Court protection for Ssangyong

Struggling South Korean carmaker hopes to avoid bankruptcy as sales plunge.

    Court protection gives Ssangyong a breathing space but does not guarantee its survival [Reuters]

    Speculation has been mounting that Ssangyong, which employs 7,100 workers, could become South Korea's first big corporate casualty of the global recession.

    The company is majority-owned by Shanghai Automotive Industry Corp. (SAIC), one of China's largest vehicle manufacturers.

    Slowdown

    Ssangyong is much smaller than other South Korean carmakers such as Hyundai and Kia Motors, although they too have been hit hard by the slowdown with demand for cars sliding in key export markets such as the US and Europe.

    The maker of the Rexton sport utility vehicle has posted four straight quarters of losses, but analysts say any turnaround will likely be tough given current market conditions.

    The company relies heavily on less fuel efficient SUVs and luxury sedans, sales of which have nose-dived on the back of soaring fuel prices last year and the fallout from the credit crunch.

    Ssangyong said last month its board had put forward a number of measures to cut costs such as seeking voluntary retirement and wage cuts for the next two years, among others steps.

    SOURCE: Agencies


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