Coronavirus disrupts Hyundai Motor’s supply chain

With the coronavirus pandemic continuing its run in China, Hyundai Motor stated, it plans on gradually suspending production at its South Korean factories from Tuesday.

Hyundai is the first automaker to do so outside China. The coronavirus is disrupted supply chain.

Other global automakers, including PSA Peugeot Citroen, Ford, Nissan, Honda Motors have suspended the operations of their factories in China, in line with China’s guidelines.

According to an union official, the bulk of Hyundai’s South Korean factories will idle from February 7 to February 10 or February 11.

The official preferred the cover of anonymity given the sensitivity of the matter.

Schedules for suspension will vary by production line, said Hyundai’s spokeswoman.

The idling of plants, which had been discussed by Hyundai management since Monday, was due to a shortage of wiring harnesses, said auto industry officials.

Hyundai and its affiliate Kia Motors do not keep a large inventory of car parts, the majority of which are manufactured in China, said Lee Hang-koo, senior researcher at Korea Institute for Industrial Economics & Trade.

“Hyundai and Kia may be more affected (than their rivals peers) as they tend to import more parts from China than other global automakers,” said Lee.

He went on to add, Hyundai’s reliance on China has grown sharply after it ramped up its production capacity in China several years ago when its business was booming there.

“South Korean parts makers followed and built their own facilities along with Hyundai,” said Lee.

Hyundai Motor has seven factories in South Korea, which caters not only to the domestic market but also U.S., Europe, Middle East and other countries. Hyundai’s domestic production accounts for about 40% of its global output.

In 2019, South Korea imported $1.56 billion worth of auto parts from China as against $1.47 billion in 2018, as per trade data.

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