Mahindra Steers Ssangyong Out of Trouble

The South Korean automaker has come a long way in just six years. Losses have made way for profits, sales are at a decade high, and the company is looking beyond its home turf.

- Pavanl All

WHEN MAHINDRA AND MAHINDRA (M&M) bought a majority stake in little-known South Korean automaker SsangYong Motor in 2011, many had to hit Google search. Sang who? Once they knew, the question was ‘why?’ This wasn’t a trophy buy— SsangYong had a limited range of SUVs and just one sedan, oddly named the Chairman. Nor did it offer M&M a pathway to the lucrative markets of Europe and North America. In fact, it wasn’t even a major player in its home country; that would be GM Korea, Hyundai Motor, and Kia Motors. And, worse, SsangYong had just filed for bankruptcy. The consensus then was, this was a bad shopping decision. Except, it wasn’t—as we now know.

Six years after acquiring a 70% stake for 522 billion South Korean won ($464 million or roughly Rs 2,100 crore at that time), M&M’s day out in South Korea has finally paid off. SsangYong, a company set up in 1954, recorded its highest sales in 14 years in 2016, and after years of being in the red is now making a profit.

Make no mistake, this was no impulsive buy. SsangYong’s turnaround, as much as it underlines M&M’s business prowess in international markets, is a vindication of the man behind the scenes: Pawan Goenka, M&M’s managing director, and chairman of the board at SsangYong Motor. Goenka, Mahindra Group chairman Anand Mahindra’s man on the job, saw something that many did not. “I believed that if we were to somehow take the best of Indian [management] style and the best of Korean style, and blend them, it would be very powerful,” Goenka says.

To Goenka, SsangYong needed no introduction. A decade before the acquisition, M&M had held talks with the Korean company on a licence agreement to sell its Rexton SUV in India. Goenka went to South Korea three times in a bid to strike a deal, but the two sides could not reach an agreement.