Coronavirus causes Hyundai to suspend manufacturing in Korea

6 February 2020

Hyundai has become the first carmaker to announce a suspension of production outside of China due to the impact of the coronavirus.

The manufacturer is to stop building models in Korea, its biggest manufacturing base, with seven factories producing models for the domestic market and the US, Europe, Middle East and other territories. The country accounts for around 40% of Hyundai’s global output.

While carmakers such as Tesla, Ford and PSA Group have suspended production in China due to the virus, Hyundai is the first to take action outside the country. However, it is unlikely to be the last, with supply chains expected to be hit as manufacturing of parts slows.

Crossed wires

Schedules of suspension will vary by production line, according to the company, with some halted until 12 February.

′The company is reviewing various measures to minimise the disruption of its operations, including seeking alternative suppliers in other regions,’ Hyundai said.. ′Hyundai Motor will closely monitor developments in China and take all necessary measures to ensure the prompt normalisation of its operations.’

Hyundai and Kia lean heavily on Chinese imports of parts across all their models. In this instance, it is the shortage of a simple wiring loom that has led to production being halted.

However, with the majority of vehicle manufacturers running their schedules based on just-in-time deliveries, it is likely that the coronavirus outbreak will lead to further delays at other plants around the world.

Two of the affected suppliers of the wiring loom, Kyungshin and Yura Corporation, said they were trying to increase production at their factories in South Korea and Southeast Asia to compensate for the disrupted supply from China.

Supply disruption

Both Bosch and Valeo make components in China for export to manufacturing plants around the world, and each company has suspended production, with Valeo not looking to open factories again until 14 February.

Seven workers at Webasto in Germany have contracted the virus after a colleague from China visited their facility, which the company has closed temporarily. The condition of the workers is reported as ′positive’.

Neil King, Senior Data Journalist at Autovista Group commented recently: ′I cannot envisage that the coronavirus outbreak will not severely disrupt the automotive supply chain and, in turn, vehicle production and deliveries says. ′Even if employees in affected areas in China can still travel to work, and so factories remain operational, transport restrictions will undoubtedly delay the movement of automotive parts, if not sever it entirely in some cases, and disrupt the just-in-time modus operandi.’ His prediction is evidently playing out.