SsangYong’s restart

A local bankruptcy court approved SsangYong Motor’s decision to select a consortium led by KG Group as the final bidder for the debt-stricken automaker on Tuesday. The approval came a year after SsangYong’s creditors put the troubled carmaker on the block. The acquisition price is about 950 billion won ($732 million), including funds for the company’s stable operation. SsangYong and its buyer will likely submit a rehabilitation plan to the court this month. If the creditor group accepts it, the carmaker will make yet another fresh start toward the end of August.

SsangYong Motor has come down a rough path. Since its founding in 1967, the automaker has changed hands five times, and the chemical-and-steel KG group is its sixth owner. Like many Korean companies, SsangYong faced its biggest trouble during the Asian financial crisis of 1997-98. In the 2000s, the automaker fell into the hands of foreign owners — China’s SAIC Motor Corp. and India’s Mahindra — and was engulfed in constant controversy over technology leaks.

The road ahead is far from smooth. SsangYong Motor has recorded an operating deficit for 21 consecutive quarters, beginning from the first three months of 2017. The cumulative loss during this period amounts to 1.15 trillion won. Due to the lack of timely investment, it has failed to secure sufficient technology for future cars. A silver lining in the dark cloud is the explosive popularity of its new SUV model, the Torres. On the first day of its launch, the new vehicle won 12,383 pre-contracts, with the total reservations reaching 25,000.

SsangYong’s new owner has five listed companies under its wing, including KG Chemical and KG Steel. The group expects its acquisition of the carmaker to create a synergy effect, as KG Steel supplies automotive steel sheets. The group also has pockets deep enough to revive the company. At stake is how to acquire next-generation automotive technology. The global auto industry is being reorganized rapidly into electric vehicles. SsangYong, famous for SUVs, should be reborn as a strong EV player. Labor unions should also cooperate positively with rehabilitation efforts with a win-win mindset.