Main gate of Ssangyong Motor Pyeongtaek factory in Pyeongtaek, Gyeonggi-do. Photo = Yonhap News
Ssangyong Motor stood at the edge of a cliff again after 11 years of applying for corporate rehabilitation procedures (legal management). Ssangyong Motor in a liquidity crisis in the automobile industry(2,770 0.00%)They are worried that the ‘2009 Nightmare’ will revive.
Ssangyong Motor, who applied for court management in 2009, announced an ambitious growth with the acquisition of Mahindra Group in India. However, they were unable to get out of the vicious circle of’slump sales, deficits, and absence of new cars’ and eventually became unable to pay off the loan.
According to the automobile industry on the 22nd, Ssangyong Motors decided to apply for rehabilitation procedures through the board of directors the previous day, and filed an application for commencement of rehabilitation procedures, an application for disposition for preservation of company property, and an application for a comprehensive prohibition order at the Seoul Rehabilitation Court. They also submitted an application for a decision to withhold the commencement of rehabilitation procedures (ARS program), and announced that they would end the liquidity crisis before the commencement of rehabilitation procedures.
On the 21st, Ssangyong Motors applied for corporate rehabilitation procedures to the Seoul Administrative Court. This case was allocated to the first division of the Seoul Rehabilitation Court. Until a decision is made to commence rehabilitation procedures, the court is expected to issue a comprehensive injunction and disposition to preserve the company’s assets. Photo = Yonhap News
Ssangyong Motor is one of the domestic automakers that has a lot of pain. Ssangyong’s owner has changed seven times since it started as the Ha Dong-Hwan Automobile Factory in 1954.
In 1977, Ssangyong Motor, which used to make buses from the engines and parts of US military trucks, changed its name to Dong-A Motors Industries, the predecessor of Ssangyong Motors. With the acquisition of’Geohwa’, which created’Korean Can Do’ in 1984, Ssangyong Motor laid the foundation for a company specializing in four-wheel drive vehicles.
In 1986, Ssangyong Group became the new owner, and the Korando Family, 9-seater Korando 9 Deluxe, and Musso hit the heyday. At the time, it was evaluated as a famous sports utility vehicle (SUV), and it has the name of’Ssangyong Motor’.
Ssangyong Motor, which was running a box office road, was taken over by Daewoo Group after being hit by the financial crisis in 1998. It seemed to be enjoying a’second heyday’ by using the Daewoo Group’s sales network to significantly increase sales, but with the collapse of Daewoo Group in 1999, he went through a workout (financial structure improvement work). In 2000, under the management of creditors, several companies were searched for for sale, but in 2004, they were sold to Shanghai Motors, China, and the tragedy of’technique’ began.
A strike banner at Ssangyong Motor’s Pyeongtaek plant in 2009. Photo = Hankyung DB
At that time, Shanghai Motors acquired Ssangyong Motors and promised R&D, facility investment, and employment security, but nothing was kept. In the five years after the acquisition, it fired 2,000 workers and, when faced with the global financial crisis in 2008, applied for corporate rehabilitation procedures and fled to China the following year. Running under the aegis of the Chinese Communist Party, it also stole Ssangyong’s diesel hybrid technology.
After the Shanghai car storm was great. Ssangyong Motor, which entered the rehabilitation process, had to undergo a restructuring of about 2,600 people, which led to a conflict with the rebelled union. The union took over the Pyeongtaek factory for 77 days, and there was a “block strike”. In the process, Ssangyong Motor was pushed until just before closing, as a loss of 316 billion won occurred due to production disruption of 15,000 vehicles.
The Ssangyong Motor crisis, which stood at the edge of the cliff, reached a normalization phase as the labor and management achieved a dramatic settlement, but intense restructuring was inevitable. The union resumed operations, and Ssangyong Motor submitted a rehabilitation plan to the court in September of that year.
Acquisition of Mahindra in 2011… I seemed to see the light
Pawan Goenka Mahindra, president of Ssangyong Motor’s board of directors, is entering the KDB Industrial Bank building in Yeouido, Seoul earlier this year.
Ssangyong Motor, which welcomed India’s Mahindra as its new owner in 2011, seemed to be on the path of stabilization. Mahindra invested a total of 522.5 billion won in the acquisition of Ssangyong Motor. Afterwards, it invested an additional 130 billion won through two capital increases and started to support the development of new cars such as the small SUV Tivoli, Korando, and Rexton.
Tivoli was born in this way, causing a sensation in the small SUV market, turning Ssangyong into a profitable model in 9 years in 2016. However, the effect did not last long.
Ssangyong Motor began to falter again in 2017, the following year. Due to the continued deficit, the ability to develop new cars diminished, and consumers began to turn away gradually. As sales declined, the vicious cycle was repeated, which further reduced the capacity to introduce new cars. Ssangyong Motor has been in the red for 15 consecutive quarters since the fourth quarter of 2016.
‘All New Rexton’ with Lim Young-woong. Photo = Yonhap News
This year, when singer Lim Young-woong was used as a model in April of this year, the sales volume was expected to turn to a surplus. Ssangyong Motors sold a total of 11,859 units, including domestic and export, last month, surpassing the wall of 11,000 units for the first time this year.
However, it was not enough to overcome the management difficulties that had been sustained for 10 years. The principal and interest of the loan that must be paid off this year is 165 billion won, but Mahindra’s investment in Ssangyong Motor is up to 40 billion won for three years.
Earlier this year, Mahindra promoted funding worth 230 billion won at the beginning of this year, but it withdrew the support plan when it was hit by a direct corona 19. Ssangyong said that it would invest up to 40 billion won over the next three years and clear up its 75% stake in Ssangyong Motor, and that it would virtually take off its hands.
The search for a new investor to take over Mahindra’s stake in Ssangyong Motors began, but difficulties continued and Ssangyong Motor’s liquidity reached its limit. The end was an application for rehabilitation procedures after 11 years.
Ssangyong Motor said the day before, “Due to the deteriorating management situation, we negotiated an extension of maturity with a financial institution by overdue loans to foreign financial institutions on the 15th. It was expected to cause a huge setback, so I inevitably applied for a rehabilitation procedure.”
Shin Hyun-ah, Hankyung.com reporter [email protected]
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