April 25, 2024

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[THE INVESTOR] Hyundai Mobis, Korea’s biggest auto parts maker, alongside other small and mid-size auto parts companies, is facing the impact of THAAD-related tensions, industry figures showed Mar. 9.

According to the Korea Stock Exchange, Hyundai Mobis closed at 240,500 won ($208) per share on Mar. 7, down 1.43 percent from a day earlier.
 
The firm’s value dropped some 5 percent this week, following news that China has amplified pressure on Korean businesses that depend heavily on Chinese consumers and those operating in China. 

Local auto parts suppliers SL and Mando also declined 2.76 percent and 0.2 percent, respectively, on the local stock market.

“Auto parts companies depend on automakers and China for sales. So if the growing anti-Korean sentiment in China continues, it will impact auto parts makers,” said Lee Sang-hyung, an analyst of IBK Investment and Securities.

Hyundai Mobis and Mando both ranked in the top 10 on Bloomberg’s list of 28 South Korean firms that depend on China for over 10 percent of their sales and are vulnerable to China’s retaliation against Korea’s decision to deploy the US’ Terminal High Altitude Area Defense anti-missile system on the Korean Peninsula.

A sales decline of Hyundai Motor is having a domino effect on auto parts companies, such as Hyundai Mobis, which depends on Hyundai Motor and Kia Motors for some 70 percent of its total sales.

“Auto manufacturers are required by Chinese law to operate a joint venture with a China-based firm, so the impact will spread. Meanwhile, local parts firms have to bare all the burden,” Lee added.

Hyundai Motor, South Korea’s biggest automaker, saw the number of its cars delivered to customers decline 28.1 percent on-month in February, figures by the company showed. 

According to company data, China accounts for a larger portion of the pie of auto parts firms’ sales than automakers.

In 2016, China accounted for 24 percent of Hyundai Mobis’ sales and 63 percent of sales at Mando. Meanwhile, Hyundai Motor sold 1.13 million units in China last year, making up 23 percent of its global sales, while Kia Motors sold 650,000 units, which made up 21.6 percent.

“Sales at small and mid-size firms will continue to plunge if China’s retaliation continues. Just as Japan-based automakers’ sales dipped in September of 2012 when a territorial dispute between Japan and China surrounding the Japan controlled-Senkaku in the East China Sea took place,” said Hanwha Investment and Securities. 

By Kim Bo-gyung/The Korea Herald (lisakim425@heraldcorp.com)