Kia considers closing South Korean plants

KIA Motors could be about to suspend production at three of its South Korean manufacturing plants as the effects of the ongoing COVID-19 crisis on the global new car market continue to intensify.

In a statement issued this week, the brand said it was “currently reviewing the suspension of some of its plants in Korea” in response to declining global demand due to COVID-19” but a decision had not yet been made.

According to a report by global news outlet Reuters, the outcome of the decision will come down to whether or not the plan is accepted by Kia’s labour union as negotiations revolving around shutdown pay continue.

If the shutdown were to go ahead, production of all models currently offered in Australia – Picanto, Rio, Cerato, Optima, Stinger, Seltos, Sportage, Sorento and Carnival – would cease temporarily between April 23 and April 29, something Kia Motors Australia (KMAu) media and corporate communications general manager Kevin Hepworth said would have little to no impact on local availability.

According to Mr Hepworth, KMAu’s current stock levels of all models are “adequate” enough for business to continue as usual, especially given Kia was one of the few brands to experience sales growth through the first quarter of 2020 (+4.5% vs Q1 2019).

Almost all of this growth can be attributed to the introduction of the Seltos compact SUV which chalked up 2251 sales between the start of January and end of March.

The only other two models to see any sales increases were the Cerato and Rio small cars, the latter of which was the only model to see any sales growth month on month (+19.1%).

If the plants do close down, it would be far from unprecedented given both Kia and parent company Hyundai Motor Group have been temporarily suspending operations at most of their facilities outside South Korea and China.

The move would also mimic Hyundai’s move to shut down its Ulsan production line (where the Tucson is made) between April 13 and April 17.