The new tariffs in the US are hitting Kia/Hyundai so hard that the car group is now forced to borrow 13.6 billion kroner from the South Korean government to survive.
Hyundai and Kia are facing major challenges. The 25 percent US tariff is hitting hard.
Therefore, the South Korean company has put together some emergency aid in the form of a loan of 13.6 billion kroner for the group.
The money will help Kia/Hyundai through a difficult time. The US is a very important market – if not the most important – for Korean cars. Half of all cars built for export in Korea are sent to the US.
That is why the tariffs that Donald Trump is imposing on the automotive industry are also creating major problems. The new tariffs of 25 percent are worrying the industry, which fears a very acute crisis.
The South Korean government is acting quickly, however, on the condition that Kia/Hyundai pays back all the money.
The loans will be administered through the Korea Development Bank (KDB). It is expected that the emergency loan agreement can be approved soon. Perhaps as early as this week in a government-wide fashion.
Korean car industry is under massive pressure
A spokesman for the Ministry of Economy and Finance has spoken to the Yonhap news agency in connection with the loan negotiations. He emphasizes that the 13.6 billion kroner is 'only' an approximate figure.
– The economic support will likely amount to about 3 trillion won.
This corresponds to 13.6 billion Danish kroner.
The money will be disbursed through KDB's current loan program. This is to ensure a quick process. The support is targeted at the pressured car manufacturers.
The consequences of the tariffs could be significant. A forecast shows a possible decline in exports. This applies to South Korea's car exports to the United States.
The decline is expected to be 18.6 percent. This is due to the new tariff rate of 25 percent. This is a significant figure for the industry.
The economic consequences of tariffs in the US
The Korean automotive industry is an important part of the country's economy. Companies like Hyundai and Kia are global players. They employ many thousands of people.
Tariffs and trade barriers are affecting global supply chains. This is clearly seen in this situation. Companies must adapt to the new conditions.
The government's intervention with emergency aid is an attempt to mitigate the damage. It is intended to give businesses breathing space. They can adapt or wait out the situation.
The future of exports to the US is uncertain. Much depends on political developments. Trade relations between countries can change rapidly.
Automakers may be working on alternative strategies. This could include focusing on other markets. Or increasing production in the US to avoid tariffs.
The situation is being closely monitored by economists and analysts, both in South Korea and internationally. The health of the automotive industry is of great global importance.
While Hyundai and Kia navigate the economic challenges, they continue to develop new cars. On Boosted.dk you can read more about some of their latest models. Among other things, about a supercar that after several death throes has still been given the green light.
