Kia Motors eyes suspending operations at 3 of its South Korean factories

In a statement on Monday, South Korean labour union said that Kia Motors Corp (KRW:000270) plans on temporarily shutting down 3 of its domestic production facilities as Coronavirus brings exports to key markets of the United States and Europe to a near halt.

According to the union official, an agreement has not yet been signed between the union and the automaker. Negotiations regarding workers’ pay during the shutdown are currently ongoing. If approved, Kia Motors will shut down its factories for one week from April 23^rd to April 29^th.

Kia Motors Is Currently 30% Down Year To Date In The Stock Market

The South Korean multinational automotive manufacturer stated on Monday:

“Kia Motors is currently reviewing the suspension of some of its plants in Korea in response to declining global demand due to COVID-19. However, a decision has not been made at this time.”

Following the announcement, Kia Motors was reported trading around 3.4% down on Monday. Its affiliate, Hyundai Motor, on the other hand, saw a narrower decline of 2%. The wider .KS11 index posted a 0.7% drop on Monday.

At £19.38 per share, Kia is currently trading around 30% down year to date in the stock market. The company sustained its strength in the first two months of 2020 but the decline sharpened in March as the confirmed cases of the flu-like virus continued to increase causing severe disruptions in business. The stock dropped to as low as £14.13 per share on March 23^rd.

Owing to the COVID-19 driven downward rally, Kia has now lost its entire gain that it posted in the stock market last year.

South Korea Records A Massive Drop In Exports In April

The Coronavirus pandemic has also pushed Hyundai Motor into suspending production of its Tucson SUV at its Ulsan factory from April 13^th to April 17^th.

Kia Motors and its affiliate, Hyundai have temporarily shut down the majority of their factories located outside of mainland China and South Korea as the pandemic continues to take the rest of the world in its grip.

According to the companies, the ongoing health emergency has weighed heavily on global demand due to an unprecedented loss of pace in consumer spending.

April’s first 10 days posted a massive 18.6% decline in South Korea’s exports as compared to the same period last year. Vehicles shipments dropped 7.1% while vehicle components saw a much wider 31.8% decline in this period.