Six years after it acquired SsangYong Motor for a little over $450 million, Mahindra & Mahindra is now beginning to reap the benefits of this move.
According to Pawan Goenka, Managing Director of M&M and Chairman of SsangYong, what is especially significant in this six-year partnership is the way the duo is working in tandem. They have already done an engine platform together which was used in Tivoli and KUV100.
Beyond this, M&M and SsangYong are “about to start developing” a common platform where engineers of both companies will work together. Both will own the IPR and build their individual products. This working together is generating tremendous value, adds the M&M chief.
For instance, SangYong has licensed the Tivoli platform to M&M for building the latter’s product(s) and that will come out in the second half of 2018. “We have just finished the styling work and it looks amazing,” says Goenka.
From his viewpoint, it is an alliance where both companies are benefiting tremendously in terms of cutting down development costs and having better sourcing costs/opportunities between India and Korea.
In a way, there are now two home bases for sourcing. “Through SsangYong, we know Korean suppliers very well and through Mahindra, our suppliers are known very well too and able to take the best out of both,” says Goenka. Right now, M&M is supplying a major subsystem to SsangYong for the four-wheel drive vehicle. It has also signed up with its Korean arm to supply the transmission for a vehicle that will be launched in 2019. In addition, M&M has just formally agreed to buy crankshafts from SsangYong. This is the “real value” that has come out of the acquisition where both companies benefit.
“SsangYong also has a good product line-up and three new mainstream products will be launched in 2017, ‘18 and ‘19. We would have virtually a new product portfolio by 2019,” said Goenka. The SsangYong website refers to this time-frame as ‘Aspiration 2019’ where the targeted sales are 4.5 lakh units with new technologies and markets being part of the roadmap.
“We are happy not just with the turnaround but also the fact that the company is in pretty good shape. The management and workers union have worked very hard to create a harmonious relationship,” says Goenka.
Building bonds all over again between the two sides was hard work especially in the aftermath of the violent strike in 2009. It was not the easiest of tasks getting back to normal with all the ill-feeling around and the fact that this has been done is truly a big achievement from M&M’s point of view.