Korean Parts Suppliers Fear Chain Bankruptcy
Hyundai Motor Group is planning to allow Chinese auto parts suppliers to supply their parts without limitation for use in its cars manufactured in China. At present, they cannot bid when it comes to key auto parts such as power trains.
Kia Motors is planning to do so within this year and Hyundai Motor Co. is going to apply the measure to every global auto parts supplier meeting its quality requirements.
The idea is to enhance profitability with Chinese auto parts, which have significantly improved in terms of quality and are highly competitive in terms of price. The group sold about 1.14 million cars in China in 2016 but the volume dropped to 790,000 or so last year. The drop in sales volume led to a lower profitability and using more Chinese auto parts began to be mentioned as a solution to the situation.
Approximately 130 South Korean auto parts suppliers working with the group in China and more than 10,000 South Korean auto parts suppliers working with the primary subcontractors are expressing concerns about chain bankruptcy. Some of them are already going through liquidation and more than half of the factories of the subcontractors in Chongqing are already closed.