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SsangYong Motor posts record Q1 loss amid virus woes

Autos 19:09 May 15, 2020

SEOUL, May 15 (Yonhap) -- SsangYong Motor Co. reported on Friday that its net loss sharply widened in the first quarter compared to a year earlier, marking the 13th consecutive quarter in the red, amid growing worries over the coronavirus outbreak.

Net losses for the January-March quarter deepened to 193.54 billion won (US$157 million) from 26.12 billion won in the year-ago period, the company said in a statement.

"Disrupted production by the coronavirus outbreak and weaker sales amid virus fears cut into the bottom line," the statement said.

Operating losses also deepened to 98.63 billion won in the first quarter from 27.80 billion won a year ago. Sales fell 30 percent to 649.19 billion won from 933.21 billion won during the same period.

This photo taken on April 5, 2020, shows SsangYong Motor's plant in Pyeongtaek, 70 kilometers south of Seoul. (Yonhap)

The South Korean unit of Indian carmaker Mahindra & Mahindra Ltd. has struggled with declining sales due to a lack of new models and the parent firm's recent decision not to inject fresh capital into the Korean unit.

Mahindra said early this year it will inject 230 billion won into SsangYong for the following three years after obtaining approval from its board.

But Mahindra's board voted against the investment plan last month as the spreading COVID-19 outbreak continues to affect vehicle sales in global markets.

Instead of the proposed 230 billion won, Mahindra said it would consider a "special one-time infusion" of up to 40 billion won over the next three months to help SsangYong continue operations.

But analysts said the special infusion could be just a quick-fix solution for the cash-strapped carmaker. They said the fate of SsangYong hangs in the balance should there not be a rebound in vehicle sales.

From January to April, sales fell 33 percent to 30,952 units from 45,908 in the same period a year ago.

SsangYong's lineup consists of the flagship G4 Rexton, as well as the Tivoli, Korando and Rexton Sports.

In 2011, Mahindra & Mahindra acquired a 70 percent stake in SsangYong Motor for 523 billion won. Mahindra currently owns a 74.65 percent stake in the SUV-focused carmaker.

kyongae.choi@yna.co.kr
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