South Korea’s Hyundai Motor Group will aggressively ramp up production at home and rollout of new releases while its top executive bought back shares in bulk to make the name stand out among automaking majors grappling with common challenge from factory shutdown and global economic fallout from virus pandemic.
According to industry sources on Sunday, most of Hyundai Motor Co. and its smaller sibling Kia Motors Corp.’s overseas factories with a combined output of 3.88 million vehicles last year have been plugged off amid the spread of the new coronavirus across the world.
Hyundai Motor’s factory shutdown in the U.S. extends until Apr. 13, and Kia Motors also will halt production for two days in Mexico, adding to the Easter period on Apr. 8-11.
The Chinese plants have recently resumed operation, but it is expected to take some time before making a full recovery in the world’s biggest auto market, said market experts.
Amidst worsening business conditions overseas, Hyundai Motor and Kia Motors turned focus on the local market. Domestic factories now are in normal operation, and new car models have received warm response from local customers.
Luxury sedan brand Genesis’ first SUV model GV80 drew 30,000 orders at home, and Kia Motors’ Sorento SUV 26,000 pre-orders. All-new Avante sedan of Hyundai Motor also has made impressive debut with pre-orders topping 10,000 in the first day of launch in Korea, nine-times larger than the previous sixth-generation version.
Hyundai Motor now is discussing a temporary extension of workweek hours to 60 through overtime with its labor union to expand output at its Ulsan factory.
Kia Motors also expects that domestic orders would meet its earlier target for the home market despite a possible change in plans for outbound shipments in the second quarter, according to Shinhan Investment.
To win shareholders’ confidence in the battered stocks amid the ongoing virus crisis, Hyundai Motor Group’s executive vice chairman Chung Euisun purchased total 80 billion won ($65.3 million) worth shares in Hyundai Motor and Hyundai Mobis.
The vice chairman heads the managing board of the two units.
According to the disclosure of each unit, Chung has bought 581,333 shares in Hyundai Motors at 40.57 billion won in total and 303,759 shares in Hyundai Mobis at 41.09 billion won from March 19th to 25th. With the purchase made over five straight sessions, Chung now holds 2.62 percent stake in Hyundai Motor and 0.32 percent stake in Hyundai Mobis.
Market analysts expect that Chung’s treasury stock purchases show his commitment to the companies and will help boost shareholders’ confidence in the companies’ stocks.
Kia Motors’ Sorento SUV and All-new Avante of Hyundai Motor Co. [Photo provided by Kia Motor and Hyundai Motor]
Another relief is that the overall financial health of Hyundai Motor Group companies remains sound. The shares of its mainstay Hyundai Motor and Kia Motors already went correction in the early stages of the global COVID-19 crisis, and both units sit on ample liquidity. Hyundai Rotem is the only unit that suffers from losses and has decided to issue convertible bonds worth 240 billion won to obtain working capitals and repay maturing bonds.
Experts now are watching how long the coronavirus pandemic would last. If shutdowns at the U.S. and European manufacturing bases are extended into the latter half of the year, the Korean auto makers would suffer from a supply disruption of key auto parts that would jeopardize the future of Korean parts makers.
On Monday, Hyundai Motor shares closed 1.16 percent lower at 85,400 won, and Kia Motors 2.16 percent down at 24,950 won in Seoul.
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]