Kia Motors Corp., on Thursday, said it would temporarily suspend four of its nine plants located in South Korea due to the economic impact of the new coronavirus. South Korea’s second-biggest carmaker by sales reported a net profit plunge of 59 percent for the first quarter this year.
Hyundai Motor‘s affiliate plans to suspend operations at two of its plants in Sohari, Gwangmyeong, south of Seoul. The company scheduled the suspension from April 27 to May 8 and once more on May 22 to 25. Kia said that this would minimize the risk of further spreading the virus while maintaining inventories at manageable levels.
Additionally, Kia would also shut down two plants in Gwangju located further south of Seoul. The carmaker would close its second plant from April 27 to May 8, while the third plant from April 27 to 29.
With the temporary closures, Kia aims to respond to lower demand abroad as consumers prefer not to visit car dealerships because of fears of viral infection. The company added that the lower global shipments and lower imports of necessary parts, especially from China, contributed significantly to its slump.
In a regulatory filing on Friday, Kia reported a net profit of 266 billion won ($216 million), a 59 percent drop from a year earlier. The company’s operating profit for the first quarter also fell 25 percent to 444.5 billion won ($360 million). Meanwhile, sales revenue rose 17 percent to 14.56 trillion won ($12 billion).
Factory Contribution to Kia’s Output
Each of the four factories temporarily closed contributes to the majority of Kia’s exports.
One of the two plants in Sohari manufactures the K9 sedans and Stinger sports cars. Meanwhile, the other plant produces the subcompact Stonic.
Kia’s No.2 plant located in Gwangju builds Sportage sport utility vehicle (SUV) as well as the Soul boxcar. Meanwhile, the No.3 plant manufactures pickup trucks, large buses, and military vehicles.
However, during the temporary closure, military cars and trucks would continue into production.
Kia said it currently operates nine manufacturing plants in the country and three factories located in China. The company, however, continues the suspension of its plants in the U.S., Mexico, and India.