Hyundai Motor, Kia Motors cut production in China amid diplomatic tensions

The sales of South Korean manufacturers has declined due to poor consumer sentiment from Chinese consumers due to political tensions between the two.

A man takes pictures of a Hyundai car during the 15th Shanghai International Automobile Industry Exhibition in Shanghai. Photo: Reuters

South Korea's Hyundai Motor Co and Kia Motors Corp have slashed vehicle production in China, people familiar with the matter told Reuters, amid diplomatic tensions and competition from local brands.

China, the world's biggest auto market, accounted for over a quarter of the pair's 2016 overseas sales but their March sales there were hit by anti-Korean sentiment and competition from local automakers like Geely Automobile Holdings Ltd.

Kia Motors has cut production shifts at its China factories, two of the sources said. One of them said Hyundai also had eliminated a second shift from its three factories in Beijing starting mid-March.

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The sources declined to be identified because the matter was not public. The automakers declined to comment on Tuesday.

Hyundai earlier said it had suspended output at its factory in Hebei from March 24 to April 4. It was unclear how the shift cut would affect employment there.

Political tensions have soared since late February when South Korea's Lotte Group agreed to provide land for a US missile defence system in South Korea. The move angered Beijing, although Seoul says the system is a response to North Korea`s nuclear threat and is not intended to contain China.

South Korean firms including Lotte Group have encountered difficulties in China such as boycott calls in state media, protests, suspension of operations and cyber crime.

The South Korean automakers said on Monday that weaker sales in China had likely dragged down overseas sales in March, blaming poor "consumer sentiment towards Korean products".