Unionized workers at troubled Ssangyong Motor Co. said yesterday they plan to sue their Chinese parent, Shanghai Automotive Industry Corp. (SAIC), for what they call SAIC's mismanagement of the company.
The planned lawsuit, to be filed this week in South Korea, will seek an unspecified amount in compensation for damages and SAIC's cancellation of its 51-percent stake in Ssangyong, the union said.
Ssangyong entered court receivership last month after it was abandoned by SAIC, China's largest automaker, amid collapsing sales and dwindling cash reserves.
The South Korean carmaker is required to meet its creditors and a bankruptcy judge on May 22 to review its plan to turn the company around. If the plan is deemed unfeasible, the company will be liquidated.
"The lawsuit would allow Ssangyong Motor to fully sever ties with SAIC," said a union official.
"In addition, we expect the lawsuit to force SAIC to take legal responsibility for its management failure," the official said.
In a statement, the 5,200-worker union said it has secured enough shares to take legal action.
The union also accused SAIC of stealing technology from Ssangyong. Last year, South Korean prosecutors raided Ssangyong's research facilities seeking evidence of the alleged technology leaks.
On March 11, Lee Dae-soon, an attorney representing the Ssangyong union in the planned lawsuit, said, "A focal point in the lawsuit will be whether Shanghai Auto took the technology at an unreasonable price, exploiting its prominent position."
Officials with Ssangyong's public relations team in Seoul or SAIC were not immediately available for comment.
Ssangyong is South Korea's first big corporate casualty of the global economic crisis, which has taken the wind out of demand for new vehicles and tightened credit conditions.
The carmaker has an annual production capacity of 200,000 vehicles. It posted a net loss of 709.7 billion won (US$511 million) in 2008 on sales of 2.5 trillion won, down 20 per cent from a year earlier.
Last month, Ssangyong's vehicle sales plummeted 69.4 per cent to 2,369 units.
SAIC bought the majority stake in Ssangyong in 2004, marking the first direct investment by a Chinese company.
Gasgoo not only offers timely news and profound insight about China auto industry, but also help with business connection and expansion for suppliers and purchasers via multiple channels and methods. Buyer service: buyer-support@gasgoo.com Seller Service: seller-support@gasgoo.com
All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us: autonews@gasgoo.com.