BANGALORE, India — The Indian conglomerate Mahindra and Mahindra said it would not not invest further in its struggling South Korean unit SsangYong Motor, as automakers try to save cash in an effort to ride out the coronavirus crisis.
Mahindra also said it asked SsangYong to look for other means of funding as coronavirus-driven restrictions in India exacerbated a slowdown in demand, with Mahindra posting an 88 percent drop in March sales.
"After lengthy deliberation given the current and projected cash flows, the M&M Board took a decision that M&M will not be able to inject any fresh equity into SYMC and has urged SYMC to find alternate sources of funding," Mahindra said in a regulatory filing. Mahindra holds a 74.65 percent stake in SsangYong.
The announcement on Friday came less than two months after Mahindra said it would invest $423 million to make SsangYong profitable by 2022. SsangYong primarily builds SUVs, and last year sold 14,627 vehicles in Europe, a decline of 10 percent from 16,082 in 2018, according to data from JATO Dynamics.
SsangYong had planned to start selling a full-electric variant of the Korando SUV this year in Europe. It was supposed to be shown at the Geneva auto show last month, but the event was canceled due to coronavirus restrictions.
Mahindra said it would consider a special one-time infusion of up to 40 billion Korean won ($32.34 million) over the next three months to help SsangYong continue running its business while it seeks other sources of funding.
Mahindra's board has also started several measures to bolster its balance sheet in the face of the pandemic, it said. In addition to SsangYong, the company’s other mobility brands include Automobili Pininfarina, in which it has a controlling stake, and Peugeot Scooters, which it acquired in full from PSA Group in 2019.
Mahindra rescued Ssangyong from near-insolvency in 2010 but despite several attempts it has struggled to revive the SUV maker's fortunes. It had also weighed entering the U.S. auto market but ultimately decided to focus on China.
