Korea’s Ssangyong Flexes Muscle With New Products

Despite economic slowdowns in many world markets, Ssangyong is increasing sales at home in Korea and abroad and plans to bring one new vehicle to market in each of the next three years.

In fact, top officials with the country’s No.4 automaker are comfortable in predicting sales in the current quarter will soar compared with like-2015, setting a record high and helping the automaker surpass its full-year sales targets.

The first of the three new offerings will be the replacement vehicle for the Rexton W midsize SUV that has seen domestic deliveries fall 11.9% year-over-year in the first 10 months of 2016 with 4,040 units sold, but conversely saw exports climb 43.6% with 5,198 overseas deliveries.

Ssangyong says only that the new entry will be released sometime in first-half 2017 and will not necessarily be called a Rexton.

The spokesman calls it “a body-on-frame SUV with larger dimensions that the current Rexton, positioned in the upper-segment, rather than replacing Rexton. Thus the name has not been specified yet, nor has the exact launch date.

“Once it has been rolled out, it will be shipped anywhere where Ssangyong has a sales network, including Europe, Asia-Pacific, South America and Africa.”

At the Paris auto show, where it broke cover as the LIV-2 (Limitless Interface Vehicle) concept, the new higher-end offering was hailed as Ssangyong’s coming flagship.

The LIV concept virtually is the production-ready version of the new vehicle. It has its work cut out for it if the plan is to surpass the tremendous success of Ssangyong’s diminutive Tivoli subcompact.

It will be offered with choice of a 2.0L turbocharged gasoline engine making 222 hp, or a 2.2L turbodiesel high-torque engine generating 189 hp, both available with 6-speed manual or automatic transmission.

The new marque will carry a slew of high-tech appointments and safety features.

The spokesman says the current Rexton W, which this year underwent some body styling and interior changes and was equipped with a high-efficiency 2.2L diesel, may stay in production alongside the new vehicle.

The spokesman identifies Ssangyong’s planned 2018 offering as the Q200 pickup, which shares the same platform with the as yet-unnamed Rexton successor. It is slated to replace the Korando (a truncated version of “Korea Can Do” sports pickup, which is sold in export markets as the Actyon (for “Action-Young”) sports.

Sometimes erroneously called a 1-ton pickup, the Korando/Actyon vehicle has a cargo capacity of 881 lbs. (400 kg).

The third model, available sometime in 2019, is codenamed C300. It will replace the current Korando 5-door compact SUV. The Korando also has been upgraded and is being offered with a new, high-efficiency 2.2L diesel.

New Products Seen Building on Tivoli’s Success

The three new offerings will help carry the sales load now largely borne by the Tivoli (“I-Love-It” spelled backwards) subcompact SUV now offered in both 5-door and XLV extended versions.

For the first 10 months of 2016, the Tivoli sold 68,618 units globally. It accounted for 55% of Ssangyong’s total global sales of 125,321 vehicles, a 7.1% year-on-year improvement over 2015.

Surging Tivoli sales in both domestic and overseas markets were diminished in the overall tally by the sluggish or negative results from some of the automaker’s other vehicles.

Tivoli sold 46,232 units in Korea in the January-October period, a bounce of 32.5%. It accounted for roughly 46% of domestic sales of 83,379 units, which were up 5.2% in a market that finished the third quarter down more than 12%.

The subcompact SUV recorded export sales of 22,386 units in the same 10-month period, a gain of 43.2% that accounted for 53% of the automaker’s total overseas shipments of 42,032 units, which were up 11.1% overall.

The Tivoli owns 56% of the Korean domestic subcompact SUV market, more than three times the sales logged by its closest competitor, Kia’s Niro (15,000), four times those of Renault Samsung’s QM3 (11,000) and more than five times those of GM Korea’s Trax (8,000).

