Hyundai Motor's Inventory Running Out

Seoul S.Korea July 27, 2003; Bae Keun-min writing for the Korea Times reported that Hyundai Motor is faced with a big sales problem after operations at its production lines were halted due to the protracted labor strike and summer vacation.

A month-long strike at the nation¡¯s largest automaker has prevented Hyundai from supplying automobiles and auto parts to domestic as well as overseas markets and plants. It has already reported a loss of 1.27 trillion won in production due to the strike.

Its union members will go on collective vacation for a week from today. It is still unclear whether operations of the assembly lines will be normalized after the break, as negotiations between management and labor on wage increase and working hours remain unsettled.

Signs of severe supply bottleneck have already been reported.

Assembly lines in Russia, Egypt, Malaysia and Pakistan, to which Hyundai provides know-how and auto parts, have stopped their operations due to the supply interruption, Hyundai said. Plants in China and Turkey are to suspend operations of their manufacturing lines soon unless the supply of parts is resumed.

In particular, the Sonata-producing mill in Beijing has only enough auto parts in inventory for this month¡¯s manufacturing. It will have to cease its operation from next month unless the negotiations between the company and its labor union are completed right after the summer holidays, according to Hyundai.

After the suspension of operations at factories in Russia and Egypt, Hyundai said it has been receiving written protests from the auto mills, saying foreign automobile dealers are threatening to stop doing business with Hyundai.

Hyundai has yet to ship 50,000 units to the U.S. market and 13,000 to the rest of the world.

After August, Hyundai may be unable to meet the demand, a Hyundai official said.

Due to the halt in production, Hyundai is unable to take full advantage of the government¡¯s excise tax cut on automobiles.

Hyundai has received orders for more than 5,000 vehicles daily, more than the normal daily average of 2,200, since July 12 when the excise tax cut went into effect. But Hyundai is unable to meet the orders.