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Carmakers cutting output due to supply shortage

Some automakers in Korea are considering reducing their output due to a shortage of parts from their Japanese suppliers hit by last week’s powerful earthquake, company officials said Friday.

Renault Samsung Motors Co., Renault SA’s Korean unit, will cut production at its Korean factory to prepare for a potential parts supply disruption the company said.

The carmaker will cut overtime work at its factory until the end of March and that will reduce total monthly production by as many as 2,500 units.

Renault Samsung receives up to 18 percent of its parts from Nissan and its smaller suppliers as its French parent, Renault, has a strategic alliance with the Japanese automaker.

“Renault Samsung imports all engines and transmissions from Japan so it faces the biggest challenge,” said Kim Byung-kwan, an analyst at Mirae Asset Securities Co.

GM Korea, a General Motors Co. unit, is also considering cutting overtime work at its factories if the Japan quake impact is prolonged and disrupts parts production, a spokesman Kim Sang-won said.

Kim added that the company hadn’t made a final decision.

The company said its auto parts currently in stock will soon run out unless supplies from Japan resume at an early date, GM Korea brings in only about 3 to 4 percent of its vehicle components from Japan under its international operations network, but the company is said to import all its engines for its small passenger vehicles Lacetti and Chevrolet Spark from Japanese suppliers.

Carmakers expect such a drop in production will not lead to an immediate decline in sales or an undersupply of vehicles unless the current supply disruption lasts for a long period of time.

Korea’s top automaker Hyundai Motor Co. and its affiliate Kia Motors Corp. are believed to be better insulated from the Japanese risk as their dependence on parts from Japan is significantly lower than that of other automakers here.

Still, Hyundai or Kia are not completely safe as many of their 2,690 Korean suppliers depend heavily on Japanese parts.

Production at Ssangyong Motor Co. may also be affected this month, Pawan Goenka, Mahindra & Mahindra Ltd.’s automotive division president, said in Mumbai. Mahindra-owned Ssangyong imports some “critical parts” from Japan, Goenka said.

(From news reports)
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