Ssangyong Says China Factory Plans to Be Firmed Up Within a Year

  • South Korean automaker is conducting a feasibility study
  • Company’s exploring China joint venture with Shaanxi Auto

Ssangyong Motor Co., the South Korean SUV maker which is exploring a joint venture in China, said the company will decide within a year on its plans for a factory as it looks to expand in the world’s largest auto market.

The automaker has entered into an agreement with a province in China for setting up a manufacturing plant, Pawan Goenka, managing director of Mahindra and Mahindra Ltd., which owns a majority stake in Ssangyong, said in an interview. A feasibility study is expected to be concluded in about a year or less, he said.

Ssangyong last month said it’s exploring a joint venture in China with Xi’an-based Shaanxi Automobile Group Co. and expects the automaker’s first overseas production to serve as a new growth engine. Chief Executive Officer Choi Johng-sik said a factory is essential to increasing sales and competitiveness in China’s auto market.

“We have reached a stage where financially we can take larger bets” in China, Russia and the U.S., Goenka, who is also on the board of Ssangyong, said at his office in Mumbai last week. “China is a major SUV market and hence it’s very important to Ssangyong.”

Ssangyong is expected to post this year its first annual profit since Mahindra purchased a majority stake in 2011, according to analysts’ estimates compiled by Bloomberg. The financial turnaround of the company is sustainable, Goenka said. The automaker said its global sales climbed 7 percent to 125,411 units in the 10 months through October, while domestic deliveries increased 5.2 percent led by demand for its Tivoli SUVs.

The Pyeongtaek, South Korea-based automaker will produce 156,000 units this year and is targeting at delivering as many as 300,000 units annually, Goenka said without providing a timeframe. Ssangyong has three products in the pipeline, to be introduced each year through 2019, he said.

The company is looking to push into overseas markets including China, the U.S. and Russia to achieve its sales goal even as it expects shipments to the U.K. to decline following the Brexit referendum.

The company will decide on entering the U.S. market by the third quarter of next year and has started conducting market research, products that will fit with the demand and financial feasibility, Goenka said. The company is also looking to renew its push into Russia, he said.

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