Operating Losses Expand Despite Fixed Cost Reduction
SsangYong Motor Co., part of India's Mahindra Group, announced on July 27 that it sold 49,419 vehicles, posted revenue of 1,356.3 billion won, an operating loss of 215.8 billion won, and a net loss of 202.4 billion won in the first half of 2020.
Despite its efforts to reduce fixed costs through strong self-rescue plans such as reducing welfare and labor costs, its H1 2020 deficit increased compared to H1 2019 due to the decline in exports and production disruption caused by the coronavirus breakout.
The company’s sales and revenue declined 29.7% and 27.4%, respectively, over the same period last year, as production disruptions continued due to the shortage in imported parts supply amid the coronavirus pandemic.
However, compared to the previous quarter, Q2 sales have been on the recovery track with a rise of 4.7%, based on the domestic sales uptrend for two consecutive months thanks to the release of upgraded models.
Despite the reduction in fixed costs, including labor costs (down 60 billion won, -19.5% YoY) and other fixed costs (down 16 billion won, -21.3% YoY), as part of the company’s self-rescue plan, its H1 operating loss has expanded due to the temporary revenue decrease and sales allowances increase amid intensified competition.
The company expects that the fixed cost reduction effects through the self-rescue efforts will be maximized and contribute to improving the company’s financial structure in the post-coronavirus era when the market recovers and sales get back on track.
In addition, its H1 net losses were at the same level as the first quarter thanks to the gain on the disposition of non-core assets carried out as part of asset restructuring in the second quarter.
Currently, SsangYong Motor is preemptively responding to the resumption of economic activities in Europe including an online launch event on YouTube. The company is also making every effort to expand global sales including signing a contract with China’s SONGUO Motors for Tivoli KD sales.
The company is also accelerating the launch of upgraded models including the face-lifted G4 Rexton and the long-bodied Tivoli in the second half of this year and conducting a final quality inspection before launching Korea’s first sub-mid- sized electric SUV early next year.
SsangYong Motor said, “We are committed to finding ways to cooperate with various stakeholders to secure our future competitiveness by attracting new investors along with the current management reform plan. Through aggressive marketing strategies for existing models and new products to be released in the second half this year, we will increase sales volume and improve profits.”