Ssangyong may face bankruptcy

By Shinhye Kang  |   2008-12-24  |     NEWSPAPER EDITION

SAIC Motor Corp, China's largest auto maker, may exit from Ssangyong Motor Co if the South Korean company's labor union doesn't accept a restructuring plan.

SAIC may pull out by early or mid-January, Jung Jang Seon, chairman of the Knowledge Economy Committee of South Korea's National Assembly, said. Jung met Ssangyong Chief Executive Officer Choi Hyung Tak yesterday, Bloomberg News said.

The Chinese auto maker's withdrawal would mean bankruptcy for Ssangyong, Choi said.

Ssangyong and SAIC both declined to comment.

Shanghai Automotive Industries Corp, SAIC's parent, bought 49 percent of Ssangyong for about US$500 million in 2004 following the collapse of the Daewoo Group. The stake was later increased and injected into Shanghai-listed SAIC.

Ssangyong fell 14 percent to 1,105 won (82 US cents) in Seoul trading, extending the drop for the year to 84 percent.

The auto maker temporarily suspended production from December 17 to reduce inventory. Ssangyong's sales plunged 27 percent in the first 11 months.