. This is a discussion on Mahindra & Mahindra Acquires SsangYong within Global Auto News. Part of The Auto Talk category; Auto major Mahindra & Mahindra today said it is developing three new engine platforms, along with its Korean subsidiary SsangYong ...
M&M, SsangYong jointly developing 3 engines for global market
Auto major Mahindra & Mahindra today said it is developing three new engine platforms, along with its Korean subsidiary SsangYong Motor, which are likely to hit the roads in the next two-three years in markets across the world.
"We are looking at joint product development. Currently we are working together to develop three new engine platforms for both Mahindra & Mahindra (M&M) and SsangYong," M&M Chief Executive (Automotive Division) Pravin Shah told reporters here.
Both companies are developing the engines keeping in mind India, South Korea and other markets around the world, he added.
"It will take us 24-36 months to develop these engines," Shah said.
He, however, declined to share details such as capacities of the engines or whether these will be fitted in small cars, sedans or sports utility vehicles.
"M&M and SsangYong are working on to synergies strength of both the firms. Apart from product development, we are also working on joint global sourcing and utilising global network for products," Shah said.
Talking about the investments, Shah said M&M will put in Rs 4,000 crore in the next three years, while SsangYong will make an investment of Rs 1,500 crore.
SsangYong Motor today launched SUV Rexton in Delhi, priced between Rs 17.75 lakh and Rs 19.75 lakh (ex-showroom).
When asked if separate showrooms would be considered in India for products of the Korean firm to establish the brand, SsangYong Motor Company Executive Vice President (Sales and Marketing HQ) Johng-Sik Choi said: "It may help in having separate showrooms for the brand.
"However, we are selling Rexton in M&M outlets as a pilot project. After one year, we will review the sales performance and then we will take a decision accordingly. At present, there is no plan to open separate outlets."
Mahindra and Mahindra's Korean subsidiary Ssangyong sees better financial performance in next 2 years
Auto major Mahindra and Mahindra's Korean subsidiary SsangYong today said it expects to improve financial performance in the next two years.
"SsangYong is doing better compared to what we have expected. We are happy with the acquisition and so are with their financials. We feel the turnaround will be as what we have planned. We see better financials in year or two," M&M Chief Executive-Automotive Division Pravin Shah said.
He was speaking to reporters on the sidelines of launch of Ssangyong's Rexton SUV in Hyderabad market.
SsangYong had posted net loss of KRW 13.4 billion (USD 12.4 million) for the quarter ended September 30, against KRW 35.4 billion (USD 32.7 million) during the year-ago period.
Shah, however, declined to reveal when the Korean subsidiary expects to break-even.
M&M, which emerged as the preferred bidder for SsangYong in August 2010, holds 70 per cent stake in the company, for which it shelled out USD 463 million (about Rs 2,105 crore).
Ssangyong recorded 29,039 vehicles in sales volume, which includes 11,906 CKD vehicles in domestic sales and 17,133 in exports.
Its revenues for the third quarter stood at KRW 696.5 billion (approximately USD 634 million).
"The performances resulted from a decrease in exports due to recession of global automotive market, despite an increase in domestic sales," SsangYong had said in a release during results announcement.
The company showed a decrease of 4.4 per cent in sales volume and 6.8 per cent in revenues in Q3 compared to the same period last year.
"In the current year, the domestic market (Korean) and European markets for Ssangyong are not growing. The market situations are known. The whole of Europe is undergoing difficult times. Hence, Ssangyong is also facing the issue (of tough time)," Shah said.
Replying to a query on the agitating former employees of Ssangyong, he said they were aware of the situation and the issue would be addressed diligently.
Ssangyong inaugurated new design center at their South Korean plant
Mahindra owned Ssangyong Motor Company has inaugurated a new design center at their Pyeongtaek manufacturing facility.
The construction of the design center commenced in October last year. The center has a total of 4 levels occupying an area of 93,320 square feet.
The new Design center is located within the plant to enable greater interaction and synergies between the R&D team and the manufacturing plant throughout the process of product development.
The center includes highly modern infrastructure and equipment like modeling room, design sample room, color lab, internal and external presentation areas. There are two evaluation rooms, one for internal purposes and other for external purposes both of which are equipped with high resolution virtual reality system to evaluate the new designs.
The new design center will enable Ssangyong to fast forward the design process of the XIV series of vehicles which are expected to be the company’s future. The Ssangyong Rexton which will need an all new design in the years to come could also be benefited by the design center.
Lee Yoo-il, CEO of Ssangyong Motor stated that, “Ssangyong’s new Design Center will take a lead role in reflecting various customer needs and design trends in Ssangyong vehicles.”
The South Korean manufacturer’s new design philosophy will revolve around the theme, ‘Nature, Human and Motion’.
