SsangYong, Shaanxi Auto to Explore JV in China

South Korea’s SsangYong Motor Co. has signed a letter of intent with Shaanxi Automobile Group to begin jointly vehicle production in China by the end of 2019.

The potential partners envision an engine and vehicle assembly complex in Xi’an with an initial capacity to make 150,000 units per year. They say the facility’s output would eventually be doubled. The companies also propose to establish a cluster of suppliers to support the venture.

The complex would become SsangYong’s first manufacturing facility outside Korea. CEO Choi Johng-sik says it is “essential” for the company to launch production in China to expand its markets and increase volume. Earlier this week the company said it intends to introduce two small crossover models in the U.S. by 2020.

SsangYong was acquired by India’s Mahindra & Mahindra Ltd. in 2014, which indicated earlier this year that the Korean company's immediate focus would be on China. It isn't yet clear which SsangYong models the 50:50 venture would produce. SsangYong specializes in SUVs. Xi’an-based Shaanxi makes heavy-duty and special-purpose trucks.