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SAIC to retain Ssangyong assets

By Ma Zhenhuan (China Daily)
Updated: 2009-02-11 08:04

A spokeswoman from SAIC Motor Corp, China's largest automaker, said yesterday it will continue to work toward the normal business operation of debt-ridden Ssangyong, after the South Korean SUV maker was put into bankruptcy protection by a Seoul court last Friday.

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"We respect and understand the rule by the court. It is a decision based on all related interested parties in line with the South Korean law," said the SAIC spokeswoman.

 

SAIC issued a statement yesterday saying that the Seoul Central District Court approved the bankruptcy protection application from Ssangyong.

The decision ends Shanghai-based SAIC's four-year control of Ssangyong. But SAIC will still retain its interests in Ssangyong's assets.

SAIC said yesterday that it hoped the two managers will map out and implement a "practical business revival plan" to put Ssangyong back on track as soon as possible.

"I don't think Ssangyong's case will pose a big threat to SAIC's financial performance and operation," said Zhu Siming, an automobile analyst at consulting firm Frost & Sullivan.

Ssangyong is comparatively weaker in terms of its SUV branding, and its SUVs are mostly sold in South Korea, so the market is limited, he said.

Besides, SAIC may well take advantage of other brands it had purchased, such as Roewe, to develop and boost its SUV sector, he added.

SAIC purchased 49 percent of Ssangyong's shares in October 2004 for $500 million to add SUVs to its production line-up. It later became the controlling stakeholder by increasing its shares to 51 percent. In November 2008, its interest in Ssangyong stood at 1.851 billion yuan, SAIC said in a previous statement.

South Korea-based Ssangyong, facing a serious liquidity crisis amid a global recession, witnessed its sales tumbling 30 percent to 92,665 vehicles last year as customers shunned its gas-guzzling SUVs in favor of more fuel-efficient cars.