South Korea said Friday it will spare no efforts to help local automakers suffering from a supply crunch amid the fast-spreading coronavirus, which led to disruptions at parts suppliers in China.
"South Korea is taking all necessary efforts to minimize the economic fallout of the new coronavirus on the country," Industry Minister Sung Yun-mo said during a meeting with economy-related ministers.
The South Korean automobile industry is one of the major economic victims of the coronavirus outbreak, as auto parts suppliers in China have been forced to halt their production to prevent the further spread of the deadly virus.
Asia's No. 4 economy imported US$5.34 billion worth of auto parts in 2019, with China taking up $1.56 billion, or 30 percent, according to the Ministry of Trade, Industry and Energy.
Local carmakers especially depend heavily on China for labor-intensive products, including wiring harnesses, steering wheels and air bags.
Due to the supply crunch, local carmakers, such as Hyundai Motor Co. and its sister company Kia Motors Corp., have already suspended or are considering halting some of their assembly lines here.
Top player Hyundai said it will gradually suspend assembly lines at its seven domestic plants by Friday. It is the first time Hyundai has temporarily halted all of its domestic production lines since 1997.
To cope with supply shortages, the ministry said it will seek to simplify the import processing of auto parts from Vietnam, Cambodia and the Philippines; provide financial subsidies to local auto part makers, including loans for the expansion of their production lines; and fund their research and development projects.
South Korea said it is working closely with Beijing and provincial governments of China to win approval to reopen factories supplying auto parts for the country.
"Through the measure, we will promptly ease uncertainties in the supply of auto parts and normalize the production of cars. We will also brace for the possible extension of the situation over a longer period," Sung said.
Outbound shipments of cars reached $43 billion in 2019, up 5.3 percent from a year earlier, standing as the third-largest export product for South Korea. The country's overall exports dipped 10.3 percent last year.