Hyundai and affiliate Kia are cutting production at joint ventures in China as diplomatic tensions between China and Korea hit economic ties between the two countries.
Reuters reports that the two Korean brands are responding to inventory growth as anti-Korean sentiment hits sales of Korean branded goods. In the automotive market, keen competition from local brands is also thought to be a factor.
The report said that Hyundai and Kia saw their combined China sales slump by 52% in March from a year earlier.
China has objected to South Korea's deployment of a US missile defence system amid rising concerns over North Korea's growing missile technology capabilities. There have been street protests in China and calls to boycott South Korean brands in state media.
Reuters reported that Kia has cut production shifts at its China factories, while Hyundai had eliminated a second shift from its three factories in Beijing starting mid-March.
The report added that Hyundai and Kia said in a statement that they were "adjusting operations at Chinese plants in line with the market environment."
Hyundai has reported a 7.8% year-on-year fall in March overseas sales, blaming "weaker sales in China".
The Korean carmakers' problems in China have been added to by the rise of domestic makers such as Geely and Great Wall who have improved quality and product offerings – especially in hot SUV segments – in recent years.