Mahindra preferred bidder for SsangYong

Mahindra & Mahindra, the Indian SUV manufacturer has been named as a favoured bidder for SsangYong, the failing South Korean car firm.

SsangYong racked up debts of $634m (400m) and is presently being reorganised under court control. Last year saw fierce protests from SsangYong’s employees, postponing the launch of the all-new C200 compact SUV.

If Mahindra & Mahindra decide to purchase SsangYong, it would give the Indian firm admission into the South East Asian market, where it has no existence and new technology including diesel engines. Mahindra has a fine record of organising industrial quarrels.

Mahindra has alleged to bid roughly $400m (£250m) for the troubled company, which has a 2% market share in South Korea. Mahindra shares dropped 1% once the news was announced, however, industry analysts said that the purchase will benefit the Indian firm in the future.

“The acquisition could be slightly negative for Mahindra in the near term because SsangYong is a small player and scalability is limited. So Mahindra will have to make some investments," said an analyst from Prabhudas Lilladher. "I am guessing it would take two to three years for Mahindra to turn around the company. That is when we expect the benefits to kick in.”