Kia Mulls Keeping Plants Closed over Drop in Demand Overseas, Report Says

The coronavirus pandemic was largely defeated by South Korea early on, but something else is now keeping auto plants in Europe and Asia closed: a drop in demand. Kia Motors told its labor union this week that it wants to keep three plants in South Korea closed due to a decline in demand in its export markets, including the U.S., Reuters reports.

“Kia Motors is currently reviewing the suspension of some of its plants in Korea in response to declining global demand due to COVID-19. However, a decision has not been made at this time,” the automaker said in a statement, according to Reuters.

Under the plan advanced by the automaker, car production at three plants would be halted from April 23-29.

The report reflects the evolving nature of the pandemic’s effect on global economies. It’s not just the threat of infection that could keep auto plants closed for weeks or months, but also the drop in demand in Europe and North America amid stay-at-home orders. At the moment, most Kia and Hyundai plants outside of South Korea and China are at a standstill, Reuters notes, as dealership traffic has slowed to a crawl in most countries in Europe and the Americas. The dilemma now facing automakers is, with car sales having slowed to a trickle, there is no incentive to keep plants churning out vehicles at full volume that will just have to be stored in ports and parking lots.

Despite the planned downtime, Kia sister brand Hyundai reopened its plant in the Czech Republic earlier this week, being the first automaker in the country to do so, Reuters reports.

If there is a beacon of hope for the auto industry at the moment, it can be found in an unlikely place: China. Over four months after the outbreak began, dealership foot traffic is slowly turning in the direction of pre-outbreak levels. Dealerships in China in late March have been reporting customer traffic ranging from 35% to 57% of pre-outbreak levels, on average. These numbers may not look great at first, but they are far better than in countries still under various quarantine regimes at the moment—and where dealerships are closed or empty.

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