Ssangyong Motor Co, majority owned by Mahindra & Mahindra, may consider making India a manufacturing and export base, mirroring similar moves by other automakers that are benefiting from low cost of production here.
Mr Choi Jong-sik vice president for sales of Ssangyong also said the company plans to invest over USD 1.2 billion on its own over the next three to five years, which will help roll out four new products and their variants.
Seoul based Ssangyong, which is set to launch its Rexton and Korando C sports utility vehicles in India from its assembly plant in Chakan, near Pune, could move to manufacturing and exporting smaller compact and sub compact SUVs being jointly developed with M&M.
Mr Choi said that "If you see manufacturers like Hyundai, they are exporting cars like Santro to many countries; so possibly, we may explore such opportunities in the future. They will be exported as Ssangyong brand adding that we know the cost of manufacturing is lower in India, but the quality should be of international standards."
M&M has already started talks with Indian vendors for localization of some of key parts of Rexton and Korando C to bring down their costs. Vendors are also participating in the development of the S101.
Mr Choi said the USD 1.2 billion investment in its Korean operations would not include funds from Mahindra, which completed acquisition of Ssangyong last year.
He added that "We are going to invest from our own earnings. We are developing a new product pipeline and smaller compact SUV is a part of it. There are two product platforms which are under joint development and they will materialize in the next two to three years."
Experts say Ssangyong's consideration of India as a manufacturing base is driven out by factors such as Indian ownership, lower cost of manufacturing, synergies of joint development and joint manufacturing.
Mr VG Ramakrishnan vice president at market research firm Frost & Sullivan said that "The ownership is what may be driving the move. And if you have a product, which is well suited to the needs of the BRIC markets, it makes sense to manufacture them in India instead of a high cost base such as Korea.”
(Sourced from ET)
