Hyundai Motor Co. and its sister company Kia Motors Corp. announced on Tuesday that they would suspend parts of their local assembly lines due to a shortage in key part supplies from China amid the spread of the coronavirus outbreak.
The decision came after talks between the labor union and Hyundai’s management, gradually stopping all production lines in the country until February 9.
Hyundai Motor’s shutdown of assembly lines is a result of the inventory shortage of wiring harnesses produced mostly in China. The companies expect the plants will be suspended until they obtain stocks of wiring harness parts from local manufacturers by next week, Monday or Tuesday.
According to the Korea Automobile Manufacturers Association, wiring harnesses, which are vital components for a variety of car models, make up the bulk of automobile parts imported from China. The harnesses must be laid on the floor of vehicles during initial assembly, and each model’s wiring structure varies depending on the car model and trim, making extensive inventories challenging to manage.
On Monday, Hyundai President Ha Eon-tae stated that halting production on their factories is “inevitable” because of the “disruption of parts supplies” coming from China. The Chinese government recently restricted plant operations amid the new coronavirus outbreak.
Hyundai Motor possesses seven domestic plants, five of which are located in Ulsan and the other two in Jeonju and Asan. All five factories in Ulsan will halt operations by Friday.
The company has already suspended the operation of the automaker’s independent brand, Genesis’s sedan line, at its No. 5 plant located in Ulsan earlier in the day. The plant manufacturing Hyundai’s Porter pickup trucks also ceased later in the afternoon.
Hyundai’s No. 1 plant, which produces the coupe Veloster and the compact sports utility vehicle Kona, will stop operations from Wednesday.
The Asan and Jeonju plants, however, will cease from Thursday and Friday.
Meanwhile, Kia Motors has eight local plants, in which three are located in Hwaseong, two in Gwangmyeong, and three in Gwangju. The company did not provide further details about the suspension of its assembly lines.
Hyundai and Kia stated that they are concerned about a widespread shortage of critical components coming from China. They worry that the fallout could deal a further setback to their sales, which for the past three years has been declining in the Chinese market.
A Hyundai Motor official also announced that the company intends to continue factory operation as soon as it obtains the needed wiring harnesses from Korean plants.
Other carmakers such as GM Korea and Renault Samsung are considering halting or delaying their overtime production. Ssangyong Motor already went into a week-long shutdown with its Pyeonteak plant since Tuesday last week.
An extended outbreak of the novel coronavirus is also threatening Korean technology companies as many of their factories are situated in China.