However, most car factories need to produce at least 200,000 cars per year to remain viable.
After Mahindra was unable to offload its shareholding, Ssangyong filed for bankruptcy on 21 December 2020, owing 315.3 billion won ($US285 million) in overdue debt to several financial institutions, a week after their deadline for payment had passed.
The Reuters news agency reported that, among the financial institutions owed money, about 30 billion won was owed to Bank of America, 20 billion won to JPMorgan Chase & Co, and 10 billion won to BNP Paribas.
“SsangYong Motor applied for the court receivership procedure as a massive disruption in the operation is expected after the company could not reach an agreement to extend its loan repayment deadlines with foreign banks,” the company said in a media statement.
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Struggling South Korean car maker SsangYong says it is “business as usual” and will continue to sell and service cars in Australia – despite filing for bankruptcy just days prior to Christmas 2020.
SsangYong has been in financial pain for years and Indian conglomerate Mahindra and Mahindra had been trying to sell its majority shareholding in the company over the past six months.
Mahindra bought a 70 per cent stake in SsangYong in 2011 for US$463.6 million – also saving it from bankruptcy at that time – and had increased its shareholding to 75 per cent by 2019.
However, over a decade of Mahindra ownership, SsangYong sales never really took off and the company couldn’t reach a production volume that was financially competitive or viable.
SsangYong continues trading after bankruptcy filing, with business as usual for Australia
23 Dec 2020 • 4 min read
The SsangYong Motor Company will continue to operate as normally around the world – including in Australia – after it has secured protection under South Korea’s bankruptcy administration process.
This comes after the South Korean arm of Indian industrial giant Mahindra and Mahindra (M&M) filed for bankruptcy on Monday December 22, following the failure to meet accumulating debt repayments due the week before, that amounted to about 60 billion Korean won ($A72 million).
In September M&M revealed that it would transfer, dilute or cease its controlling stake in SsangYong, after almost a decade of mounting losses, meaning it sought a buyer for the struggling brand. The Mitsubishi Motors Corporation of Japan was reportedly one new major investor in discussions until recently.