SEOUL: Hyundai Motor said today it will suspend production in South Korea due to the coronavirus outbreak disrupting parts supply, becoming the first major automaker to do so outside of China.
The flu-like virus has killed more than 400 people and its economic impact has spread beyond mainland China.
In China, global automakers have already extended factory closures in line with government guidelines including Hyundai, Tesla, Ford, PSA Peugeot Citroen, Nissan and Honda Motor.
“Hyundai and Kia may be more affected as they tend to import more parts from China than other global automakers,” said Lee Hang-koo, senior researcher at the Korea Institute for Industrial Economics & Trade.
Hyundai has built up a huge production capacity in China over the past two decades.
“South Korean parts makers followed and built their own facilities along with Hyundai,” Lee said.
South Korea imported US$1.56 bil (RM6.41 bil) worth of auto parts from China in 2019, up from US$1.47 bil in 2018, trade data show.
Most of Hyundai’s South Korean factories will be fully idled from Feb 7, while some production lines are expected to restart on Feb 11 or 12, a union official said, declining to be identified given the sensitivity of the matter.
Schedules for suspension will vary by production line, a Hyundai spokeswoman said.
‘Emergency’
The move follows a shortage of wiring harnesses which Hyundai sources mainly in China, industry officials said.
Two of the affected suppliers, Kyungshin and Yura Corporation, said they are trying to boost production at their factories in South Korea and Southeast Asia to compensate for the disrupted supply from China.
They both also plan to resume production at their Chinese factories after Feb 9.
“We are in an emergency,” a Kyungshin official said.
Hyundai has seven factories in South Korea, catering to the local market and the US, Europe, Middle East and other markets.
Hyundai’s production in South Korea accounts for about 40% of its global output.
Hyundai’s decision to halt assembly lines at home could delay supplies of its popular sport utility vehicles (SUVs) such as the Palisade and Genesis GV80.
The automaker recently turned in its best quarterly profit in more than two years and said it was on track for higher profit margins, aided by more sales of SUVs.
The virus outbreak may slow manufacturing activities in automobiles and other sectors, Japanese trading house Mitsui & Co has warned. – Feb 4, 2020, Reuters
