Hyundai warns rising costs, supply disruptions due to Mideast war

Hyundai Motor reported on Friday that its exports to Europe and North Africa, which typically pass through the Middle East, are being disrupted due to the ongoing regional conflict, highlighting growing strains on global supply chains.

The conflict has choked key shipping routes, raising logistics costs, delaying deliveries, and putting pressure on Hyundai and its suppliers. Kim Dong-jo, senior vice president of Hyundai Motor’s Global Policy Office, warned that even if the Iran war ends soon, rebuilding supply chains will take considerable time, News.Az reports, citing Reuters.

He made the remarks at Pyeongtaek-Dangjin Port, southwest of Seoul, during a meeting with government officials, logistics firms, and automakers to assess the war’s impact.

At the port, cars were lined up on a giant vehicle carrier set to transport about 4,900 vehicles to the U.S. west coast. Kim noted that rising logistics costs and raw material constraints linked to the conflict are pressuring parts suppliers and production, and Hyundai is working with suppliers and the government to minimize disruption.

Hyundai Glovis, the company’s logistics unit, said some Middle East routes are currently inaccessible, forcing temporary storage of cargo at alternative locations until conditions stabilize. While shipping to North America has not been heavily impacted, restricted Middle East access and higher fuel costs are hampering efficiency.

South Korea’s Trade Minister Yeo Han-koo said some shipments are being rerouted to intermediate hubs like Sri Lanka, where cargo is held while transport schedules are reassessed. Last month, Reuters reported that some used car exports from Japan were delayed in Sri Lanka due to port congestion from diverted Dubai shipments amid the conflict.

South Korea’s exports in March grew at their fastest pace in nearly 40 years, but shipments to the Middle East fell 49%, with auto exports largely unchanged as supply disruptions offset strong demand for eco-friendly vehicles.

Hyundai Motor reported selling 358,759 vehicles globally in March, down 2.3% year-on-year, with domestic sales falling 2.0% and overseas sales down 2.4%. Shares of Hyundai Motor and Hyundai Glovis closed down 1.2% and 0.7% respectively on Friday, compared to the KOSPI’s 2.7% rise.

News.Az 

By Nijat Babayev