SsangYong Motor’s labor and management agreed to reduce labor cost on Dec. 19. The ailing automaker’s labor and management have been implementing voluntary cost-cutting measures since September in their bid to draw support from Korea Development Bank, its main creditor bank, and India’s Mahindra Group, the largest shareholder of the company.
“The latest agreement followed the September agreement to reduce employee benefits to secure the company’s future competitiveness,” SsangYong Motor announced. The highlights of the Dec. 19 agreement included employees’ handing back of 200 percent bonuses, performance-based bonuses and incentives based on production performance. SsangYong Motor believes that this and other measures can save the carmaker about 100 billion won in labor cost a year.
“We will seek ways to cooperate with various stakeholders including the largest shareholder Mahindra to raise funds and overcome limitations in R&D activities due to its poor financial conditions,” SsangYong Motor added.
SsangYong Motor's sluggish sales have caused a severe shortage of R&D funds, halting its efforts to develop eco-friendly cars and future cars. SsangYong Motor is reported to be considering asking Korea Development Bank for mid- to long-term financial support in order to secure R&D funds.
"Mahindra Group is also studying various support measures to ensure that its Korean subsidiary makes necessary investment in R&D," a SsangYong Motor official said. SsangYong will also minimize investment risks and secure cost competitiveness by sharing platforms with Mahindra and jointly developing new cars.