South Korean is keeping faith on India. They are listening to what Mr. Manmohan Singh, PM of India, requested them. Otherwise, no industrial labor union in S. Korea ever gave written commitment to stay away from strikes. Recently, labor union in SsangYong Motors has committed to support the restructuring plan, devised jointly by major stake holder M&M and SsangYong management. They have come out with a 100-step program which should turn the ailing SUV maker onto profit’s path.
SsangYong Motor is suffering from serious financial problems since late 1990s. Post-Daewoo, it took a real ugly turn, which went just out of hand when SAIC dumped the company in 2009 after lot of empty promises. M&M acquired major stake in early 2011 and infused $300 million. That gave SsangYong much needed breather in terms of financial creditworthiness. In fact, during 2010, banks had stopped lending the company. It’s debt to equity ratio went up to 179%.
Despite the successful turnaround, SsangYong is still not seeing any profit. That’s a new challenge before both the companies. However, they are working on it and officials are confident. Primary plans are,
1. To achieve better field rate. They have achieved 85% already from 50% few months back. Target within this fiscal is 95%. This will improve after-sales service and brand equity of this SUV maker.
2. They are planning to streamline product portfolio with two major SUVs – Korando and Rexton. M&M is trying to build up a joint R&D and production platform for both petrol and diesel variants.
3. As a next step, M&M is jointly developing hybrid transmission with SsangYong for future SUVs.
As SUV makers, M&M and SsangYong both have certain common objective. However, to make things profitable, they will need to take few harsh steps. This will need true union support and favorable global economy. We hope they get it.