Sales Drop Due to Shrinking Demand

Nine out of 10 Korean auto parts makers say they are suffering liquidity shortages due to the new coronavirus (COVID-19) crisis.


The Korea Automotive Industry Association conducted a survey of 96 auto parts companies to see the impact of COVID-19. It found that 93.8 percent of the respondents had liquidity problems.

The main culprit behind their liquidity crisis was a drop in sales (69.5 percent) due to shrinking demand. The survey found that half of the companies suffered a 20 percent drop in sales in the first quarter compared to a year before. Other factors included unstable operation funds due to labor costs (41.1 percent), unstable operations of overseas factories (33.7 percent), reduced export volume (15.8 percent), and difficulties in financing (14.7 percent).

However, more than half of the auto parts makers in a temporary liquidity shortage said they needed less than five billion won, which is not a very large amount.

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