Mahindra & Mahindra’s tie up with the Korean company Ssangyong is Another major hitch in settling with Ssangyong is that it has just 2% M&M’s venture with Ssangyong is to have high spirits all set to see the roll down of new launches in India. The President for Automotive of M&M made it public that more vehicles under Ssangyong’s brand image will flow down to India on Completely Knocked Down form. The possible entries are the high-end SUVsRexton and Korando C to counter the moves of Toyota Freelander, Hyundai Tuscon, Ford Endeavor, Honda CR-V and GM Captiva. The company’s Chief for operations revealed that the proposed products will be pitted against the SUVs available on the price range of Rs15-20 lakhs. The net cost will be fixed on the localized amalgamation of the SUVs. The industry analysts come out with a somewhat reserved opinions on the move of M&M. They claim that the new SUVs will have to go for long run before establishing. They foresee that M&M would see the difficulty in pushing at least 300-400 units and if the talk is for 1000 units, they say, then it will be a tremendous task from M&M. They predict that for such small vehicles M&M is going to invest huge amount and the resultant profit will be not upto the expectations. They assess that M&M will be able to reach the target of 40K -50K annual units only after 6-7 years. But a section of observers agree to the move from M&M claiming that if the company is able to go with 1000 units then it will be a giant step. They look upon the marketing of these two CKDs to promote M&M’s Scorpio customers.
Another major hitch in settling with Ssangyong is that it has just 2% market share in addition to the legal bindings out of labor tussle. The situation in M&M is akin to Tata Motors at the time of acquiring Jaguar Land Rover and Tata has successfully overcome the difficulties. M&M has first to sort out matter of the labor dispute in Ssangyong before stepping into the marketing of SUVs. The Labor Union of Ssangyong is not making any hindrance to the acquisition by M&M except any military means. Moreover, the Union is willing to have dialogue with the prospective bidder, whether it is Korean or from abroad, said its leader. Tata too faced similar situation when it entered into pact with Daewoo and it is hoped M&M will easily sort out such problems by migrating the operations to India while retaining the R&D in Korea. It is to be seen whether M&M will be able to attain its target of 25-30% share in Korean market, in the face of Shanghai Auto’s failure venture with SYMC by losing the ground of $450 million. The reason cited was the flaw in technology
However, SSangyong has got some relief as it has gained Ebidta + during this quarter which enabled it to go ahead with its operations which have been in suspension for more than two and half years.