Mahindra and Mahindra promises to become a global SUV player

Mahindra and Mahindra said that it would use its purchase of South Korea's Ssangyong Motor for becoming a global player in the SUV (sport utility vehicle) market. Pawan Goenka, president of Mahindra's automotive and farm sector opined that the merger would help both Mahindra and Mahindra and Ssangyong Motor to expand in the global market. After signing a preliminary agreement to buy a controlling stake in Ssangyong, Goenka further said that they believe that Ssangyong and Mahindra make powerful companies to create a global SUV brand. Ssangyong Motor is the smallest carmaker of South Korea. This company manufactures low-priced but robust SUVs like Rexton, Kyron and Actyon which sell globally. The company also manufactures sedans.

Goenka also commented that the two companies are very compatible. They have similar size and they both are very SUV-focused. He further added that the Indian firm will keep Ssangyong's present management after the acquisition and provide financial stability. Ssangyong’s glory should be brought back, said Goenka. According to him Ssangyong is a very strong brand. Ssangyong Motor was under court protection from creditors in February 2009 after the rise in oil prices and the slowing demand because of this crisis hit SUV sales. Also the former Chinese parent Shanghai Automotive Industry Corp had declined to provide more funds.

Though the takeover cost has not been revealed by Mahindra and Mahindra but the experts say that it will be more than 500 billion Won (423.3 million US dollars). Mahindra's vice chairman and managing director, Anand Mahindra was quoted saying that his company had cash reserves of more than 500 million US dollars. He also said that Mahindra and Mahindra intends to be there as a long-term player, so they are not looking to talk to any financiers for the purpose of financing this acquisition. The vice chairman also said that Ssangyong Motor will have a good opportunity in India where demand for sport utility vehicles is fast rising.