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Hyundai Stops South Korean Production Over Coronavirus Supply Chain Issues

Manufacturers including Hyundai, Tesla, Ford, PSA Peugeot, Nissan, and Honda have all closed factories in China

Evan Williams By: Evan Williams February 5, 2020

Automotive factory shutdowns caused by the coronavirus outbreak have now started to affect operations outside of China. Hyundai is the first to shut down outside of that country, suspending production in South Korea because parts suppliers from China have been disrupted.

More than 24 of China’s provinces, cities, and other regions were closed for business as of Monday morning, with government statements saying that the closures would continue until at least February 10th. Those areas account for the vast majority of China’s exports, which means that countless factories are closed while the government fights to stop the spread of the coronavirus, which has infected more than 24,000 in the country.

Manufacturers including Hyundai, Tesla, Ford, PSA Peugeot, Nissan, and Honda have all closed factories in China, along with China’s domestic auto manufacturers. The closures include parts suppliers, and that’s what is starting to impact automaker production outside of China.

The first to announce a closure outside of China is Hyundai, which made the decision yesterday, Reuters reports. Many of Hyundai’s parts suppliers are located in China, and those missing components mean the idling of most of Hyundai’s South Korean plants. Reuters said that the exact cause of this stoppage is wiring harnesses, but that the stoppage, set to start on the 7th, is expected to end on the 11th or 12th.

“Hyundai and Kia may be more affected as they tend to import more parts from China than other global automakers” Lee Hang-Koo, senior researcher at the Korea Institute for Industrial Economics & Trade, told Reuters.

If Hyundai’s assembly line stoppages continue, it could cause supply issues for the company’s Palisade SUV and the brand-new Genesis GV80 crossover.

Expect more assembly stoppages to occur, due to the just-in-time nature of automotive operations and expanding global supply chains, where the goal is to avoid stockpiling parts and instead have them arrive as close to the moment they’re needed as possible. Though many automakers do keep production of most components in locations close to where final assembly occurs, so where and how widespread additional closures could be is yet to be seen.

Source: Automotive News