Male Group to Close Busan Factory in September 2025
Plans Withdrawal from Korean Business Without Additional Investment
Part of Global Business Restructuring... Alternative Production Likely in China and India
Electrification Transition Challenge... Signal for Auto Parts Industry Restructuring
Male Bear Air Conditioning, a second-tier supplier providing internal combustion engine air conditioning parts to Hyundai Motor Company and Kia, is withdrawing from the Korean market. Amid a global reduction in electric vehicle investments, global parts manufacturers are also trimming their internal combustion engine operations. This move is interpreted as a signal of industry restructuring, as global parts companies boldly streamline unprofitable businesses to secure funds necessary for the electric vehicle transition.
According to industry sources on the 12th, Male Bear Air Conditioning (hereafter Male Bear) plans to close its Korean factory located in Gijang-gun, Busan Metropolitan City, by September 2025. This month, executives from the German headquarters will visit Korea to explain the direction of business restructuring and discuss detailed withdrawal schedules, including severance payments for laid-off employees.
Male Bear is a 100% subsidiary of the German parts company MAHLE. MAHLE is a sizable global parts manufacturer, ranking fourth in market share in the automotive air conditioning (heating and cooling devices) sector, following Denso, Hanon Systems, and Valeo. Male Bear was established in 2007 as MAHLE’s Korean production base. The Busan factory produces air conditioning parts for internal combustion engine vehicles, with annual sales around 70 billion KRW. Its main business is manufacturing air conditioning system parts necessary for engine cooling.
Male Bear’s withdrawal from Korea was a foreseeable step. The company conducted voluntary retirement in 2022 and sold off some business units last year, including the thermostat (temperature control device) business. Over 160 employees, including union members, are strongly opposing the withdrawal from Korea.
The primary reason for the withdrawal is the declining demand for air conditioning parts for internal combustion engines. The air conditioning systems of internal combustion engines and electric vehicles differ significantly. Internal combustion engine air conditioning prevents engine overheating and uses engine heat to warm the interior, whereas electric vehicles prevent overheating of the battery, motor, and electronic systems and heat the interior using separate electric energy. Consequently, the scope and types of parts for internal combustion engine and electric vehicle air conditioning systems inevitably differ.
MAHLE Group’s global business restructuring is also analyzed to have influenced the withdrawal from the domestic site. Headquartered in Germany, MAHLE operated 152 production plants worldwide and employed about 70,000 people as of 2022. However, due to the impact of COVID-19 and increased investments to respond to electrification transitions, profitability worsened, leading to asset sales for cost reduction. In this process, the Korea plant, focused on internal combustion engines, was included in the withdrawal list.
Attention is now focused on the impact on Hyundai Motor Company and Kia. Male Bear currently supplies internal combustion engine air conditioning parts such as Exhaust Gas Recirculation (EGR) devices to Hyundai and Kia. To minimize supply chain disruptions, Hyundai and Kia have inquired with the MAHLE Group about parts supply plans after the Korean factory’s closure. Alternative production at plants in China and India is strongly considered after the Busan factory ceases operations.
There are also forecasts that Male Bear’s withdrawal decision will signal a restructuring of automotive parts companies. Previously, Hyundai decided to close its Ulsan internal combustion engine forging plant as part of the electrification transition. Furthermore, the lack of additional investment from the MAHLE Group is interpreted as Korea being deprioritized in the market. A Male Bear official stated, "To make Korea a production base for electrification, large-scale additional investments are necessary, but from the group’s strategic perspective, Korea appears to have fallen behind in priority."
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