Major Shareholder Mahindra Again Hints at 'Abandoning Ssangyong Motor'... Future in Uncertainty

Goenka Mahindra President "Ssangyong Motor Needs New Investor... Seeking Investors"
Ssangyong Motor Expects 200 Billion Won Support from Kian Fund... Government and KDB Face Deepening Concerns

Earlier this year, Pawan Goenka, President of Mahindra, visited Korea to discuss the revival plan for SsangYong Motor and met with the creditor bank, the Korea Development Bank. (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] The Indian Mahindra Group, the major shareholder of SsangYong Motor, has once again mentioned the possibility of relinquishing control over SsangYong Motor. Amid sluggish domestic sales and exports due to the impact of the novel coronavirus disease (COVID-19), uncertainty about SsangYong Motor's future is growing.

According to industry sources on the 14th, Pawan Goenka, President of Mahindra, told reporters in India on the 12th (local time), "SsangYong Motor needs a new investor," adding, "We are exploring whether we can secure an investor." Goenka serves as the chairman of SsangYong Motor's board. Anish Shah, Vice President of Mahindra, expressed a position one step further than Goenka. When asked if they plan to exit SsangYong Motor, he said, "If a new investor emerges, our shareholding will automatically decrease or the investor may buy our shares." He also emphasized, "We will review all loss-making businesses over the next 12 months." Mahindra acquired SsangYong Motor in 2011 and holds a 75% stake.

Earlier in April, Mahindra also announced it would seek a new investor for SsangYong Motor. At the April board meeting, Mahindra withdrew its previous plan to invest 230 billion KRW in SsangYong Motor and decided to inject only a one-time special fund of 40 billion KRW. At that time, concerns were raised that Mahindra might be trying to withdraw from SsangYong Motor.

However, it is not easy for SsangYong Motor to find a new investor. Most global automakers are currently facing crises due to the COVID-19 pandemic. With global new car demand shrinking, existing factories are even being forced to halt operations, making it unlikely that new investors will emerge for SsangYong Motor.

For now, SsangYong Motor is pinning its hopes on 200 billion KRW support through the government's Industrial Stability Fund. However, the current atmosphere excludes fund support. This support is targeted at companies struggling due to COVID-19. In SsangYong Motor's case, it had been in crisis even before the spread of COVID-19, recording losses for 13 consecutive quarters through the first quarter of this year.

The concerns of the creditor bank, the Korea Development Bank (KDB), are also deepening. SsangYong Motor has loan maturities coming up on the 6th (70 billion KRW) and 19th (20 billion KRW) of next month. So far, KDB has emphasized the major shareholder's responsible attitude and has been reserved about extending the maturities. SsangYong Motor is expected to request loan maturity extensions soon. Recently, banks have been inclined to extend loans for companies struggling due to the COVID-19 crisis. KDB may also consider extending only part of the loan, as it did in December last year.

This content was produced with the assistance of AI translation services.