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SsangYong on track, says distributor

Saviour: The SsangYong C200 concept car is likely to lead the Korean company out of hardship.

Ex-Hyundai man appointed to steer SsangYong through restructuring

27 May 2009

SSANGYONG’S Australian distributor says it is confident the Korean car-maker will emerge from its problems leaner and stronger, and with an attractive new product range, starting with the C200.

The Korean company has been in court-administered receivership for the past few months where it has been protected from its creditors while it restructures its operations and cuts costs.

A viability plan presented by the receiver – former Hyundai executive Lee Yoo-Il – was accepted by the court late last week, clearing the way for a crucial government-backed loan of about $US280 million ($A357 million) from the Korean Development Bank (KDB), one of SsangYong’s biggest creditors.

“Last Friday was a big step forward,” said Rob Dommerson, the chief executive of SsangYong and Peugeot importer Sime Darby Pty Ltd.

“The court accepted the viability report and virtually that means the Korean government will support the company in a restructuring process,” Mr Dommerson said.

 center imageLeft: Sime Darby's Rob Dommerson.

That greatly increased SsangYong’s chances of receiving the KDB loan, although Mr Dommerson said the restructuring plan still needed to be finalised.

He said several positive indicators suggested SsangYong was expected to emerge from the receivership, which is like the US Chapter 11 bankruptcy process or an Australian administration.

He said the receiver Mr Yoo-Il, was a former president of Hyundai’s overseas division.

“In fact, that gentleman actually helped set up Hyundai in Australia with Alan Bond. He knows Australia very well and is very passionate about it,” Mr Dommerson said.

“We have had some good meetings with him.”

Mr Dommerson said Mr Lee “was making things happen” and he believes it was no co-incidence that an experienced automotive executive was installed as SsangYong’s receiver or legal trustee.

“He’s been tapped on the shoulder and given the opportunity and the challenge to turn SsangYong around. And, as he himself said, ‘I wouldn’t do this if I didn’t think it was going to work’.”

Mr Dommerson was encouraged by the amount of activity happening at SsangYong.

“We are not just waiting for the court and the formal things, we are seeing product plans being put in place, vehicles at motor shows, changes in management and some really creative things happening,” he said.

“The frustration I think, for him and for us and the dealers, is it could happen faster. That would be nice.”

Mr Dommerson said Mr Lee had been frank with the union, which went on strike last Friday when the court approved the viability plan put forward by Mr Lee.

“He told them this was a very difficult situation given the global financial crisis and we are trying to save two thirds of the jobs. And I think at the end of the day they just have to accept that.”

Mr Dommerson said the Korean unions tended to be “quite difficult” to reach agreement with because the leaders must be seen to be strong and aggressive in their campaigns.

“I think the difficult thing for the union is they are facing either a one-third reduction in the workforce or a 100 per cent reduction in the workforce. So it’s a bit hard to negotiate from that position,” he said.

Mr Dommerson said Mr Lee had also pointed out that if SsangYong went forward and put new products into the market, there was a good chance the retrenched workers would be rehired again.

Mr Dommerson would not divulge any of SsangYong’s forward production plans, but pointed out that sales were expected to improve from later this year.

“They have the C200 in place for later this year, thankfully with good diesel engines and a diesel/electric hybrid to follow in right-hand drive for us. And they are talking seriously about passenger cars and upgrading their existing product range.

“Clearly, SsangYong has some good intellectual property. They have developed those engines and they realise, to get back on track again, they need to get back on to the front foot and get hybrids into the market as soon as they can.

“If they can do that they will be on the front foot pretty quickly.

“There is not too much wrong with the existing product range. We are pretty happy with the Kyron and Rexton and the ute.”

Mr Dommerson said 80 SsangYongs rolled out of Australian dealerships in April, 50 of them the $24,990 all-wheel-drive diesel Ute, and that Sime Darby hoped to sell more in May.

He said the global outlook for SsangYong was also interesting.

“When you look at the global situation at the moment, the Americans are in a lot of trouble and are questionable about the product they are producing at the moment.

“The Europeans are good, but they are rather expensive, and the Koreans, with the exchange rate to the Australian dollar, and the value product they’ve got – and I include Hyundai and Kia as well – they have got an excellent opportunity in the next 12 months or more to capitalise on that.”

Read more:

SsangYong gets green light to rebuild

SsangYong back into gear

The Road to Recovery podcast series

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