SEOUL: Hyundai Motor Group, Hana Bank and the state-run Korea Trade Insurance Corp (KTIC) have launched a 630 billion won financing programme to support auto parts makers hit by US tariffs.
The three parties held a signing ceremony on Monday to back Hyundai Motor Group’s domestic suppliers, which face risks of declining sales after the United States imposed a 25% tariff on car parts.
The ceremony was attended by Minister of Trade, Industry and Energy Kim Jung-kwan, Hyundai Motor Group president Sung Kim, KTIC chief executive officer (CEO) Jang Young-jin and Hana Bank CEO Lee Ho-sung at the headquarters of DY Auto in Asan, South Chungcheong Province.
DY Auto, a manufacturer of car window motors, was selected as the first recipient.
Based on funds from Hana Bank’s contribution of 30 billion won and Hyundai Motor Group’s 10 billion won, KTIC will provide up to 630 billion won in preferential financing to parts makers recommended by the group.
Participating suppliers will be eligible for loans with interest rates up to two percentage points below market rates.
KTIC will also extend the guarantee period from the current one year to three years and increase guarantee ceilings for loans under the programme.
“In a trade environment that has become more challenging following the recent US tariffs, this new financing programme will provide significant support to the auto parts market and, from an original equipment manufacturer perspective, is expected to help stabilise the supply chain,” said Hyundai president Sung Kim.
Although South Korea and the United States agreed on July 30 to lower the car parts tariff from 25% to 15%, the change ended the zero-tariff benefit that South Korean parts makers had enjoyed under the South Korea-US Free Trade Agreement.
As a result, Hyundai Motor Co, an automaker under Hyundai Motor Group that still relies heavily on South Korean partners for its US production, said in July that it is considering shifting part of its supply chain to local US suppliers. — The Korea Herald/ANN
