S. Korea Offers Suppliers $3.1 Billion in Financial Aid

The South Korean government is coordinating 3.5 trillion won ($3.1 billion) in aid to auto suppliers struggling with a slump in new-car production, the Financial Times reports.

The program is being funded by Korean carmakers and central and local governments. The plan includes 1 trillion won ($887 million) in loans, 1 trillion won in credit guarantees and extended maturities on 1.2 trillion won worth of existing loans.

Hyundai Motor Co.—the country’s largest carmaker—saw its third-quarter profits plummet by two-thirds to a seven-year low. Demand for the company’s Hyundai and Kia brand vehicles has slumped in China and the U.S. The country has extended a 30% tax cut on domestic new-car purchases through the first half of 2019 to help bolster volume.

FT says the number of major Korean auto suppliers that are posting losses has ballooned from six in 2015 to more than 30 now as they cope with underutilized factories. The country’s auto industry employs 235,000 people and contributes about 7% of Korea’s gross domestic product.