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SsangYong Motor's potential buyer HAAH set to file for bankruptcy HAAH bankruptcy likely to have negative impact on carmaker's EV efforts

Translated by Kim So-in 공개 2021-07-22 07:46:58

이 기사는 2021년 07월 22일 07:44 더벨 유료페이지에 표출된 기사입니다.

U.S. vehicle importer HAAH Automotive Holdings, which has been considered one of the strong candidates to take over South Korea’s financially ailing carmaker SsangYong Motor, is set to file for bankruptcy, a move that could hinder the domestic carmaker’s electric vehicle (EV) push.

HAAH plans to file for bankruptcy soon due to worsening relations between the United States and China, according to industry sources and media reports on Wednesday. HAAH had planned to launch China-based Chery Automobile Company’s sports utility vehicle in the U.S.

HAAH's potential decision to fold its business could take a toll on SsangYong Motor. Industry sources said that HAAH, which has delayed its investment due to various reasons including fixed costs, is highly likely to cancel its investment in the automaker.

Other potential buyers include Korea-based electric bus manufacturer Edison Motors, small electric vehicle maker K Pop Motors, and a local private equity fund. But their financing capability is still in question.

SsangYong Motor will receive letters of intent by the end of July, while nothing has been submitted until now. EY Hanyoung, which is managing the sale process, is reportedly mulling over a variety of ways to sell the company.

SsangYong Motor recently said it will move out of Pyeongtaek campus, which has been a base for its combustion engine-powered vehicles for the past 42 years, to a new site to produce EVs.

The move came after Lee Dong-gull, chairman of Korea Development Bank (KDB), the main creditor of the cash-strapped automaker, last month said that SsangYong Motor should submit a viable revival plan that meets expectations of potential buyers.

The automaker's union and management reached an agreement over a restructuring plan, under which SsangYong Motor employees will take unpaid leave for two years from July.

SsangYong Motor’s decision to move out of Pyeongtaek campus and construction of new production facility is expected to accelerate its plan to focus on EVs. The carmaker aims to launch six eco-friendly models by 2026, including its first EV, the Korando Emotion, which targets the European market in October.

SsangYong Motor has been investing in research and development (R&D) amid the global automotive industry's EV transition. Although R&D expenses have been partially reduced as its sales have continued to decline since 2018, its investment in R&D has reportedly been maintained at the 5% level.

The carmaker spent 28.5 billion won ($25 million), or 5.3% of its revenue of 535.8 billion won, on R&D in the first quarter. (Reporting by Su-jin Yoo)
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