SsangYong Motor records global sales of 11,871 vehicles in December, sells 120,717 units in 2012
The Mahindra Group-owned SsangYong Motor has registered total sales of 11,871 vehicles in December 2012 – 5,365 vehicles in domestic sales (Korea) and 6,506 in exports including CKD. The company says its sales exceeded 10,000 vehicles for four consecutive months with an increase of 37 percent from the same month last year.
Domestic sales hit a monthly record high, increasing by 21.8 percent compared to the previous month, and 53.2 percent compared to December 2011 thanks to an upward trend in sales of the Korando series. Exports also showed a steady growth with an increase of 26 percent in December 2012 as compared to the same month last year.
Despite a sluggish global economy, Ssangyong’s cumulative sales in 2012 recorded 120,717 vehicles, including 47,700 vehicles in domestic sales and 73,017 units in exports with a year-on-year increase of 6.8 percent. Cumulative domestic sales recorded the highest growth of 23.4 percent YoY through a sales increase of refreshed models such as the Korando C and Korando Sports. SsangYong’e export performance was driven by the Russian market, which bought 32,328 vehicles. This is the first time the company has recorded annual exports of over 30,000 to a single country.
Commenting on the results, Lee Yoo-il, CEO of Ssangyong Motor, said, “It is a very meaningful accomplishment that the company achieved the highest growth among domestic and imported automakers despite a sluggish global economy. We will further increase our global sales through differentiated marketing strategy and reinforced export product line up, continuously.”
Ssangyong takes back 455 workers as demand improves
Mahindra and Mahindra's Korean unit Ssangyong Motor will hire back 455 workers who were sent on leave after the unit turn around its business and increased business in the region and exports to Russia.
These employees went on unpaid leave during the company's restructuring. Ssangyong however would not reinstate those workers who took voluntary retirement or dismissed workers.
Even though Ssangyong Motor has not yet achieved a financial turnaround, it has been improving its sales record year after year since 2009. Building on these performances, it will continue to focus on market expansion by entering new overseas markets and launching facelift models this year to maintain this growth trend, Mahindra said in a statement.
On the proposed National Assembly investigation, Ssangyong Motor also made it clear that it is opposed to it as the allegations on issues such as accounting fraud raised by the outside labor and some political circles were already proven as unfounded by the Financial Supervisory Service and the Court, and were also fully addressed during the National Assembly hearting and audit.
Furthermore, an unprecedented National Assembly investigation on an individual company under a constitutional government would damage the Company’s image and reduce its credit worthiness worldwide. It will lead to a sales decline that will also have a negative impact on the reinstatement plan, which was prepared with great difficulties.
Also, as many of the points on the list of the investigation items are still being litigated in the court, a parliamentary investigation on those issues would violate the National Assembly Audit and Investigation Act, Chapter 8 that prohibits a parliamentary investigation with the purpose of intervening in an ongoing litigation.
Dr. Pawan Goenka, Chairman, Board of Directors, Ssangyong Motor Company and President, Automotive and Farm Equipment Sectors, M&M Ltd said that “Mahindra has always believed in finding a solution to the issue of unpaid leave workers, and I am pleased that the demand of Ssangyong vehicles has increased such that we are able to reinstate the unpaid leave workers.”
He further stated that “Mahindra acquired Ssangyong assuming that all the restructuring efforts done prior to the acquisition were fully compliant with the Korean legal and governance systems. Therefore, if the past restructuring is questioned and all the dismissed workers were to be taken back, it will make it difficult, if not impossible, to achieve the turnaround of the company. The turnaround of Ssangyong still needs significant investment in future products and capacities and hence will need full support from the government and honorable members of the National Assembly.”
Mahindra has invested a total of KRW 522.5 billion in March 2011 (new paid-in capital increase of KRW 427.1 billion, corporate bonds 95.4 billion won) to acquire 70% of the Ssangyong Motor shares. Mahindra has shown a strong resolve to provide for the financial resources for the mid- to long-term investments and advance the turnaround of the Company by making a direct investment in Ssangyong in the first half of 2013 and implementing various measures to build up core competencies of the Company.
Moreover, as the current issue cannot be solved by outside intervention, being an issue related to the business operation of an individual company, Ssangyong Motor needs the support from the political circle so that the labor and the management can take the initiative in solving the issue. It also asked the outside parties to help the company pay full attention to business management only as it exerts all efforts to ensure job stability and job increase. It has the responsibility to preserve the jobs of approximately 4,800 direct employees and some 110,000 employees working in the A/S network and at the suppliers.
CEO of Ssangyong Motor Lee Yoo-il said that “Ssangyong Motor’s labor and management have been making utmost efforts to normalize the company’s operations during the last three years based on a cooperative relationship,” and added that “based on these efforts, we now created the conditions for the unpaid leave workers to come back, and we will continue to do our best to strengthen the future-oriented labor-management relations.”
