Ssangyong eyeing entry into the US market
Korean automaker Ssangyong, a shambles five years ago, soon will to change the name of its brand and company to something with dash in hopes of sending its hardy and now-stylish SUVs to American shores.
In bankruptcy in early 1999, and ditched by its then-Chinese majority owner SAIC, a desperate Ssangyong downsized its workforce only to face the worst strike in the Korean auto industry?s history.
Workers set fire to parts of the Pyongtaek plant and illegally occupied it for more than two months. The strikers were subdued and expelled only after battalions of special-force police units stormed the plant, including commando teams skydropped from helicopters to lead the assault.
The lukewarm ashes of the wrecked company were saved by Indian automaker Mahindra & Mahindra, which in February 2011 acquired a 70% stake since raised to 73%.
Using judicious employment practices the new Korean management brought the worker union into its confidence and its planning.
Without an hour of strike since the acquisition, the same workers who were so volatile after SAIC dumped the automaker now are among the most diligent and productive in Korea. They are working a 2-shift schedule, with overtime on weekdays and weekends.
In 2013 Ssangyong racked up its highest sales since 2002, with 145,649 vehicles sold, a year-over-year jump of 20.7%. Of those deliveries a record 81,679 were made in overseas markets, up 11.9% year-over-year.
Last year?s domestic sales of 63,970 units were up 34.1% over 2012.
Now a spokesman confirms to WardsAuto that Ssangyong definitely plans to enter the U.S. market.
He confirms a product portfolio for North America is being planned, and says the automaker has hired a consultant to help it find a more palatable corporate and brand name. The aim is to shuck imagery of the old company and describe a product with quality, vigor and a long future.
Promise 2016 Targets 300,000 Sales Annually
Ssangyong President and CEO Yoo-il Lee has said the U.S. market is a must if the automaker is to grow in line with its formidable plans and his team is studying ways in which to gain entry.
Thus far the company has no supporting structure in North America: no sales operation, no technical team to get the vehicles approved by U.S. government regulators. But there are strategies nobody at Ssangyong will hint at, except to say ?Mr. Lee would love to get into that market.?
If the automaker?s designs on the U.S. sound dramatically optimistic, its current business plan seems to do no less. Called ?Promise 2016,? it targets sales of 300,000 vehicles in the year 2016, more than double the current volume. Lee is moving cautiously toward it with a 2014 target of 160,000 vehicles, up 10% over 2013.
He has not disclosed how Ssangyong plans to ramp up to that heady 2016 volume target from its solitary vehicle plant in Pyongtaek, which then would be running more than flat-out at full design capacity.
The automaker seems to have found success in its home market, posting in January what a spokesman calls ?fair domestic sales, not bad? of 5,445 units, a 34.9% year-over-year surge in a market that was down 2.1% overall The numbers, he notes, reflect reduced production and sales activity caused by the Korean Lunar New Year holidays, which fell in late January this year.
Total sales for January were up 9.5% to 11,634 vehicles. Exports of 6,189 units were off 6% because of a reduction in shipments of partial complete-knocked-down shipments to Russia. Reduced CKD output caused by the long Lunar New Year holiday was partly to blame, but the Russian market is in a downturn.
January exports of completely built-up units were up 1.8%.
Ssangyong?s refreshed range of vehicles, including the much-improved Korando C, which accounted for one-third of total sales last year despite being released in August , is getting good reviews in major markets.
The spokesman confirms the X-100 project?s long-awaited compact CUV, currently called the SLV, will launch in most markets in 2015. Some analysts think it will be a hit and bump the Pyongtaek plant up to full capacity.
Concepts for this vehicle, actually prototypes in progress, have been shown twice at the Geneva auto show as the SIV1 and SIV2.
This year a 7-seat SLV version will be on the floor as a diesel-electric mild hybrid, powered by an all-new 1.6L diesel engine and an electric motor that draws from a lithium-ion battery pack.
The diesel engine is significant as it is the first of its size to be developed by Ssangyong. The spokesman confirms it will be applied in other models in the production portfolio.
He says although the vehicle to be shown will be closer to the production model, it still is classified as a next-generation concept car. Analysts say it is the production model, however.
Vehicle dimensions confirmed by the spokesman are: length, 169 ins. (4,300 mm); width, 71 ins. (1,800 mm); and height, 63 ins. (1,600 mm). The SLV has three rows of seats.
Sales may launch simultaneously in many markets as camouflaged versions of the vehicle have been photographed in the past week or so in diverse markets such as India and Sweden.
WardsAuto was asked by the spokesman if it had been seen in Canada or the U.S., but would not say whether it is under test in either market.
The new vehicle is the first to be jointly developed by Mahindra with Ssangyong, which means it has benefited from the Indian parent?s deep pockets and credit, as well as parts-acquisition coordination. Analysts believe joint purchasing with Mahindra is taking 5% to 7% off Ssangyong?s production costs.
There is some slowing in some of the automaker?s export markets, but the overall sales outlook for 2014 remains strong.
Except for partial-CKD shipments to the Sollers plant in nearby Vladivostok, Russia, all other exported vehicles are shipped CBU.
The Sollers plant assembles the full range of Ssangyong SUV offerings and last year accounted for about 30,000 of the total 81,679 exported vehicles.
The next-biggest export market is Chile, which accounts for roughly 10,000 units and China, where volume last year was about 8,000.
It is of note that when South Korea President Park Geun-Hye made a state visit to India last month she conferred with Mahindra Chairman Anand Mahindra and Executive Director Pawan Goenka, who also is chairman of Ssangyong.
The two told Park the parent company will support any of Ssangyong?s needed investments. Goenka told her Mahindra Finance was studying the possibility of joining with Woori Bank in Korea to provide financial services for Ssangyong?s Korean customers.
Park thanked both of them for Ssangyong?s impressive turnaround and for last year?s rehiring of 450 workers who had voluntarily opted to take unpaid leave five years ago instead of being made redundant.