SSANGYONG SETS THE BALL ROLLING WITH TIVOLI. China, US are the new frontiers for SsangYong

Its corporate website refers to Promise 2016 where annual production next calendar is targeted at three lakh units. Three years later, as part of Aspiration 2019, SsangYong Motor hopes to roll out 4.5 lakh units - over three times the volumes registered in 2014 at 1.42 lakh units.

Company CEO, Yoo-il Lee would rather focus on the immediate priorities which include optimising the 2.5 lakh unit per annum capacity at its Korean plant and reach breakeven by end-2016. This is where the recently launched Tivoli compact SUV becomes particularly critical in kicking off the growth momentum across the company’s strategic markets.

“Our potential markets of the future are China and the US. Once we make a success story in the US with a jump in our brand image as a world-class manufacturer, we can rapidly grow our sales in Western Europe and elsewhere,” Lee said. For the moment, though, the US is some years away as SsangYong is still studying the prospects of entering the market. This will involve choosing the right model and building a dealer network. “Hopefully, we will enter the US market in three years,” he added. However, China could emerge SsangYong’s largest market by 2019 when it hopes to roll out 4.5 lakh vehicles annually. It will then have to consider a manufacturing operation in tandem with a local partner. Exports to China have been on the rise with 6,000 shipments in 2013 going up to over 10,000 vehicles last year. With the Tivoli, this number is expected to rise even further in 2015.

The big setback for SsangYong has been the Russian market which accounts for a fair share of its exports. With the country enveloped in an economic crisis, numbers have fallen from 30,000 units in 2013 to 20,000 units the following year. This void could be made up by higher volumes in the Chinese market and the US some years down the line. It also remains to be seen how quickly Russia revives and this is where China could emerge a strategic ally even while the West has turned its back to the country.

Falling oil prices are also of some concern to Lee as they have the potential to affect the health of economies dependent on (oil) exploration and exports. To that extent, 2015 will be a critical year for SsangYong thanks to uncertainty in oil prices as well as the Russian crisis.

According to Lee, Africa is another promising market for the automaker though pricing would be its biggest challenge. “However, we don’t expect the African market to be an opportunity in the immediate future,” he said. Likewise, price will be the barrier for India even though it is projected to be among the fastest growing automobile markets in the world. Duty levies are yet another obstacle especially for import of completely built up units. “We will consider manufacturing with M&M at its Nashik facility if demand for SsangYong products increases,” Lee said.

There are no immediate plans for the Asia-Pacific region even though Indonesia, Thailand and Malaysia are important growth regions. The ASEAN Free Trade Area will eliminate tariffs and allow free flow of completely knocked down kits.

Lee said SsangYong would ideally like to see its sales back home increase to eventually account for 60 per cent of total numbers. Once the diesel version of the Tivoli debuts in June, it could set the ball rolling in South Korea and revive the SsangYong brand. For 2015, the company has targeted sales of 1.6 lakh units of which 76,000 units will be exports.

For a company which was down and out thanks to a series of ownership changes, Mahindra & Mahindra has emerged a strong and reliable ally. The biggest challenge now is to pull out all stops for the Tivoli and work towards its targeted production of 1.2 lakh units annually.

The writer was recently in Seoul at the invitation of M&M.

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