TagAZ will make SsangYong SUVs in Russia

[Ian]

TagAZ will make SsangYong SUVs in Russia

Anna Smolchenko
Automotive News Europe
November 26, 2007 -- 16:18 CET

MOSCOW -- TagAZ will start production of three SsangYong SUVs at its plant in southern Russia in January.

The carmaker said it signed the deal with the South Korean company because it wants to benefit from Russia's growing demand for SUVs.

TagAZ, which already assembles cars for Hyundai of South Korea, bought equipment and the rights to make the Korando, Musso and Musso Sports. Production of all three was discontinued in South Korea in 2005.

A TagAZ spokesman, who declined to be named, would not reveal the deal's financial details or the planned production volume for the SUVs.

Russian business daily Vedomosti, citing a source at Doninvest, which controls the plant, said the line has capacity to make 35,000 units a year. Citing estimates by consultancy A.T. Kearney, the newspaper said TagAZ paid no more than $5 million (about 3.37 million euros) for the production line.

SsangYong's exclusive distributor and manufacturer in Russia has been Severstal Avto, which assembles current versions of the Rexton, Kyron and Actyon SUVs.

Because of the Severstal Avto-SsangYong partnership, TagAZ must use different names for the SUVs it makes. The Korando will be called the Tager, the Musso will become the Road Partner and the Musso Sports switches to Road Partner P400.

The TagAZ spokesman said prices would be announced in the next two weeks. Currently, customers pay more than $30,000 for an SUV here. The spokesman said TagAZ wants to sell for less.

"Only Chinese cars are cheaper," he said.

Severstal Avto spokesman Sergei Iliynsky said TagAZ would not compete with his company because TagAZ's models are outdated. The TagAZ spokesman said the models still should sell well in Russia.

"Expensive cars with elaborate technical insides are not of great interest to the Russian market thus far," he said.

In a statement, Severstal Avto also said that SsangYong would not provide any technical support to TagAZ.

Through 10 months SsangYong has sold 8,958 cars in Russia, a 194 percent increase compared with the same period last year, according to Association of European Businesses in the Russian Federation.

SOURCE: Automotive News