Hyundai production cut in international markets

South Korea automotive major Hyundai has decided to go for a cut in output at all its plants at various international locations.

The move has come as a follow up to declining sales world over. All domestic plants of Hyundai began cutting daily overtime in the first such move since 1998, when South Korea’s economy teetered on the edge of collapse in the face of the Asian financial crisis.

Industry observers have pointed out that Hyundai is suffering from the worst economic downturn in decades amid slumping sales in major markets such as the United States, Europe and China.  As per the decision, the company has already cut production at its seven plants in South Korea. It has in fact gone ahead and reduced monthly output by 10 per cent.

Reports said that the automotive giant as already informed the labour union of its reduction of output at its all overseas plants. Hyundai, which has long relied on overseas markets to increase growth, has overseas plants in the US, China, India and Turkey. Hyundai had earlier enough stopped weekend overtime at its local plants to cope with slowing demand overseas and weak domestic consumption.

Though the company has not made public the magnitude of its proposed production cuts, it is expected that the reduction is going to be fairly big. Plummeting sales have also forced Hyundai to stay away from acquiring other automakers as the company feels that it’s more important to have cash reserves for now. Last month, Hyundai’s vehicle sales fell 1.6 per cent from a year earlier to 234,211 units.

Meanwhile, in the Indian scenario, Hyundai Motor India Ltd saw domestic passenger-car sales fell 23.34 per cent to 14,605 units in November against 19,052 units in the same month last year. However, according to available data, the company’s cumulative sales, which includes exports, in November were up by 48.89 per cent to 43,105 units compared with 28,950 units in the year-ago period. Exports for the month rose by nearly three-fold to 28,500 units.

HMIL sold 38,216 units of hatchbacks Santro, Getz Prime and i10, 4,883 units of Accent and Verna, two units of Sonata Embera and four units of its SUV Tucson in November.

“It is becoming increasingly challenging to keep the sales ticking and the footfalls in the showroom across the country has shown a steady downfall, which is the combined effect of increase in interest rate, high inflation and economic slowdown,” HMIL Senior Vice-President (Marketing and Sales) Arvind Saxena said.

The trend of slowdown was likely to continue in the coming months too, he added