Hyundai Motor Group Minimizes Risks Through Global Hub Investments
U.S. President Donald Trump, who has launched a "tariff war" against the world, has been intensifying pressure on global automakers by declaring a 25% tariff rate. With the barriers to entry in the world's largest automobile market rising, the sense of crisis in the automotive industry has reached its peak. Hyundai Motor Group, a representative automaker of South Korea, is no exception. Under the bold decision-making of Chairman Chung Eui-sun, Hyundai Motor Group is minimizing risks by expanding local production in the U.S. and implementing region-specific strategies in countries like India and China. This strategy aims to create opportunities through strong determination, even amidst a global crisis. ◆ Global Production Restructuring… Turning Crisis into Opportunity Under the leadership of Chairman Chung Eui-sun, who took office in 2021, Hyundai Motor Group has evolved from being known for its 'quality and perseverance management' to embracing 'innovative management,' which has upgraded the company's approach. This shift in management philosophy has rapidly transformed the entire group. In particular, by methodically implementing a localization strategy to target global markets, Hyundai Motor Group has enhanced its competitiveness in international markets. As a result, despite not being able to avoid the impact of President Trump's tariff bomb, the group has developed the flexibility to respond effectively. According to Hyundai Motor Group's business report, Hyundai and Kia set a record last year by selling approximately 1.71 million units in the U.S. – the highest in history. Half of this volume was produced domestically and exported. Industry experts predict that if a general tariff is imposed, Hyundai will face an additional monthly burden of 200 billion to 400 billion KRW, while Kia will have an additional monthly burden of 100 billion to 200 billion KRW. The direct impact of the tariff imposition on Mexico is being felt at Kia's Monterrey plant. Kia produces approximately 400,000 vehicles annually at the Monterrey plant, with more than 160,000 units exported to the U.S. However, Hyundai Motor Group's proactive measures, including a strategic investment of approximately 11 trillion KRW (79.9 billion USD) and the establishment of the 'Hyundai Motor Group Metaplant America (HMGMA)' in Georgia, have been hailed as a 'masterstroke.' HMGMA, located on 11.83 million square meters (approximately 3.58 million pyeong) of land, will begin full-scale operations this year with an annual production capacity of 300,000 units. Originally built as an electric vehicle-only plant, HMGMA plans to modify its production lines to allow for the mixed production of hybrid vehicles, with a target of expanding capacity to 500,000 units annually. The Alabama plant will produce 360,000 units annually, while Kia's Georgia plant will produce 340,000 units, expanding U.S. production capacity to 1.2 million units. Additionally, Hyundai's September meeting with GM's Chair and CEO Mary Barra, where they signed a Memorandum of Understanding for comprehensive cooperation, has been positively evaluated. This partnership allows Hyundai to avoid tariff imposition by producing vehicles at GM's plants. Hyundai Motor and Kia are focusing on expanding production and sales by increasing investments in countries such as China and India. Hyundai Motor produces 750,000 units annually at its Chennai plants 1 and 2 in India, with 20% of this production, or 150,000 units, being exported to regions like Africa, Europe, and Southeast Asia. Both production and exports rank second after domestic production. Kia, on the other hand, produces approximately 390,000 units at its Anantapur plant in India. Hyundai Motor has not stopped there and has identified India as a core hub. In October of last year, Hyundai listed its Indian subsidiary on the Indian stock exchange, with the company's value estimated at approximately 19 billion USD (27.4 trillion KRW). The IPO raised 3.3 billion USD (about 4.7 trillion KRW), making it the largest IPO in Indian history. This is the first instance of Hyundai’s overseas subsidiary being listed, and the funds raised from the IPO will be focused on investments in the Indian region, aiming to develop it as a strategic export hub to target emerging markets. This success is attributed to the trust Hyundai has built with India, as Chairman Chung Eui-sun has met with Prime Minister Modi more than six times since 2015 to discuss business