"We expected "The New Grandeur" to be delivered about two months after signing, but production disruptions are occurring due to the strike, so delivery within two months seems difficult. We have not yet received a notice to inform customers of this situation, but we are telling customers who want quick delivery to sign as soon as possible."
On the 10th, a dealer at a Hyundai Motor sales outlet in Seoul said of the delivery schedule for the flagship sedan "The New Grandeur," released in May, "In my experience, if the strike drags on, the wait for delivery also gets longer." The New Grandeur sold 8,532 units in Korea last month, topping domestic sales, but the hit could lose steam due to production disruptions.
The Hyundai Motor labor union, which staged three partial strikes last month, returned to work this day after a nine-day summer vacation. The union is set to decide on the 11th whether to launch an additional strike.
If the strike is prolonged, Hyundai Motor could face an emergency in its second-half new-car sales. Not only the new Grandeur but also new versions of the core sport-utility vehicle (SUV) Tucson could miss the golden time for new models that would drive a rebound in second-half results.
According to the auto industry this day, the Hyundai Motor union plans to convene the Central Strike Countermeasures Committee on the 11th to decide whether to go on an additional strike and at what level.
The Hyundai Motor union carried out three partial strikes last month. The resulting production disruption amounts to about 42,000 vehicles. Hyundai Motor's revenue loss is estimated at 1.12 trillion won.
The strike immediately led to declines in domestic production and sales. Hyundai Motor's domestic output last month was 137,449 vehicles, down 0.4% from a year earlier. Domestic sales in the same period fell 14.4% to 48,113 units.
By contrast, Kia's domestic sales rose 21.3% to 54,604 units, overtaking Hyundai Motor. Kia's union has also secured the right to strike, but it has not actually gone on strike.
The Hyundai Motor union is demanding performance bonuses equal to 30% of net profit. The management, meanwhile, has proposed a total package worth 36.3 million won, including: ▲ an 89,000 won increase in monthly base pay ▲ a 350% performance bonus ▲ a flat 10 million won payment ▲ 15 shares of company stock.
Choi Young-il, Hyundai Motor's CEO, sent a direct letter to employees on the 30th of last month, just before the summer vacation, urging a settlement of the wage and collective bargaining talks. Choi said, "Due to production disruptions from the strike, second-half business results are expected to worsen, and employees are also expected to have lost an average of 1.92 million won in wages, so I am worried the damage could grow."
Choi said that if the union withdraws demands that are difficult for management to accept—▲ reinstatement of dismissed workers ▲ a prior agreement before the legalization of raising the retirement age ▲ a 50% increase in bonuses—management would propose additional wages and performance bonuses.
However, as of this day, Hyundai Motor labor and management have not set an additional bargaining schedule and are only engaging in back-channel contact. On the 29th of last month, the Hyundai Motor union warned, "If management's stance does not change, after the vacation we will gradually raise not only the daily strike hours but also the number of strike days."
If the strike phase drags on, disruptions to the second-half new-car launch schedule will be unavoidable. For now, production of the pilot (test) model of the new Tucson, which was set to be put on the Ulsan plant's line at the end of last month, has been blocked. The full-change model of the Tucson, which was slated to launch as early as this month, as well as the facelift release of the midsize SUV Santa Fe, which had been mentioned for within the year, have both become uncertain.
Hyundai Motor's position is that, so far, the partial strikes are not at a level that is fatal to new-car deliveries. But many expect disruptions will become visible starting this month as the strike's impact takes hold. Hyundai Motor's operating profit in the second quarter fell 20.8% from a year earlier. The plan was to use new models in the second half to find a breakthrough.
An auto industry official said, "Even if it is not enough to affect new-car deliveries right now, if the strike is prolonged, production disruptions could create problems for deliveries," adding, "To prevent a deterioration in second-half results, the strike issue needs to be resolved quickly."