"Should We Build a Factory?"... Domestic Car Industry 'Distressed' Amid New Coronavirus Impact

Disruption in Parts Supply Due to Suspension of Chinese Factory Operations
Ssangyong Motor Halts Pyeongtaek Plant Operations from the 4th
Hyundai Motor Also Considering Factory Operation Status Next Week

Hyundai Motor Ulsan Plant (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] The fear of the novel coronavirus infection (Wuhan pneumonia) is spreading to the domestic automobile industry. This is due to disruptions in parts supply caused by the shutdown of factories in China. First, Ssangyong Motor decided to halt its factory operations next week, followed by Hyundai Motor canceling weekend overtime this weekend. Completed car manufacturers are showing signs of struggling to come up with countermeasures, keeping open the possibility that the situation may prolong.

According to the industry on the 1st, Ssangyong Motor announced the day before that it will suspend automobile production at its Pyeongtaek plant for seven days from the 4th to the 12th of this month. Regarding the reason for the production suspension, it explained, "Due to disruptions in the procurement of production parts caused by the Chinese government's ban on operating production factories to prevent the spread of the novel coronavirus." It added that the scheduled date for resuming production may change depending on the situation in China.

Hyundai Motor canceled weekend overtime scheduled for some lines at Ulsan Plant 4, which produces the Palisade. Since there are difficulties in parts supply, the possibility of halting factory operations next week is also under consideration.

Earlier, the Chinese government extended the Lunar New Year holiday by three days until the 2nd of this month in response to the rapid spread of the novel coronavirus. Local governments also successively extended mandatory holidays for companies by about a week.

As a result, there have been problems in the supply of wiring parts, which act as the 'blood vessels' of automobiles. Among the suppliers delivering wiring to Hyundai Motor's domestic plants, two Chinese production factories have been shut down due to the novel coronavirus. Ssangyong Motor also faced issues with wiring supplied through its Chinese factories.

Although there are differences by company and model, most of the wiring inventory necessary for vehicle production is expected to run out around the 5th of this month. Besides Ssangyong Motor, which quickly decided to halt operations, other completed car manufacturers are also contemplating whether to continue running their factories next week. Completed car production is organically connected, so even if the supply of just one part is interrupted, vehicle production becomes difficult.

Hyundai Motor held labor-management practical consultations the day before regarding whether to halt factory operations. It is known that a plan to temporarily suspend operations for about a week starting from the 5th was discussed at this meeting. Hyundai Motor's labor and management will conduct a final check on inventory status and hold renegotiations on the 3rd.

Korea GM and Renault Samsung Motors stated that there are currently no problems with parts supply. However, they are closely monitoring the situation and have started seeking alternatives in case the situation prolongs.

An industry official said, "Most domestic completed car manufacturers have partner company production factories in China," adding, "Even if there are no immediate disruptions in production, if the novel coronavirus situation continues for a long time, there is concern that damages may expand."

This content was produced with the assistance of AI translation services.