Korea's SsangYong Motor to apply for court receivership

09 January 2009

Hit by falling auto sales due to the global slowdown, SsangYong Motor of South Korea, said it has applied for court receivership to avoid bankruptcy. SAIC Motor Corp, the Chinese partner of global auto giants GM and VW owns a 51-per cent stake in SsangYong in the company.

Just two weeks after the automaker was turned down for new bank loans, the company said its parent Shanghai Automotive Industry Corp (SAIC) had decided on the move at an emergency board meeting on Thursday night.

Founded in 1954, it has been manufacturing automobiles for more than five decades. It began its business as a manufacturer of commercial vehicles such as trucks, buses, and special purpose vehicles including mixers and fire-fighting trucks.

In 1986, when the SsangYong Group acquisitioned Keohwa Motors specialized in manufacturing jeeps with the brand of Korando, and launched a full-scaled investment in automobile manufacturing. In 1988, it developed a compact 4WD SUV, Korando Family, which was the first SUV manufactured in Korea, opening the era of SUVs in the country. SsangYong Motor is the smallest of the 5 Korean automakers.

The company has passed through several ownerships. It is no longer part of the SsangYong Group (headed by SsangYong Corporation) after having been sold by the financially troubled group's creditors. Daewoo first bought the company but ran into troubles of its own, after which creditors at Chohung Bank ran SsangYong Motor. In 2005 China-based Shanghai Automotive Industry Corp. (SAIC) bought control of the company; it now owns just over 50 per cent of the Korean automaker.

The state-run Korea Development Bank, SsangYong's main creditor, said late last month that it would not consider new loans unless SAIC extended Ssangyong 320 billion won (HK$1.95 billion) of funding first.