Mahindra’s Ssangyong Motor explores China JV with Shaanxi Auto

Ssangyong signs a letter of intent with China’s Shaanxi Auto to study a possible joint venture and local production plant


Ssangyong Motor is looking to markets such as the US and China to make up for an expected decline in shipments to the UK following the Brexit referendum, chief financial officer Vasudev Tumbe said in August. Photo: AFP
Ssangyong Motor is looking to markets such as the US and China to make up for an expected decline in shipments to the UK following the Brexit referendum, chief financial officer Vasudev Tumbe said in August. Photo: AFP

Singapore: Ssangyong Motor Co., the South Korean SUV maker, is exploring a joint venture in China with Shaanxi Automobile Group Co. to produce vehicles in the world’s largest auto market.

Ssangyong signed a letter of intent with Xi’an-based Shaanxi Auto on Wednesday to study a possible joint venture and local production plant, the Pyeongtaek, South Korea-based automaker said in a statement.

Shaanxi Auto, set up in 1968, produces heavy and special-purpose trucks, including military trucks under the Yanan nameplate, after the city that served as the one-time headquarters for the Communist Party. Xi’an, where the automaker is based, is famous for being the site of the life-size terracotta warriors from the Qin dynasty in the third century BC.

“The joint venture, which will be SsangYong’s first overseas production base, will serve as a new growth engine,” Ssangyong Motor chief executive officer Choi Johng-sik said in the statement. He called the plant “quite essential” to increasing sales and competitiveness in China’s car market.

Ssangyong Motor is looking to markets such as the US and China to make up for an expected decline in shipments to the UK following the Brexit referendum, chief financial officer Vasudev Tumbe said in August. Parent Mahindra & Mahindra’s electric vehicle unit is also looking for a joint venture partner in China. They would be among the last of major global automakers to build factories in China, which imposes hefty duties on imported vehicles.

The planned foray into China comes at a time when the central government said it won’t in principle allow new automakers to set up if they produce vehicles that run on traditional fuels. The country is encouraging the development of electric vehicles to reduce its dependence on imported oil.

A Ssangyong Motor spokesman said it was too early to comment on specific model plans, but the company will have a plan in line with the Chinese government’s policy.

China’s SAIC Motor Corp. bought a 49% stake in Ssangyong for $500 million in 2004 before it was taken over by India’s Mahindra & Mahindra seven years later following the Korean automaker’ bankruptcy protection. Bloomberg

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