March 26, 2020 11:32
Kia will close down its car plant in the U.S. state of Georgia for 10 days from March 30 as sales decline sharply due to the coronavirus pandemic, the carmaker said Wednesday. It follows its affiliate Hyundai's halt of production at its plants in Alabama last week.
The two have closed seven of their 12 plants abroad due to the pandemic -- Hyundai in Brazil, Czech Republic, India and the U.S. and Kia in India, Slovaki and the U.S.
Hyundai and Kia are capable of producing 9.32 million cars a year, but the temporary closures have reduced that amount to 6.77 million, which is similar to their capacity back in 2011. Their plants in China already ran at only 35 percent capacity last year, and they produced almost no cars there early this year due to the coronavirus outbreak there.
Their stock prices have also fallen to levels last seen around a decade ago. Hyundai's share price closed at W84,500 on Wednesday (US$1=W1,232).
Analysts had expected the two automakers to achieve sound results overseas this year due to the rollouts of several new models and accolades abroad for their quality and design, but the pandemic poured cold water on everything.
Their plants in Korea halted production last month due to disruption in supplies of auto parts from China, and most overseas factories followed suit this month.
According to the China Passenger Car Association, car demand in China has recovered slightly this month compared to February, but Hyundai and Kia are still struggling there. The U.S. market, where Hyundai achieved the largest monthly sales at 53,013 cars last month, was the only source of hope, but car purchases there are expected to grind to a halt as unemployment is projected to rise due to the epidemic.
Dealerships in Europe have also closed down temporarily leading to forecasts of sharp sales declines.
Kim Pil-soo at Daelim University said, "Hyundai's future relies on its performance in the U.S. and Europe where high-margin SUVs sell well."
Hyundai plans to offer exemptions on installment payments and extended warranty periods to lure more American customers. In 2009, just after the global financial crisis, Hyundai-Kia achieved stellar sales by offering American consumers the option of getting a full refund on their car if they are laid off within a year.
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