Refusal to supply to 5 major component companies
The Pyeongtaek plant will stop operating on the 24th and 28th
Main gate of Ssangyong Motor Pyeongtaek factory in Pyeongtaek, Gyeonggi-do. /Photo = Yonhap News
Ssangyong Motors, who applied for a corporate rehabilitation procedure to the court, temporarily stopped operating the plant. This is due to the concern that primary vendors, such as Hyundai Mobis S&T Heavy Industries, will lose the price of parts and stopped supply.
There are concerns that Ssangyong Motor’s additional earnings deterioration will lead to a decline in its supply capacity and a vicious cycle in which parts makers stop supply.
Ssangyong Motor announced on the 23rd that it will stop production at the Pyeongtaek plant for two days on the 24th and 28th. The company explained the reason, “It is because the supplier’s refusal to supply parts has disrupted the procurement of parts.”
Five companies that refused to supply to Ssangyong are Hyundai Mobis (headlamp), S&T Heavy Industries (axle assembly), LG Hausys (bumper), Borg Warner Ochang (T/C assembly), and Continental Automotive (combi meter). These are companies that supply core parts for all vehicle types.
These companies were notified of the suspension of delivery, questioning the ability to pay due to Ssangyong Motor’s application for corporate rehabilitation. It is known that they are also requesting cash payments for goods that have already been delivered (around 8 billion won).
Cars waiting to be shipped are waiting at Ssangyong Motor’s Pyeongtaek factory office in Pyeongtaek, Gyeonggi-do. /Photo = News 1
As global parts makers with a relatively small portion of Ssangyong’s supply to Ssangyong Motor participated in’performance events’, small and medium-sized business partners with a high dependence on Ssangyong Motors became embarrassed. It is reported that these SMEs are asking Ssangyong Motor to come up with measures so that it can continue to deliver.
Earlier, Ssangyong Motors applied for corporate rehabilitation to the Seoul Rehabilitation Court when it faced a liquidity crisis, such as being unable to pay off the loans of KRW 90 billion and KRW 7.5 billion for Industrial Bank, which expired on the 21st, after overdue 60 billion won borrowed from foreign financial institutions. Including the loss of profit due to the company’s rehabilitation application (financial institutions recovering loans before maturity for various reasons), a total of 255.3 billion won of loans has been overdue.
An official of Ssangyong Motor said, “We are in the process of negotiating with our partners to resume supply,” and said, “We will be able to resume production on the 29th.”
Bobae Lee, guest reporter at Hankyung.com [email protected]
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