Hyundai Motor Adds 'Hydrogen' to Mobility and Services... Establishes Three Major Business Structures

Investment of 60.1 Trillion Won by 2025 and Operating Profit Margin Target of 8%
Investment Plan Reduced by About 1 Trillion Won Due to COVID-19
Increased Investment in Future Capabilities Such as Electrification and Hydrogen
New Addition of Hydrogen Solutions to Existing Business Structure... Completion of Three Major Business Structures

[Asia Economy Reporter Suyeon Woo] Hyundai Motor Company unveiled its '2025 Strategy,' establishing a three-pronged business structure by adding a new 'Hydrogen Solution' to its existing smart mobility products and services.

On the 10th, Hyundai Motor President Wonhee Lee announced this and the mid-to-long-term financial goals at the 'Hyundai Motor CEO Investor Day.' Hyundai added the hydrogen fuel cell-based business, 'Hydrogen (H2) Solution,' to its existing two business structures of smart mobility devices and smart mobility services.

The mid-to-long-term financial strategy includes a target operating profit margin of 8% in the automotive sector by 2025 and a total investment plan of KRW 60.1 trillion by 2025. Although the total investment amount decreased by about KRW 1 trillion compared to last year's plan, investments to secure future business capabilities, such as hydrogen fuel cell development, were actually increased. President Lee said, "Based on active efforts to improve profitability, we will continue mid-to-long-term investments to firmly establish a foundation for sustainable future growth."

Hyundai Motor Company's Three Major Business Structure Directions

Expansion of Hydrogen Solution Business...Aiming to Replace Internal Combustion Engines with Hydrogen Fuel Cell Systems

In the hydrogen (H2) solution business, one of the pillars of the new business structure, Hyundai plans to secure the group's hydrogen ecosystem initiative by advancing hydrogen fuel cell system technology and expanding its application targets.

Beyond simply partnering with and selling hydrogen fuel cell systems to other automakers, Hyundai aims to establish these systems as a core replacement for existing internal combustion engines across all transportation sectors, including ships, trains, and UAM (Urban Air Mobility). To this end, the company will focus on developing hydrogen fuel cell systems with industry-leading durability and efficiency. Simultaneously, Hyundai announced plans to launch the hydrogen fuel cell system brand 'HTWO.'

Additionally, Hyundai set three strategic directions centered on the three business structures: ▲ enhancing competitiveness in the finished vehicle business and leading electrification ▲ building a foundation for mobility service business ▲ securing hydrogen ecosystem initiatives.

In the smart mobility device and service business, Hyundai plans to accelerate digital transformation across the entire value chain, products, and business models, aiming to provide optimized vehicles and services based on customer data. To achieve this, the company will first expand the adoption of virtual development processes, market-based product planning, smart factory construction, and expand non-face-to-face sales and service channels across all regions, enhancing digital capabilities throughout the value chain.

Through value chain digitalization, products delivered to customers will feature 'OTA (Over-the-Air)' wireless software update functionality or 'FoD (Feature on Demand)' services that allow selective purchase of software features as needed. Furthermore, highly advanced autonomous driving functions jointly developed with Motional will be equipped.

KRW 60.1 Trillion Investment, 8% Operating Profit Margin, and 5% Market Share Target by 2025

On the same day, Hyundai also disclosed mid-to-long-term financial goals, including ▲ KRW 60.1 trillion investment ▲ securing an 8% operating profit margin in the automotive sector ▲ achieving a global market share in the 5% range by 2025.

Hyundai announced it will invest a total of KRW 60.1 trillion by 2025 to strengthen existing business competitiveness and secure future business capabilities. This is slightly lower than the investment plan (KRW 61.1 trillion) disclosed at the CEO Investor Day last December.

This reduction is due to cost-saving measures amid the COVID-19 pandemic and reduced investment in internal combustion engines, resulting in a somewhat decreased investment of KRW 36.6 trillion for strengthening existing business competitiveness. However, investment to secure future business capabilities increased to KRW 23.5 trillion. In particular, investments related to electrification and hydrogen businesses significantly increased from KRW 10.4 trillion last year to KRW 14.9 trillion, influenced by the full-scale promotion of the hydrogen business and expansion of the electrification lineup.

Despite volatility in the global automotive market, Hyundai will continue to pursue its original 2025 target of an 8% operating profit margin in the automotive sector. The company will focus on achieving profitability through cost innovation and securing resources for expanding electrification and building a foundation for future new businesses. The global market share target remains in the 5% range, and Hyundai also plans to enhance shareholder value through market-friendly shareholder returns.

Over the past five years, despite worsening external business conditions and profitability pressures, Hyundai has maintained a dividend payout ratio of over 30%. However, this year, due to the need to secure liquidity amid COVID-19, the company suspended interim dividend payments. Although concerns about uncertainties in the business environment remain next year, Hyundai plans to review annual dividends considering liquidity and performance recovery trends.

This content was produced with the assistance of AI translation services.