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SsangYong Motors mulls self-rescue plans amid financial woes

SsangYong Motors, the South Korean unit of India’s Mahindra & Mahindra, is seeking measures to revive its business amid dwindling sales and liquidity woes, according to the company Tuesday.

According to a letter sent to employees, SsangYong Motor CEO Yea Byung-tae said the company would conduct an organizational reshuffle in September to normalize business. The company will also reduce 10 to 20 percent of its senior executive workforce in the annual reshuffle slated for February, as well as slash their salaries, as part of cost-cutting measures. 

As of this year, there are 43 senior executives at SsangYong Motors, excluding outside directors.

Yea also suggested introducing sabbatical leave for employees. 

(Ssangyong Motors)
(Ssangyong Motors)

Meanwhile, industry sources said SsangYong is considering the joint purchase of auto parts for its flagship compact SUV Tivoli, in cooperation with Mahindra. 

Since the fourth quarter of 2016, the automaker has reported an operating loss for 10th consecutive quarters. Its accumulated operating loss came in at 1 trillion won from 2008 to 2018. 

In the first half of this year, SsangYong Motors reported an operating loss of 76.9 billion won ($63 million), a twofold jump from 38.7 billion won the previous year. 

Its domestic and global sales have also significantly fallen in recent months, recording sales of 10,786 units of vehicles in July, down 16 percent on-year. Sales in June also declined 17.5 percent from the previous year. 

According to the industry, SsangYong Motors’ ratio of cost of sales is higher than that of the country’s largest automaker, Hyundai Motor. For the past decade, SsangYong has posted an average 80 percent ratio of cost of sales, far less profitable compared to Hyundai Motor’s 70 percent on average. 

By Kim Da-sol (