According to a senior official of Ssangyong, the Korean manufacturer may be thinking about making India a production centre for its export operations. If the company finalises this move, it will be following other car makers that are increasing profits through India's low-cost manufacturing costs, such as compatriot Hyundai. Factors like Indian ownership and synergies of joint development and joint manufacturing are also considered to be behind this move.
On this, the vice-president of Frost & Sullivan, VG Ramakrishnan, commented, "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." He added that the Korean company stands to gain from joint manufacturing and sourcing. By producing vehicles in India, Ssangyong will also be able to avoid high custom duties levied on exports.
Choi Jong-sik, vice-president, sales of Ssangyong, also commented that the manufacturer will be investing more than $ 1.2 billion over a period of 3 to 5 years for developing 4 new vehicles and their variants. The company, owned by India's Mahindra & Mahindra (M&M), will be launching two Sports Utility Vehicles (SUVs), named Rexton and Korando C, in the country by the end of 2012. It may start producing smaller compact and sub-compact SUVs that are being developed in conjunction with its parent company for export.
According to Choi, "If you see manufacturers like Hyundai, they are exporting cars to many countries; so possibly, we may explore such opportunities in future. We know the cost of manufacturing is lower in India, but the quality should be of international standards." M&M is conducting meetings with domestic vendors for developing some crucial components of Rexton and Korando C locally in a bid to lower costs.
In October, it was reported that the two companies are working together on a new sub-compact SUV, which is being called S101 presently. With this new car, the two SUV giants will take on the hatchbacks costing Rs. 3-4 lacs, a new segment for them. The Ssangyong version of this car is expected to be produced in India for sale in foreign markets. Vendors are also pooling in their resources for the development of the S101 model as well.
