Mahindra acquired the SsangYong Motor in 2010. However, it did not really work out for Mahindra and they tried to sell their stake. SsangYong filed for Bankruptcy and they are now under court receivership now until SsangYong finds a new buyer.
SsangYong was already at a loss when Mahindra acquired them. The Seoul manufacturer became more of a liability for the homegrown manufacturer because they were not able to deliver on its SUV promise. The Alturas G4 and Rexton did not clock good sales in the Indian market. However, Mahindra continued to make new investments in SsangYong and was not getting any successful returns.
Last year in April, Mahindra decided that they will not be investing any more money in SsangYong and they rejected the proposal. Due to this, by the end of 2020, SsangYong Motor had to file for bankruptcy as their outstanding loan reached Rs. 680 Crores. The manufacturer has also applied for receivership after defaulting on its loans. They are now preparing a rehabilitation plan that they will submit to the court within two months. The plan will be the last effort for the manufacturer to convince the court that they can still be a success.
SsangYong Motor’s statement said, “We plan to promote the early termination of the rehabilitation process through the completion of the M&A, such as selecting an advisor in the shortest possible time in consultation with the Seoul Bankruptcy Court”
SsangYong reported a profit of 58 billion Korean wons in 2016. After this, things took a bad turn, in 2017, the manufacturer reported a net loss of 66 billion wons. Then in 2018, the loss rose to 62 billion wons. 2019 was really bad for SsangYong as they reported a loss of 341 billion wons in 2019.
2020 was the year for COVID-19 and all the manufacturers were struggling. SsangYong Motor continued to post losses during the year. The losses accumulated to 309 billion Korean won which roughly translates to a massive Rs. 2,100 Crores. During this time, the manufacturer was already trying to reduce the fixed costs.
Mahindra also expects a loss from the international subsidiaries to fall by 90 percent. The Indian manufacturer has already ended their joint venture with Ford Motors and they have cut more than half of their North American workforce.
In India, Mahindra is doing pretty well. They launched the Thar last year, which is an incredible success for the manufacturer. They are continuously working on introducing new models for the Indian market. They have a petrol and AMT version of the Marazzo MPV lined up for the launch. They are also working on a new Bolero Neo. Then there are the most awaited vehicles from the manufacturer which will be the XUV 700 which was recently announced and there will also be a new generation of the Scorpio.
The XUV 700 is slated to launch between Quarter 2 and Quarter 3 of the calendar year 2021 whereas the Scorpio could be unveiled by the end of 2021 or during the festive season. Once the XUV 700 is launched, Mahindra will be discontinuing the current XUV500 for some time. We expect the XUV 500 to make a comeback in a 5-seater form.