[Car Talk Forest] Court Management After 10 Years... The Key to Ssangyong Motor's Revival: 'Acquirer's Capability?'

Withdrawing After Only Taking Shanghai Auto's Technology and Workforce in the Past
Currently, Edison Motors and K-Pop Motors Among Interested Buyers

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor has entered court receivership again, 10 years after graduating from court management in 2011. The current state of Ssangyong Motor, now in its second court receivership, is worse than when it first entered court management in February 2009. There is no new vehicle to carry on the legacy of the Korando, a representative of the sports utility vehicle (SUV) segment, and the research and development (R&D) function has weakened, lowering expectations for new models. Reorganizing overseas distribution networks is also an urgent task. Ultimately, Ssangyong Motor's fate depends on the emergence of a 'capable' buyer.

A capable buyer may seem like an obvious requirement, but Ssangyong's past did not reflect this. During the International Monetary Fund (IMF) foreign exchange crisis, Ssangyong was acquired by Daewoo Motors, but after the Daewoo Group was dismantled, it was handed over to creditors. Then, Shanghai Automotive Industry Corporation (SAIC) acquired Ssangyong in 2004. SAIC only took Ssangyong's technology and workforce for five years and withdrew to China in 2009 amid the global financial crisis. Mahindra, which acquired Ssangyong during its 2009-2011 court receivership, pledged last year to support Ssangyong with 230 billion KRW amid financial difficulties but only injected 40 billion KRW. Meanwhile, the technological gap with other automakers has widened.

What about the companies that have expressed interest in acquiring Ssangyong now? Currently, domestic electric bus manufacturer Edison Motors, electric two-wheeler company K-pop Motors, and small private equity firm Park Seok-jeon & Company have shown intentions to acquire Ssangyong. Among them, only Edison Motors has submitted an audit report to an external audit firm. Edison Motors recorded sales of 89.8 billion KRW and an operating profit of 2.8 billion KRW last year. They plan to accelerate Ssangyong's electric vehicle development and sales using their technology developed for electric buses. K-pop Motors, established in September 2014 and headquartered in Yeonggwang, Jeollanam-do, mainly produces electric two-wheelers. To acquire Ssangyong, K-pop Motors completed the registration of a special purpose company (SPC), K-pop Motors Holdings Group Co., Ltd., on February 22, and has announced plans to list on NASDAQ. However, without an external audit report, it is difficult to assess their financial structure. Park Seok-jeon & Company is an affiliate of Hyunlim Partners, which participated in the 2017 acquisition bid for Gyeongnam Enterprise, but its sales and performance are undisclosed.

However, creditors and industry insiders believe the current candidates are unlikely to acquire Ssangyong. An industry official said, "Even if Ssangyong resolves over 500 billion KRW in debt through court receivership, there are many challenges ahead such as vehicle sales, new model development, and securing foreign distribution networks, requiring more than 1 trillion KRW in new investment. Unless there is a party capable of continuously injecting funds, there is no prospect for acquiring Ssangyong."

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