Only a year ago, at the fag end of CY13, Ssangyong seemed close to booking its first full-year profit as a Mahindra & Mahindra (M&M) subsidiary. It posted its highest-ever sales in the domestic market since its 2005 debut, amid a surge in overseas volumes. From a Rs 502.4-crore loss in cy12, it had significantly cut losses to Rs 12.8 crore.
With the turn of the year, however, the South Korean company seems to have lost steam. Its plans to return to profitability in CY14 received a setback due to flagging sales, owing to the appreciating currency in the home country. Ssangyong now hopes sales to revive with the introduction of its next-generation X100 sports utility vehicle (SUV) early next year.
The company started the year with a Rs 62-crore profit in Q1CY14; however, with a decline in sales, it closed the next two quarters with losses of Rs 169.7 crore and Rs 91.7 crore, respectively.
Unlike peers Jaguar Land Rover or Hyundai, Ssangyong lacks a strong, successful product lineup and a presence in key global markets, especially China, Russia and India. Since its 2010 acquisition by M&M, the company has been scaling up R&D spend every year to come up with new products. In the first six months of the current calendar year, its accumulated R&D spend has crossed more than half its annual R&D spend a year ago. In CY13, Ssangyong’s R&D spend touched a five-year high of Rs 824 crore, up from Rs 622.5 crore in CY12 and Rs 520 crore in CY11.
“Ssangyong is missing out on China, India, Russia and other emerging markets from where it can build volumes. In China, where the market is booming, Jaguar Land Rover sells 30% of its total volumes while Ssangyong is tapping under 10% volumes,” said Puneet Gupta, associate director, IHS Automotive.
“The carmaker needs to be a leader in at least one or two models and build on its technology and brand, where it currently lags. The new crossover is expected to help deliver volumes and apart from other markets it is expected to be launched in India too,” he said.
In 2009, a year before the acquisition, Ssangyong sold 60,000 vehicles, with volumes going up to 1.4 lakh units in CY13. According to IHS Automotive estimates, Ssangyong will sell 1.25 lakh units in CY14, which is comparable to its CY07 volumes. “Ssangyong had a setback on account of an appreciating currency leading to slide in exports,” said Pramod Amthe, auto analyst, CIMB.
“New products will start rolling out CY15 onwards, the rub-off effect of which will reflect in CY16,” he said.
Ssangyong’s current lineup has six models, including the Rexton. The carmaker is expected to launch the Tivoli or the new SUV in early 2015.
M&M did not answer questions sent to the company.
Full throttle, little acceleration
* The company’s plans to return to profitability in CY14 received a setback due to flagging sales, owing to the appreciating currency in South Korea
* Ssangyong started the year with a R62-crore profit in Q1CY14; however, with a decline in sales, it closed the next two quarters with losses of R169.7 crore and R91.7 crore, respectively
* Unlike peers Jaguar Land Rover or Hyundai, Ssangyong lacks a strong, successful product lineup and a presence in key global markets, especially China, Russia and India
* In CY13, Ssangyong’s R&D spend touched a five-year high of R824 crore, up from R622.5 crore in CY12 and R520 crore in CY11
