India's largest sports utility vehicle (SUV) maker, Mahindra & Mahindra, in association with Ssangyong Motor Co. Ltd will soon commence operations, for their first product under the joint venture, a sports utility vehicle. Dr. Pawan Goenka, President, automotive sector, Mahindra & Mahindra commented, “We are investing in product and brand development in SsangYong Motor Co. Both the teams of M&M and Ssangyong Motor Co. are working together to develop new product platforms over the next 3-4 years.”
Majority stakeholder in the joint venture, Mahindra, further disclosed the plans of establishing a chain of service outlets, where SUVs manufactured under the joint venture will be available. Confirming the reports of producing a utility vehicle within a joint venture, Senior Vice-President and Head of product development, auto sector, Mahindra, B. Bhaumik stated, “We will soon start conceptualizing a utility vehicle together. It will be a premium SUV in the range of Rs. 15-20 lacs.” Furthermore, he hinted that several other joint venture products are also being considered.
Mahindra & Mahindra owns around 70% share in Ssangyong, costing Rs. 2,105 crore. The Maharashtra based company made this move in order to provide a better range of products to its customers and boost overseas sales. It is a first-of-its-kind collaboration, where two premium utility vehicle makers have joined forces and would share technologies.
Commenting on the collaborated product development, Chief Executive, automotive division, Mahindra, Rajesh Jejurikar said, “We will be sharing each other’s platform to develop vehicles. The discussions regarding developing a joint product are at final stages'. Moreover he added, 'Very soon we will be forming a cross-functional team to look after the interests of both the companies. So far, the strategy is to bring in products at (the) top end from Ssangyong, while the needs of (the) lower end will be taken care of by Mahindra.”
The South Korean car maker, Ssangyong is believed to have taken this step in order to expand its global market share. Moreover, the company will be aiding Mahindra in expanding its overseas sales network and enter the rapidly growing markets. An official statement from Ssangyong states, “To begin with, Ssangyong will commence using Mahindra’s existing network in South Africa by March 2012. With Mahindra’s assistance, Ssangyong will also move to local manufacture of its vehicles in India and Egypt.”
Industry experts and analysts envisage that the step will boost Mahindra's sales volume. Moreover, with hardly any competitors, in terms of price range, the company will surely hold all the aces, Yaresh Kothari, sector analyst at Angel Broking Ltd commented, “The Rs. 15-20 lacs range is mostly dominated by sedans like (Honda) Accord and (Toyota) Camry while on the SUV front, you only have (Tata) Aria and (Skoda) Yeti. A locally produced vehicle in that price range will attract a lot of buyers.”
Both companies aim to boost their sales volume and expand overseas market through this joint venture. Car experts and industry consultants are considering this move to be individually advantageous. Moreover, their sports utility vehicle, slated for launch in the near future, poses a threat to models which are existing in the market for years.
