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Kia May Cut Output as Export Markets Shrink

It’s all about disrupted demand overseas
#facilities #asia #Kia

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Idling plants because of the coronavirus isn’t just about protecting employees who work there.

Just ask Kia. The company is pondering a plan to suspend operations at three of its home plants in South Korea because the markets they supply in Europe and the U.S. have been upended by the pandemic.

Translation

Korea has done a good job of getting a grip on the pandemic. But for carmakers, such success at home doesn’t necessarily translate into a need to rush back into high-volume output.

Kia has told its unions that it wants to pause production at its domestic facilities for six days beginning April 23. It’s not because employees face a renewed health threat. It’s because nobody overseas is in a buying mood right now.

The company hasn’t finalized the new shutdown plan, Reuters reports. But it comes as Kia and parent Hyundai tweak their production schedules elsewhere with a sharp eye on making only what will sell.

Market Forces

This week Kia’s factory in Ulsan, Korea, is suspending output of its Tucson midsize SUV, a popular model in the U.S. But the carmaker has partially resumed output in Slovakia of Europe-bound Ceed small cars and Sportage SUVs.

Tomorrow Hyundai will resume partial production of small cars and Tucson SUVs in Czech Republic.

Both companies have been particularly responsive to the health crisis. Hyundai shuttered all seven of its plants in Korea for a few days in early February because of problems getting components from suppliers in China, where the pandemic began.

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