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At stake is how to be reborn as EV maker
A consortium led by electric bus maker Edison Motors has been selected as the preferred bidder to acquire SsangYong Motor. If Edison and its auditor, EY Hanyoung, complete two weeks of due diligence on SsangYong and sign a formal contract next month, it will become the fifth owner of the debt-ridden carmaker. SsangYong has taken a uniquely tumultuous path, even in Korea's industrial scene full of corporate ups and downs. The company is living proof of all the economic turbulence this country has experienced in recent decades, such as the 1997-98 Asian financial crisis, takeovers by foreign capital and intense labor-management conflicts.
Since its founding in 1954 as a small car shop, several managers, both Korean and foreign, have taken over the company. Finally, in 2009, SsangYong's unionized workers seized the plant in Pyeongtaek, some 80 kilometers south of Seoul, protesting scheduled mass layoffs. The 77 days of desperate resistance and the consequent brutal crackdown that ended with several deaths left a big social scar. The incident's aftereffects continued so long that it even became the motive of "Squid Game," an original Korean drama on Netflix emerging as a global hit.
Most Koreans might be wishing Edison Motors' acquisition of SsangYong Motor will provide the troubled carmaker with an opportunity for a restart. The upcoming acquisition will likely be SsangYong's last chance for transformation from a combustion engine carmaker to an electric vehicle manufacturer. SsangYong's possible revival under a Korean consortium also comes as good news for the nation's auto industry and job market. Had the debt-ridden carmaker failed to find a new owner, it would have led to the loss of 200,000 jobs.
However, the company and its potential new manager have a long way to go before returning to normalcy. SsangYong recorded an operating loss of 177.9 billion won ($151.9 million) in the first half of the year, forcing its accounting firm to give a disclaimer audit opinion. It also needs massive investment for normalization. When global carmakers turn to EVs, concerns are mounting whether an electric bus maker with annual sales of 90 billion won can meet the financing necessary. Nevertheless, we hope SsangYong, an excellent SUV maker, will retrofit itself with innovation for EVs.
