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India's Mahindra studying US entry for Ssangyong auto unit: executive
September 11, 2014 / 10:30 AM / 3 years ago

India's Mahindra studying US entry for Ssangyong auto unit: executive

Pawan Goenka (L), President of Automotive and Farm Equipment of Mahindra & Mahindra, and Yoo-Il Lee, chief executive officer of Ssangyong Motor Co, pose with the newly-launched Ssangyong Rexton SUV vehicle in Mumbai October 17, 2012. REUTERS/Vivek Prakash

NEW DELHI (Reuters) - Mahindra and Mahindra Ltd (MAHM.NS), India’s largest utility vehicle maker, is conducting early-stage studies on selling cars in the United States made by its wholly owned South Korean unit Ssangyong Motor Co (003620.KS), a senior executive said.

“Right now what we are doing is very early feasibility study of which products will make sense for the U.S., what will it take to make those products work, whether it will be financially viable to launch in the U.S.,” Pawan Goenka, president of Mahindra’s automotive and farm equipment sectors told Reuters in an interview on Thursday.

Goenka did not say when the feasibility study, which started four to six months ago, is expected to be completed. He said that the company will look at having multiple Ssangyong products available in the United States.

“Once we have the board approve the U.S. project, then we will have to start the work,” the executive said. It would take at least two to two and a half years after board approval before any U.S. products could be launched, he said.

Under Mahindra’s ownership, Ssangyong is investing nearly $1 billion on its product lineup as part of a strategic plan to break into the United States and Asian markets including China.

Ssangyong aims to use new models to position the South Korean brand as a value-for-money sports utility vehicle supplier, knowledgeable people close to the company say. It will target the U.S. market where Ssangyong never sold cars on its own previously.

The South Korean firm has also held talks with local Chinese automakers and other industry concerns in China to possibly begin production of Ssangyong cars in mainland China, the world’s biggest auto market, they say.

“We have not made any firm plans but eventually manufacturing in China, once we get to a certain level in volume, would be something we will be looking at,” Goenka said.

Ssangyong could set up a manufacturing plant in China if sales there rise to 50,000 vehicles a year, the brand’s sole China agent Pang Da Automobile Trade Co Ltd (601258.SS) said earlier this month.

Foreign automakers that want to manufacture in China must take on a local partner under the country’s regulations. Pang Da does not have a manufacturing license, but would be willing to invest in any Ssangyong joint venture, Pang Da officials have said.

This year, Ssangyong, which was acquired by Mahindra in 2011, expects sales of 20,000 vehicles in China, a more than three-fold jump from the 6,300 vehicles it sold a year ago.

In India, Mahindra plans to roll out two compact utility vehicles and a commercial vehicle in 2015 to try to regain lost customers. Its share of the utility vehicle market fell to 42 percent in 2013-14 from nearly 48 percent a year earlier.

“Right now we are sort of at the bottom of the cycle. Once we start launching we will start picking up again,” Goenka said, adding the company is confident it will “undoubtedly” be able to claw back some of its lost market share after the new product launches.

Additional reporting by Norihiko Shirouzu in BEIJING; Writing by Aman Shah; Editing by Kenneth Maxwell

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