The negotiations for the sale of HAAH Automotive with Mahindra Group, which had been ongoing since last year, were temporarily broken on January 24th. Since the KDB has said that conditional funding is possible in the event of a new investor of Ssangyong Motor, new loans from the KDB are also difficult. In addition, it is known that the Mahindra Group is undergoing administrative procedures to completely abandon Ssangyong’s control as well as its ownership, and Ssangyong is driven to the edge of the cliff.
Accordingly, Ssangyong Motor decided to enter the P-Plan, a short-term court official, and HAAH Automotive is also known to have agreed to support Korea Development Bank as a condition. However, there are many reactions that they are worried about being acquired by HAAH Automotive. Today’s AutoPost Issue Plus looks at the reasons why there are many voices of concern over the acquisition of Ssangyong Motors by HAAH Automotive.
Written Jinwoong Lee Editor
Based in the USA
Car distributor
Anyone who has heard the news about Ssangyong Motor will have heard of a company called HAAH Automotive. It wasn’t a famous company from the beginning, as it was a startup based in California, USA.
HAAH Automotive was founded in 2014 by Chairman Duke Hale, who has more than 35 years of experience in automotive companies such as Volvo, Mazda, Jaguar and Land Rover. Its main business is a distribution business that supplies overseas automobile brands to the North American market.
It is confirmed that no car is currently being sold by HAAH Automotive, and the Vantas, a premium SUV of Cherry Motors, will be sold in the US and Canada in the second half of 2022. Vantas is a car that will be assembled and manufactured in the US based on the Acid platform.
In 2023, Cherry Motors’ five- and seven-seater mid-size crossover SUVs, Tigo, will be sold to the US and Canada. Unlike other companies, it seems that they are mainly dealing with Chinese cars.
Korea Development Bank support is conditional
Agreed to plan P
Earlier, on January 24, HAAH Automotive and Mahindra had a temporary breakdown in the sale of negotiations. Because of this, there was a story saying,’Aren’t Ssangyong Motors eventually liquidated?’
Ssangyong Motor applied for the P-Plan, a short-term court manager. The P-Plan is a system that combines the new fund support function and the legal management debt adjustment function into one. It undergoes short-term court management for two to three months on the premise of supporting new funds from creditors, and allows quick debt adjustments led by the court.
HAAH Automotive also agreed. However, it was put up as a condition of supporting Korea Development Bank. The logic is that the investment funds from the capital increase should be used for Ssangyong Motor’s future strategy, and the KDB should support the operating funds.
After signing an investment contract in early February, Ssangyong Motor and HAAH Automotive plan to apply for a P-plan, a short-term court official, to the court. According to the plan, Mahindra’s stake is first lowered through potatoes, and HAAH Automotive participates in a capital increase of about 280 billion won, securing 51% of the stake to become the largest shareholder. However, if the P-plan is destroyed, Ssangyong Motor is more likely to go bankrupt. For now, it can be understood as’hope remains’.
To take over Ssangyong Motor
Questioning if there is funds
However, it is said that HAAH Automotive is worried about taking over Ssangyong. HAAH Automotive does not have as much sales as it is a startup. It has an annual sales of 23 billion won, and it is reported that last year it has decreased to a tenth.
In this situation, it is questionable how HAAH Automotive will raise 280 billion won, which is a 51% stake in Ssangyong Motor. Since the sales are small, even if you get a loan, there is no choice but to repay it.
With Chinese funds
Suspicion of taking over
At one time, it was said that the largest shareholder of HAAH Automotive was Cherry Motors. Cherry Motors has denied that it owns or invests in HAAH Automotive, but as HAAH Automotive has a strategic relationship with plans to produce and sell Cherry Motors’ models in North America, related suspicions continue to be raised.
Netizens are expressing concern as news that the source of the funding for the acquisition of Ssangyong Motor is in China. It would be better to reinvest in Volvo like Geely and learn only technology without touching detailed management or car brand control as much as possible, but if there is little technology outflow or reinvestment like Shanghai Motors, it could be counterproductive for Ssangyong.
Even the Mahindra group couldn’t survive
I wonder if a startup can survive
The Mahindra Group, which has been with Ssangyong Motor for 10 years, is one of the largest companies in India. Not only automobiles, but also aviation, aftermarket, agriculture, parts, construction equipment, consulting, defense industry, agricultural machinery, finance and insurance, industrial equipment, IT leisure, logistics, real estate, retail, and motorcycles. There are 250,000 employees. The corporate value is $20.7 billion (about 23 trillion won), similar to the domestic Booyoung Group and LS Group.
Even the large Mahindra Group could not withstand the deficit and gave up control of Ssangyong Motors, but it is questionable whether HAAH Automotive, which is much smaller, will be able to withstand. HAAH Automotive could also go bankrupt if it fails to save after taking over Ssangyong Motor.
Even if it takes over
The possibility of regeneration is low
Ssangyong Motor’s debt is about 800 billion won, and last year alone, it posted a deficit of 400 billion won. As of the end of last year, the total amount of capital was eroded to -622 billion won. If HAAH Automotive takes over, it will only take a sigh, and it is questionable how long this will last.
In order for Ssangyong Motor to rise again in the current situation, it must succeed by releasing new cars one after another. However, if you look at the current new car plans, only the Rexton Sports Facelift, the E100 electric car, and the J100 classic SUV. Rexton Sports is currently in a virtual monopoly, so it will maintain some sales volume, but the E100 is known to be less competitive than the Ioniq 5 or CV, which will be released this year. The J100 authentic SUV cannot be judged yet as detailed information is currently unknown. As such concerns are emerging, netizens are responding not to save Ssangyong Motor. It was Auto Post Issue Plus.
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