SsangYong Motor reports 59 billion won net loss in third quarterSsangYong Motor, the Korean unit of Indian carmaker Mahindra & Mahindra, said Monday its third-quarter net losses narrowed from a year earlier due to self-help measures.
SsangYong Motor's net losses narrowed to 59.29 billion won ($50 million) for the three months ended in September from 102.44 billion won in the year-ago period, the company said in a statement.
"An extended global chip shortage affected vehicle production and sales but employees' acceptance of pay cuts and unpaid leave helped reduce the quarterly net loss," it said.
The SUV-focused carmaker's operating losses narrowed to 60.07 billion won in the third quarter from 93.19 billion won a year ago.
Sales fell 11 percent to 629.76 billion won from 705.7 billion won during the same period.
From January to September, the company reported a reduced net loss of 239.83 billion won from a loss of 304.82 billion won in the same period of last year.
A local consortium led by Edison Motors is in the process of acquiring the debt-laden carmaker after it was selected as the preferred bidder last month. The Edison consortium submitted the acquisition bid of 310 billion won for SsangYong and began two weeks of due diligence on the carmaker on Nov. 10.
It is estimated that up to 1 trillion won is needed to take over SsangYong and then pay its debts. Edison Motors has said it will set up a special purpose company to raise between 800 billion won and 1 trillion won to acquire SsangYong and increase capital starting next year by issuing new shares to achieve a turnaround within three to five years.
The electric bus and truck maker said it aims to transform the SUV-focused SsangYong into an EV-focused carmaker in the next decade in line with changes in the automobile market. It plans to produce 10 new EV models, including the Smart S, by 2022, 20 by 2025 and 30 by 2030.
In April, SsangYong was placed under court receivership for the second time after undergoing the same process a decade earlier. Its Indian parent Mahindra & Mahindra failed to attract an investor due to the pandemic and its worsening financial status.
Court receivership is one step short of bankruptcy in Korea's legal system. In receivership, the court will decide whether and how to revive the company.
China-based SAIC Motor acquired a 51 percent stake in SsangYong in 2004 but relinquished its control of the carmaker in 2009 in the wake of the 2008-09 global financial crisis.
In 2011, Mahindra acquired a 70 percent stake in SsangYong for 523 billion won and now holds a 74.65 percent stake in the carmaker.
In the January-October period, sales fell 22 percent to 66,603 autos from 84,904 during the same period of last year.
In self-help measures, SsangYong's 4,700 employees began to take two-year unpaid leave in rotation on July 12 while accepting an extension of a cut in wages and suspended welfare benefits until June 2023.
The company plans to sell its Pyeongtaek, Gyeonggi, plant in three to five years and build a new factory in the same city to focus on electric vehicles.