Daewoo Motor Company was forced to suspend production today (Wednesday) as a major supplier owed part of $US700 million in unpaid bills stopped deliveries of brakes and other parts, Reuters reported.
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Reuters said that Daewoo has estimated that lost output stemming from a continued boycott by suppliers would amount to 15 billion won ($US12.5 million) a day, or around 2,000 cars.
“We had a limited inventory of components. Our chairman is continuing talks with our biggest suppliers to seek their cooperation,” Daewoo Motor spokesman Kang Sung-ki told Reuters.
A group representing Daewoo’s 191 parts suppliers had agreed at a meeting on Monday to halt supplies from Thursday, Reuters said.
Daewoo told Reuters its biggest single supplier, unlisted Korea Delphi Automotive Systems, which is not part of the group that met the car maker on Monday, acted independently by halting supplies on Wednesday.
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By GlobalDataAll the suppliers are seeking around 850 billion won ($708.3 million) in back payment, Reuters said.
An official at Daewoo’s main lender, Korea Development Bank (KDB), was unable to confirm to Reuters a report in the Korea Economic Daily that the state-run bank plans to offer as much as 100 billion won to the car maker’s parts suppliers.
The KDB official told Reuters that such a decision was still under discussion.
Daewoo has said it needed creditors’ approval to make payments owed to the parts suppliers, while the lenders were still in discussions over how much debt they should shoulder, Reuters noted.
KDB has provided 727.9 billion won in support payments to Daewoo since the automaker entered court receivership in November 2000, another official at the bank told Reuters. Since then, Daewoo Motor has repaid KDB about half of the loans, he said.
An official at Delphi in South Korea told Reuters it had yet to receive more than 200 billion won for parts supplied since November 2000.
“Until May, it took two weeks for cash payments for supplied parts,” the official told Reuters. “Now, payments are being delayed up to five weeks,” he said, adding that the amount of orders had also declined.
The Daewoo spokesman told Reuters that the car maker had enough completed cars in inventory to last from one to three weeks of sales.
But supplies of the automaker’s Rezzo minivan, sold as the Tacuma in the key US market, had almost run out, the spokesman told Reuters.
