Hyundai Motor has set aside KRW1.67 trillion (US$1.47bn) to support struggling small and mid sized suppliers and help strengthen research and development across its domestic supply chain, according to local reports.
The reports suggested that, due to weaker sales at both Hyundai and Kia, local suppliers have incurred substantial financial losses with many forced to seek debt workout programs from creditors in recent months.
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Hyundai's global sales fell by 7.2% to 4,503,000 units last year, reflecting mainly weak demand in China and the US, while Kia's sales were 8.4% lower at 2,730,000 units.
With the two automakers renowned for driving tough purchasing deals, margins among suppliers are typically very thin.
Hyundai said the funds it is making available, most of which are expected to be disbursed between 2019 and 2023, are to be used to help restore management stability among its small and medium sized suppliers, encourage the development of new eco friendly and future mobility technologies and strengthen the overall supply chain eco system.
In October the South Korea government agreed to provide special credit guarantees worth KRW1 trillion for struggling component suppliers and finance minister Hong Nam-ki last week said new support measures would be announced this month to support the troubled auto parts industry.
