Korea’s Lost Sole
IMI Magazine speaks to Korea’s oldest automotive manufacturer, SsangYong, which is hoping to achieve a Skoda-like transformation in terms of both trade and consumer perception with the launch of the new Tivoli. Could it represent a new revenue stream for your dealership? Read on…
Why has SsangYong struggled to-date?
SsangYong’s 60 year history has been well documented – it’s Korea’s oldest car brand – but it’s possibly fair to say that some of the products developed for the domestic market, albeit extremely rugged and reliable, had more limited appeal to the more sophisticated export markets. That all changed with the third generation Korando. The company took a clean sheet of paper and gave it to Giugiaro in Italy, who came back with a design that was extremely pleasing on the eye and achieved much international acclaim. Due to problems and delays encountered with a potential Chinese purchaser of SsangYong, Korando unfortunately came to market slightly later than planned, by which time some key competitors models were well established With Mahindra investing in SsangYong in 2011 and providing considerable funding, the company has been able to enjoy a prolonged period of stability, refine its existing range and focus on new product development, the first result of which being Tivoli, which was launched in Korea in January.
Will it be on value, SsangYong’s traditional strong point?
Value for money is a key pillar of our brand positioning, but that doesn’t just mean low price. It means a quality product that is well built and reliable, comprehensively equipped with features you wouldn’t expect (such as heated rear seasts in the Korando and all models with a heated windscreen), a market leading five year limitless mileage warranty (including commercials and taxis often excluded by other brands) and a competitive price.
What’s going to draw people away from existing top-sellers?
People like to be different, and if all your neighbours have Renault Capturs, Vuaxhall Mokkas or Nissan Jukes parked in their drive do you really want to be like them? Three leading UK journalists who had a first drive of Tivoli in Korea came away very favourably surprised and impressed at the way the car looks – internally and externally – and drives. If that translates into the type of media coverage we are anticipating, we think Tivoli could be one of the big news stories of 2015.
You're talking about best-in-class interior quality. Given where SsangYong has come from on refinement, people are going to be sceptical. What has happened to create such a remarkable turnaround?
Yes, you're right, people will be sceptical, just as they were a few years ago about the chance of Skoda ever making a decent car again. But with the global ambitions shared by SsangYong and Mahindra, it was appreciated that you can't make a quantum shift in perception with a 'me too' product. Right from the first LXIV-1 concept car shown at Frankfurt in 2011, pundits have been saying that it didn't look like a SsangYong, and neither does the finished item. It's a wholly new approach to a new product in a segment the brand has never been in before; it had to be different, and had to surprise. With regard to refinement, those that express that point of view are generally people who haven't driven the recent models. The Korando Sports has a best in class NVH, and the new 2.0 litre engine in Turismo and Rexton - SsangYong's own turbo charged engine that replaced the original Mercedes-Benz unit - has transformed the driving characteristics of these cars.
What will be the specifications of the new range in terms of engine, powertrain, off-road, body styles etc.?
There will be two Euro 6 engines from launch - 1.6 petrol (and a 1.6 diesel very soon afterwards), two wheel drive and four wheel drive. Other derivatives will come off the same platform in due course. In fact we will offer a wider choice of transmission and drive train combinations than anyone else in the sector, so I really think Tivoli could become the smart choice.
Does it have any innovative technology that will appeal to buyers?
The car is designed to appeal to a more youthful purchaser than has been the case previously, and connectivity to smart devices is a key feature for this type of buyer. Add to this the wide choice of transmissions and drive trains plus comprehensive safety features, and we really think we have a lot to offer.
If not, is there a risk it's just another 'me too' SUV that's going to be lost in all the other brands?
Absolutely. And so by launching a new car that is a better product, has the best warranty in the market and at a price point that undercuts the competition, we really do believe we're on to a winner! And we believe that we can create additional business and conquest customers for our dealer network - who are really enthusiastic about the future prospects for the brand. Sales aspirations for it? 6,000 units in the UK in its first full year on sale - 2016. The car arrives here this summer.
What else can we expect in terms of new product in the near future?
There are new product plans across the range, and the LIV-1 concept shown at the Seoul Motor Show in March 2013 showcased a much larger 4x4 model which will follow in the next couple of years. You can be sure that the step-changes made with Tivoli will be replicated on the other new models to come.
Any strategic alliances in the pipeline?
Strategic alliances are an intrinsic part of the motor industry, but with SsangYong and Mahindra working so closely together, it would seem unlikely that there will be olher alliances in the near future, beyond the sourcing of certain components such as automatic gear boxes from AISIN of Japan.
With 20 new dealers in 2014 - what's been the deal-clincher for them to sign up and how many do you intend to sign-up in 2015?
We are a 'light touch' franchise, which means we don't impose needless bureaucracy or make punitive investment demands on the style, shape or colour of the dealer showrooms. We have straightforward trading terms, an easy to implement corporate identity, and procedures and processes in place to help dealers manage their own business, and their relationship with us. Unusually for such a low cost franchise, we are able to offer a four model range – Korando SUV, Rexton W, Korando Sports pick-up and the seven seat Turismo MPV. This will soon be supplemented with Tivoli which takes the franchise into the larger volume B-segment. This means that dealers have the flexibility to tailor their product offer to best suit their local market, be it urban, rural or a mix. We pride ourselves on being close to the network and with a flat organisation, decision making and support is promptly instigated. Network strength should be at around 75 full sales and service dealerships by the end of 2016.
Is the entire network profitable?
We currently don't run a formal composite programme, but we are confident that our network is financially capable of funding the next stage of growth, and our floor plan provider GMAC has provided increased facilities for all our dealers in readiness for the expected growth. Retained gross margins on our products are very good and service retention levels are excellent as a result of our niche positioning.
London, Liverpool, Birmingham, Manchester (I.e., urban areas) have been open points in the network because the product offering has been quite 'rural' in its appeal (i.e., large SUVs, pick-ups). Are they still open points? What will convince dealers to take a franchise there?
The Tivoli will have urban appeal and we have seen the new Korando begin to win customers away from traditional brands. The Korando Sports pick-up, now with a 1 tonne payload, will add further scope for urban sales. We don't necessarily see ourselves in city centres quite yet and may have to circle big metropolitan areas and sell to people where they live rather than where they work e.g. Manchester can be served by having dealers in Bury, Ashton, Warrington and Stockport. As to the major decision influencer, answer this question: •1r you were offered a niche Korean franchise with 5 year warranty and 60 years of history, that had the backing of a global player AND whose entry costs were modest and provided very efficient output in relation to input" ... would you be interested?
For more information on the SsangYong Tivoli please click here