover, and also manufactures its own petrol and diesel engines.
So far this year SsangYong’s Australian sales are up almost 21 per cent, with nearly 700 vehicles sold, but the brand has a much stronger presence in Europe, Russia, South America, the Middle East, Africa and Asia.
SsangYong was established in 1962 and has more than 1200 dealers globally, plus an R&D staff of 600 working in modern design, testing and validation facilities.
Starting in 1945 by assembling the Willys Jeep in India, Mahindra is now a $7.9 billion Indian multinational employing more than 100,000 people worldwide.
Mahindra recently acquired a majority stake in the REVA Electric Car Co and is a dominant global player in the utility vehicle, tractor and information technology sectors.
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