Kia, which was hampered by fire in the safety industry, highlights the need to manage supply chains for small car parts

*This content was translated by AI.

The need to inspect supply chain management has once again come under fire in the aftermath of a major fire at Hyundai Motor and Kia's primary partner safety industry, which supplies key engine parts to major internal combustion engine models.

According to the automobile industry and the sales front line on the 25th, serious parts shortages began to erupt around Hyundai Motor and Kia's small and medium-sized vehicles as the safety industry's production facilities, which have supplied a significant amount of engine valves, were destroyed in the fire. The first models hit by the incident were Kia's flagship compact cars, Morning and Ray, which have already officially halted production due to the inability to supply and demand parts, and as the line stopped operating, the waiting period for consumers to deliver new cars has increased without a promise.

A more serious problem is that even the Avante, the main model that supports Hyundai Motor's domestic sales, has been directly affected, and the waiting period for Avante's shipments, which remained at around a month until last month, has increased sharply to more than three months right after the fire, and the industry believes that the Avante production line at the Ulsan plant is also likely to be shut down within this week. In particular, small and semi-medium internal combustion engine models, whose demand has been relatively stagnant as the finished car industry has recently focused on electrification, have taken an efficiency strategy that does not secure enough inventory parts, but paradoxically, this "low inventory operation" has resulted in maximizing the impact of supply chain disconnection along with unexpected fire accidents.

Engine valves are a key component that requires high precision processing technology, and it will take a considerable amount of time to restore dedicated production lines lost in fire or secure a third alternative supply line to complete quality verification, deepening concerns about prolonged production disruptions. At the sales site, official guidelines at the headquarters have not yet been delivered to all branches, but they have already begun to evolve by guiding contract customers about possible delays in delivery, and some prospective buyers have begun to cancel their contracts without enduring delays in shipments.

Experts point out that the incident is a typical supply chain risk brought about by excessive dependence on certain primary partners and criticize that despite Hyundai Motor and Kia's steep growth in the global market, the core parts supply system of domestic production bases is still tied to a single path, making them very vulnerable to disasters.

Hyundai Motor Group is reportedly considering all available measures, including early recovery measures through cooperation with accident companies, diversion of overseas plant supplies and emergency production increase by other suppliers, but the waiting situation for shipments is expected to continue for the time being. In the end, the safety industry fire revealed the potential risks of the cost-saving supply chain structure pursued by automakers beyond simple accidents of individual companies, and the diversification of parts supply chains and the re-establishment of emergency response systems have emerged as urgent tasks in the future. Consumers are paying keen attention to the timing of resuming production of their reserved models, and the industry is paying close attention to the negative impact of the parts crisis on overall sales performance in the first half of the year and the possibility of market fluctuations in the used car market.

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*This content was translated by AI.