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SsangYong Motor bids goodbye to Mahindra after 10 years | Autocar India

Written by Rashmi

The management crew at Mahindra & Mahindra had reiterated that the SsangYong acquisition introduced a very good alternative for the Indian firm to go international.

It’s lastly over for Mahindra & Mahindra and SsangYong Motor. With the Korean SUV maker now within the fingers of a consortium led by Edison Motors, its 10-year innings with its Indian proprietor has formally come to an finish.

M&M had already made it identified a few years in the past that it could cap investments in SsangYong since there was little coming by means of any return. Whereas losses have been piling up, gross sales have been nothing to write down residence about. The one means out was to discover a suitor and exit, which is exactly what has occurred now with Edison Motors.

Mahindra & Mahindra-SsangYong: A particular alliance

From M&M’s perspective, the long run is now about specializing in its core strengths of SUVs which, sarcastically, was the rationale why it selected to name it a day with Ford over twenty years in the past. This was the time it made the vital determination of specializing in Mission Scorpio as a substitute of pumping in cash right into a three way partnership the place it had little to contribute within the automotive house.

Scorpio, in fact, turned out to be a powerful success story and a bolder M&M emerged within the course of, which was now eager on spreading its wings into the mobility house. It threw its hat into a bunch of latest areas, like two-wheelers (shopping for out Kinetic’s enterprise), vehicles (by way of an alliance with Navistar of the US) and a comeback in automobiles by means of a three way partnership with Renault to fabricate the Logan.

But, SsangYong was particular as a result of it marked an extension of its core enterprise of SUVs and the truth that this was following a buyout of a world firm made it much more engaging. Tata Motors had already carried out this twice with Daewoo Industrial Autos and a extra glamorous buyout of Jaguar Land Rover from Ford.

Each Tata Motors and M&M represented legacy Indian firms which had braved the MNC onslaught and nonetheless managed to carve a distinct segment for themselves – the previous with its Indica and the latter with the Scorpio. This was taking place at a time when two different Indian manufacturers, Hindustan Motors and Premier Vehicles, had been relegated to the sidelines. There have been, therefore, numerous hopes when M&M introduced its acquisition of SsangYong means again in 2010-’11.

The corporate was clearly on a roll and upbeat concerning the prospects with its new Korean acquisition which had been by way of its share of upheavals with earlier homeowners like Daewoo and China’s SAIC Motor Corp. It was admittedly a small participant in South Korea in comparison with giants like Hyundai and Kia, however this actuality didn’t deter M&M which was hopeful of making new synergies and serving to the model develop.

Mahindra & Mahindra-SsangYong: Deal with technique, monetary viability

The management crew had reiterated then that SsangYong introduced a very good alternative for the Indian firm to go international, although there was numerous work that wanted to be carried out. There can be particular concentrate on points referring to technique, long-term monetary viability and main HR initiatives. One other high precedence for M&M after the buyout was to draw extra expertise into SsangYong and “create an entire lot of pleasure”.

Some key individuals had give up the Korean firm when it was going by way of a tough patch previous to the acquisition. But, M&M was assured that expertise wanted for the long run weren’t briefly provide out there and drawing individuals again to SsangYong could possibly be carried out with the precise focus and path. This confidence stemmed from the truth that there was “no fundamental injury” to the model, or that it had turn into weak as a result of a bunch of things.

This author had visited Seoul in 2015 for the launch of the Tivoli which was anticipated to offer SsangYong Motor the size in markets like Western Europe and hopefully make it a robust entity. At that cut-off date, the management at M&M stated that seeing the product take form was like watching a child develop.

There was additionally super respect for the SsangYong crew’s environment friendly timetable for the Tivoli provided that the launch date of mid-January 2015 had been set means again in November 2011 when work on the venture began. It was this degree of Korean self-discipline and dedication which had been an exceptional studying expertise for M&M.

For an organization that was actually within the wilderness for a few years, the sort of data SsangYong had on product planning was actually mind-boggling to its Indian ally. “It’s wonderful how a lot it [SsangYong] has in its armour and the logic in its product planning impresses me so much,” a senior member of the management crew had commented.

Mahindra & Mahindra-SsangYong: Widespread sourcing

This dialog was taking place 4 years into the buyout when the partnership was working nicely with every of the businesses exercising the pliability to undertake the opposite’s follow as long as it made enterprise sense. SsangYong’s data expertise system in Korea, as an illustration, was a replication of M&M’s and this was true for its human useful resource administration mannequin too. The Indian proprietor, in its flip, had so much to be taught from its Korean ally within the product planning course of.

