Hyundai Motor in China has been further hit by the disruption of parts supply due to a dispute with a supplier over payment.
Reuters reports that the company’s JV with BAIC has suspended production at one of its plants this week. Reuters also reported that Hyundai Motor’s relations with partner BAIC are fraying under the pressure of slower sales and losses this year. The report said Hyundai is at loggerheads with its Chinese partner over efforts to cut supplier costs. SOme reports say that BAIC is in charge of payments and has been responsible for the delays.
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The latest setback follows the resumption of Beijing Hyundai vehicle production in China last week after it was forced to shut down its operations because local component manufacturers had stopped deliveries over payment arrears.
Hyundai has three production facilities near Beijing and one in Chengdu, with a combined production capacity of around 1.3m units per year.
It has just completed construction of a fifth plant with an additional production capacity of 300,000 units per year in Chongqing, but the start-up of operations here has been delayed due to the brand’s sharp drop in sales in recent months.
Beijing Hyundai was said to have payment arrears of close to US$17m, thought to be with local fuel-tank supplier Auto Inergy Beijing, fuelling speculation that the recent sales decline is having an impact on the local company’s cashflow.
Hyundai brand sales reached 1.15m units in China last year, but this year volumes have plummeted since a political row has erupted over the deployment by South Korea of the US-supplied THAAD missile defence system.
The brand’s sales in the first six months of 2017 fell by over 42% to 301,000 units, with deliveries plunging by over 60% in May and June amid calls in China for a consumer boycott of South Korean products.
