Han Ye-kyung and Lee Eun-joo
Hyundai Motor Group, owner of South Korea’s two largest automakers Hyundai Motor Co. and Kia Motors Corp., has earmarked over 1.6 trillion won ($1.5 billion) in funding to their supply chain amid collective downturn in the auto industry.
Hyundai Motor Group on Thursday pledged a 1.67 trillion won funding package for its small- and mid-size auto parts suppliers to help them sustain operation amid reduced order and make necessary upgrades for demands in environmentally-friendly and future cars.
The conglomerate will newly create a 140 billion won worth of future growth fund to provide funding support to stabilize management of its first- to third-tier suppliers and boost investment in new technology. Suppliers will be able to receive low-interest loans from the fund to be used to overcome difficult business environment and invest in future vehicle components such as of green cars and self-driving cars.
The fund is in addition to Hyundai Motor Group’s combined 455 billion won worth fund created earlier this year to help second- and third-tier suppliers.
Hyundai Motor Group promised to front-load investments to its component suppliers so that they can keep ahead in component research and development and parts mass production, noting projects do not go smoothly if funding is made after R&D is completed.
It will provide early payment of funds to component suppliers to be used to mass produce auto parts. The conglomerate expected suppliers to benefit from about 1.46 trillion won worth of early payment for component investment over the next five years.
The 1.67 trillion won funds will also be used to provide emergency funds to help small- and mid-size component suppliers stabilize their management, expand facility for hydrogen cars, utilize shared growth payment system, and establish facility autonomous control system. It will also be used to help support suppliers attend auto component exhibitions at home and abroad and manage programs that introduce them to overseas buyers.