collaboration. Currently, Hyundai Motor Group is focused on increasing production capacity, including the construction of Hyundai's third plant in the Pune region, which will implement smart manufacturing systems. The Pune plant is scheduled for completion in the second half of this year and will start with a production scale of 170,000 units in Phase 1, with plans to expand to a total production capacity of 250,000 units by 2028. In China, Hyundai Motor has set a "selection and concentration" strategy and plans to gradually increase production in the long term. The company is particularly focusing on increasing the production share of eco-friendly vehicles at its Chinese plants to boost both domestic and export volumes. In 2016, Hyundai operated five plants in China, but after the "THAAD dispute," it faced sales difficulties and now only has two plants remaining (Beijing 2 and 3 plants, with an annual production capacity of 750,000 units). Hyundai is now focusing on expanding production at these remaining plants. In December of last year, Hyundai decided to invest 1.1 billion USD (approximately 1.6 trillion KRW) in its joint venture Beijing Hyundai with its Chinese partner Beijing Automotive Group (BAIC). Through this investment, Hyundai aims to introduce its first dedicated electric vehicle model in China this year and increase sales in the country to 400,000 units. Additionally, Hyundai has already expanded its export volume from zero in 2022 to over 45,000 units last year, and it plans to focus on further expanding its export markets. Kia also reduced its factories in China from three to two, but continues to operate them as production hubs for both local sales and future expansion into emerging markets. Last year, Kia's Chinese plants sold 170,317 units through overseas exports, accounting for 68.6% of its total sales (248,202 units). Vehicles such as the Pegas, Sonet, Seltos, and Sportage, produced at the Chinese plants, are being exported to regions including Latin America (Chile, Peru), Saudi Arabia, Vietnam, and the Philippines. SK Securities analyst Yoon Hyuk-jin stated, "Even if a 25% tariff is imposed, the expansion of production capacity and increased utilization rates at U.S. plants, along with the higher utilization rate at Kia's Mexican plant, can minimize the impact of the tariffs." However, he added, "To ensure production stability, employment security, and export competitiveness in Korea, it is crucial to make efforts to reduce tariffs as much as possible." Professor Kim Pil-su from Daelim University’s Department of Automotive Engineering noted, "Hyundai Motor Group is building a stable response system by increasing production in major global hubs," and added, "However, reducing reliance on the U.S. and expanding production bases to other countries will take some time." He also remarked, "A 25% tariff essentially means 'don't come to the U.S.,'" but he further pointed out, "President Trump is a negotiator aiming for an advantageous position, so this policy is unlikely to last long." ◆ Overcoming Crisis through 'Strategic Alliances'... Forging Future Mobility Technologies Hyundai Motor Group is further expanding its collaborations with global companies to secure technological competitiveness in areas such as eco-friendly and autonomous driving technologies, aiming to grow as a leading company in the future mobility market. First, Hyundai Motor Group garnered global attention by formalizing its collaboration with Samsung Electronics last month. On the 24th of last month, the two companies, the top two in South Korea, signed a "Strategic Business Agreement for Samsung SmartThings Pro-Kia PBV Business Collaboration" at the 'Kia EV Day' media event held at the Tarragona Arena in Spain. Kia decided to integrate Samsung Electronics' B2B customer-tailored solution, "SmartThings Pro," into its Purpose-Built Vehicle (PBV) business, which Kia has positioned as a new growth engine. Additionally, the two companies are pooling their efforts in building smart manufacturing solutions and collaborating on battery development. Hyundai Motor and Samsung SDI began collaborating on electric vehicle batteries in 2021, signed their first electric vehicle battery supply contract in 2023, and agreed to supply batteries for Hyundai's European electric vehicles starting in 2026 for a period of seven years. Recently, they have also expanded their cooperation to include batteries for robots. Hyundai Motor Group is accelerating its efforts to secure a leading position in the rapidly growing