SEOUL, June 1 (Korea Bizwire) — SsangYong Motor Co., the South Korean unit of Indian carmaker Mahindra & Mahindra Ltd., said Monday it has sold a service center to secure capital amid a liquidity crunch worsened by the new coronavirus.
SsangYong Motor sold a local after-sales service center in Guro, Seoul, for 180 billion won (US$147 million) to local asset management firm PIA, the company said in a statement.
“The sale of the non-core asset is part of the company’s efforts to improve its financial status and secure funds for investments,” it said without elaborating.
The company said it will use the Guro service center for the next three years in a sale and lease-back deal.
SsangYong Motor has struggled with declining sales due to a lack of new models and its parent firm’s recent decision not to inject fresh capital into the Korean unit.
Its Indian parent Mahindra said early this year it will inject 230 billion won into SsangYong for the next three years after obtaining approval from its board.
But Mahindra’s board voted against the investment plan in April, as the spreading COVID-19 outbreak continues to affect vehicle sales in global markets.
Instead of the proposed 230 billion won, Mahindra said it would consider a “special one-time infusion” of up to 40 billion won over the next three months to help SsangYong continue operations.
But analysts said the infusion could be just a quick-fix solution for the cash-strapped carmaker. They said the fate of SsangYong hangs in the balance should there not be a rebound in vehicle sales.
From January to April, SsangYong’s vehicle sales fell 33 percent to 30,952 units from 45,908 in the year-ago period.
SsangYong’s lineup consists of the flagship G4 Rexton sport utility vehicle, as well as the Tivoli, Korando and Rexton Sports SUVs.
In 2011, Mahindra & Mahindra acquired a 70 percent stake in SsangYong Motor for 523 billion won. Mahindra currently owns a 74.65 percent stake in the SUV-focused carmaker.