[Photo by Han Joo-hyung]
South Korea’s auto part maker Dymco Co. became the latest in the automotive parts supply chain to go under and head to the bankruptcy court amid chain breakdown of the automobile sector due to struggling Korean finished car industry.
Founded in 1989, Dymco specialized in the production of LPG auto valves and gauges. In 2016, it dominated the local LPG auto value and gauge market with a nearly 100 percent share thanks to strong demand from major customers mainly Korean car makers such as Hyundai Motor, Kia Motors, GM Korea and Renault Samsung Motors. More than 2.20 million LPG-powered vehicles out of total 2.24 million used its parts in its heyday.
The company failed to meet its heavy debt obligation despite solid sales of 6 to 7 billion won ($5.3 to 6.2 million) continued for four years since 2014 and filed for court protection late last month.
Its downfall was mainly driven by the falling demand for LPG-powered vehicles on growing popularity of hybrid and electric vehicles. The softening overall auto demand has also weighed on the company.
Small-to-mid sized local auto parts companies have been falling one by one due to falling orders from finished carmakers grappling with slowing auto demand. The Korean government packaged up emergency funds of 1 trillion won for auto parts suppliers to help them avoid bankruptcies. As of October, nine have filed for bankruptcy in Seoul including automotive antenna maker Semco with 16.0 billion won in debt on assets of 13.2 billion won.
By Han Ye-kyung and Lee Ha-yeon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]