Hard-earned Achievement in Overseas Markets Put at Risk

Unionists at Hyundai Motor Company who have been on strike for over a month, protesting for a five-day workweek, have affected the company’s overseas operations. Exports have staggered and production lines have stopped at some foreign facilities Hyundai has not yet finished building.

“Russian market may be lost”

Doninvest, Hyundai‘s technological partner and Russian manufacturer of Verna, sent a letter on July 25 to the head of the overseas sales department at Hyundai, saying “If the disruption continues, the Russian market may be lost.”

Doninvest, which produces 1,500 units of Verna each month with imported auto parts from Korea, has had all its operations stopped since mid-July due to the suspended supply of auto parts following Hyundai strikes.

“Complaints from auto-dealers in Russia have reached an intolerable level,” said Doninvest in the letter. “Without a solution, the brand image of Hyundai will be seriously tarnished in Russia.”

Hyundai Motor Company announced yesterday that disrupted supply of auto parts has shut down operations in overseas factories, including Egypt, Malaysia, and Pakistan, as well as Russia, which has been idle since mid-July.

Chinese line is on the verge of shutdown.

Hyundai Motors in Beijing, which has manufactured the automobile company’s Sonata since last December, is yet to be affected. However, the factory won’t be able to avoid a shutdown in production unless the unionists currently on strike resume work very soon. The Beijing factory’s reserve of major auto parts, including engines and transmissions, will hold out no longer than the end of this month.

The aftermath of a shutdown at the Beijing factory would be severe, given that Hyundai auto sales in China have been rapidly increasing from 1,135 units in January this year to 3,601 in March to 4,469 in May. The rise is seen as a result of a boom in “my car ownership” among the emerging middle-class in China.

Red light turned on for delivering popular car models to foreign consumers.

Despite protracted strikes at Hyundai, major overseas markets, such as the U.S. and the EU, have not suffered from supply shortages thanks to goods in stock. Nevertheless, the protracted strikes have exhausted some popular models in stock, thereby affecting sales performance.

Among the best-selling models, parts for the Santa Fe, Hyundai‘s most popular model in the U.S., are expected to dry up within a month. This effectively means that the inventory has ran out already, considering that it takes a month to ship vehicles to the U.S.. Local dealers are demanding timely supply of the items.

In European markets, where compact and diesel cars sell the most, some popular models, including Click, are almost out of stock. If operations cannot be normalized quickly, exports in automobiles will fall into serious disruption.

Jong sik Kong kong@donga.com