M&M additionally had expatriates for some key features which helped immensely in cross-learning and adopting good practices. “The most important sense of shut working is in buy as a result of it’s a clear win-win the place we mix the teachings of India and Korea and cut back prices for each firms,” the senior govt had stated.

This was due to widespread sourcing the place within the Tivoli, as an illustration, the engine was taken out of the platform put in place for M&M. Almost 30 % of sourcing was widespread for the 2 engines resulting in vital price advantages. “We’ve saved the 2 firms impartial and no matter we do is on a business foundation,” he had reiterated.

Mahindra & Mahindra-SsangYong: Plans for India

The intent to create a robust SsangYong model in India was in place, however this may have wanted good numbers to make it a viable proposition. Additional, the very fact additionally remained that it was not a robust Korean entity in contrast to Hyundai, which had already established itself because the strongest challenger to Maruti Suzuki. (And Kia, of late, which has surged forward of established gamers from the West regardless of being a late entrant to India.)

“What our affiliation will deliver to SsangYong is buyer confidence and what we get from them is Korean high quality and worth,” the senior govt had stated. When M&M subsequently determined to hitch fingers with Ford another time for a three way partnership with a brand new record of priorities, SsangYong was additionally being thought of as a part of the product synergies deliberate then.

“The profit between M&M and Ford is that they’re serving virtually similar markets whereas Korea may be very totally different from India,” stated the identical govt talked about earlier. But, the opportunity of SsangYong becoming a member of M&M-Ford by way of product synergy and platform commonalisation was “very a lot on the playing cards”.

Moreover, the pondering then was that SsangYong may have a product that Ford might need discovered attention-grabbing for its markets. “SsangYong can be in an identical state of affairs as M&M within the sense that it has 5 – 6 superb merchandise, however doesn’t have a really sturdy model and community exterior Korea,” added the manager.

This is able to have paved the best way for an entire lot of latest permutations and mixtures as in a SsangYong product being retailed below the Ford identify and community if such a chance have been to come up. In fact, M&M and Ford determined to shelve their three way partnership (an announcement made on the New Yr of 2021) owing largely to enterprise priorities altering as a result of pandemic and the imperatives of protecting prices in examine.

Mahindra & Mahindra-SsangYong: Now not financially sustainable

Previous to this taking place, M&M and SsangYong have been nonetheless carefully concerned in a bunch of latest initiatives even because the script was going awry and losses started piling up with no answer in sight. The Covid-19 outbreak did little to enhance points and M&M lastly made it identified in early 2020 that it could not be sustainable to hold on to SsangYong. With the Ford divorce additionally imminent, the corporate had clearly made identified that it could now be specializing in a robust steadiness sheet and enterprise expansions may look forward to now.

Former managing director of M&M Pawan Goenka performed a giant function by way of the SsangYong alliance, spearheading a sequence of initiatives. In an interview with our sister publication Autocar Skilled final 12 months, simply previous to his retirement, Goenka had stated: “I’ve little question that SsangYong was a proper determination even after seeing what has occurred. The XUV300 is a profitable product that got here below a licence from SsangYong. The Alturas is one other instance and extra would have adopted had we continued.”

In his view, there was numerous expertise improvement carried out collectively… it was not a one-way avenue and there was so much Mahindra may do in addition to SsangYong. “Sadly, too many issues didn’t work proper on the similar time. If I needed to do it another time, I might nonetheless do it,” he emphasised.

Undoubtedly, the monetary efficiency was lower than expectations lately, however “a number of issues have been taken care of” throughout this time. “I take pleasure in the truth that Mahindra was capable of make SsangYong sturdy sufficient to rent again individuals who have been laid off earlier than we got here in,” stated Goenka. He was additionally candid sufficient to confess that the very fact SsangYong didn’t succeed would rely as the most important remorse in his profession at M&M.

“It was very unlucky and would have meant so much to India since an organization right here rescued a Korean firm. Until the time we determined to exit SsangYong, Mahindra was extremely revered for what we did. Because of this, Indian administration was extremely revered too,” stated Goenka.

Extra importantly, this was a two-way studying course of the place the companions complemented one another in expertise.

There have been many joint initiatives and numerous competencies have been constructed alongside the best way. It was simply unlucky that issues did not fairly go in accordance with plan and the M&M of as we speak is evident about staying in these companies the place it makes financial sense. What the long run holds for SsangYong in its new possession construction will turn into clearer within the coming years. 

What are your ideas on Mahindra letting go of Ssangyong after a partnership of 10 years? Tell us within the feedback under.

About the author

Rashmi