Ssangyong Motor Faces Imminent End of Court-Managed Suspension... Concerns Over Collapse and Departure of Partners

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor's P-Plan (short-term court receivership) is facing difficulties due to delays in decisions by potential investor HAAH Automotive.

According to industry sources on the 23rd, Ssangyong Motor notified HAAH to respond by the 20th of this month regarding their investment decision, but has yet to receive a reply. Considering that the date fell on a weekend, a response was expected by the 22nd, but HAAH is reported to have only stated that more time is needed to review the materials.

HAAH is known to be seriously considering Ssangyong Motor's deteriorating management situation. On the 15th, Ssangyong Motor issued a revised disclosure stating that its operating loss last year, based on consolidated financial statements, decreased by 59.4% to 449.4 billion KRW, and net loss decreased by 47.8% to 504.3 billion KRW.

Additionally, due to the issue of public interest bonds amounting to 370 billion KRW, which exceeds their investment amount of 250 million USD (approximately 280 billion KRW), the main creditor bank, KDB Industrial Bank, is expected to provide a corresponding amount of support. However, KDB insists that Ssangyong Motor must submit a business plan demonstrating the possibility of recovery and that both management and labor at Ssangyong must find self-rescue measures. Because of this, some are skeptical about the likelihood of entering the P-Plan, given that the court has only granted Ssangyong 7 business days.

There are also concerns that if Ssangyong enters court receivership, the parts supply chain could suffer serious damage. An industry insider said, "Small suppliers whose deliveries to Ssangyong account for more than 50-60% of their total sales are at high risk of bankruptcy, and large-scale partners may gradually reduce their supplies to Ssangyong."

Some in the industry point out that for HAAH's investment and KDB's support to be secured, Ssangyong's management and labor must also take wage cuts. Professor Ho-geun Lee of Daelim University's Department of Automotive Studies said, "Even if Ssangyong receives investment, to secure the possibility of recovery, they must consistently release 2-3 new models with sales volumes comparable to the Tivoli. If investment in new cars decreases due to labor costs, doubts about the possibility of recovery may arise."

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