As the Hyundai Motor labor union’s strike drags on, Kia’s (000270) union is also poised to enter strike proceedings, raising growing concerns about production disruptions across Hyundai Motor Group. Should the Kia union actually go on strike, it would break a five-year streak of dispute-free negotiations that lasted from 2021 through last year.
According to industry sources on the 12th, Kia labor and management began working-level negotiations the previous day and will proceed with main negotiations over the next two days. The union has effectively set this week as the negotiation deadline. “This week is the last time and opportunity given to management,” the union stated, applying strong pressure by adding, “If they maintain an insincere attitude in future negotiations, the responsibility for all ensuing situations will lie solely with management.”
The Kia union’s demands for this year include: a monthly base pay increase of ₩149,600 (approximately $105.58), a performance bonus equivalent to 30% of last year’s operating profit, the implementation of a 4.5-day work week, and an extension of the retirement age to 65. The union has already secured the legal right to strike, having received 82% approval from eligible members in a strike authorization vote held on the 23rd of last month.
If the Kia union actually proceeds with a strike, it would be the first such action in six years, since 2020. Kia labor and management had concluded wage and collective bargaining agreements without disputes for five consecutive years from 2021 through last year. Hyundai Motor (005380) had also maintained a seven-year dispute-free record from 2018 to 2024, but is now in an unusual situation where strikes have continued into this year following a partial strike in 2025 after negotiations broke down for the first time in seven years.
Hyundai Motor’s union has already accumulated over 60 hours of strikes. The company estimates production losses exceeding 42,000 vehicles, and industry observers project revenue losses could reach ₩1.12 trillion (approximately $790.5 million). If Kia’s production lines also come to a halt, the total strike-related losses for Hyundai Motor Group are expected to snowball.
The damage from production disruptions could be particularly severe for Kia, given its steadily rising sales performance. Kia sold 1,922,417 vehicles in the global market from January through July this year, a 4.3% increase compared to the same period last year. In the South Korean domestic market, it sold 350,383 units, recording 9.0% growth.
The core sticking points between Hyundai Motor labor and management show a wide gap regarding the scale of wage increases and performance bonuses. The union demanded a base pay increase of ₩149,600 and a bonus equivalent to 30% of net profit, but management countered with an offer of an ₩89,000 (approximately $62.81) base pay increase, a 350% performance bonus, plus an additional ₩10 million (approximately $7,058). Additional issues such as bonus increases, retirement age extension, and the reinstatement of previously dismissed union members are also entangled as separate points of contention. Hyundai Motor CEO Young-il Choi stated in a message on the 23rd of last month, “The union chapter is only sticking to its position on three demands, failing to find a clue to resolve negotiations,” adding, “If the three demands are sorted out by the union itself, we are ready to make additional offers, including wages and performance bonuses, at any time.”
This year’s strikes are perceived as particularly threatening because they coincide with a challenging external environment. Hyundai Motor’s second-quarter operating profit fell 20.8% year-over-year due to high U.S. tariff burdens and exchange rate volatility. The second half of the year is packed with major new vehicle launches, including full-change models of the Avante and Tucson, as well as the Genesis GV90 and GV80 Hybrid, making it inevitable that a prolonged strike will disrupt the initial supply of new models.
The group’s competitiveness in the South Korean domestic market is also wavering. In the first half of this year, Hyundai and Kia’s combined domestic market share fell to 69.8%, breaking the 70% threshold for the first time, while the import car share surged to a record high of 24.1%. During the same period, Tesla sold 56,147 vehicles in South Korea, and BYD recorded 11,675 units, an eightfold increase year-over-year. In the second half, Zeekr, the premium brand of China’s Geely Automobile, is set to enter the South Korean market, while Chery Automobile is expanding its offensive by investing approximately ₩110 billion (approximately $77.6 million) in KG Mobility.
Structural changes also form the backdrop of the labor-management conflict. The so-called “Yellow Envelope Law,” enacted last year, expanded the scope of the principal contractor’s employer status, opening a path for subcontractor unions to negotiate directly with the principal contractor. Consequently, concerns have been consistently raised within the industry that parts suppliers could suffer collateral damage from labor disputes. Furthermore, new issues have emerged, including the transition to a monthly salary system, the matter of prior labor-management agreement regarding the legislation of retirement age extension, and employment security issues related to the introduction of robot automation.
Hang-gu Lee, a specially appointed professor at Pyeongtaek University (and former head of the Korea Automotive Technology Institute), diagnosed the situation, saying, “There’s the Yellow Envelope Law, the cooperative profit distribution system, and various other factors overlapping. Since this is the first year, the sentiment is to make a statement.” Professor Lee also pointed out the “polarization” of R&D investment between large corporations with revenues of ₩500 billion (approximately $352.9 million) or more and smaller firms, expressing concern that “only the large corporations are surviving, and when strikes occur, subcontractors continue to be affected.”
The importance of labor risk management is growing even more significant in the global competitive landscape. Toyota maintains a cooperative relationship by advocating “Shunko” (spring collaboration), where labor and management solve tasks together, instead of the annually recurring wage struggle known as “Shunto” (spring offensive). Tesla, with its non-union system, can make rapid decisions on production line operations and expansion, while China’s BYD, Geely, and Xpeng also leverage low labor costs and swift decision-making as strengths. Industry observers note that “as competition in electrification and software-defined vehicles (SDVs) intensifies, labor risk management capabilities will determine the long-term competitiveness of automakers.”
Meanwhile, Hyundai Motor Group held an “AI Transformation (AX) Performance Presentation” at its headquarters in Yangjae, Seoul, on this day, announcing plans to expand the application of artificial intelligence (AI) enterprise-wide in vehicle manufacturing and R&D. The group reported that by accelerating its AI transformation, it has reduced the time researchers spend on case analysis and data review by approximately 90%. Eunsook Jin, President of ICT at Hyundai Motor and Kia, stated, “Hyundai Motor Group’s goal is to become the company that utilizes AI most effectively in the world,” adding, “We plan to proactively respond to technological changes and present new standards for the future mobility industry.” Hyundai Motor Group has been concretizing its enterprise-wide digital transformation (DX) strategy since Chairman Euisun Chung declared in 2018 that the company would “become a company more like an IT company than IT companies.”
The Hyundai Motor union, having returned from its summer vacation, convened its Central Dispute Countermeasures Committee on the 11th to decide on further strike actions and their intensity. The industry views whether an agreement can be reached before the Chuseok holiday as a watershed moment that will determine the second-half production plans.