Hyundai Motor said on Wednesday it had restarted production in China after a supply issue forced the suspension of operations past week, complicating its efforts to raise sagging sales.
The production stoppage that is resolved at the moment, contributes to investor issues after the South Korean automaker posted its smallest quarterly profit in five years in the middle of political headwinds linked to diplomatic tensions between South Korea and China.
Hyundai was required to cut production at its four factories located in China earlier this year because of plunging sales. Its fifth China factory was set to start production this month.
Hyundai Motor’s sales from its Chinese factories dropped 64 percent to 105,000 vehicles in April-June alone.
“The effects of the China production halt are yet uncertain, however Hyundai’s third-quarter results are likely to be below the previous quarter partly due to continued weak performance in China,” stated Park Sang-won, expert at Heungkuk Securities.
Hyundai shares pared losses following the skid to their lowest level in over four months on Wednesday, dropping as much as 3.8 percent. They were trading down 0.4 percent at 0504 GMT (1.04 a.m. ET), compared to a flat larger market.KS11.
Hyundai stated previously on Wednesday its joint venture with China’s BAIC Motor Corp Ltd started shutting down production recently after a fuel-tank components provider refused to offer parts due to non-payment.