SsangYong re-enters Saudi market with SUVsSsangYong Motor, a Korean unit of Indian auto giant Mahindra & Mahindra, continues to expand its markets overseas and returned to Saudi Arabia.
The sports utility vehicle (SUV) manufacturer opened a dealership in Riyadh, the capital of Saudi Arabia, on Monday after four years of absence from the market.
It launched some of key models such as the Tivoli Air - sold as the XLV - and the new Korando C. The Saudi dealership will be run by Abdullah Saleh Al Bazie Automotive, a local automobile dealer.
SsangYong was in Saudi Arabia in the past, selling about 500 cars per year before 2013. But sales plummeted around 2013 which forced the Korean SUV maker out.
The company said it will be crucial for the carmaker to enhance its image among Saudi consumers to succeed in the market this time around.
In February, SsangYong inked a deal with Saudi National Automotive Manufacturing (SNAM) to launch a joint project to build an auto manufacturing plant in Saudi Arabia. SNAM is the first auto manufacturer in the nation.
The partnership between SsangYong and SNAM is part of Saudi Arabia’s Vision 2030 initiative, which seeks to diversify the kingdom’s economic portfolio to rely less on oil exports amid falling oil prices. Korean companies other than SsangYong such as Hyundai Heavy Industries will help Saudi Arabia develop industries other than oil.
“SsangYong is a partner in the Saudis’ project to promote and develop their auto industry,” said a spokesperson of SsangYong.
Q200, a premium pickup set to be released next year, will be manufactured at the plant.
SsangYong was in the red during the first quarter of this year, recording a 13.9 billion won ($12.4 million) net loss, hit hard by hefty currency losses.
A year earlier, the SUV maker had posted net profit of 2.3 billion won. During the period, sales of Tivolis rose 14 percent compared to a year before to 14,000 units.
“It was a clear indicator that SsangYong relies too heavily on one model [Tivoli] and its exports have yet to recover,” said Kang Dong-wook, an analyst from Hi Investment & Securities.
“[Whether the company swings to a net profit during the second quarter] comes down to the successful launching of the G4 Rexton as well as increases in exports to countries such as Russia, Western Europe and South America.”
Now that SsangYong has re-opened its business in Saudi Arabia, sales from the Middle East will also play a crucial role in whether the company turns profitable in the second quarter.
BY CHOI HYUNG-JO [firstname.lastname@example.org]
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