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Vehicle production at GM Daewoo's main plant in Bupyeong, west of Seoul, was suspended indefinitely from Friday afternoon as Hankook Tire Co. (KSE:000240) and Kumho Tire Co. (KSE:073240), the nation's top two tiremakers, cut their supply.
The two companies are demanding a 12 per cent rise in tire prices.
"The two tiremakers account for 85 per cent of our tire demand," said an official at GM Daewoo.
"Unless the supply resumes, it will significantly hurt production," the official said, asking not to be named.
On Thursday, GM Daewoo, South Korea's third-largest automaker, filed a court injunction with a Seoul court to demand the two tiremakers restart their supply of tires, according to the GM Daewoo official.
Friday's work stoppage will cost GM Daewoo some 700 vehicles in lost production, the automaker said.
Officials at both Hankook Tire and Kumho Tire weren't immediately available for comment.
GM Daewoo and the two tiremakers have been in negotiations over a price hike, the company official said.
"We might have no option but to meet their demands, because we are facing difficulties in replacing the suppliers as they supply the bulk of our tires," the official said.
Four other automakers in South Korea, including Hyundai Motor Co. (KSE:005380) and its affiliate Kia Motors Corp. (KSE:000270), completed their price negotiations with the two tiremakers in the first-half of this year, according to local news reports.
(Yonhap)
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