MUMBAI: Mahindra & Mahindra owned South Korean SUV specialist Ssangyong Motor has signed a letter of intent to form a 50:50 joint venture with Shaanxi Automobile Group of China to set up a 1.5 lakh unit plant in Xi’an Economic and Technological Development Zone in Xi’an, Shaanxi Province, in northwest China, by 2019.
The company which is likely to close 2016 with decade-high sales number will need more capacity by 2019 with consistent volumes growth, and the incremental output from China will help Ssangyong motor company to tap into the growing demand in the world’s largest passenger vehicle market.
In a recent interview with ET, Ssangyong Motor CEO Choi Johng-sik said, “By 2019, our four products will be replaced and there will be 300,000 vehicles produced and beyond that time, there will be a local production plant required beyond Korea. This could be in China where we intend to have 250,000 to 300,000 units.”
The joint venture, which will become Ssangyong’s first overseas production base in a 50/50 partnership with the Shaanxi Automobile Group, will build production facilities for CBU vehicles and an engine plant on a site with an area of 1.23 million in the Xi’an Economic and Technological Development Zone in Xi’an, the company said in a statement on Wednesday.
The first phase of the construction will establish a plant with an annual capacity of 150,000 units per year by the end of 2019, while the second phase will involve an expansion of the facilities to 300,000 units annually.
Ssangyong will be setting up an automotive component cluster in the region which will help the company manufacture at a competitive price. The first Ssangyong product will be built in the second half of 2019.
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Source: Economic Times
