South Korea’s fourth largest automaker Ssangyong Motor Co. has suspended its pickup truck licensing project in Saudi Arabia due to the difficulty in collecting payment from a local partner amid mounting uncertainty about the country’s political situation.
Industry insiders also are flagging the possibility that Ssangyong Motor would give up the project due to the shaky political situation in the Middle East after Washington walked out of the landmark 2015 nuclear deal and re-imposed sanctions on Iran.
According to sources from the automotive industry on Friday, Saudi Arabia has stopped the project to allow Saudi National Automobile Manufacturing Co. (SNAM) to manufacture its premium pickup truck Rexton Sports codenamed Q200 in the country starting 2020. It has been more than a year since the two signed the product licensing agreement, but Ssangyong Motor is yet to be paid the contract.
The agreement with SNAM is practically over due to the country’s political insecurity, which makes it difficult to draw financing for the project, according to an official at Ssangyong Motor.
SNAM, an automotive affiliate of Saudi Arabia’s Safari Group, was founded with a long-term plan to foster the country’s automotive industry under the tagline of “Saudi Vision 2030.” It secured land totaling 1 million square meters in Jubail to build an auto manufacturing plant and an additional site of the same size for local suppliers.
Earlier, Posco Daewoo International dropped out of a deal to build a passenger car manufacturing plant with SNAM after the mega-billion dollar project lost momentum due to the Saudi government reluctant to proceed it. LG International’s electric vehicle project in Iran also is at risk of being stranded because of the slow progress for more than two years.
By Kang Young-woon and Lee Ha-yeon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]