Mahindra cans three-year SsangYong investment

THE future of SsangYong could once again be hanging in the balance after parent company Mahindra and Mahindra announced it was cancelling its planned three-year, $US406 million ($A661.7m) investment in the Korean brand.

In a statement issued last week, Mahindra said that it would be unable to “inject any fresh equity into SsangYong Motor Company (SYMC) and has urged SYMC to find alternate sources of funding” due to the financial impacts of the ongoing coronavirus pandemic.

Instead, the Indian auto giant said it would consider a one-time infusion of up to $US32m ($A52.2m) to ensure SsangYong’s production and business operations continued while it explored other viable sources of funding.

Outside of its native South Korea, Australia is the only other market in the world with a factory-backed operation, although that mantra made very little impact on the sales charts, with SsangYong falling well short of its expected 3000 new registrations in 2019 with just 1040 sales.

Things are not looking too much brighter so far in 2020 either, with only 313 units being shifted in the first quarter, resulting in a projected sales total of just 1252 for the year if this trend continues.

It is not all doom and gloom however with Mahindra saying it “would make every effort to continue to support to all other non-fund initiatives that are currently in place to help SYMC reduce Capex (capital expenditure), save costs and secure funds”.

These measures include free access to Mahindra’s new platforms, supporting the technology and material cost reduction programs as well as supporting SsangYong management in the search for new investors.

“In anticipation of the possibility of a prolonged low-growth phase internationally caused by the spread of COVID-19, the company has already embarked on strengthening the business with a range of innovations across a number of areas,” SsangYong Australia COO Chris Mandile told dealer partners.

“SsangYong have a three-year business plan and structures to support its operations both here and abroad.

“As Mahindra’s new funds to support the brand will be less than originally planned, SsangYong Motor are looking to attract new investment from other sources as well as improvements to financial structures etc.”

It remains to be seen exactly what impact Mahindra’s decision will have on the South Korean brand, especially in Australia where it is/was due to launch a battery-electric version of its Korando mid-size SUV later in the year.