Hyundai suspends car plant amid stand- off
South Korea- based Hyundai Motor on Monday said it had suspended production at one of its Chinese factories for a week, raising concern that a diplomatic standoff may be hurting sales in the automaker’s top market.
South Korean companies have said that they are being targeted in China because of its objections to a planned deployment of the US Terminal High Altitude Area Defense ( THAAD) system in South Korea. China worries the system’s powerful radar can penetrate its territory.
News of Hyundai’s China plant closure, first reported by online media ChosunBiz on Sunday, drove shares of the company down 1.2 percent.
Shares in Hyundai’s affiliates, Kia Motors and Hyundai Mobis, also finished lower.
Hyundai said it had suspended the plant in North China’s Hebei Province, from March 24 to April 1, in order to check its production line to modify technology. The automaker has three other passenger car factories in China, which accounts for about one- quarter of its total sales. No further details were available.
Industry officials and analysts said that the suspension may be aimed at bringing down inventories given slowing sales in China, due to political tension and rising competition.
Ko Tae- bong, an analyst at Hi Investment & Securities, said Hyundai’s March sales in China may have fallen year- on- year due to the political spat, after gaining in January and February.
The automaker is already grappling with falling market share in China with a product line- up that features more sedans at a time when sport utility vehicles ( SUVs) have become more popular.
China’s Geely Automobile Holdings recently reported its biggest profit growth in eight years, underlining a threat from Chinese makers armed with cheaper SUVs.
Chinese authorities have also closed nearly two dozen retail stores of South Korea’s Lotte Group, with some workers saying that the closures were fire- safety related. Earlier this year, Lotte approved a land swap outside Seoul that will allow South Korea to install the THAAD.