Hyundai suspends output at China plant amid diplomatic spat
Hyundai Motor Co. said Monday that it has suspended production at one of its Chinese assembly plants for a week, fueling concern that a diplomatic standoff may be hurting sales in the company's top market.
South Korean companies, from cosmetics firms to retailers, say they are being targeted in China because of Beijing's objections to a planned deployment of the U.S. Terminal High Altitude Area Defense system in South Korea. China worries the system's powerful radar can penetrate its territory.
Hyundai said it suspended output at the plant in Hebei Province, from March 24 to April 1, to check a production line to modify technology. The automaker has three other assembly plants in China, a country that accounts for a quarter of its total sales. No further details were available.
Hyundai decision to idle a China plant was first reported by online media ChosunBiz on Sunday.
Industry officials and analysts say the suspension may be aimed at bringing down inventories given slowing sales in China, due to political tension and rising competition.
Ko Tae-bong, an analyst at Hi Investment & Securities, said Hyundai's March sales in China may have fallen year-on-year due to the political spat, after rising in January and February.
China competition
The automaker already is grappling with falling market share in China with a product lineup that features more sedans at a time when crossovers and SUVs have become more popular.
Geely Automobile Holdings recently reported its biggest profit growth in eight years, underlining a competitive threat from Chinese makers armed with cheaper crossovers and SUVs.
Hyundai makes Verna subcompact cars at its Hebei plant, which came online less than six months ago.
The automaker plans to start production at a fifth China factory later this year. Hyundai's China operations are run by a 50-50 joint venture with state-owned Beijing Automotive Industry Holding Corp.
Hyundai officials have previously said the company's business ties with Chinese firms meant they were less likely to be the main target of any punishment resulting from the diplomatic standoff over the deployment of the THAAD.
The chill in business ties between the nations is evident elsewhere. China's tourism ministry has instructed tour operators in Beijing to stop selling trips to South Korea, while state media has called for a boycott of South Korean goods.
Chinese authorities also have closed nearly two dozen retail stores of South Korea's Lotte Group, with some workers saying the closures were fire-safety related. Earlier this year, Lotte approved a land swap outside of Seoul that will allow South Korea to install the THAAD.
Hyundai said it suspended output at the plant in Hebei Province, from March 24 to April 1, to check a production line to modify technology. The automaker has three other assembly plants in China, a country that accounts for a quarter of its total sales. No further details were available.
Hyundai decision to idle a China plant was first reported by online media ChosunBiz on Sunday.
Industry officials and analysts say the suspension may be aimed at bringing down inventories given slowing sales in China, due to political tension and rising competition.
Ko Tae-bong, an analyst at Hi Investment & Securities, said Hyundai's March sales in China may have fallen year-on-year due to the political spat, after rising in January and February.
China competition
The automaker already is grappling with falling market share in China with a product lineup that features more sedans at a time when crossovers and SUVs have become more popular.
Geely Automobile Holdings recently reported its biggest profit growth in eight years, underlining a competitive threat from Chinese makers armed with cheaper crossovers and SUVs.
Hyundai makes Verna subcompact cars at its Hebei plant, which came online less than six months ago.
The automaker plans to start production at a fifth China factory later this year. Hyundai's China operations are run by a 50-50 joint venture with state-owned Beijing Automotive Industry Holding Corp.
Hyundai officials have previously said the company's business ties with Chinese firms meant they were less likely to be the main target of any punishment resulting from the diplomatic standoff over the deployment of the THAAD.
The chill in business ties between the nations is evident elsewhere. China's tourism ministry has instructed tour operators in Beijing to stop selling trips to South Korea, while state media has called for a boycott of South Korean goods.
Chinese authorities also have closed nearly two dozen retail stores of South Korea's Lotte Group, with some workers saying the closures were fire-safety related. Earlier this year, Lotte approved a land swap outside of Seoul that will allow South Korea to install the THAAD.
