The Chinese majority shareholder of Ssangyong Motor is raising its stake in the automaker, drawing interest from the market about what its intentions are.
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The Korea Times said Shanghai Automotive Industry Corp. (SAIC) Motor, which became the largest shareholder of Ssangyong Motor by acquiring a 48.29% stake, has continued to buy additional shares over the past year.
Its stake rose to 49.33% when it purchased 224,770 and 272,980 shares on 16 and 17 May, 2005, respectively.
After continuous buying, its holding passed the 50% mark and has now reached 51.03% with the acquisition of 288,730 shares on 15 June, 2006.
Ssangyong officials reportedly say SAIC’s action is believed to aimed at removing market speculation that it will sell the automaker to other investors.
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By GlobalData“SAIC’s additional share purchasing is securing its position as a responsible largest shareholder,” a company official told the paper. “It is also focuses on long-term investment.”
But vehicle industry experts allege the action is designed to make it easier for technology transfer to China by holding an absolute management right.
Ssangyong is no more a Korean company. Its technology is being handed over to SAIC,” an executive of Hyundai Motor said.
SAIC is set to replace a number of Korean subcontractors with Chinese auto parts suppliers in an alleged bid to relocate core technologies.
The carmaker has proposed the automaker buy parts from Auto Parts Sourcing International Service (APSIS), an SAIC Motor affiliate.
Ssangyong Motor is expected to accept the suggestion, and it is possible the carmaker will be pressed to discontinue deals with most Korean auto parts suppliers, the Korea Times said.
Ssangyong reportedly said the SAIC Motor plan comes from its strategic plan to secure global competitiveness by reducing costs for auto parts. APSIS is providing Shanghai-GM and Shanghai-Volkswagen with auto parts imported from various countries, as a broker or sourcing pool.
Under the project, global and Chinese subcontractors can easily access vehicle designs conceived by Korean engineers.
SAIC Motor is said to have taken 800 designs for auto parts and finished cars, including the Kyron, from the Korean company, according to the Ssangyong labor union.
