SAIC Waves Money, SsangYong Still Under Pressure

Despite the report issued before Christmas claiming that SaangYong has closed its factories and filed for bankruptcy, the South Korean automaker is still struggling to resolve its financial problems, asking the local government to provide support. Although majority owner SAIC initially said it won't invest more money in the carmaker, the state-owned Korea Development Bank urged the company to bring 120 billion won ($93 million) in cash to SsangYong, according to a report by Gasgoo. Moreover, bank representatives explained that they would provide additional loans to the South Korean carmaker but only if SAIC brings it on the floating line.

"At present SAIC and Ssangyong are actively seeking support from the Korean government and banks," SAIC explained in a statement, without mentioning wether the company plans to inject more money into Ssangyong even without government aid.

However, after a few days, SAIC decided to give financial support to its dying carmaker, with media reports claiming that the Chinese owner has already approved a 25.9 billion won ($19.89 million) in funds. "We hope that this project will help Ssangyong ease some of the short-term pressure on its cash flow," SAIC said in a statement according to the aforementioned source.

But even so, problems are far from being over as SsangYong employees expect the money to be used for their salaries which total no less than 29 billion won, the South Korean publication Maeil Business wrote. In addition, workers may also disagree with SAIC's restructuring plans which could cause even more disputes inside the company.

SsangYong's sales adopted a descending trend since mid-2008, with the apogee reached in November when only 3,835 vehicles were sold. This means sales were down 63 percent when compared to the same month of the previous year, according to figures provided by Gasgoo.