The Tivoli will continue to bring home the bacon in its new ʼ17 version, just released in September with available advanced all-wheel-drive and advanced driver assist system,

the first among subcompact SUVs in Korea. It features forward-collision-warning system, autonomous emergency brakes, lane-departure warning, lane-keeping assist and high-beam assist.

Besides bucking negative trends and improving domestic sales, Ssangyong is rebuilding overseas sales.

Deliveries have gained in Europe since the automaker last year expanded imports to the Northern European markets of Denmark, Sweden and Norway, in addition to its traditional markets in Western Europe.

Ssangyong sold 19,000 units in the European markets through October this year, compared with 22,000 for all of 2015.

In September the company resumed exports to Russia, the first shipments made since the automaker imposed a freeze in January 2015. The Korando began shipping in September, followed by the Tivoli in October.

Before the market meltdown in Russia, it was Ssangyong’s highest-volume export market.

Ssangyong also is shipping to newly opening markets in the Middle East, selling 5,486 vehicles in Iran and 1,639 vehicles in Egypt through October, gains of 600% and 400%, respectively, over minuscule 2015 volumes.

Court Victory Boosts Financial Outlook

In addition to doing well on the sales front where many markets, including in Korea, are down, Ssangyong is operating in the black and may show a modest profit for full-year 2016.

This month the automaker restated its 9-month net income for the January-September period after the Supreme Court of Korea issued a favorable ruling in a lawsuit over worker wages.

The company had reported 9-month net profit of 23 billion won ($19.5 million) after setting aside 15.6 billion won ($13.2 million) as a contingency in case the court ruled against it.

After the ruling Ssangyong reinstated the contingency funds and restated its earnings. This increased 9-month net income to 38.64 billion won ($32.7 million).

The case involved liability for wages of 459 workers who were placed on unpaid leave in 2009 when the automaker was in receivership. The court ruled Ssangyong was not liable for the unpaid wages and had met its legal obligations relative to the unpaid layoffs.

In March 2013, Ssangyong rehired all of the workers, keeping its promise to put them back on the payroll when the company’s finances had stabilized.

Although more than 260 of the laid-off workers had sued while unemployed in 2010, all of those who had been on unpaid leave now are on the job.

Ssangyong was the first of Korea’s five automakers to sign a new wage agreement this year, which included a modest pay hike that was far less than the increases received by Hyundai, Kia and GM Korea workers, but there was no strike action or even a threat of it.

Though concerned about unfavorable foreign-exchange rates and slowdowns in some overseas markets, there is much optimism at Ssangyong.

The automaker’s confidence is reflected in its October signing of a memorandum of understanding for possibly forming a joint venture and automotive production plant with Shaanxi Automobile Group of Xi’an, China.

In announcing the move Ssangyong CEO Choi Johng-sik said the JV will be “Ssangyong’s first overseas production base and a new growth engine.

“It will be quite essential to increasing our sales competitiveness in China.”

Thus far Ssangyong has exported a small number of vehicles to China that have been marketed by a local distributor.

Based on sales and revenues for the first 10 months, Choi is confident the final quarter will be Ssangyong’s best ever and its 2016 global sales target of 160,000 vehicles will be reached. That would surpass the 2015 sales record of 144,764 units by at least 10.4%.

Ssangyong’s revival dates back to its 2011 acquisition by Mahindra & Mahindra of India. It is designing and developing vehicles in its own facilities in Pyongtaek, Korea, and developing its own advanced engines at plants in Changwon.

The two companies also are working jointly on engine and vehicle development. They anticipate a boost in brand value when M&M’s recently acquired Pininfarina, the famous Italian design and engineering firm begins providing inputs for future vehicles.

Pininfarina has provided the look of many famous vehicles produced by Alfa Romeo, Peugeot, Ferrari, Maserati and Hyundai.

Both M&M executives and Ssangyong’s Choi are on record of wanting to crack the U.S. vehicle market. Some studies have been completed and others are under way.

Currently, Mahindra USA, based in Houston, supplies agricultural and construction utility tractors through more than 500 dealers across North America.