Ssangyong Motor, Whose Parent Company Funding Fell Through, "Will Proceed with Management Reform Plan Without Delay"

[Asia Economy Reporter Suyeon Woo] Ssangyong Motor announced on the 5th that despite the disruption of new funding support from the Mahindra Group due to the impact of the novel coronavirus infection (COVID-19), it will steadily proceed with the originally planned business normalization measures.

On the 3rd (local time), the Mahindra Group, the major shareholder of Ssangyong Motor, held a board meeting and decided that it would be difficult to provide the promised new investment fund of 230 billion KRW to Ssangyong Motor, considering the group's liquidity situation caused by COVID-19. Instead, the Mahindra Group promised to provide a one-time fund support of 40 billion KRW to support the continuity of Ssangyong Motor's business operations.

Earlier, Ssangyong Motor had prepared and implemented a high-intensity management innovation plan, including welfare suspension and reduction last year, followed by financial structure improvement and labor cost reduction. Ssangyong Motor stated that despite the suspension of the parent company's new investment plan, it plans to continue the business normalization measures that have been underway without wavering.

Furthermore, as the global low-growth phase is likely to be prolonged due to the current spread of COVID-19 during the business normalization process, Ssangyong Motor is also intensifying internal innovation capabilities, such as upgrading work systems across all company departments from product planning to research and development, production, sales, and service.

Ssangyong Motor plans to take measures to ensure there are no short-term liquidity problems through various cash securing methods, including the sale of non-core assets such as the Busan logistics center, to raise new funds.

In addition, Ssangyong Motor emphasized that it reaffirmed the parent company's position to dispel withdrawal rumors and strengthen support for Ssangyong Motor through securing funds by attracting new investments.

Moreover, the 500 billion KRW needed for Ssangyong Motor's business normalization is not an amount that must be raised immediately this year but is the required fund over the next three years. It plans to secure it without disruption through early realization of various support plans proposed by Mahindra and cooperation plans with multiple stakeholders.

A Ssangyong Motor official said, "We plan to continuously seek support and cooperation from related stakeholders through a feasible long-term business plan," adding, "We will continue to develop a win-win labor-management relationship and accelerate efforts to secure product competitiveness and increase sales to achieve the common goals of company growth and employment stability."