Even as the news on the strike at Maruti Suzuki is being updated, we have another news on strikes at a carmaker. Hyundai Motors is grappling with a workers strike at its Korean plants over wages. If you were wondering how this will affect Hyundai Motor India, the answer lies in the fact that Hyundai imports its diesel engines from its Korean plants.
Hyundai Motors India has now revealed that the strike in Korea will not affect Indian production immediately as it has an inventory of stock that will suffice for one month. Hyundai Korea is discussing with workers and a resolution on wages is expected to be made soon.
If the strike continues and there is a shortage of parts, particularly the diesel engines, Hyundai Motor India will look for alternative sources. A company spokesperson has revealed it is only a distant possibility and said the strike in Korea will end soon.
The smooth functioning of Hyundai's Korean plant is vital for Hyundai Motor India as it is dependant on Korea for its diesel engines. At a time when demand for diesel cars is so high any disruption in supply will have an impact on production. This will then result in increased waiting periods for Hyundai's diesel cars which include the i20 and the Verna sedan.
Hyundai had recently increased the number of diesel engines it imported by 50% to help reduce the waiting period of the i20 and the Verna. It was also planning to build a diesel engine plant near Chennai but decided not to go forward due to the ambiguity in government policy on diesel pricing.
Hyundai Motor India is hoping the strike is resolved quickly. There is a possibility of supplies coming down even if the strike ends this week as the Korean workers will be going on a summer vacation between July 28 and August 5.
If the strike in Korea becomes a serious issue, it might trigger Hyundai Motor India to consider building at least some diesel engines here in India. This will not only reduce its dependence on Korea for parts but will also help reduce the prices of its diesel cars.