Ssangyong Motor Company does not qualify for financial support under the government’s market stabilisation fund, according to the South Korean government-run Korea Development Bank (KDB).
The struggling SUV manufacturer, owned 75% by Mahindra & Mahindra, has been accumulating losses for several years and is in need of fresh capital to help it emerge from the current downturn.
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The company’s global sales fell by 32% to 39,206 units in the first five months of 2020 from 58,030 units in the same period of last year.
Mahindra & Mahindra last April agreed to inject KRW40bn (US$33m) into Ssangyong to help it stay afloat through the COVID-19 pandemic.
In May, Ssangyong transferred ownership of its main service centre in Seoul to local asset management firm PIA for KRW180bn (US$147m) in a sale and lease back deal to raise funds.
Ssangyong does not qualify for support under the KRW40trn (US$33bn) government fund established earlier this year to help industries weather the COVID-19 pandemic as the automaker was already in financial difficulty before the coronavirus outbreak.
Choi Dae-hyeon, vice chairman of Korea Development Bank (KDB), told local reporters: “The market stabilisation fund for key industries is not designed to support companies with existing problems prior to the outbreak of the new coronavirus.”
Reports recently suggested Mahindra & Mahindra was looking to sell all or part of its stake in Ssangyong to a strategic investor, after years of losses, perhaps in an attempt to convince the government to provide financial support.
Mahindra managing director Pawan Goenka is quoted as saying: “SsangYong Motor needs a new investor. We are working with the company to see if we can secure investment.”
Last Friday, Ssangyong Motor said it had agreed to export Tivoli SUV knocked down (KD) kits for assembly in China by Songuo Motors.
The Chinese automaker plans to export the assembled vehicles to the Middle East and Africa later this year.
