Hyundai Motor hit by further disruption in China

Hyundai’s China woes show no signs of recovery as one of its Chinese plants was forced to halt operationd due to a supply disruption, its second shutdown in the country in less than a month.

According to suppliers familiar with the matter, BAIC is in charge of payments and has been responsible for the delay, Reuters reported.

Their joint venture resumed production at four China plants on 30 August following suspension of about a week after a French supplier refused to provide fuel tanks due to non-payment.

If parts inventories become depleted, the other three Hyundai factories in China will have to stop production as well.

In the January-July period, Hyundai sold 351,292 vehicles in China, down 41 percent from 592,785 units a year earlier.

This time, a German firm has refused to provide parts for air intake systems, a representative for Hyundai said, declining to identify the supplier.

Reuters reports that the company’s JV with BAIC has suspended production at one of its plants this week.

The new China CEO, however, has a huge task in front of him if he is going to get Hyundai back on track in the world’s biggest auto market – one that accounted for almost a quarter of Hyundai’s revenue in the last financial year.

Hyundai brand sales reached 1.15m units in China last year, but this year volumes have plummeted since a political row has erupted over the deployment by South Korea of the US-supplied THAAD missile defence system.

The investment – which in the past was provided in several installments over five to six years – will help boost liquidity for the cash-strapped suppliers who have suffered due to Hyundai and Kia’s protracted sales slump. China says the system poses a threat to its nationwide security.

The news sent Hyundai Motor 1.07 percent lower to 138,500 won as of 1:40 p.m., underperforming the broader KOSPI’s 0.31 percent loss.

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