Ambiguity Hovers over SsangYong’s Future as Mahindra Abandons 3-Year Investment Plan
Due to the Covid-19 pandemic, parent company Mahindra & Mahindra India has cancelled its planned financial assistance of US$406 million (RM1.7 Billion) for SsangYong Motor Company (SYMC), leaving its fate hanging in an awkward balance again. SsangYong Motor Board Chairman and Mahindra & Mahindra Managing Director, Pawan Goenka Mahindra, said that they would be unable to inject any fresh equity into SYMC and has urged them to find alternate sources of funding due to the financial impacts of the ongoing coronavirus pandemic.
SsangYong Motor Board Chairman and Mahindra & Mahindra Managing Director. Image source.
India is under a 21-day complete lockdown and only emergency services are operating while everything else is closed. “The board hopes that the employees and management at SYMC understand the magnitude of this unfortunate and unexpected crisis due to the COVID-19 pandemic, which has forced Mahindra to make this tough decision,” Mahindra said in a statement
The Indian auto giant however said it would consider a small injection of up to US$32 million (RM140 million) to ensure SsangYong’s production and business operations continued while it explored other viable sources of funding.
Apart from the one-time injection of cash, Mahindra also said that it will make every effort to continue to support all other initiatives that are currently in place to help SYMC reduce their capital expenditure. These include access to Mahindra’s new platforms, supporting the technology and material cost reduction programmes as well as supporting SsangYong’s management in the search for new investors.
SsangYong had initially planned a three-year turnaround plan to restructure its operations worldwide with the investment from Mahindra. Unfortunately, without the financial support, SsangYong is back to sourcing new investment from others as well as making improvements to its own financial structures.
It remains to be seen exactly what impact Mahindra’s decision will have on the South Korean brand worldwide as it was due to launch a battery-electric version of its Korando mid-size SUV later in the year.