Indian conglomerate Mahindra & Mahindra, the parent company of Ssangyong Motor Co., is pushing ahead with a plan to establish a plant in China to produce Ssangyong vehicles. The company is aiming to directly target the Chinese market by lowering production costs.
A senior official from Ssangyong Motor said on March 8, “The company is considering a plan to build a Ssangyong Motor production plant in China.” Mahindra is said that it has decided to form a joint venture in China and is in talks with three to four Chinese firms.”
In 2010, Mahindra bought Ssangyong Motor for 522.5 billion won (US$432.35 million). Since then, the company has been investing more than 1 trillion won (US$827.47 million) to stabilize the company. In the fourth quarter last year, Mahindra had a surplus in eight quarters thanks to the strong demand of its compact sport-utility vehicle (SUV) Tivoli, which was released in 2014. However, it has failed to put up a good show in the global market. In particular, Ssangyong’s cumulative overseas shipments as of the third quarter last year dropped 2.7 percent from a year ago due to economic uncertainties in its major markets, China and Russia. The company believes that there will be a limit to target the Chinese and the U.S. market in the future with its Korean plant alone.
However, Mahindra said it will not shut down its Korean plant or reduce its output even when a Chinese plant is set up. The official said, “The company is planning to construct a Chinese plant to expand the overall pie. We will not decrease productions in the Korean plant.” Currently, Ssangyong’s Pyeongtaek plant produces 150,000 cars annually.