Mahindra cancels $658m SsangYong lifeline
SsangYong’s future is in doubt with coronavirus affecting the cash flow of its parent company, Mahindra.
INDIAN AUTOMOTIVE conglomerate Mahindra & Mahindra has pulled its investment funding from SsangYong, leaving the South Korean manufacturer only scraps from the table to keep itself afloat.
Citing a staggering 88 per cent drop in sales in March this year, Mahindra says that the Coronavirus COVID-19 pandemic will unsettle its ability to operate as planned.
In February this year, Mahindra, which owns a 74.65 per cent stake in SsangYong, announced a $658m funding program available across the next three years to help the brand develop its platforms and maintain viable production volumes at its plants. That funding has now been pulled in full.
“After lengthy deliberation given the current and projected cash flows, the M&M Board took a decision that M&M will not be able to inject any fresh equity into SYMC and has urged SYMC to find alternative sources of funding,” says Mahindra in its public media statement.
“The Board hopes that the employees and management at SYMC understand the magnitude of the unfortunate and unforeseen crisis created by the COVID-19 virus, which has compelled it to take the difficult decision.”
Mahindra will, however, consider an almost $50m lifeline to help SsangYong survive the next three months, with Mahindra’s board authorising the potential move. And it will also provide its own platforms for use in future SsangYong product without any capital expenditure, including the latest Mahindra W601 platform.
The loss of funding is a huge blow for SsangYong which recently confirmed its fully-electric Korando – also confirmed for Australia – and its plans to bite into a larger share of the local dual-cab ute market could be rocked, at an almost prime time when Holden and it’s top-selling Colorado ute depart.