Mahindra Group To Stop Investing In Ailing SsangYong Brand

Published June 16, 2020
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It is actively looking for a new investor and is ready let go of complete ownership of Ssangyong

After facing severe losses, the Mahindra Group has announced its decision to stop investing in the SsangYong brand which was struggling to generate revenue for the company. The Mahindra Group is now actively looking for a new investor and is ready to forego complete ownership of the South Korean brand.

Mahindra made this important decision while announcing its operating profits for FY 2020 which stood at Rs 5,402 crore, 23 per cent down when compared to the previous year. The reason for such a steep loss is low volumes, BS6 transition and COVID-19 impact. The loss-making Ssangyong brand was also providing severe headwinds for profit driveability.

Mahindra currently has a 75 per cent stake in the South Korean company and has stopped infusing fresh capital in it. Once a new investor comes in, the carmaker could slowly start diluting its stake in the company. It has also announced that it’s willing to let go of complete ownership.

What does this mean for the older SsangYong Rexton as well as the platform shared XUV300 and Alturas G4 customers? Rexton owners won’t face any issues as manufacturers are required to supply spare parts even after a vehicle has been discontinued, while the other two are already Mahindra-branded products. Moreover, given the numerous projects that Mahindra and SsangYong have worked on, we expect them to continue collaborating in the future even if the latter has a new parent company.