Hyundai Motor Group Provides Emergency Funding of Over 1 Trillion KRW to Small and Medium Parts Suppliers (Comprehensive)

Hyundai Motor, Kia Motors, Hyundai Mobis, Hyundai Wia, Hyundai Transys Supply Chain of Over 350 Companies
Full Effort on Quarantine and Early Operation of Local Production Plants in China
Negotiating with Chinese Local Governments to Resume Early Production After Completing Factory Quarantine Systems

Hyundai Kia Motors Yangjae Headquarters

[Asia Economy Reporter Kim Hyewon] Hyundai Motor Group is launching an emergency fund support worth over 1 trillion KRW to assist small and medium-sized parts suppliers facing management difficulties due to the novel coronavirus (Wuhan pneumonia) outbreak in China.

Additionally, the group is strengthening quarantine measures at parts suppliers' factories in China to ensure the safety of local employees and is exploring ways to resume production early. This is based on the judgment that smooth domestic parts supply is essential to resolve the management difficulties of domestic small and medium-sized parts suppliers and to stabilize the overall management of the domestic automobile industry ecosystem.

On the 6th, Hyundai Motor Group announced that it will execute funds worth about 1 trillion KRW, including 308 billion KRW in interest-free management funds, early payment of 587 billion KRW in delivery payments, and 105 billion KRW in parts mass production investment costs for small and medium-sized parts suppliers.

Hyundai Motor Group decided to provide financial support so that small and medium-sized parts suppliers can secure timely liquidity, minimizing the impact of the global automobile market downturn and the spread of the coronavirus in China, and operate in a more stable environment.

The target includes about 350 small and medium-sized suppliers that supply parts to Hyundai Motor, Kia Motors, Hyundai Mobis, Hyundai Wia, and Hyundai Transys.

First, Hyundai Motor Group will provide 308 billion KRW in interest-free management funds to ease the financial burden of small and medium-sized parts suppliers. The funds will be prepaid from mid-month so that suppliers can use them as operating capital.

Small and medium-sized parts suppliers have had difficulties securing necessary funds when needed due to strict loan screenings and high interest rates from financial institutions, but with this emergency support from Hyundai Motor Group, they will be able to manage funds more urgently.

Payments of 692 billion KRW in delivery payments and parts mass production investment costs for small and medium-sized suppliers will also be made early. Payments scheduled for mid-February will be made this week, and delivery payments scheduled for mid-March will be paid by the end of February. By paying up to 15 days earlier than scheduled, it is expected to greatly help suppliers' fund management. Parts mass production investment costs will also be paid earlier than the original schedule.

Hyundai Motor Group plans to encourage first-tier suppliers who receive support to advance payments to second- and third-tier suppliers, so that the effect of early payment can spread.

◆ Strengthening support for quarantine and employee safety at wiring harness suppliers' production plants in China

Hyundai Kia Motors is also making all-out efforts to strengthen quarantine and ensure safety at Chinese parts suppliers amid the spread of the novel coronavirus. They have completed quarantine systems at wiring harness production plants in China, where domestic parts supply has been interrupted, and are working to resume plant operations early based on this.

Since securing the safety of supplier employees is paramount, support is being provided to ensure that supplier factories have thorough quarantine systems. Along with wiring harness parts suppliers, they are conducting workplace disinfection, installing thermal imaging cameras, individually supplying masks, placing thermometers and sanitizers in workplaces, and measuring the temperature of all workers twice daily to ensure thorough workplace quarantine and employee safety.

In addition, Hyundai and Kia Motors have been taking measures since last week to resume production at wiring harness suppliers in China.

On the 1st, in cooperation with the Ministry of Trade, Industry and Energy and the Ministry of Foreign Affairs, they sent an official letter through the Qingdao Consulate General to Shandong Province, a key hub for wiring harness production, requesting cooperation. Considering the significant impact on both countries' economies if domestic automobile production is disrupted, they asked for approval to allow production under strict quarantine management even at some factories. They emphasized that preventing the spread of the coronavirus through strengthened quarantine is the top priority.

Executives of Hyundai Motor Group China (HMGC) also directly contacted Shandong provincial government officials to discuss ways to resume production. Since last week, they have been working with suppliers to expand wiring harness production outside China. They plan to increase parts procurement from domestic and Southeast Asian sources and minimize the time required for parts procurement when production in China resumes.

The Ministry of Trade, Industry and Energy, the Ministry of Foreign Affairs, and the Qingdao Consulate General are also engaging with local Chinese governments to minimize the economic impact on both countries caused by automobile production stoppages and are making efforts to restart operations. In particular, since the 1st, the Ministry of Trade, Industry and Energy and the Ministry of Foreign Affairs have been negotiating with local Chinese governments to resume production at the wiring harness plant in China, the most urgent parts factory.

The Qingdao Consulate General met with Shandong provincial government officials to explain the necessity of early plant operation and discuss necessary measures. Through the Commercial Counselor of the Chinese Embassy in Korea and the Shandong Korean Representative Office, they are negotiating with city governments in Shandong where wiring harness plants are located to resume factory operations.

The Ministry of SMEs and Startups is also providing quarantine supplies not only to domestic small and medium parts companies but also to their business sites in China. Wiring harness parts suppliers such as Kyungshin, Yura, and THN are also implementing thorough quarantine management for employee safety and directly requesting city governments to resume factory operations.

A Hyundai Motor Group official said, "Although the rapid spread of the novel coronavirus is an unavoidable situation, the government and companies are making multifaceted efforts together to overcome difficulties. We expect this emergency fund support to greatly help stabilize the management of small and medium-sized parts suppliers."

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