Both Hyundai and Kia have found the Chinese market challenging this year in the face of official campaigns against Korean brands and goods due to diplomatic issues related to heightened North Korea tensions

Both Hyundai and Kia have found the Chinese market challenging this year in the face of official campaigns against Korean brands and goods due to diplomatic issues related to heightened North Korea tensions

Hyundai Motor has said it has resumed vehicle production in China 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 for a consumer boycott of South Korean products.

Latest reports suggest that Hyundai is in talks with the supplier to resolve the outstanding payment issues and that component supply has resumed - allowing Hyundai to restart production.

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