Hyundai Motor, GM Korea strikes threaten to disrupt Korea’s auto exports

Hyundai Motor's union workers stage a protest in front of its factory in the southern city of Ulsan, Wednesday. Yonhap

Korea’s major carmakers face an increasing risk of production disruptions and subsequent export shocks in the wake of partial strikes at Hyundai Motor and General Motors (GM) Korea.

Hyundai Motor's union launched a four-day partial strike starting Wednesday, after wage negotiations broke down, marking the first large-scale walkout since 2018.

It is expected to cause major financial damage to the carmaker. In 2016, the company was estimated to have suffered losses of approximately 2.5 trillion won ($1.8 billion) in the wake of a large-scale strike. Its union workers suspended production for 166 hours, resulting in the carmaker unable to produce some 114,000 vehicles.

GM Korea’s union began a three-day partial strike Monday, stopping work for four hours each day.

GM Korea's union workers hold a protest at its manufacturing facility in Bupyeong, Incheon, in this undated file photo. Yonhap

GM Korea’s production suspension also comes as a major risk for the export-reliant Korean economy, as more than 80 percent of vehicles produced at its factories here are exported to the United States. GM Korea, along with Hyundai Motor, serves as a major pillar supporting Korean auto exports to the world’s largest economy.

Industry officials raised concerns that major carmakers could be exposed to higher risks from the sequential strikes, as they continue to grapple with the aftermath of U.S. tariffs.

“The carmakers’ earnings have seriously deteriorated amid the 25 percent auto tariff imposed on Korean car imports to the U.S.,” an industry official said. “The sequential strikes by the major carmakers’ unions will further aggravate the firms’ earnings outlook and hold back their export growth.”

Kia’s labor union has also been holding wage negotiations with its management. Given that the union and management still have a wide gap in their ongoing talks, the carmaker cannot exclude the possibility that its union will follow in the same footsteps as Hyundai Motor's workers.

According to data from the Ministry of Trade, Industry and Energy, compared to last year, Korea’s auto exports to the U.S. fell 3.5 percent in August due to tariff shocks.

Data also showed 2.42 million cars were assembled in Korea between January and July, down 0.4 percent from the previous year.

If wage talks between unions and management remain deadlocked, the figure is feared to drop by a bigger margin in September and continue declining throughout the latter half of this year.