To Prevent Auto Plant Shutdowns
The Ministry of Trade, Industry and Energy is planning to designate certain reported auto parts as items subject to emergency air transport support so that the impact of COVID-19 on automakers’ production activities can be minimized.
An ocean freight charge instead of an air freight charge, which is about 15 times the charge, is applied to those items. In early February this year, the South Korean government designated wiring harnesses as such an item to prevent a production delay. At present, the ministry is expanding its quick procurement system to regions such as the United States and Europe for smooth auto parts supply.
According to automakers, production setbacks will occur at any time if overseas plant shutdown is prolonged in the wake of COVID-19. Only 10 out of Hyundai Motor Group’s 18 overseas manufacturing bases are currently in operation in China, Russia, Slovakia and the Czech Republic.
“Key components such as transmissions and electronic control units constitute the largest part of procurement from the United States and Europe, and any setback will have a serious impact,” said a local automaker, adding, “In fact, some companies are already facing a shortage.”