Another resurrection battle for SsangYong cars is about to begin.
On January 10, South Korean car company SsangYong Motors applied to seoul's Huisheng Court (the court specializing in bankruptcy cases) to formally sign an merger and reorganization agreement with electric bus manufacturer Edison Motors, saying that a consortium led by Edison had agreed to acquire the company for 304.8 billion won (about 1.625 billion yuan).
In addition, Edison Automobile will provide SsangYong Automobile with an additional 50 billion won of operating funds, and require the addition of clauses in the agreement that can interfere in the planning and operation of funds for SsangYong Automobile's project. SsangYong Automobile should submit a bankruptcy reorganization plan, including a repayment plan, to the court before March 1, and the court will finally approve SsangYong's bankruptcy reorganization plan after two-thirds of the creditor group agrees.
The phenomenon of "snake swallowing elephants"
As early as October last year, foreign media insidervs reported that Edison would acquire SsangYong Automobile for about 260 million US dollars (about 1.66 billion yuan). The consortium led by Edison at the time was the only bidder for SsangYong Motors, and another consortium led by its competitor, the electric vehicle company EL B&T, was excluded from the bidding list because it could not prove that it had enough acquisition funds.
But now Edison said that due to the confirmation of the potential loss risk of SsangYong Motors, it asked to reduce the investment amount by 5.1 billion won compared with the previous investment amount.
According to SsangYong Motors' previous data, in December 2020, it filed for bankruptcy reorganization on December 21 due to a loan of about 60 billion won (about 350 million yuan) in arrears. Operating losses widened to 449 billion won (about 2.6 billion yuan) in 2020. From the fourth quarter of 2016 to the fourth quarter of 2020, it experienced 17 consecutive quarters of losses.
So, in the context of such a huge loss, what is the origin of Edison who has the courage to take over the "mess"?
Founded in 2015, Edison mainly produces electric trucks and buses, and is currently the largest electric bus manufacturer in Seoul, South Korea. Edison sees SsangYong as a potential foothold in the passenger car market and plans to mass-produce passenger electric vehicles at SsangYong's only Pyeongtaek auto plant.
Seeing this history, it is inevitable to recall the previous well-known Geely acquisition of Volvo phenomenon, when the industry all used "snake swallowing elephants" to mock Li Shufu, thinking that his Geely car simply did not have the ability to digest the huge Volvo car, but now Volvo has been successfully listed, completing the largest listing event in Sweden since 2000, who now does not sigh a sentence: "Li Shufu really made a lot of money"!
Now Edison's acquisition of Ssangyong is similar to the previous Geely acquisition of Volvo, after all, Ssangyong was once a well-known car manufacturer in South Korea, but this time "snake swallowing elephant", whether Edison can successfully digest like Geely, it will take time to prove.
The twists and turns of SsangYong cars
Unlike Volvo, the Ssangyong automobile system is larger and the loss is greater, and the current market environment is a problem for auto companies, self-protection is a problem, not to mention the revitalization of a traditional car company that has been losing money for a long time.
Briefly talk about the history of SsangYong Automobile, SsangYong Automobile was founded in the 1950s, formerly known as Hadong Huan Automobile Manufacturing Factory, mainly producing heavy-duty commercial vehicles and special-purpose vehicles, which was built on the basis of the famous Willis M38A off-road vehicle to create a military off-road vehicle, making Hadong-hwan Automobile Manufacturing Factory the originator of Korean off-road vehicles, it is also one of the earliest listed enterprises in South Korea. In 1993, SsangYong borrowed $1 billion to enter the luxury car market, but it was also this year that the Asian financial crisis broke out, the South Korean won depreciated sharply, and SsangYong's capital chain was also broken.
Subsequently, SsangYong Automobile also fell into the whirlpool of fate of being acquired.
In 2004, China SAIC Motor acquired a 48.9% stake in SsangYong Automobile, becoming the largest shareholder. However, after being acquired, the operation of SsangYong Automobile did not improve. By 2008, the subprime mortgage crisis in the United States had spread to South Korea. In mid-January 2009, SsangYong Automobile applied to the court to avoid bankruptcy, and SAIC's shareholding in it was gradually disassociated from the company.
It wasn't until mid-March 2011 that Mahindra & Mahindra, an Indian manufacturer of agricultural machinery and multifunctional sports models, announced that it had successfully acquired a 70% stake in South Korean car company SsangYong Motors, which has since become an Indian company.
This acquisition by Edison is the third acquisition of SsangYong Automobile and its third resurrection battle.
"We hope to build SsangYong Automobile into an electric vehicle brand that can compete with global auto companies such as Tesla, Volkswagen and General Motors." Edison CEO Kang Young-kwon has said.
Can it be revitalized? How to revitalize?
In fact, before being forced to go bankrupt, SsangYong Automobile also launched a "self-rescue plan". The self-help program includes two years of unpaid leave, two years of pay cuts and the suspension of currently valid benefits, an additional 20 percent reduction in executive salaries, a change from the collective agreement cycle to three years, efficient human operations and production responses, and the sale of idle assets (4 pieces of real estate).
However, after this series of operations, SsangYong Automobile still cannot avoid entering bankruptcy proceedings.
It can be seen that it is a very difficult thing to save the SsangYong car. Judging from the news that has come out now, after the completion of the acquisition link, the future direction of SsangYong Automobile is to turn to the pure electric vehicle market, hoping to revitalize itself with the current rapid development of the new energy market.
It is understood that SsangYong Automobile is currently developing the first pure electric vehicle model U100, which will be officially mass-produced in 2023.
It is worth mentioning that at the end of 2021, BYD Automobile and SsangYong Automobile signed a cooperation agreement, and the two sides will jointly develop key components for batteries and produce battery packs. With the deepening of cooperation, it is likely that the two sides will jointly develop battery packs and pure electric vehicle production platforms.
In the eyes of industry insiders, the cooperation between BYD and SSANG is to take what they need, with the rise of electric vehicles, battery supply has become a place where soldiers must compete, and the current situation of SsangYong Automobile forces it to 'start first' in the battle for battery companies. In this way, you can not only learn the technology of battery companies, but also enrich your own technical route with the help of different product technology solutions of battery companies.
According to Edison's plan, they set SsangYong Motors a goal of becoming profitable within three to five years, tripling annual car production to 300,000 units, including 150,000 electric vehicles and 50,000 hybrid vehicles.
Whether this resurrection battle of SsangYong Cars can be successful or not will take time to prove, and we look forward to seeing a brand new SSangYong car.