Head of the Ssangyong Workers' Union Kim Kyu-han also said that “we were able to come up with the latest agreement on the unpaid leave workers issue as a result of several rounds of in-depth discussion and close communication between the labor and the management.” He also mentioned that “this will serve as a momentum for the Ssangyong Workers' Union to continue to play a responsible role in the turnaround of the company. In this context, we strongly oppose any move for a National Assembly investigation
Mahindra to spend Rs 397 crore to increase stake in Ssangyong
Mahindra & Mahindra will increase its stake in its Korean unit Ssangyong Motor Co to 72.85 percent with an investment of Rs 397 crores.
Mahindra has to make the payment by May 22 to subscribe to preferential shares issued by Ssangyong.
Mahindra, the flagship company of the $15.9 billion Mahindra Group, bought a 70% controlling stake in the carmaker in March 2011.
Mahindra said in January that it would invest $ 900 million or Rs 4850 crore over the next four years in Ssangyong to develop new products. Mahindra had also said that it has shown a strong resolve to provide for the financial resources for the mid- to long-term investments and advance the turnaround of the company by making a direct investment in Ssangyong in the first half of 2013.
Mahindra to invest €55 million in SsangYong to help it build small crossover
Mahindra’s Ssangyong Motor announced that a board of directors’ meeting on Thursday had approved a paid-in capital increase of KRW 80 billion (€55 million) to raise investment funds.
SsangYong will issue 14,545,455 new shares through third-party allotment, increasing the company’s paid-in capital by 11.9 percent. The board resolution will result in a capital increase from the current KRW 613.4 billion to 686.1 billion (€474 million). With the debt to equity ratio going down and liquidity increasing, the company’s financial strength is expected to improve significantly.
The willingness expressed by Mahindra to participate in the increase in the paid-in capital confirms the Indian company’s committment to provide continuous support as well as its determination to achieve an early turnaround of Ssangyong Motor Company. Ssangyong will use the funds from this capital increase to invest in new product developments such as small CUV models.
“By expanding investment in Ssangyong and creating tangible synergy in various areas such as sales, product development and sourcing, we will continue to increase our global competitiveness,” said Dr. Pawan Goenka, Chairman of the Ssangyong Motor board and President of Mahindra’s Automotive and Farm Equipment Sectors.
“With the recent decision on paid-in capital increase, we will be able to secure the necessary investment funds and at the same time, strengthen the financial soundness of the company,” said Lee Yoo-il, CEO of Ssangyong Motor.
M&M to help South Korea's Ssangyong return to profit in 2015
South Korean car maker Ssangyong Motor Co expects to return to profitability in 2015, its chief executive said on Tuesday, with the financial clout of its Indian parent helping it to update its product line.
Ssangyong, which Mahindra & Mahindra rescued from bankruptcy in 2011, will receive a $73 million capital injection from the Indian company this year, as it looks to launch its next-generation X100 sports utility vehicle (SUV) in early 2015.
"In 2015 we will use our full capacity. That is when we will (have achieved) turnaround," CEO Yoo Il Lee told Reuters in an interview on the sidelines of the Geneva Motor Show.
Lee also said that the company will return to borrowing from banks next year to fund its expansion.
Ssangyong's debt was wiped clean by Mahindra after the Indian company bought its controlling stake.
Mahindra and Ssangyong will also expand its dealer-sharing programme - currently in place in Australia - to South American and African countries, Lee said, with a long-term target of entering the United States market.
"We are diversifying our export markets. Russia now is the largest, but depending on one country is a bit insecure," Lee said.
Mahindra's capital injection, which Lee says will happen in May or June, will increase the Indian car maker's holding in Ssangyong to 73 percent.
Ssangyong records healthy growth in domestic and export volumes
Mahindra-owned Ssangyong Motor witnessed sales increase by 15.2% in March 2013 compared to March 2012.
In the Korean market, Ssangyong sold 4,924 cars, an increase of 30.1%. 5,837 vehicles were exported, including CKD, leading to a grand total of 10,761 cars.
This is the second time Ssangyong is exceeding a monthly sale of 10,000 units in 2013 after the first five figure sales in January. Sales in the domestic market has improved for the third consecutive month. It is also considerably better compared to the average monthly sales figure of 4,000 units in 2012.
The main credit for the energetic start to 2013 goes to the Korando brand which consists of the Korando C, Korando Sports and Korando Turismo. Ssangyong says customers recognize the Korando as an outdoor lifestyle brand. The recent addition Korando Turismo has logged 3,800 contracts since January.
Ssangyong expects the upward trend to continue as production is being ramped up to satisfy the high demand in Russia. The company’s Rexton, launched in India last year, has received a good response from Mahindra’s customers. Mahindra plans to assemble 500 units of the vehicle. The company may also launch the Korando Turismo and the Korando C in India within the next two years.
