Pricing Clash Halts Korean Plant Production

GM Daewoo, the third largest auto manufacturer in South Korea, has released a statement to news sources saying that the company has stopped auto production at its Bupyeong manufacturing plant after OE tyre suppliers halted shipments to the factory. Hankook and Kumho, who between them provide over 85 per cent of the tyres fitted to vehicles at the GM Daewoo facility, have suspended supplies in a dispute over tyre prices.

The two tyre manufacturers have been requesting a hike in tyre prices of 12 per cent in the wake of soaring production costs. According to sources within the industry, GM Daewoo has agreed in theory to a price rise, but does not accept the figure placed on the rise by the manufacturers. However, Hankook’s spokesman has stated that “GM Daewoo refuses to negotiate and told us to withdraw the request.”

Both tyre makers have said that they have no intention of resuming shipments until GM Daewoo shows the intention to make a price hike deal. Currently, the only factory to have been affected is that based in Bupyeong. GM Daewoo has a further two car manufacturing plants in the country, in Gunsan and Changwon. The auto maker has stated that it has filed for a preliminary injunction at Seoul Central District Court in an attempt to force Hankook and Kumho back to shipping.