Ssangyong hit unlikely to deter China carmakers

Cash-strapped South Korean automaker Ssangyong Motor proposed a capital writedown on Tuesday that would slash the stake of SAIC Motor, its Chinese majority shareholder.

Ssangyong, which makes the Rexton sport utility vehicle and was put under court receivership in February, said it put its plan to a Seoul court, seeking an initial 5-for-1 writedown of SAIC's shareholding, with a further writedown planned.

Analysts said that despite this soured investment, Chinese automakers would still be interested in buying foreign brands.

"SAIC failed with Ssangyong because it's an SUV maker, but SAIC made a success with MG Rover as it made sedans," said Song Sang-hoon, an auto analyst at Kyobo Securities. "So, if they can use other makers' technologies, they will still buy them."

SAIC has launched a mid-range sedan, the Roewe, developed from technologies acquired from defunct UK car maker MG Rover.

Chinese carmakers are venturing on to the global stage with interest in Western brands from Volvo to Hummer and Saab, but there are doubts their inexperienced companies can manage the transformation such deals would bring.

Still, automakers in the world's top car market are likely to eye Western brands not just for the technologies they can bring.

"Ssangyong is not a global brand. But Saab and Hummer are a different story for Chinese makers," said Cho Soo-hong, an analyst at Hyundai Securities.