Mahindra-SsangYong Could Soon Become History - Here's Why

by Kshitij Rawat | 16/06/2020
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Mahindra & Mahindra is looking for investment for its South Korean acquisition, SsangYong, after reported a heavy loss in 2020.

South Korean carmaker SsangYong was acquired by Mahindra & Mahindra in 2011, when the Indian carmaker bought a majority share in the company. Currently, Mahindra holds almost 75 per cent stake in SsangYong, with an investment of more than $110 Million. Sadly, Mahindra was unable to revive the company’s business. Now, Mahindra has recently announced that it has been seeking investors to pour money into SsangYong.

Mahindra SsangYong logo

Mahindra & Mahindra has reported a gigantic loss of Rs. 3,255 crore for the first quarter of 2020, primarily due to investments in SsangYong, but also due to the pandemic outbreak and subsequent lockdown. The Indian auto market was already facing a sales slump since last year, and this year has been much worse. In April 2020, the entire Indian car market was brought to a standstill, with every carmaker reporting zero sales. During the same period last year, i.e. the first quarter of 2019, Mahindra has reported a profit of Rs. 969 crore.

“If a new investor comes on board, that automatically takes our stake down in SsangYong or they may even buy our stake”

Anish Shah
Deputy Managing Director, Mahindra & Mahindra

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Losses aside, things might be on a path to recovery though. In May 2020, Mahindra XUV300 became the best-selling sub-4-metre SUV in India, beating popular rivals like Maruti Brezza, Hyundai Venue, and Tata Nexon. That being said, other vehicles in the company's range, like Scorpio, TUV300, and KUV100 were unable to secure decent sales. In fact, the TUV300 sold absolutely zero units in May 2020, which is quite a cause for concern. Thankfully, Mahindra has plenty of new launches lined-up for the near future, which might help recapture buyer interest - the next-gen Thar, the next-gen Scorpio, and the XUV500 facelift.

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Mahindra-SsangYong partnership has resulted in many brilliant vehicles over the years. Mahindra & Mahindra had repurposed and rebadged various SsangYong vehicles, like XUV300 (from Tivoli) and Alturas G4 (from Rexton), and if the partnership survives, they might continue to do so in the future as well. Other than that, Mahindra has also entered a JV with Ford Motor Company. Mahindra has acquired a major share in Ford’s Indian operations, which will help the American carmaker better navigate the Indian market. According to reports, Ford’s upcoming compact SUVs will be based on Mahindra vehicles' platforms and might feature Mahindra engines as well.

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