Hyundai Production Facing Decline
The Hyundai Automotive Group said that the production of the company has been disrupted due to the strike at a core engine parts supplier, Yoosung Enterprise. South Korea’s top automotive group said on Monday that they have suffered the production loss of 50,000 units.
Yoosung Enterprise has closed its factories after workers started a strike for increment in wages and better working environment. Approximately, 70% of the vehicles made by the Hyundai Motor and its affiliate Kia Motors get the engine parts from Yoosung.
The production of the sports utility vehicles such as the Tucson ix, Santa Fe and Veracruz as well as Kia’s Carnival model has been interrupted badly due to the shortage of the parts.
A Hyundai Spokesman said that if the strike will be continued then the domestic sale of the company will be affected badly.
A person familiar with the matter said that if Yoosung and the union don’t find the way to end the dispute the automobile company has to suffer from production loss.
Meanwhile, NH Securities analyst Lee Sang-Hyun said that the dispute will have a short term impact on Hyundai and Kia as they do not have any other alternative supplier for core engine parts.
He added, “But the companies have inventories of two months' worth of completed vehicles in global markets, so there is a grace period of two months”.
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