Mahindra halts funding for SsangYong amid virus crisis; 'one-time' RM142m infusion possible: report
Indian conglomerate Mahindra & Mahindra has said it would no longer invest in SsangYong Motor, Automotive News Europe reported, as automakers worldwide are aiming to save cash in order to survive the coronavirus crisis.
In a regulatory filing, the Indian brand also asked SsangYong to look elsewhere for other means of funding as restrictions that have been put in place due to the coronavirus outbreak has strangled demand, with Mahindra charting an 88% drop in sales for March, the report said. Mahindra holds a 74.65% stake in SsangYong.
The announcement arrives less than two months after Mahindra said it would invest $423 million (RM1.8 billion) to make SsangYong profitable by 2022. the Korean brand sold 14,627 vehicles in Europe last year, down 10% from 16,082 units sold in 2018 according to data from JATO Dynamics, Automotive News Europe reported.
Mahindra said it would consider a special, one-time infusion of up to 40 billion won (RM142 million) over the next three months to help SsangYong continue running its business while the Korean brand continues to seek other sources of funding, the report added, while the Mahindra board has commenced several measures to bolster its balance sheet in the midst of the ongoing pandemic, it said.
Earlier this year, SsangYong had planned to begin selling a fully electric version of its Korando SUV in Europe. The electric model was due to be displayed at this year’s Geneva Motor Show, which ended up being cancelled due to the outbreak of the coronavirus.
SsangYong was saved from insolvency in 2010 by Mahindra, though several subsequent attempts failed to improve the Korean brand’s fortunes, said the Automotive News Europe report. An entry into the United States market was considered, however the manufacturer decided to focus its attention on China instead, it noted.
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