Reputed South Korean automaker Hyundai Motor has been facing a stumbling block – the production in one of its Chinese factories has been halted due to supply disruptions. The company’s officials have announced the shutdown of this production plant in China since the supplier apparently refused to provide the necessary auto parts. The vendors have blamed the company for the same, citing reasons of delays in payment. This is the second incident of its kind that Hyundai has faced in the last few weeks. In consequence, experts predict that a company of this stature facing production shutdown at a crucial time is likely to hamper its position in automotive market.
Apart from the supply disruption from their vendors, the diplomatic tension between South Korea and China regarding the deployment of U.S. missile defense systems on the North Korean border has also reflected badly on the business landscape of Hyundai Motor Co. In fact, as per reports, after the escalating tensions between China and South Korea, automobile sales nearly reduced by half.
With a view to easing the issues related to supply and sales, Hyundai Motor has been attempting to adopt strategies such as new joint ventures and organizational restructuring. The remaining three Chinese factories belonging to the automaker remain fully functional as of now.
Hyundai Motor’s spokesperson was quoted stating that the company has stopped churning out cars in the Cangzhou factory, which is situated in Heibei province pertaining to the shortage of air intake systems from an unnamed German based supplier. Apart from the German suppliers, French suppliers have also refused to provide fuel tanks to the company after the payment disputes. Most of the partners and suppliers of Hyundai have categorically stated that the supply disruption is due to payment delays from the parent company.
Hyundai’s controversial relations with BAIC Motor Corp Ltd, one of its Chinese partners, is also slated to affect the company’s shares. The Cangzhou factory in fact, is one of five plants operated by the joint venture between Hyundai and BAIC. The representatives of Hyundai and BAIC have been simultaneously working to resolve the problem, cite reports.
Apart from tension brewing within China, Hyundai Motor has also been facing problems while selling the cars, as its local and foreign automakers are offering huge discounts. It now remains to be seen how this South Korean automaker makes it safely out of the mess of political tensions and auto sales in China, dubbed as the largest automotive market in the globe.
Sunil develops content for Market Size Forecasters. A Post graduate mechanical design engineer by qualification, he worked as an intern at the defense lab for one year in the engine design and development department before switching his professional genre. Following his technical writing skills, he ...