| Cars are ready to ship at the export loading dock at Hyundai Motor's Ulsan plant. Yonhap |
By Kim Hyun-bin
Local automakers have been closely monitoring the escalating Russia-Ukraine military tensions, as they export a significant number of vehicles to both countries, according to company officials Wednesday.
The Korea Automobile Manufacturers Association (KAMA) expressed its concerns to the Ministry of Trade, Industry and Energy over a possible decline in demand and disruption in the supply of parts in the event of a war between Russia and Ukraine, calling for a contingency plan.
Last year, about half of Korea's exports to Russia were made up of automobiles and auto parts, and $2.496 billion worth of cars were exported. Auto parts ranked second with exports of $1.454 billion. Automobiles and related parts accounted for 29.2 percent and 15 percent of Russia's total imports, respectively.
KAMA predicted that in the event of continuing Russia-Ukraine tensions, domestic sales in Russia would decrease by 10 percent and if the situation expands into an all-out war, a 29 percent drop is predicted to occur.
“If the conflict expands into an international conflict dragging in other countries, it would become worrisome as it could disrupt the global supply chain, among other export issues,” a GM Korea official said.
Hyundai Motor Company produced about 230,000 vehicles last year at its St. Petersburg plant in Russia. Kia Motors sold 206,000 and Hyundai Motors 172,000 cars, reaching a combined total of nearly 380,000, which includes the amount of production and exports through local sales corporations.
As of 2021, Hyundai Motor and Kia recorded 38,161 and 51,869 vehicle exports, respectively with Russia accounting for 4.5 percent of the total export volume of the conglomerate.
Fortunately, Hyundai Motor's St. Petersburg plant is about 1,200 km away from the disputed area between Russia and Ukraine, and therefore is not directly affected. However, there is a possibility of a supply parts disruption due to the escalation of tensions.
"We are closely monitoring the local situation," a Hyundai Motor official said.
SsangYong Motor also is being supplied some car parts from Slovakia, which borders Ukraine.
SsangYong Motor's exports to Russia have been suspended since 2014 and exports to Ukraine since 2017, but it is receiving raw materials such as aluminum from Ukraine and parts from Slovakia through its partners.
“We have partner firms in Slovakia but the import of vehicle parts is relatively small from the region, so we won't be heavily impacted by the conflict,” a SsangYong official said.
KAMA has temporarily applied emergency quota tariffs on items facing possible supply disruption due to the Ukraine crisis, and has requested liquidity support for companies suffering due to export sanctions to Russia.