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.