Software-Defined Vehicle (SDV) market. By next year, the group plans to complete the development of SDV test vehicles with autonomous driving as a core function, and then sequentially apply the technologies to mass-produced vehicles. Last month, Hyundai Motor Group entered into a partnership with Google to enhance its navigation and infotainment systems. Furthermore, earlier this year, the group formed a strategic partnership with NVIDIA to strengthen the application of AI in autonomous driving, SDVs, and robotics. Efforts to secure leadership in eco-friendly vehicle technologies are also ongoing. Last year, Chairman Chung Eui-sun met with Toyota Chairman Akio Toyoda to discuss strengthening cooperation in areas such as hydrogen and robotics between Japanese and Korean automakers. In October of last year, Hyundai Motor’s overseas subsidiary Boston Dynamics and Toyota's research institute, Toyota Research Institute (TRI), formed a partnership to develop AI-based humanoid robots, reflecting the growing collaborative atmosphere between the two companies. During this time, Chairman Chung stated regarding hydrogen collaboration with Toyota, "We are discussing hydrogen, and we aim to collaborate well together." Chairman Akio Toyoda also mentioned the possibility of further collaboration with Hyundai, saying, "We definitely need cooperation in the expansion of technologies and infrastructure related to carbon neutrality and the future of automobiles." In September of last year, Hyundai Motor Group signed a joint development agreement with GM, the largest automaker in the U.S., to collaborate on the development of passenger and commercial vehicles, as well as internal combustion, electric, and hydrogen vehicles. Hyundai Motor Group has announced that it will complete the final contract signing in the first quarter of this year. Chairman Chung Eui-sun's 'golden network' is also contributing to the group’s management in the global market. Last month, Chairman Chung had a two-hour golf meeting with Donald Trump Jr., the influential eldest son of U.S. President Donald Trump. This was likely not just a social meeting but a discussion closely tied to future business strategies. Chairman Chung is seeking to explore North American market opportunities through strengthened networks with the Trump administration. ◆ Leading Core Technologies: Hyundai Mobis... Securing Future Competitiveness Hyundai Mobis, a key subsidiary of Hyundai Motor Group, is focusing on securing core technologies for future mobility. This is aimed at ensuring not only the qualitative growth of Hyundai Motor Group but also securing stable demand sources in the unstable global market. Centered around its Mabuk Technology Research Center, Hyundai Mobis has 3,000 researchers working across six global R&D hubs (Mabuk, Uiwang, the U.S., Germany, China, and India), concentrating their efforts on securing key technologies in areas such as electrification and electronics. Based on these efforts, Hyundai Mobis has seen its sales nearly double in the past five years, reaching 60 trillion KRW. Despite challenges such as the COVID-19 pandemic and semiconductor supply issues, the company has maintained a steady annual sales growth of 17% in the 2020s, continuing to drive its progress. Hyundai Mobis is investing 2 trillion KRW in research and development (R&D) this year to secure core competencies in advanced technologies such as autonomous driving, electrification, infotainment, and connectivity. The goal is to differentiate product competitiveness and focus on diversifying its global customer base. This investment represents about a twofold increase compared to the 1.1 trillion KRW spent on R&D in 2021. In line with the increase in R&D spending, the number of R&D personnel has also been steadily growing. Hyundai Mobis' domestic and international R&D workforce, which was about 5,500 in 2020, grew by more than 30% to approximately 7,500 people last year. This expansion is directly tied to securing future competitiveness. From 2021, Hyundai Mobis has filed about 3,000 new patents in key future vehicle technologies such as electrification, autonomous driving, and connectivity over three years. These patents account for nearly 40% of the total 8,001 new patents filed by Hyundai Mobis in the past three years. Hyundai Mobis has ranked 6th in the global automotive parts industry for three consecutive years and has been named to the 'Most Admired Companies' list by the U.S. business magazine Fortune for two years in a row. ChatGPT를 사용하여 번역한 기사입니다.
