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 The company, founded almost 60 years ago and which was recently
Chinese-owned and in receivership, plans to develop four new SUV
models, CEO Lee Yoo-il told Reuters in an interview, hoping to
launch one new product a year from 2015.
The new models aim to position Ssangyong as a value-for-money SUV
brand, say knowledgeable people close to the company, and target, by
as early as 2016, a U.S. market where the company — now 70
percent-owned by India's Mahindra & Mahindra <MAHM.NS> — has never
sold cars on its own. China and Indonesia are also on its radar, as
are Australia and South Africa.
Lee, 70, said Ssangyong may even change its "Chinese sounding name"
in a bid to boost its brand appeal.
He said the plans have not yet been finalized.
Industry experts say it's a very ambitious goal given Ssangyong's
limited resources and technological prowess. Even parent Mahindra
last year gave up trying to crack solo a fiercely competitive U.S.
market with a small, $25,000 pickup truck called the Appalachian.
"We know we can't afford failure in the U.S. If we fail in the U.S.,
we would go bankrupt," said Lee, who was U.S. sales chief for Korean
rival Hyundai Motor <005380.KS> in the 1990s. Lee is also
considering developing a one-ton truck.
A breakthrough into the United States would cap a swift turnaround
at Ssangyong, where many of Lee's management team are also former
Hyundai executives with decades of experience.
"The United States is a scary market ... very difficult to break
into," he said. "At Hyundai, I learned the hard way that we cannot
succeed there unless we are fully prepared."
Lee said it was "commercially viable" for Ssangyong to sell as many
as 100,000 vehicles a year in the United States, though he gave no
timetable for that. He added Ssangyong would consider building cars
in the U.S. if sales topped 150,000 vehicles a year. The company
currently has a single assembly plant and one engine factory in
South Korea.
While it's a tough ask, Ssangyong insiders believe they have
attractive products — including a subcompact SUV code-named the X100 — to compete against General Motors' <GM.N> Buick Encore and Chevy
Trax. The people close to Ssangyong also said the company plans a
slightly bigger compact SUV that may replace the Korando C, and
possibly a redesigned Rexton mid-size SUV.
"Everybody wrote off Ssangyong a few years ago ... (but) Mahindra
has done a pretty incredible job turning it around," said Ashvin
Chotai, the head of London-based consulting firm Intelligence
Automotive Asia. "Now we're talking about the next step, which is
very, very challenging. Ssangyong has done a good job developing new
products, but it's still quite an ambitious plan. It's going to be
tough."
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ON THE REBOUND
Ssangyong is bouncing back from a $278 million loss and near
insolvency in 2009. Lee said the company began making money again
this year, two years ahead of plan.
In January-November, it sold 57,386 cars in South Korea and exported
74,992 to markets including Russia, putting it on course to shift
143,000 vehicles this year, up 18 percent from 2012. Lee reckons
Ssangyong should maintain double-digit sales growth next year.
He said Ssangyong has built up a 400 billion won ($380 million) cash
reserve and could finance its turnaround plan without relying on
Mahindra, by using cash it generates or, if necessary, bank loans.
"We're not worried about financing," he said.
Ssangyong has been selling vehicles in China for more than a decade — it went through an unhappy spell in 2005-09 under the control of
China's SAIC Motor Corp Ltd <600104.SS> — and aims to sell about
8,000 vehicles there this year.
The company is also looking at entering Indonesia — where vehicle
penetration is just 40 per 1,000 people — with a pickup truck, the
X100 and a 3-row people-mover version of the X100, said those close
to Ssangyong.
In both China and Indonesia, Lee said Ssangyong would need to
assemble cars using nearly-finished vehicle kits sent from South
Korea to get around high import tariffs. Lee said he was searching
for a suitable local partner in both markets.
Ssangyong, which in the early 1990s had a deal with Mercedes-Benz <DAIGn.DE>
to engineer and build its own vehicles using the German group's
technology, is now developing more engines, including a 1.5-liter
and a 1.6-liter powertrain.
It is also looking to tap global suppliers, and is developing its
own manual transmission, and may replace its current transmission
supplier with Japan's Aisin Seiki Co Ltd <7259.T>.
($1 = 1052.2000 Korean won)
(Additional reporting by Paul Lienert in
Detroit; editing by Ian Geoghegan)
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