[The Editors' Verdict] The SsangYong Motor Solution Everyone Already Knows

[Image source=Yonhap News]

According to a report titled "Management of Startups and Survival" published by the Samsung Economic Research Institute in 1997, out of the companies ranked among the top 100 in 1965, only 16 survived over the 30 years until 1995. During this period, none of the companies that were ranked in the top ten survived.

The institute analyzed that the reason was that Korean companies experienced much more severe managerial fluctuations compared to those in Japan or the United States. At that time, the survival rate of the top 100 companies over 30 years was 21% in the U.S. and 22% in Japan, both higher than the 16% of domestic companies.

Although much time has passed, the business conditions companies face have not improved significantly. This can be seen from the survey results announced by the Korea Economic Research Institute in 2019. According to the institute, 60% of the large business groups classified as the top 30 by the Fair Trade Commission in 1998 had disappeared 20 years later.

While many top companies in the business world have exited the stage of history every 10 to 20 years, there is a company that has endured decades of ups and downs and maintained its existence. That company is SsangYong Motor. Despite falling into a ping-pong fate through multiple ownership changes to Chinese and Indian companies, it has continued to survive by steadily releasing new cars. Like the symbol of SsangYong Motor’s design, "strength," it has struggled to endure at the brink of life and death.

SsangYong Motor originated from "Hadonghwan Automobile Manufacturing," established in 1954. It is a pioneering company in Korean automotive history, having exported buses it produced independently overseas in 1966. Hyundai Motor’s export of the Pony came ten years later.

Every time SsangYong faced a crisis, it revived by timely launching a hit model. When it was acquired by Daewoo and then plunged into crisis due to the group’s breakup, the Rexton succeeded. After being acquired by India’s Mahindra, it released the compact SUV Tivoli in 2015, which almost became a market game changer.

Like a tumbler doll, SsangYong Motor has once again reached a crossroads of survival. However, this time it does not seem easy to get out of the thorny bushes. The previous "revival formula" of public fund injection and foreign capital attraction is not feasible. Having undergone two rounds of court receivership, there is no justification for further public money injection. After Edison Motors’ failed acquisition, the search for a new owner has begun, but the situation is difficult. If a new investor is not found by the end of this month, it may be delisted from the Korea Composite Stock Price Index (KOSPI).

The government’s mistakes have also played a part in SsangYong Motor’s current situation. Every time it faced a critical moment, the administration tried to solve SsangYong’s problems with political calculations. Although pressured by the labor union, the decision to reinstate all dismissed workers from 11 years ago instead of restructuring the company in the worst management crisis was not unrelated to political logic.

During its 66-year history, SsangYong Motor has changed owners five times, with two of the chaebols disappearing without a trace. It has also been sold to foreign capital twice. This is a rare and unfortunate fate in the history of Korean companies.

The "landmine" that is SsangYong Motor is expected to be a heavy burden for the soon-to-be-inaugurated Yoon Suk-yeol administration as well. If the largest automobile company with the greatest forward and backward linkage effects is allowed to close, tens of thousands of workers, including about 5,000 employees and partner companies, will be left jobless on the streets. We have witnessed several times that strong self-help measures and external capital injections can only extend the life span for a while but cannot save the patient. The lifespan of a company and employment stability can be said to be "two sides of the same coin." If it cannot be sold, there may be only one option left. If the answer is known but not acted upon, it will only prolong the painful years with "false hope." It is time for bold decisions.

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