Sales of the Ssangyong Chairman W Summit, launched at the Seoul Motor Show in late March, kick started on April 1. Aggressive marketing efforts, focusing on VVIP’s, are underway to improve Ssangyong’s brand image and profitability.
SsangYong registers operating loss for Q1 2013, but sales increase
SsangYong Motor Company, the South Korean brand owned by India’s number one SUV makers, Mahindra & Mahindra, has announced their results for Q1 2013. The company declared net loss in operating profit, though sharply lowered over last year’s results. At the same time, the company also announced increase in sales.
SsangYong registered net loss to the tune of 9.8 billion won (INR 48.06 crores) for the period January to March 2013. This is a reduction in loss by 43%, as 31.5 billion won (INR 154.47 crores) operating loss was registered in the same period of the previous year.
SsangYong also declared 18.2% growth in sales volumes and 16.7% increase in revenues over the same period. Sales increase during the first quarter of this year was primarily to sale of Korando C and Korando Turismo which the company introduced in February 2012. Domestic and overseas sales of these two models increased to 13,293 and 17,972 respectively, an increase of 37% and 7.4% over sales during the same period in the previous year. Further interest shown to the company’s new and refreshed models in both Korean and export markets have also resulted in lower losses during the first quarter of this year.
Commenting on the results, Dr. Pawan Goenka, President, Automotive and Farm Equipment Sector said, “This performance shows that the turnaround of Ssangyong continues at a brisk pace. Our new and refreshed models are increasingly popular in the Korean and export markets and have helped to significantly lower our losses.”
Ssangyong Motor posts highest ever sales in April since 2006
Ssangyong Motor, part of the USD 15.9 billion Mahindra Group has announced on that the company sold a total of 12,607 vehicles in April 2013 – 5,115 vehicles in domestic sales and 7,492 in exports, including CKD kits. Ssangyong achieved its highest ever monthly sales since December 2006 and its result exceeded average monthly sales in Q1 this year, when the company recorded the highest growth rate in the domestic auto industry.
The domestic as well as export sales increased by over 20% each compared to the same month last year and came close to the monthly sales record in 2012. As a result, total sales in April rose by 25.9% year-on-year and cumulative sales grew by 20.4% sharply compared to the same period last year. Ssangyong’s domestic sales showed an upward trend for four consecutive months thanks to increased sales of the Korando series. The company sold 5,115 vehicles in the domestic market, exceeding 5,000 again in 5 months since last December, with a growth of 27.7% from the same month last year.
The company registered an increase of 24.7% in exports from a year earlier, exceeding 7,000 vehicles. It was attributed to a sales upswing in overseas markets such as Central and South America and increased sales of the Korando C to the Russian market despite the global recession. Ssangyong expects a far stronger sales growth since the Korando series including the Korando C, Korando Sports and Korando Turismo have been receiving an overwhelming response from customers.
Lee Yoo-il, CEO of Ssangyong Motor, commented, “It is very meaningful that we achieved our best ever monthly sales result in April despite the continued global recession,” adding, “We will make utmost efforts to normalize our business by expanding sales with the launch of face-lifted models consistently.”
Ssangyong Motor Co receives 80 billion won from Mahindra
Ssangyong Motor Co, part of the Mahindra Group, today said it has received 80 billion Korean won (about Rs 400 crore) from its majority shareholder Mahindra & Mahindra Group in lieu of the new shares offered to the Indian firm.
"...The full payment of 80 billion won for the new shares has been received from its majority shareholder Mahindra & Mahindra Group and that the paid-in capital increase was successfully completed," Ssangyong Motor Co (SMC) said in a statement.
On February 14, 2013, SMC had decided to make a third party allotment (Preferential Offer) to Mahindra to secure investment funds for new products.
"The 80 billion won paid-in capital for stock has been received, and the paid-in capital increase has been successfully completed," SMC CEO Lee Yoo-il said.
"As we have secured the funds, we will vigorously proceed with our investments for new product development such as small engines and small CUV and make utmost efforts for an early turnaround of the company and improve the corporate value," he added.
The preferential offer has resulted in an increase in the paid-up capital of SMC by 11.9 per cent and increase in M&M's stake in SMC to 72.85 per cent from 69.63 per cent.
SMC said all of the 14.54 million new shares will be locked up for one year, and the expected listing date in India is scheduled for June 7, 2013.
The Korean firm said that apart from the 80 billion won paid-in capital, Mahindra has also agreed to roll over the corporate bond worth 95.4 billion won that was scheduled to mature in 2014, by another year.
"This is an additional source of fund for Ssangyong Motor. With this, the company expects more tangible results from synergy in various areas of sales, sourcing, etc," Ssangyong said.
Mahindra had invested 522.5 billion won in 2011 to about 70 per cent stake in Ssangyong Motor Co.