Commercial Creditors Supporting Ssangyong Motor's New Car Development... "Government Support Also Crucial"

[Asia Economy Reporter Ki-min Lee] The trade creditor group, composed of suppliers collaborating with Ssangyong Motor, which is undergoing corporate rehabilitation procedures, has decided to support stable production and new car development, and plans to appeal for government assistance as well.

According to industry sources on the 5th, Jeong Yong-won, the Ssangyong Motor administrator, recently met with the Ssangyong Motor trade creditor group and requested their support for new car development and stable production.

Ssangyong Motor plans to launch its first electric vehicle, the Korando e-Motion, in the European market in October this year. Additionally, the company aims to release the mid-size sport utility vehicle (SUV) J100 (project name) and its derivative models around next year.

In particular, Ssangyong Motor is not stopping at the launch of the Korando e-Motion but is also researching and developing (R&D) a dedicated electric vehicle platform to secure competitiveness in future vehicles.

However, cooperation from suppliers is essential for Ssangyong Motor to develop and launch new cars stably. Until recently, Ssangyong Motor experienced production disruptions due to suppliers halting parts deliveries. Moreover, if suppliers fail to equip their production lines to match the parts installed in new cars, Ssangyong Motor could face a situation where it cannot mass-produce new cars even after completing development.

The trade creditor group has also agreed to cooperate to prevent production stoppages at Ssangyong Motor and to enhance corporate value through new car launches. It is reported that Ssangyong Motor, which is in a difficult financial situation, will prepay part of the contract amount to suppliers, allowing them to equip facilities, and then recover funds after the vehicle launch. Ssangyong Motor is also expected to complete the rehabilitation process by successfully concluding a pre-approval merger and acquisition (M&A) and use part of the funds injected through the M&A to pay suppliers.

However, the trade creditor group sees government support as crucial for suppliers to overcome the current crisis. The government and Gyeonggi Province have formed a fund totaling 75 billion won to expand liquidity support for Ssangyong Motor’s suppliers. Nevertheless, considering that the newly formed fund is less than 50% of one month’s delivery payments, it is far from sufficient to resolve the financial difficulties.

The trade creditor group plans to soon appeal to the government and the Blue House for support in parts payments and collateral loans for Ssangyong Motor. A representative of the trade creditor group stated, "The trade creditor group will assist Ssangyong Motor’s new car launches and smooth production of existing models," adding, "We hope the government will also expand loans secured by Ssangyong Motor bonds held by suppliers."

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