In another major face-losing setback in the world’s largest automobile market for South Korea’s household car name Hyundai Motor on top of shriveling sales there, the carmaker had to close down four of its five factories in China for nearly a week because it could not meet payment dues to its parts suppliers. The automaker hurriedly normalized the factories after the news made headlines and sent jitters on the stock market on Wednesday.

Beijing Hyundai Motor Co. (BHMC), Hyundai Motor’s joint-venture entity in China stopped all three factories in Beijing with combined capacity of 1.05 million units and one 300,000-capacity plant in Cangzhou, Hebei Province as of Tuesday, leaving just one 300,000-capacity line in Chugqing.

The factories have been powered down since last week because parts suppliers refused to make shipments in protest to overdue payment. The automaker’s Chinese operation, which is a 50:50 joint-venture with its Chinese partner BAIC Motor, must run operation solely from its performance in China. It is said to have been late in payment dues to its suppliers for up to a month because of poor sales.

Factory output from BHMC plunged 67.5 percent on year in the second quarter alone amid widening repercussions from consumer shunning of Korean brands amid diplomatic spat over Korea’s deployment of a U.S. missile shield. Operation rate of 145 parts suppliers has been hovering under 50 percent because of poor performance of Hyundai Motor and its sister company Kia Motors.

Shares of Hyundai Motor that fell to as low as 138,500 won ($123.44) in the morning upon the news recovered to 143,500 won as of 1.20 p.m. Wednesday after Hyundai Motor announced normalization in the Chinese operation.

While admitting four factories of BHMC stopped running after a French-Chinese maker of plastic fuel tanks delayed supplies, the company said in a disclosure statement that talks went well and production was being normalized.

A car made out of millions of parts cannot be produced if it lacks even a few components.

Hyundai Motor said it could not pay the parts suppliers on behalf of its Chinese subsidiary due to the joint-venture regulations in China.

Sales of Hyundai brand cars in China sank 40.7 percent in January-July period against the year-ago period while those of Kia cars plunged 54.2 percent.

What’s worse is that the factory disruption could recur as Hyundai Motor and Kia Motors are quickly losing their presence in China due to fast ascension of home-made brands under the Beijing government sponsorship while bilateral ties between Korea and Chine remain at their worst.

By Park Man-won and Woo Je-yoon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]