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Carmakers call for liquidity, tax support amid virus woes

All News 21:13 April 21, 2020

SEOUL, April 21 (Yonhap) -- South Korean carmakers on Tuesday called on the government to extend 32 trillion won (US$26 billion) in emergency loans through banks amid a growing coronavirus impact on the automobile industry.

In a meeting with Trade Minister Sung Yun-mo, senior representatives from local carmakers said they need a total of 42 trillion won to operate plants, maintain current workforce and meet other fixed costs for the following three to four months, according to the Korea Automobile Manufacturers Association (KAMA).

Carmakers call for liquidity, tax support amid virus woes - 1

Carmakers can afford to finance 10 trillion won out of the total during the period but the remaining 32 trillion won needs to be extended from banks, executives claimed.

On top of fresh loans, there should be reduction in corporate taxes and other tax breaks for carmakers to help them weather the coronavirus crisis, KAMA President and CEO Jeong Marn-ki said.

Hyundai Motor Group President Gong Young-woon said the company needs at least 10 trillion won in emergency loans to ride out the coronavirus crisis as the deadly disease will continue to affect exports and overseas sales for some time.

Currently, Hyundai's plants in the United States, India and Brazil are not in operation, while Kia halted production in the U.S., India and Mexico in line with local governments' guidance and declining consumer demand.

GM Korea Co., Renault Samsung Motors Corp. and SsangYong Motor Co. also requested fresh loans and tax benefits.

From January to March, the five carmakers sold 1,687,905 vehicles, down 9.2 percent from 1,859,767 a year earlier, as customers opted not to visit dealerships due to COVID-19 fears.

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