The SsangYong Motor Company is hardly a household name. First, its name is difficult to pronounce. Second, few people outside of Asia have heard of it. Still, this automotive manufacturer is considering selling its cars in the ultra-competitive U.S. market, which has raised a few eyebrows among industry analysts.
SsangYong, which is controlled by Indian manufacturer Mahindra & Mahindra, may enter the world’s most profitable consumer market by late 2019. If reports prove true, SsangYong may follow on the heels of Hyundai and Kia, established Korean manufacturers with a U.S. presence numbering in the decades.
SsongYang: History and Pending Name Change
On Tuesday, SsangYong CEO Choi Johng-sik announced a plan to export vehicles to the U.S. market. Choi said that it would happen in 2019, but not before the company changes its name.
The SsangYong Motor Company traces its history to 1954, having changed hands several times before the current structure was established.
In the 1960s, the company began producing jeep vehicles under contract with the U.S. Army. In the 1980s, SsangYong partnered with Daimler to build SUVs. The automaker currently offers a full line of four-wheel drive vehicles and one sedan. The compact SsangYong Tivoli SUV is the first model derived from its partnership with Mahindra.
At present, SUVs are a hot commodity in the U.S. and a profitable segment at that. Models such as the currently offered SsangYong Rodius, Actyon, and Kyron might be sold in the U.S. — but the naming convention may also need to change.
China Not the US
Choi’s announcement surprised some analysts, but the biggest surprise may have come from Mahindra Executive Director Pawan Goenka himself. Mahindra purchased a controlling 70 percent share of SsangYong in 2011, rescuing the Korean company from bankruptcy. Goenka told Reuters that SsangYong was in discussions with Chinese manufacturers to build SUVs in China as part of a joint venture.
Goenka emphasized that China is the primary focus, while the U.S. is “somewhat on the backburner.” In other words, the decision to enter the U.S. market is still up in the air. Look for Choi to walk back his statement in the coming days.
A Failed US Foray
Mahindra’s caution is likely based on the Indian automaker’s own experience when it attempted to enter the U.S. market a few years back. Best known in the U.S. for its line of farm tractors, Mahindra contracted with an importer, Global Vehicles, to bring its family of diesel-powered midsize pickup trucks to the U.S.
That deal ended badly as the importer accused Mahindra of dragging its feet in getting the vehicles certified by the EPA. Mahindra countered by dropping Global Vehicles and its 350-dealer network.
Lawsuits were filed and Mahindra eventually prevailed, but consumers were left without a promised midsize diesel-powered pickup truck. Just last year General Motors filled that void by introducing Chevrolet Colorado and GMC Canyon models with newly available diesel engines. What once was a promising opportunity may have disappeared.
Although Choi may have jumped the gun in announcing SsangYong’s plans, a look at Mahindra’s current stake in the U.S. market may have given him the boldness to make such a pronouncement.
Specifically, soon after the initial foray failed, Mahindra established a technical center near Detroit that currently employs scores of engineers. Those engineers are tasked with developing future products for Mahindra, likely for other markets, but possibly just as suitable for the U.S. if Mahindra chooses to take that route. Just like SsangYong, Mahindra is top heavy in trucks and SUVs.
Market Realities Weigh In
Ultimately, what may stay SsangYong’s hand are market realities. The U.S. market is littered with vanquished names, such as Isuzu, Daihatsu and Suzuki. Retired U.S. brands such as Plymouth, Oldsmobile, Saturn, Mercury, Hummer, Eagle, and Pontiac should also be added to the mix. Some of the remaining manufacturers, such as Mitsubishi, are just struggling to hold on.
Finally, if fuel prices suddenly surge, SsangYong may find itself stuck with the wrong product mix while each of the larger and more established players such as Ford, Toyota, GM and Nissan quickly shift production to smaller, more efficient cars. That’s a very real prospect in this day of globalization and unstable oil prices.