Geo Political Tensions Hurting Hyundai

The recent events in the Asian basin has proved even more challenging for the Hyundai Motor Company.  While tensions continue to run high in the region with multiple missile tests from the North Koreans, the Chinese market for the South Korean manufacturer seems to have been hit harder by the US decision to install new defense systems. Sales for Hyundai have dropped over 60% since the whole event transpired and more and more Chinese buyers are avoiding the brand all together. Even more telling is that the company’s manufacturing plants are in yo-yo mode with factories stopping and starting production every couple of weeks when assembly lines go dark on any given day.

The company isn’t getting much help from the Chinese government on this either as the state controlled and ran newspaper continues to bash the company in its editorials for being “arrogant and greedy” because they are no longer using more Chinese suppliers. These attacks on the company have led to a number of suppliers suspending shipments to Hyundai which is only exacerbating the issue with plants having to shut down because of the lack of materials to build cars with. The dealer groups are also up in arms as they continue to lose money because of the need for major incentives to attract any kind of buyer. Many are taking net losses on the limited number of cars they are selling and there’s a number of dealers who are threatening to stop carrying the brand all together. When you add this to the challenges that the company is facing in the US, where sales dropped a whopping 25% year over year, the company as whole is in major crisis mode and will need to make some drastic changes to pull out of this tailspin.