Mahindra-SsangYong Deal Details Emerge
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According to Pawan Goenka, the president of Mahindra's automotive & farm equipment division, the MoU states that Mahindra is pretty much free to do as it feel necessary in terms of employment and long term strategy. There is no obligation to keep to personnel, nor to hire some more. The Indian carmaker does state however that the current contract with the unions is still in effect.
“M&M’s MoU with SsangYong honours the current wage agreement that the company has with the unions,” Goenka was quoted as saying by indiacar.com. “We will hope to grow employment as the volume grows though we have no specific commitments.”
The financial terms of the deal have still not been announced, but estimates are that the deal, which is expected to close in November, would cost Mahindra in between $400 million and $500 million. According to sources, about five percent of that money has already been paid.
The goal Mahindra is pursuing with this deal is to strengthen its position in the SUV sector of the industry, as well as gaining access to this segment on some markets it is not currently present in, like Europe, Russia, South America and the US.
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comments written so far
On 8 September 2010 at 01:44 UTC, Racey said:
I hope they are not going down the same path as the Shanghai Motor Group.
On 9 September 2010 at 19:21 UTC, SR said:
So what's so bad about the deal - after all "Hiring depends on the performance of the brand"? Why should any company commit to retaining staff if the company continues to take in water in the way SsangYong has over the last few years. Blame management for choosing such a $hitty partner like the Chinese SAIC in the first place - thats what got them here.
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