SsangYong Motor has confirmed its Indian parent Mahindra & Mahindra Ltd will inject KRW40bn (US$33m) to help it stay afloat, as the company continues to struggle under the impact of the global COVID19 coronavirus pandemic.
Earlier this year the Indian parent company said it was looking to directly inject KRW230bn (US$187m) of fresh capital into its struggling South Korean subsidiary over a three year period to help it reverse its slumping sales and mounting losses.
Mahindra had also asked minority shareholder Korean Development Bank (KDB) to provide a further KRW270m in loans and investment to Ssangyong to help fund the three year recovery plan.
Since then Mahindra & Mahindra’s board had voted against the investment plan as the impact of the global pandemic continued to escalate with the focus switching to avoiding bankruptcy.
At SsangYong’s extraordinary board meeting held on 10 April, Mahindra & Mahindra managing director Pawan Goenka formally proposed the lower cash injection plan which was duly approved by the subsidiary’s other directors.
A Ssangyong spokesperson said “the emergency funding clearly shows Mahindra remains committed to Ssangyong and dispels any market speculation that Mahindra plans to exit South Korea”.
Mahindra has also said it will help Ssangyong attract new investors for its assets while seeking other means to help the carmaker avoid a short term liquidity crisis.
Ssangyong’s first quarter 2020 global sales fell by 31% to 24,139 vehicles from 34,851 a year earlier.