SsangYong steers diesel future

Korea's car industry is over 50 years old, yet most people regard the country as a newcomer when it comes to making cars. SsangYong was formed in 1954, and adopted its current name (which means 'twin dragons') in 1986. In 2004, the Shanghai Automotive Industry Company (SAIC) -- China's third-largest car-maker -- bought a 51 per cent stake in SsangYong. Still, to Australians the brand is the junior Korean -- the new kid on the block.

Chinese plants build thousands of SsangYongs for the domestic market only. All other production -- including vehicles destined for Australia -- are built in Korea using parts from myriad sources. For example, SsangYong currently uses diesel engine blocks made by Mercedes-Benz and injection systems from Delphi, while Garrett makes its turbochargers.

The internationalism of the brand is boosted by SAIC. Via a complex series of failed and partial deals SAIC has the rights to the MG-F and the Rover 75 and owns the former Rover design centre in the UK.

Once known for the Mercedes-Benz powered and feature-packed Musso SUVs, SsangYong has had a chequered Australian availability. Local and New Zealand distribution is now run by a Sydney company jointly owned by Kiwi, Russell Burling, and the long-established Western Australian dealership chain, the Barbagallo Group.

Under Burling's stewardship, SsangYong has shifted to 100 per cent diesel power (more here) claiming the honour in the process to become the first Australian car distributor to eschew petrol-powered vehicles. SsangYong's entire range now uses Euro IV emissions-compliant turbo-diesel engines.

In response to Australian demands for a cost-effective workhorse, SsangYong will soon introduce a tradie's dual-cab ute at $24,990. It will be available in white only, with a manual gearbox and come with twin airbags; the optional auto gearbox will add $3000.

Burling says a new SUV model will arrive in Australia next year, while the Rexton will be replaced in 2010. In addition a 2.0-litre turbodiesel-powered four-door medium passenger car will arrive in Australia in the second half of next year.

Based on the Rover 75, the front-wheel-drive car has distinctly Audi A4-esque looks and will sport DSI's silky six-speed auto gearbox. It is not the just unveiled Roewe 550, say SsangYong sources, but will share componentry.

More than a year out pricing is undecided, but Burling assures it will be "competitive".

Such is the parent-company's ambition that within five years, SsangYong vehicles will be available with engines from 1.6 to 5.0-litres but the Mercedes-mimicking Chairman model apparently won't be returning Down Under.

Speaking at this week's media review of SsangYong's 2008 model range, Burling ventured that Australian consumers are facing a "perfect storm" of interest rate hikes and spiralling fuel prices and that the swing towards more economic diesel-powered vehicles was well underway.

"The price of fuel affects everything that we do", he said, predicting that sales of large cars will suffer another downturn within the next 90 days.

Furthermore, he predicted that within five years, at least 70 per cent of new SUVs sold in Australia will be powered by high-efficiency turbo-diesels. [Ed: a pretty safe bet with the influx of compact turbo-diesels and Territory going diesel in 2010, we'd suggest].

The number of diesel-powered passenger vehicles (cars, SUV and light commercials) sold in Australia in 2007 increased by almost 35 per cent compared with 2006, as the popularity of new-generation clean diesels climbs rapidly. Private passenger car and SUV diesel sales grew almost 63 and 43 per cent respectively.

"The reality is that an SUV powered by diesel offers better driveability, fuel economy and range as well as being environmentally friendly," opined Burling.

"Local manufacturers are clamouring to get diesel engines in their large cars and SUVs, as they have seen demand building. If you don't have a diesel engine [in these sorts of vehicles] in five years' time, you will struggle in the Australian market," said Burling.

Euro IV compliant engines emit 98 per cent less particulate matter over previous Euro III engines, while nitrous oxide (NOx) levels are lower by 33 per cent. Diesel engines under Euro IV emit less than 0.02 grams of particulates per kilowatt-hour and less than 3.5 grams of NOx per kilowatt-hour.

Under the next level of reductions (Euro V) due to be introduced in Europe in October next year, diesel engines will have to achieve a further 50 per cent reduction in NOx levels -- to less than 2 grams per kilowatt-hour.

And despite current higher pump prices for diesel fuel, Burling insists that lower consumption per kilometre will make smaller diesels more economical overall than their petrol-powered equivalents. Currently the most frugal SsangYong model uses a 2.0-litre engine and six-speed auto transmission, designed and built by DSI in Albury.

The company sold 200 vehicles in March 2008 and is targeting 3000 units for 2008; to do this, the nationwide dealer count will rise to around 80 by year's end with growth targeted predominantly in country areas, Burling says.

Burling expects between 25 and 30 per cent of SsangYong's 2008 sales to be the higher-specified models as consumers go "shopping for value, on tighter budgets" in an environment where heavy discounting by dealers and manufacturers has confused the marketplace.

Burling confesses, however, to having little interest in the hyper-price-sensitive small-car market, which he says isn't profitable in Australia. He doubts SsangYong will sell a vehicle with an engine smaller than two litres any time soon.

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