Mahindra rejects new funding for Ssangyong
Mahindra and Mahindra, the owner of SsangYong Motor, has decided to not go through with a request to inject KRW 500 billion (approx. Rs 3,085 crore) into its South Korean subsidiary. This amount was requested by the management and labour bodies in the Korean firm to tide over the company's issues for the next three years. Mahindra owns 74.65 per cent of SsangYong Motor.
Instead, the Indian carmaker has asked SsangYong to look for alternate sources of funding. But Mahindra has promised KRW 50 billion (approx Rs 243 crore) immediately to ensure daily operations aren't affected. In a statement Mahindra said, ''The Board hoped that the employees and management at SYMC understand the magnitude of the unfortunate and unforeseen crisis created by the COVID-19 virus, which has compelled it to take the difficult decision."
SsangYong has been facing losses for an extended period of time. The company has revamped its product line-up under Mahindra ownership since 2013, seeing most success with the SsangYong Tivoli SUV. The Mahindra XUV300 sub-four-metre SUV is a derivation of this. However, the Korean carmaker has faced an extended downturn for most of the last three years.
Mahindra has promised to support SsangYong in a number of ways until the company has found a new investor. It will have access to the carmaker's new platforms including the ones being co-developed with Ford. Further, the Indian firm will support technology programmes which would help reduce SsangYong's capex, aid in the current material cost reduction programme and help SsangYong find new investors.