With all of the focus on the likes of GM and Chrysler in recent weeks, each struggling to stave off bankruptcy, Korea?s Ssangyong Motors may very well slip into oblivion with nary a whimper - the first automotive casualty of 2009.
The Korean car maker, known for its unusual looking vehicles, is in dire straits and majority owner China?s SAIC (51.33 percent holding) is showing little interest in easing the pain.
SAIC recently stumped up USD$19.9 million to keep the doors open at Ssangyong, but with USD$21 million reportedly owed in unpaid wages alone, it was not nearly enough to avert the inevitable. Ssangyong has now been forced to file for bankruptcy.
There is speculation that SAIC is viewing Ssangyong?s pending bankruptcy (it is yet to be approved by the Korean court) as a way to extract itself from the poorly-performing car maker.
?(Receivership) seems to be a way for SAIC to get out of Ssangyong,? Song Sang-hoon, an auto analyst at Kyobo Securities, told Automotive News. ?SAIC appears unwilling to invest further in Ssangyong as the global industry is facing an overcapacity problem amid slowing demand and it is not clear how much money would be necessary to revive Ssangyong.?
SAIC has watched its investment in Ssangyong dwindle from USD$500 million to USD$271 million, and will no-doubt watch it sink further.
With the bottom falling out of Ssangyong?s November and December sales (down 63 and 53 percent respectively compared to the previous year), bankruptcy is likely to make a bad situation worse.
Ssangyong?s future looks very uncertain. With world car sales slowing dramatically and more promising car makers such as Volvo and Saab already up for sale, Ssangyong's troubles come at a time when manufacturers are looking to downsize rather than expand through acquisition.
[Source: Automotive News]