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Mahindra Fails to Find a Buyer for SsangYong Motor, Courts Takes Custody of SUV Maker

SsangYong Rexton. (Image source: SsangYong)

SsangYong Rexton. (Image source: SsangYong)

The rehabilitation plan comes as the last resort for the manufacturer to prove that it can still be commercially successful.

Mahindra automobile acquired SsangYong Motor in the year 2010 to turn around its fortunes. However, the move didn't turn out as expected by the company with Ssang Motors now filing for bankruptcy and is now under the receivership of court till it finds a buyer. South Korean automobile manufacturer, SsangYong was already witnessing significant losses when Mahindra took over it and gradually turned out to be a liability for the Maharashtra headquartered automobile firm.

Mahindra in April 2020 finally decided to not invest in SsangYong and owing to this, the South Korean company had to file bankruptcy with their outstanding loan touching a whopping Rs 680 crores, as mentioned by cartoq.com. The launched Rexton didn’t receive good response by the prospective SUV lovers in India. Despite that, Mahindra continued to pour in investments for SsangYong without any significant Return on Investment (ROI).

The manufacturer is also mulling receivership after failing to pay its loans and plans to submit a rehabilitation plan to the court in a time period of two months. The rehabilitation plan comes as the last resort for the manufacturer to prove that it can still be commercially successful.

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SsangYong in the year 2016 registered a profit of 58 billion Korean Won but things took an ugly turn in the year 2017, when the vehicle manufacturer witnessed a net loss of 66 billion Won. Subsequently in the year 2018, the company reported a loss of 62 billion Won which further soared to 341 billion Won in the year 2019.

The year 2020 was devastating for global businesses with the automobile sector being no exception. SsangYong Motors in the Covid era garnered a massive loss of Rs 2,100 crores (309 billion won) and resorted to cost-cutting measures to reduce losses.

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first published:April 17, 2021, 14:29 IST