Hyundai Mobis is in talks to supply parts to Chinese firms as part of efforts to cut its dependency on South Korean auto makers operating in China, a senior executive said.
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Chinese units of Hyundai Mobis, part of the Hyundai Motor Group, have sold products to factories belonging to Hyundai Motor and Kia Motors in China, Reuters reported.
But Chiang Gook-hwan, the director of Beijing Hyundai Mobis Automotive Parts, told the news agency his firm and Hyundai Mobis’ other units had begun talks to tie up with Chinese auto makers.
“We are in talks to sell some items, such as airbags, to China’s local makers as requested by them,” Chiang told Reuters at the company’s factory in Beijing, which opened in March.
Hyundai Mobis has seven units in China with eight factories.
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By GlobalDataAnalysts reportedly say the firm needs to reduce its dependence on its car-making affiliates Hyundai and Kia, the world’s sixth-largest car maker together by volume, for long-term growth.
But Chiang said the company needed to be cautious about supplying parts to other makers.
“If we sell parts to any car maker only for short-term profits, our car-making affiliates may face problems such as a leak of technologies to competitors,” Chiang told Reuters, adding that a group review would be necessary before any products could be sold to other car makers.
He said Hyundai Mobis’ Chinese units were not considering a price hike despite high raw material costs, preferring to use other measures such as relocating workers to cut costs.
“With the opening of the second factory, we need more employees. But instead of hiring more, we plan to relocate the existing workforce,” he told Reuters.
Chiang said the company did not plan to buy more parts from local parts makers due to quality issues.
Hyundai Mobis’ Chinese units get some 90% of their parts from suppliers in China, but most of them are from South Korean companies with operations in China, he said.
“It is difficult to expand part purchases from Chinese makers because of quality issues. We cannot consider just costs,” he told Reuters.
Chiang was upbeat about the outlook for the Chinese auto market, saying the country’s robust economic growth and the Beijing Olympics were expected to boost demand this year.
“Do you see the size of the land? Given the population of over one billion, China will be the biggest auto market in the world,” Chiang told Reuters, pointing to a map of China in a conference room at the plant.
