Hyundai Motor Co., South Korea’s largest automaker, is facing the risk of a production disruption at home as slowing profits, U.S. tariff pressure and growing competition from Chinese electric-vehicle makers create a tougher environment for the company.
The automaker’s wage negotiations with its labor union in South Korea have stalled after workers rejected an improved compensation package that included a 350% performance bonus, an additional $6,300 payment and company shares.
The dispute comes at a sensitive time for Hyundai. The company is trying to maintain its position in the global auto market while dealing with higher costs, changing trade conditions and increased competition from lower-cost rivals.
Hyundai reported first-quarter operating profit of $1.6 billion, down 30.8% from a year earlier. The decline has increased pressure on the company to manage expenses while continuing the investments needed for electric vehicles and future technologies.
At the same time, Hyundai workers are pushing for higher compensation after years in which the company strengthened its global competitiveness.
During negotiations at Hyundai’s Ulsan plant in South Korea, management proposed raising base pay by $55, providing a performance bonus equal to 350% of wages plus $6,300 and giving employees 12 Hyundai shares.
The union rejected the offer, saying it failed to meet expectations. Workers are seeking a larger wage increase and a performance bonus equal to 30% of Hyundai’s previous-year net profit.
The union has already secured the legal requirements needed for a strike after members approved industrial action and South Korea’s labor mediation process ended without an agreement. Employees have started refusing weekday overtime and Saturday shifts as negotiations continue.
A strike could create additional pressure on Hyundai by affecting production and vehicle delivery schedules. The risk comes as the company competes against traditional automakers and Chinese EV manufacturers that are increasing pressure on pricing across the global market.
For Hyundai, the negotiations have become more than an annual wage dispute. The company must find a balance between rewarding employees for past performance and maintaining the cost control and production stability needed to compete in a more challenging auto industry.
