SsangYong plans JV with Shaanxi Automobile to grow faster in China

SsangYong’s first overseas production base will have a production capacity of 150,000 vehicles by end-2019 and expandable to 300,000 units.

12 Oct 2016 | 3444 Views | By Autocar Pro News Desk

The Mahindra Group-owned SsangYong Motor Company has signed a letter of intent with the Shaanxi Automobile Group for a joint venture that will establish a local production plant for CBU vehicles.

The signing ceremony, which was held in Xi’an in Shaanxi Province, China yesterday, was attended by Ssangyong Motor CEO Choi Johng-sik, Communist Party secretary of Shaanxi Province Lou Qinjian, governor of Shaanxi Hu Heping, vice-governor of Shaanxi Jiang Feng, Communist Party Secretary of Xi’an Wei Minzhou, Xi’an Mayor Shangguan Jiqing and president of Shaanxi Automobile Group Yuan Hongming and other officials and executives from Korea and 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 CBU vehicles and an engine plant on a site with an area of 1.23 million square metres in the Xi’an Economic and Technological Development Zone in Xi’an. The first phase of construction will set up a plant with an annual capacity of 150,000 units per year by the end of 2019 and the second phase will involve an expansion of the facilities to 300,000 units per annum.

Furthermore, 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 models under development, in the second half of 2019.

SsangYong has been reviewing the central and western parts of China to set up its first overseas production facility, taking into consideration the Chinese government’s policies and the growth potential of the Chinese automotive market.

Xi’an is a strategic bridgehead for West China Development by the Chinese government and one of the key cities in the central and western Chinese region with an excellent geographical location, industrial infrastructure and facilities, good education and human resources, which give it a comparative advantage over other regions. Due to these advantages, it is a city with great investment potential within China.

Commenting on the initiative, Ssangyong Motor CEO Choi Johng-sik 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. The joint venture, which will be SsangYong’s first overseas production base, will serve as a new growth engine for Ssangyong as the company continues its efforts to become a strong global SUV manufacturer.” 

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