South Korea to help car industry ride out coronavirus
South Korea said on Monday it would provide logistical and financial support to help the car industry through the coronavirus crisis, warning of disruptions to supply chains from Europe and the US.
The government said it would speed up customs clearance, arrange freight transportation and provide liquidity support for the industry, which employs about 12% of South Korea's workforce, according to official figures.
The coronavirus pandemic has led to shutdowns at car factories and dealerships in the US and Europe which are expected to affect South Korean car makers such as Hyundai and Kia.
"It's time to prepare for the shock of a global demand contraction and European supply issues," industry minister Sung Yoon-mo said during a meeting with parts supplier executives and industry associations, according to a statement from the ministry.
"Survival is the most crucial thing in this unprecedented crisis, when both demand and supply contract at the same time."
The ministry did not give details about how much liquidity support the government would provide or what form it might take. The assistance is part of 50-trillion won (around R694bn ) in emergency financing announced last week to boost the economy.
South Korea has reported 8,961 coronavirus cases and 110 deaths from the disease.
Hyundai closed its Montgomery, Alabama, assembly plant in the US last Wednesday after an employee there tested positive for Covid-19. It also suspended production at its plants in the Czech Republic and India because of the coronavirus pandemic.
Europe and the US account for about 70% of Korean car makers' exports, and 54% of Korean parts exports, government data showed.
A trade ministry official said South Korean exports would deteriorate in April and May, after rising 10% year-on-year in the first 20 days of March. Car exports rose 13.7% in the period, customs agency data showed on Monday.
"For the time being, a drop in exports of cars and car parts are inevitable as factories and dealerships are closing," Sung said.
South Korean car makers had stocked up on inventories which could last up to two months, Sung said.