Corona virus hits auto sector ... Hyundai and Kia suspend production in South Korea

Hyundai Motor, the largest automaker in South Korea, said it will suspend production in the country, while its sister, Kia Motors, has announced it will suspend some assembly lines, due to disruption of spare parts supplies after the outbreak of the Coruna virus.

A large number of global auto manufacturers - including Tesla, Ford, PSI, Peugeot Citroen, Nissan, and Honda Motor - have already suspended operations in some of their factories in China this week, in line with government instructions.

And Hyundai's decision to cut assembly lines in South Korea may delay its recovery from lower sales.

The company recently announced that it achieved the best quarterly operating profit in more than two years, and said it was on track to achieve a rise in profit margins with the support of increased sales of sports cars such as the Pisade and Kona models.

Hyundai has already halted production with "Pisad" earlier this week due to a lack of its Chinese-made components.

A union official - who asked not to be named due to the sensitivity of the matter - said that most of Hyundai's factories in South Korea will be completely suspended from February 7, while some production lines are expected to return to work on 11 or 12 of the same month. According to Reuters.

A company spokesman said that Hyundai stopped the assembly lines that produce the "Genesis" car models at its fifth plant located in the city of "Ulsan" starting today, Tuesday, according to the South Korean Yonhap News Agency.

The spokesman added that the company and the workers' union are consulting for the possible suspension of additional production lines in other "Ulsan" factories, depending on the future developments of the problem of Corona virus.

Hyundai has seven factories in South Korea feeding the domestic market, the United States, Europe, the Middle East and a number of other countries.

The company also has ten factories abroad: four of them in China, and one in the United States, the Czech Republic, Turkey, Russia, India and Brazil, while its domestic production accounts for about 40% of its global production.

Production cut
For its part, the company "Kia Motors" - which Hyundai owns 34% of them - started reducing production in its factories in "Hwasong" and "Kwangju" outside the capital Seoul for the same reasons, according to the workers' union. The company did not provide details about the suspension of assembly lines.

Kia has eight domestic factories, seven overseas: three in China and one in the United States, Slovakia, Mexico and India. Its production capacity is 3.84 million cars.

According to the Korean Yonhap Agency, the effects of the spread of the virus could deal another blow to the two companies, which have suffered from low sales in China - the largest auto market in the world - during the past three years.

Together, Hyundai and Kia are the world's fifth largest auto manufacturer by sales. The two companies are concerned about the severe shortage of auto parts coming from Korean suppliers in China.

Trade data showed that South Korea imported auto parts from China worth 1.56 billion dollars in 2019, compared to 1.47 billion in 2018.

The sales of the two companies in China decreased by 22% last year to reach 909 thousand units, compared to 1.16 million units in the previous year.

Since the new Corona virus appeared in the Chinese city of Wuhan late last year, the number of infected people in China has reached 20,000, and at least 425 people have died. The number of infected cases in South Korea so far reached 16 confirmed cases, and the virus has reached 24 countries.