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S Korea regulator to probe Hyundai Motor, Kia

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SEOUL, Feb 22 (Reuters) South Korea's antitrust agency said on Wednesday it would investigate the country's top auto maker, Hyundai Motor Co., and its affiliate, Kia, over allegations they had unfairly asked parts suppliers to cut prices.

The move by the Fair Trade Commission (FTC) comes after parts suppliers complained about requests from Hyundai and Kia Motors Corp. to cut supply prices -- apparently to offset the impact of a firmer won ''We will investigate whether the price cuts were taken unilaterally by the conglomerate or made in line with lower prices on the auto parts markets,'' an FTC spokesman said by telephone, adding that the investigation would start this month.

Despite news of the probe, shares in Hyundai rose 0.98 percent to 82,400 won by 0040 GMT, and Kia was up 1.74 percent at 20,450 won, both outpacing a 0.49 percent gain in the broader market Hyundai and Kia, together the world's number 7 automobile supplier, said last week they aimed to lower production costs by reducing the amount they pay for auto parts by 5 percent to 10 percent in order to shield themselves from the surging won.

The won has risen 4.1 percent against the U.S. dollar so far this year, hurting South Korean exporters' competitiveness abroad and returns on sales abroad.

Officials at the two companies declined to comment on Wednesday on the latest FTC move.

Hyundai and Kia are aiming to increase overseas production to reduce the risks from changes in foreign exchange rates.

Hyundai opened its first U.S. plant in Alabama last year and has factories in China, India and Turkey.

It also is in talks with the Czech Republic to set up a 1 billion euro (.19 billion) factory and is discussing a commercial vehicle joint venture in China.

Kia has a plant in China and is building factories in Slovakia and China. It is also looking for a site for its first North American plant.

REUTERS PDS RAI0716

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