Disrupted Parts Supply Brings Halt to Hyundai Motor's Factories in China


Since last week, Hyundai halted assembly lines at its three plants in Beijing and a fourth facility in Changzhou. This is because parts suppliers stopped supplying parts to the plants as they delayed payments to local parts makers due to sluggish sales stemming from China's retaliations against South Korean companies for South Korea's deployment of the terminal high altitude area defense (THAAD) system. The company is a Chinese joint venture of French company Plastics Omnium. Industry watchers say that the company can only wait and endure these setbacks until the diplomatic problem gets resolved before it can fully bounce back.

Hyundai Motor, Korea's largest automaker, halted its auto production in China as of last week. Since Hyundai and Kia's sales have been slashed in half, these companies are running their factories at less than 50% capacity. Its fifth factory in Chongqing, set to start production next month, was not affected.

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The branch in China was reportedly having financial trouble due to plummeting sales there over growing anti-Korean sentiment as well as speculation of Beijing taking retaliatory actions against South Korean companies operating in the country. In the January-July period, Hyundai sold a total of around 350-thousand vehicles in China, down 41-percent from some 600-thousand units past year. Through July of this year, Beijing Hyundai has sold 415,000 automobiles, a stark decline of almost 30% from sales during the same period last year. Hyundai said that it's "working to bring an amicable resolution to this issue [the discontinued deliveries]", but for the present, it remains unclear when Beijing Hyundai will be able to resume operations at its Chinese factories.

The number of passengers on Chinese routes operated by domestic carriers came to 1.12 million last month, down 45.2 percent from the 2.04 million posted during the same month previous year, according to the data from the Ministry of Land, Infrastructure and Transport.