SsangYong signs deal with China firm for JV

The 50:50 JV, SsangYong's first overseas production base, will make completely built unit vehicles and also have an engine plant

Mahindra & Mahindra-controlled South Korean sports utility vehicle major SsangYong Motor Company on Wednesday announced it had signed a letter of intent with the Shaanxi Automobile Group for a joint venture that would establish a manufacturing plant in China.

The joint venture which will become SsangYong’s first overseas production base in a 50:50 partnership with the Shaanxi Automobile Group will construct production facilities for completely-built unit (CBU) vehicles and an engine plant.

The first phase of construction will establish a plant with an annual capacity of 150,000 units by the end of 2019 and the second phase will involve an expansion of the facilities to 300,000 units per annum.

Further, SsangYong will establish an automotive cluster with its major suppliers that will also enter the market to ensure product competitiveness and start the production of SsangYong’s current models and those under development in the second half of 2019.

Established in 1968, Shaanxi Auto produces heavy and special purpose trucks including those for the military in addition to small light commercial vehicle and pick-ups.  

SsangYong had been reviewing the central and western parts of China of the establishment of its first overseas production facility, taking into consideration the Chinese government’s policies and the growth potential of the Chinese automotive market, the company said.

The two groups will form a team to work on the Xi'an project, that is spread over an area 1.23 million sqmtr in the Economic Technological Developmental Zone, discuss the details for the establishment of the JV.

SsangYong Motor Company, chief executive, said, “It is quite essential to have a local CBU plant in China to increase our competitiveness in the rapidly growing Chinese car market and to increase our sales volume”.