Ssangyong Motor, Will Factory Normalize... Ongoing Discussions with Suppliers Who Halted Deliveries

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] Ssangyong Motor, which halted operations at its Pyeongtaek plant due to delivery refusals from some partner companies, is drawing attention as to whether it can resume scheduled normal operations starting on the 29th. The company, currently undergoing corporate rehabilitation procedures, has suffered production losses of about 1,300 units due to the two-day factory shutdown. Because of this, there are calls for parts suppliers to cooperate to prevent any production disruptions until February, when Ssangyong will proceed with the Autonomous Restructuring Support (ARS) program.

According to Ssangyong Motor on the 28th, production at the Pyeongtaek plant was suspended from the 24th through that day. Although the period spans five days, including Christmas and weekends, the actual shutdown lasted two days. The Pyeongtaek plant produces about 650 vehicles per day, resulting in a production loss of 1,300 units during the shutdown.

The concern is that the factory shutdown could be prolonged. Previously, five major partner companies?LG Hausys, Continental Automotive, BorgWarner Ochang, Hyundai Mobis, and S&T Heavy Industries?announced they would refuse deliveries to Ssangyong due to fears of not receiving payment. Subsequently, Hyundai Mobis and S&T Heavy Industries decided to resume normal parts supply from the 29th, but the other three companies have yet to make a decision.

Some of these companies reportedly demanded cash payments instead of promissory notes due to concerns over Ssangyong's liquidity deterioration. Currently, Ssangyong is in the ARS period, but if it enters court receivership, Ssangyong’s claims and debts will be frozen, potentially resulting in non-payment for delivered parts.

Therefore, the automotive industry is urging partner companies to support Ssangyong at least during the ARS period. Maintaining normal production and sales activities is essential for the successful progress of the ARS. Ssangyong plans to complete sale negotiations by February next year at the latest. If the sale is completed, the feared non-payment of delivery fees by partner companies is unlikely to occur.

If the Ssangyong factory shutdown is prolonged, small and medium-sized suppliers will inevitably suffer damages due to the automotive industry's characteristic of requiring 30,000 parts to assemble a finished vehicle.

As of last year, the number of parts suppliers delivering to Ssangyong Motor reached 219. This accounts for 12.4% of all domestic automotive parts companies, with delivery amounts totaling 1.8088 trillion won. Including employees and families of Ssangyong and its partner companies, the number reaches 600,000. Additionally, small and medium-sized partner companies are reportedly requesting continuous deliveries with countermeasures rather than refusing to supply parts.

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