Hyundai halts work at 4 Chinese factories

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Hyundai halts work at 4 Chinese factories

Hyundai Motor, Korea’s largest automaker by sales, said Tuesday that its four factories in China have stopped operations after a local supplier refused to provide products because of delayed payments.

Beijing Hyundai Motor, a joint venture set up by Hyundai Motor and BAIC Motor in 2002, began to gradually wind down assembly lines at a plant in Hangzhou and three in Beijing in the middle of last week due to a lack of parts, a company spokesman said over phone.

“A local parts supplier refused to provide a plastic fuel tank to Beijing Hyundai Motor as the carmaker failed to make payments for the parts the supplier already delivered to the plants,” he said.

Beijing Hyundai Motor has yet to pay 18.9 billion won ($17 million) to the Chinese parts supplier, according to local reports. Hyundai Motor did not confirm the value of the delayed payments.

This year, Hyundai Motor has suffered sharp declines in Chinese sales due to a diplomatic row between Seoul and Beijing over the deployment of an advanced U.S. missile defense system in Korea.

The four factories have a combined production capacity of 1.35 million vehicles. Lower demand in China remains the biggest worry for Hyundai Motor as China is one of the Korean automaker’s biggest car markets.

In the January-July period, Hyundai sold a total of 351,292 vehicles in China, down 41 percent from 592,785 a year earlier.

Hyundai Motor’s labor union said earlier in the day that its new leadership would resume wage negotiations with the company in November after no headway was made from 28 rounds of “fruitless” talks.

“We have decided to suspend wage talks with the company as its revised offerings were not satisfactory at all. Once a new union leader is elected next month, a leadership structure should be in place by October, and these people can then handle the wage deal in November,” a union spokesman said.

The company confirmed this year’s talks have now suspended and should resume later.

Hyundai Motor will make efforts to wrap up the wage deal with the union as early as possible, a company spokesman said.

As for concerns that such uncertainties could affect Hyundai Motor’s planned launches of new cars, the company said the union would go back to work to avoid further production losses.

The automaker hopes to roll out new models as planned.

Hyundai Motor’s luxury brand Genesis plans to unveil the G70 sedan this Friday to the media, with sales of the midsize sedan scheduled to begin in the Korean market next month. YONHAP
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