General Motors eyes Seoul's troubled Ssangyong Motor
General Motors eyes Seoul's troubled Ssangyong Motor
SEOUL (AFP): General Motors Corp. of the United States is considering taking an unspecified equity share in South Korea's debt-stricken Ssangyong Motor Co. in exchange for use of its local distribution network, reports said yesterday.
"We are in talks with GM (General Motors)," said a Ssangyong spokesman.
The South Korean jeep-specialist has said it would allow foreign concerns to buy up to 49 percent of the company in a bid to ease financial strains.
Negotiations between General Motors and Ssangyong would encompass the U.S. firm's push to grab Ssangyong's well- established distribution and dealership system in the lucrative South Korean auto market, newspapers here said.
The Ssangyong spokesman, however, declined to comment on the contents of the deal, adding that the talks were in an initial stage.
Buoyed by reports of the possible tie-up, Ssangyong Motor's share price soared by their daily permissible high of 360 won to close at 4,910 won, dealers said.
General Motors, which sold 1,279 passenger cars and trucks here last year, up from 1,003 units in 1995, has long wanted to strengthen its presence in Asia.
Its talks with Ssangyong were in line with the company's long- term goal to bolster the company's share in the promising Asian auto market from 4.8 percent last year to 10 percent, observers said.
In South Korea, the market share of total imported cars stood at a miniscule 1.51 percent or 25,148 units, according to the Korea Automobile Manufacturer's Association.
Foreign auto makers have complained that South Korea's import barriers are still high despite modest liberalizing moves in recent years.
Ssangyong Motor, affiliated to the country's seventh largest conglomerate Ssangyong Business Group, has suffered losses since 1992, including a US$262 million loss in 1996 on sales of $1.6 billion.
The auto firm's outstanding loans totaled three trillion won ($3.5 billion) and its operational losses amounted to 400 billion won in the past four years, said the company, which produces 160,000 vehicles annually.
Currently, Mercedes Benz AG of Germany has a three percent stake in Ssangyong along with a technical alliance and retains an option to increase its stake to 10 percent, the spokesman said.