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Carmakers still short of parts from China amid partial production

All News 14:04 February 15, 2020

SEOUL, Feb. 15 (Yonhap) -- Carmakers in South Korea said Saturday some of their assembly lines are still short of auto components as parts suppliers in China partially resumed operations this week amid no signs of the new coronavirus slowing.

Hyundai Motor Co. and its affiliate Kia Motors Corp., the country's two biggest carmakers, restarted production at their domestic plants Tuesday, mainly using auto components shipped from Southeast Asia.

"Some parts from Southeast Asia arrived at the plants Monday, which helped Hyundai and Kia partially resume production at their plants. As South Korean suppliers that have plants in China also resumed production this week, the carmakers expect to normalize their production next week," a Hyundai Motor Group spokesman said over the phone.

Kia Motors workers walk out of a plant in Gwangju, 330 kilometers south of Seoul, after the plant halted production from Feb. 10-11 due to lack of parts from China amid spreading coronavirus outbreak. (Yonhap)

The carmakers halted all production at their plants on Feb. 7 and kept them suspended through Feb. 10 as their China-based suppliers had suspended their production since Jan. 24 when China's Lunar New Year holiday began.

It was the first time that Hyundai Motor suspended all of its domestic plants since 1997, when the Asian financial crisis affected local manufacturers and Mando Corp. stopped supplying parts to the carmaker.

Hyundai and Kia said they will keep some of their production lines operating and others suspended until they receive an ample amount of auto parts from China.

They plan to import auto parts from companies in Southeast Asia for the time being as it may take time for their suppliers in China to fully operate their production lines amid the coronavirus called COVID-19.

The Chinese authorities had called on manufacturers to stop operations until Feb. 9, a week after the end of the holiday, to keep the deadly respiratory illness from spreading further.

Three other local carmakers -- SsangYong Motor Co., Renault Samsung Motors Corp. and GM Korea Co. -- expect parts problems will be resolved sooner or later.

SsangYong Motor and Renault Samsung said their plants will resume operations Thursday and next Monday, respectively, as their Chinese suppliers began production this week.

SsangYong Motor stopped the operation of its sole plant in Pyeongtaek, 70 kilometers south of Seoul, last Tuesday and will maintain the suspension until Wednesday. Renault Samsung plans to halt production at its sole plant in Busan, 453 km south of Seoul, from Tuesday to Friday.

GM Korea said its production has not been affected by the coronavirus outbreak though it is closely monitoring the situation involving the virus to avoid any impact on its production.

If the suspension period does not exceed a week, industry people and analysts expect no major drag on the carmakers' business results for the January-March period as they will be able to fill the output gap through overtime work.

As its plants resumed operations, Hyundai Motor said it will initially focus on the production of popular models, such as the flagship Palisade SUV and the GV80 SUV, sold under Hyundai's independent Genesis brand to meet rising demand and for exports to the United States.

South Korean officials and Hyundai Motor Group had asked the Chinese authorities to help Chinese manufacturers resume operations this week to avoid supply chain disruption for their corporate customers.

The Ministry of Trade, Industry and Energy said last week it will take all necessary steps to minimize the economic fallout of the supply disruptions on local carmakers.

To tackle supply shortages, the ministry said it will seek to simplify the import processing for auto parts from Vietnam, Cambodia and the Philippines; provide financial subsidies to local auto part makers, including loans for the expansion of production lines; and fund their research and development projects.

South Korea had reported 28 confirmed cases of the deadly virus as of Saturday.


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