500 Billion KRW Mutual Growth Guarantee for Auto Parts...Industry Says "Breath of Relief, Additional Support Needed"

[Asia Economy reporters Suyeon Woo and Kiho Sung] As the government plans to inject liquidity by establishing a 500 billion KRW-scale 'Win-Win Special Guarantee' for the automotive parts industry struggling due to the novel coronavirus infection (COVID-19), the industry expressed that although it will provide short-term relief, the support scale is still insufficient. They insist that additional support is essential to save the marginal companies on the brink of collapse.

On the 28th, the government held the 5th Emergency Economic Central Countermeasures Headquarters meeting and announced additional support measures for major COVID-19 affected industries. The plan includes establishing a 500 billion KRW-scale 'Win-Win Special Guarantee' jointly by the completed car industry, government, and local governments to support the automotive parts industry suffering from reduced finished car production.

Initially, the parts industry positively evaluated the government’s new concept of support measures through additional policies. However, given that the entire parts industry currently requires over 14 trillion KRW in liquidity, the 500 billion KRW-scale support is still grossly insufficient. Previously, the Korea Automobile Manufacturers Association estimated that if the COVID-19 impact continues from April to July this year, liquidity shortages of 14.4 trillion KRW for finished car companies and 13.7 trillion KRW for parts companies would occur.

Oh Won-seok, chairman of the Hyundai-Kia Motors Cooperation Association, said, "It is encouraging that the government has introduced a new tool called the Win-Win Special Guarantee to save the parts industry," adding, "This means the government recognizes the severity of the automotive parts industry and prioritizes support."

He continued, "However, many companies are facing life-or-death situations right now, and the 500 billion KRW scale seems grossly insufficient," adding, "We hope that the automotive parts industry will continue to be included in additional support measures."

Another industry official also commented on the government’s support plan, saying, "It is expected to greatly help stabilize the management of small and medium-sized parts suppliers," and "The purchase of public sector work vehicles and the expansion of support for electric cargo vehicles will somewhat ease the pressure on the finished car industry."

He added, "Considering the export slump that will intensify in the second quarter, we must not let our guard down," emphasizing, "Continuous government support and close cooperation with companies are necessary."

The announced support measures also include plans to back the fading demand in the automotive market. The purchase of public sector work vehicles will be advanced to over 90% by the third quarter of this year, and the number of supported electric cargo vehicles, which have high market demand, will be doubled to 11,000 units.

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