Mahindra & Mahindra’s bid to purchase a majority stake in South Korean SUV maker, Ssangyong Motor Company, is set to go ahead following its establishment as preferred bidder at the end of last week, a move that will bring the logistics operations of both companies together and could involve Mahindra in the delivery of vehicles to Ssangyong’s global network of 1,200 dealers, including those in Europe and the US.
As part of the new relationship with Ssangyong (which will continue to function as an independent company) Mahindra will enter the luxury SUV segment by bringing Ssangyong’s Rexton and Korando SUVs to India as CKD units, a move that will allow Mahindra to move upmarket in India and also increase volumes for Ssangyong.
Mahindra said it was too early to comment in detail on how the takeover will affect the logistics across the company but stated that the wide sales and distribution networks the company shares, as well as complementary product lines, will provide access to many overseas markets for both companies.
“Access to Ssangyong's distribution network in global markets such as Europe and US is definitely one of the benefits driving Mahindra's interest in the Korean SUV maker,” said Ammar Master, senior market analyst at J.D. Power and Associates.“However, Mahindra may not be able to utilise Ssangyong's US network until it resolves its legal dispute with Global Vehicles, its current US distributor,” he told Automotive Logistics News.
Global Vehicles USA launched a lawsuit against Mahindra in July alleging that the carmaker has twice missed deadlines to launch its Scorpio SUV and pickups in the US despite Global Vehicles having spent nearly $35m in signing up around 350 dealers. The lawsuit seeks to ban Mahindra selling its vehicles through any other dealer in the US. Mahindra has responded by stating that it missed the deadlines due to regulatory issues and has filed a motion to dismiss the lawsuit. It has now set the end of 2010 as the possible launch date.
