Ssangyong files for bankruptcy, how will this affect Berjaya’s plan for Malaysia?

Ssangyong Motor, which no longer has a presence in Malaysia but is sold in the Philippines under Ssangyong Berjaya Motor Philippines Inc, has filed for bankruptcy. This is the second time the Korean automaker went under with the first being in 2009.

According to Forbes, the Korean car manufacturer missed 150 billion won (RM 550 million) in repayments to the main creditor, the Korea Development Bank (KDB) along with other foreign financial institutions.

In a statement, Ssangyong Motor decided to “file for court receivership based on the belief that the company will be gravely affected if we pay back all outstanding debt.”

Insiders have told the financial media that filing for bankruptcy could see Ssangyong laying off 20 percent of its workforce in return for financial assistance to pay its salaries and utility bills.

Even though Ssangyong is currently owned by the Indian conglomerate, Mahindra & Mahindra, things haven’t been rosy for the fourth largest Korean automaker in recent years.

While its current line-up looks prettier than before, Ssangyong has failed to gain a profit for the past 15 years. It didn’t help that its Indian owners have stopped investing in them and are looking to offload the troubled Korean brand to a new owner.

Korean media have speculated that HAAH Automotive Holdings, a California-based company that deals in vehicle imports to the US, is interested in investing in Ssangyong.

Ssangyong Motor comes with a very troublesome history. It was one of the oldest car manufacturers in Korea, having established in 1954 as Dong-A Motor. Daewoo later bought over the company in 1997 before its dramatic collapse forced the brand to be sold to Chinese carmaker SAIC in 2004.

Under the Chinese, Ssangyong went through a messy relationship involving multi-million-dollar losses, worker strikes, a receivership, and accusations of plagiarism. It was eventually sold off to Mahindra in 2011 for $463.6 million (RM 1.88 billion).

Meanwhile, closer to home, the Ssangyong brand could return to Malaysia, possibly under Bermaz. Bermaz is affiliated with Ssangyong Berjaya Motor Phillipines Inc, which clinched distributorship rights for the Korean brand in the Filipino market in 2015.

It's also worth mentioning that another affiliate, Berjaya Auto Asia distributes Changan commercial vehicles in the Philippines under the Kaicene brand.

We last reported that at least one European brand and two Asian brands are in talks with Berjaya Auto and Bermaz in Malaysia. We now know that the European brand is Peugeot but we think that Ssangyong could be one of those Asian brands.

No doubt, this bankruptcy news will put some damper on the Korean brand’s Malaysian return.