Hyundai awards U.S.-made Sonata parts contract to Denso
Hyundai Motor Co. has selected Toyota-affiliated Denso Corp. to supply air-control components for the U.S.-made Sonata sedan, Bloomberg reported.
Hyundai used to rely on South Korean supplier Halla Climate Control Corp. -- an affiliate of U.S. supplier Visteon Corp. -- for those parts. Hyundai and its affiliates, Kia Motors Corp. and Hyundai Mobis Co., had accounted for 70 percent of the Halla's business, according to Bloomberg.
A Hyundai spokesperson said the change was made as part of "routine efforts to diversify suppliers to ensure stable delivery of parts."
Hyundai builds the Sonata at its plant in Montgomery, Ala. The company produced about 224,000 Sonatas there during 2012, through Dec. 24, according to the Automotive News Data Center.
TrueCar.com analyst Jesse Toprak said this instance of Hyundai working with a competitor-affiliated supplier is evidence that exclusive deals between automakers and suppliers are on their way out as the marketplace becomes more competitive.
"Suppliers need to stay in business, too. They've been under a lot pressure from manufacturers to continue to provide more for less," Toprak told Automotive News.
"At some point they can't keep doing that. They have to expand. They can't be exclusive. It promotes true free market economy dynamics, with multiple suppliers serving multiple clients."
A Korea-based analyst told Bloomberg that Hyundai is making the right move.
"Hyundai is probably trying to lower its dependency on Halla, which has long been Hyundai's key air-control parts supplier," Kim Yoon Ki, an analyst at Mirae Asset Securities Co. in Seoul, told Bloomberg.
"It's the right strategy for Hyundai, as it's rare and dangerous for an automaker to be that dependent on one supplier."
Meanwhile today, Visteon issued a statement in response to media reports about the Sonata contract going to Denso.
"HCC's relationship with Hyundai remains strong and we expect it will be further strengthened with the integration of Visteon's climate business into HCC," Visteon CEO Timothy Leuliette said in the statement.
Visteon did not comment on the Sonata contract, but said, "HCC does not win 100 percent of Hyundai's climate business and does not participate in every Hyundai vehicle program."
Reuters contributed to this report
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