In an effort to establish a production facility in China and expand its growth in the country, Mahindra & Mahindra-owned SsangYong Motor Company today announced a joint venture with China’s Shaanxi Automobile Group.

Following a 50-50 partnership with Shaanxi, the facility will come up by end-2019 with a capacity of 1,50,000 vehicles per year in the first phase. The second phase will include a ramp up in production to 3,00,000 units. The facility will be based in north-west China, which will have an engine plant on site, will also be SsangYong’s first overseas facility for CBUs or completely built unit vehicles.

SsangYong will establish an automotive cluster with its major suppliers that will also enter the market, in order to ensure product competitiveness, to produce its current models and models under development. “It is quite essential to have a local CBU plant in China to increase our competitiveness in the rapidly growing Chinese car market and to increase our sales volume,” said SsangYong Motor CEO Choi Johng-sik. This way, the company aims to become a strong global SUV manufacturer, he added.

Following the announcement, the next steps will involve obtaining the approval from SsangYong’s Board of Directors, the governments of Shaanxi Province and Xi’an, as well as the central government of China. Established in 1968, Shaanxi Automobile Group is involved in the production of vehicles such as trucks, buses, small LCVs and pick-ups.