HAAH CEO Duke Hale looks to Korea’s auto import plan
“If we were successful in acquiring SsangYong on a global scale, that obviously means that we would have the [right to] the US and Canadian markets, ”Hale said.
Hale’s new Delaware-based company, Cardinal One Motors, will take over HAAH’s one-year interest in the legal process to find a new owner at SsangYong. Indian automaker Mahindra and Mahindra said last year it wanted to sell its majority stake in Korea’s fourth-largest automaker after failing to improve its business outlook.
As no buyers came forward for SSangYong’s loss of money, the automaker went into receivership, Seoul Bankruptcy Court said in April. HAAH has been mentioned several times in Korean media as a possible savior of SsangYong, but has also repeatedly missed the court deadline to file a bailout.
Hale, in his first comments on an offer from SsangYong, said a group of investors he advises intended to attack the automaker before the end-of-July deadline set by the Korean court of law. bankruptcies. Cardinal One investors will do so under the new legal entity given the demise of HAAH Automotive Holdings, he said.
“Cardinal One Motors has nothing to do with HAAH,” Hale said in an interview Wednesday. “It is a separate entity and it is a new entity. And this entity will be in the process of submitting a letter of intent for the acquisition of SsangYong Motors.”
Hale said SsangYong’s offer would likely involve raising $ 250 million to $ 350 million, in addition to possible help from Korean financial institutions, including the Korea Development Bank. At stake in Korea, Hale said, is about 4,500 jobs.
“We are positioned in Korea, where maybe if we raise funds, we will get more money that goes into the business,” he said, without identifying where the extra money would come from.
“It’s going to take a lot of money and a lot of effort,” Hale said. “We have done a lot of due diligence on this deal. External people and companies have been evaluating SsangYong since July of last year. This is not an occasional interest. We have been involved for 12 months now.”
Although SsangYong lost money, Hale said he sees great potential for the Korean brand, which has a presence in dozens of global markets but not in the United States and Canada. Unlike the predicament with Chinese auto brands, Korean vehicles are not subject to tariffs due to its free trade agreement with the United States
“You don’t have the big tariff problem,” Hale said, comparing the prospect of Korean imports to Chinese auto imports, which are subject to a 27.5% tariff. “You have a great relationship between Korea and the United States. It’s a different ball game. And the Korean quality is considered by the American consumer to be very good.”
SsangYong, however, has been struggling for many years and losing money, prompting Mahindra’s departure.
According to Reuters, SsangYong’s operating loss in 2020 widened to 449 billion won ($ 401.76 million) from 282 billion won a year earlier. Revenue fell 19 percent to 3 trillion won.
Mahindra, who owned 75% of SsangYong at the end of last year, bought SsangYong when the South Korean automaker was on the verge of bankruptcy in 2010, but struggled to raise the bar.
Meanwhile, the fallout from the failure of HAAH is being felt by investment brokers.
Larry Battison, Battison Honda’s main dealer in Oklahoma City, said he was dismayed by Hale and HAAH’s failure to finalize the Chinese deal after telling potential US dealers that the plan with China’s Chery Automobile was moving steadily forward. .
Battison had paid a non-refundable bond of $ 300,000 for two outlets for Chinese vehicles for sale under the Vantas and T-GO brands in the United States. Battison said he was less upset about losing money than being misled by overly optimistic updates.
The business plan has also changed back and forth, from importing vehicles to assembling them in the United States. Battison was a supporter of the “Made in America” plan before it was scrapped earlier this year.
“I’m just deeply disappointed,” Battison said Automotive News Wednesday. “All this time we were looking for a factory to build cars or assemble kits in the United States and they were looking for a parts distribution warehouse. But it was all talk and very little action. “
Battison said he didn’t think the dealers were scammed by Hale and HAAH, but rather that the communication didn’t match reality. Some vehicles were shown to potential dealers, but they were Chinese versions and not American models. And then suddenly in May key executives left HAAH and Hale downplayed the importance of their exit. But for Battison, the writing was on the wall.
“I don’t think it was a fraud, but I think it made overly optimistic assumptions and made the body of dealers think they were further ahead than they actually were.” , Battison said. “And if I’m wrong, I owe Duke Hale a big apology.”