South Korean automakers are suffering from the same automotive market downturn that has caused havoc for the majority of the automotive world. Hyundai, the country's biggest automaker, announced today that it will cut production at its domestic plants by 25-30 percent for the first quarter, while Ssangyong, the fifth largest, has filed for bankruptcy.
Hyundai's sales fell 2.4 percent in December. "We decided to reduce production by 25-30 percent at all of our domestic factories, except two lines for small cars, in the first quarter," Jake Jang, a Hyundai spokesman told Reuters on the phone.
Ssangyong Motor Corp, owned by Chinese SAIC Motor Corp, filed for bankruptcy just before Hyundai's announcement. December sales for Ssangyong were down 53 percent, compared to an average 13 percent decline for all five of South Korea's automakers.
Ssangyong initially sought help from the government and banks, but found no support. SAIC injected about $20 million into the automaker earlier this month
SAIC, China's biggest car maker, bought a controlling stake in the South Korean company in 2004 for $500 million. Today, its share is worth an estimated $271 million. Although the Chinese automaker still has hope of reviving Ssangyong, it is unwilling to invest more money. Analysts say SAIC may seek to buy a different automaker instead-Volvo, Saab and Hummer are all currently for sale.