2021.02.02.  35,759 Read What Happens When HAAH Takes Over Ssangyong's Falling Down AutoPost 51

2021.02.02. 35,759 Read What Happens When HAAH Takes Over Ssangyong’s Falling Down AutoPost 51

(Photo = Report from Naver Namcha Cafe’Dabin’)

Have you ever heard of a company called’HAAH Automotive Holdings’, an American company that recently launched to acquire Ssangyong Motors? Even if there is a lot of interest in automobiles, the name of the company is most likely the first time people hear it.

The company is a startup company with only 20 billion won in annual sales. Many people expressed concern over the news that such a company will acquire a company with a debt of 1.6 trillion won and a capital erosion rate that has already exceeded 100%. What is the inside of HAAH Automotive Holdings? Is this company really capable of acquiring Ssangyong? If the acquisition is successful, what will happen to the future scenario? Today’s AutoPost Issue Plus takes a step further into the story of Ssangyong Motor in crisis.

Written Joonyoung Park Editor

Participating in a paid-in capital increase worth 280 billion won
Hoping to become a major shareholder
HAAH Automotive Holdings

A company that wants to acquire Ssangyong Motor, which has been through long and difficult days, appeared. It is said that’HAAH Automotive Holdings’, an American automobile retailer, is the main character, and Ssangyong Motor will enter into the P plan at the same time as signing a new investment contract.

The P plan is a system in which a rehabilitation plan is prepared and then legal management begins. New funding is provided after debt adjustment is made, and it is one of the ways to shorten the recovery period and achieve rapid normalization. HAAH Automotive is a form in which Mahindra, the current major shareholder of Ssangyong Motors, lowers its stake with potatoes and participates in a capital increase of 280 billion won. If implemented as planned, HAAH will own 51% of Ssangyong Motor.

(Photo = Tomato News)

A company with sales of 23 billion won
Can Ssangyong Motors be acquired?

However, when the news that HAAH Automotive Holdings will take over Ssangyong Motor, domestic netizens, including the industry, expressed concern. This is because the company to be acquired is a startup with only 23 billion won in annual sales, and at the same time, sales decreased by a tenth of last year. In the first place, doubts arise as to whether the company has the capability to acquire Ssangyong Motor.

Currently, HAAH Automotive is known to have agreed to the P plan with conditional support from Korea Development Bank. The size of the Korea Development Bank’s investment is almost the same as that of HAAH’s investment. The company plans to use the funds invested by HAAH Automotive as funds for new car development and future strategies, and the KDB subsidy as the company’s operating funds.

The news that the source of the funds is China
Netizens expressing concern

How can a company with annual sales of 23 billion won invest 280 billion won? Recently, there was news that the source of funding for HAAH Automotive is Cherry Motors in China. Cherry Motors directly explained that it was not about rumors about having a stake in HAAH or making additional investments, but suspicions are still being raised.

It seems that HAAH has a strategic relationship with Cherry Motors, such as producing SUVs released by Cherry Motors in the United States and entering into sales plans recently. When the news that China was the source of enormous capital came, many netizens expressed concern. If you think about the Shanghai train incident in the past, it is worth it.

(Photo = Seoul Economic Daily TV)

There are many challenges,
If you take over

So, can HAAH Automotive Holdings really take over Ssangyong? There are many challenges. First of all, the Korea Development Bank’s position is that in order to provide funding, a rehabilitation plan that secures future business potential must be presented. They maintained the position that the Ssangyong Motors union should certainly accept conditions such as prohibition of industrial action before turning into a surplus and extending the validity period of collective agreements from one to three years.

If things go well and the acquisition process is finished, Ssangyong Motor’s rush to turn off the lights is a success. It is possible to solve internal problems of the company based on the supported capital, and because there is cash to devote to the development of new cars, it will be possible to operate the company.

Possibility to enter the US market
It is unclear whether it will become a reality

There is also news that HAAH Automotive will be able to enter the US market if it acquires Ssangyong Motor. However, it is unclear whether this will become a reality. First of all, HAAH Automotive Holdings has only 30 dealership distribution networks in the United States. Since the annual sales are about 23 billion won, it is almost impossible to sell Ssangyong by entering the US at this level.

At 23 billion won, it is equivalent to the annual sales of one Hyundai-Kia Motors agency in Seoul. Also, even if Ssangyong Motors enters the US market through HAAH Automotive, it is unknown whether cars that are not sold properly even in Korea will work in the North American market. In the US market, where traditional pickup trucks are lined up, Rexton Sports can’t beat it.

The nightmare of the Shanghai train will be recreated.
There is also a possibility

If Cherry Motors, which is suspected to be the source of HAAH automotive capital, begins to intervene, there is a possibility that the Shanghai train nightmare will be reproduced. There were also many opinions that it was suspicious that a company that seemed to be incapable of acquiring Ssangyong Motor was going to take over with arms.

As a result, netizens said, “Take your hands off the Korea Development Bank immediately and leave it to the market principle”, “How long will the life-span cure?” Responses such as, “If Chinese capital is put in, only technology will be eaten.”

(Photo = Report from Naver Namcha Cafe’Dabin’)

You can turn off the fire right now,
Because sustainability is zero

With the acquisition of Ssangyong Motors by HAAH Automotive Holdings, management stabilization may come for a while, but the biggest problem is, in fact, how long this will last. It is also for this reason that many netizens argue, “We shouldn’t help Ssangyong anymore.”

It is difficult to get Ssangyong Motor, which is in the midst of a 16th consecutive quarter of deficit, erosion of capital, and delisting, to enter the normal track, unless it has at least three to five new cars successively hitting the box office. Looking at Ssangyong Motor’s current technology and plans to launch new cars, it is expected that there will be no other cars that deserve to shake the market except for the Korando E-motion, which will lead to continuous losses. It is a story that even if you help out and start a company, you will not be able to stand up properly.

(Photo = Newspim)

If you really want to recover
Corporate internal structure reform comes first.

If Ssangyong really hopes to stand up again, the company’s internal structural reform comes first. For the unions who have been working for a company for more than 10 years and devoting their passion to it, it may be a good news, but for the company to thrive, everyone must work together to restructure and adjust wages.

The average annual salary of companies that are continuing to suffer losses from sluggish sales is similar to that of Hyundai Motor, the number one automobile company in Korea, so it will be difficult for the company to stand up without restructuring.

(Photo = SBS News)

Of the past Korean GM situation
The need to reflect on lessons

It is necessary to reflect on the lessons learned from the Korean GM’s Gunsan plant in the past. At this time, too, the Korea Development Bank invested a huge amount of money, but in the end, GM headquarters in the United States withdrew from the Gunsan plant, and after acquiring GM Korea in 2002, the amount recovered with an investment of 1 trillion won earned more than 3 trillion won.

At the time, the political circles and the labor community had strong opposition, saying, “I condemn the predatory capital, GM,” and “GM should spit out the stolen money.” In the end, it was GM, who had already turned into a foreign company, that benefited from putting taxes to save the company alive. This is also the reason why negative public opinion about investing public funds in Ssangyong Motor is dominant. It was Auto Post Issue Plus.


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