SsangYong Motor faces an existential crisis once again due to the rising deficits and the outbreak of coronavirus. Photo courtesy of SsangYong Motor
SEOUL, May 18 (UPI) -- SsangYong Motor, a South Korean automaker owned by India's Mahindra & Mahindra, is facing an existential crisis amid snowballing deficits and the COVID-19 outbreak.
SsangYong said Monday the company's financial statements for the first quarter have been given a disclaimer of opinion by its independent auditor, Samjong KPMG. A disclaimer of opinion is a statement made by an auditor that has no opinion regarding a client's financial statements.
Samjong KPMG took issue with SsangYong's ability to continue on, since the carmaker netted a $157 million loss during the January-March period -- more than seven-fold from a year ago.
"We received a disclaimer of opinion. Unlike some media reports, however, we don't run the risks of being kicked out of the stock market," a SsangYong official told UPI News Korea.
"Based on various self-rescue efforts, we will try to get a proper evaluation from our auditor in the second quarter," the official added.
SsangYong may have struggled in recent years, but its current issues are largely rooted in the COVID-19 pandemic.
Its owner, Mahindra, initially planned to support SsangYong by injecting about $200 million. However, Mahindra canceled the investment plan in April because the virus outbreak continued to negatively impact the global automotive market.
Established in 1954 just after the Korean War halted in a cease-fire agreement, SsangYong's ownership has changed a few times, often when South Korea experienced economic turmoil.
Now-defunct Daewoo Group acquired the company in 1997, when South Korea suffered under the Asian Financial Crisis. In 2004, China's SAIC took over SsangYong, before ultimately selling out to Mahindra in 2011.