Hyundai Offers $1.5 Billion in Aid to Suppliers

Hyundai Motor Group has pledged 1.7 trillion won ($1.5 billion) over five years to help its small and medium-size suppliers stabilize their businesses and invest in new technologies.

The group’s worldwide sales through the first 11 months of 2018 totaled 4.18 million vehicles, up 2%. But demand fell below year-earlier totals in November (-4% to 403,400 units) and September (-7% to 384,800).

The aid program is intended to offset operating losses within Hyundai’s supply base caused by the shrinkage in vehicle production, The Korea Herald reports. The initiative will begin with a fund worth 140 billion won ($125 million) that suppliers can borrow from to steady their operations and spur technological development.

Hyundai says it also will help 800 of its second- and third-tier suppliers boost efficiency by installing software and automated control systems in their factories. That three-year program will begin in 2019.

The Herald says a separate program involving the Hyundai and Kia brands and Hyundai Mobis parts unit will provide a combined 15 billion won ($13 million) in aid to the group’s suppliers. The newspaper notes that a government initiative in October offered 1 trillion won ($891 million) in special credit guarantees for suppliers.