"Reducing Parts and Expanding Suppliers" Hyundai Motor Revises Supply System

CEO Jang Jae-hoon Emphasizes Stabilizing Production Disruptions at General Meeting

Jang Jae-hoon, CEO of Hyundai Motor Company, is delivering a greeting at the regular shareholders' meeting held on the 24th.

[Asia Economy Reporter Choi Dae-yeol] Hyundai Motor Company has decided to overhaul its entire supply chain system by diversifying the sources of key vehicle components and increasing the localization ratio. To secure a stable supply of vehicle semiconductors, which are considered a major cause of production disruptions, Hyundai is strengthening cooperation with global semiconductor companies while reducing the total number of parts but increasing the use of common parts across models. This decision comes amid the global automotive industry's ongoing difficulties in supply chain management for over two years since COVID-19, with the expectation that similar situations will continue.

Jang Jae-hoon, CEO of Hyundai Motor, emphasized in his speech at the regular shareholders' meeting held on the 24th, "Supply chain disruptions such as rising raw material prices and semiconductor supply imbalances will continue following last year," adding, "Since production disruptions due to parts shortages are occurring not only domestically but worldwide, it is important to maintain a stable production and sales system through supply chain management." Despite last year's challenging business environment, Hyundai recorded its highest-ever sales by flexibly managing production and sales systems, outperforming other global automakers, and plans to continue this trend this year.

Diversifying parts suppliers and increasing localization at overseas factories are measures to minimize unexpected disruptions that could halt factory operations. Previously, Hyundai responded by reducing the number of suppliers for cost reduction, but due to COVID-19 and wars, failure to procure one or two parts often led to the entire assembly line being unable to operate or production schedules being adjusted. Since reducing the number of parts and expanding commonality are not easy measures to take immediately, they will be pursued in the mid to long term.

Service robot Dali displayed on the first floor of the headquarters where Hyundai Motor Company's shareholders' meeting was held

Hyundai also clearly stated its intention to resolve the demand bottleneck where customers wait over a year from new car contract to delivery. Jang said, "We will actively respond to market demand by maximizing supply through optimal semiconductor allocation per vehicle and development of alternative components," adding, "We will also increase profitability by raising the proportion of sports utility vehicles (SUVs), luxury cars, and trims."

The premium brand Genesis plans to leverage its foothold in the domestic and North American markets to actively promote sales in Europe and China, where its market share is still minimal. In the electric vehicle market, where competition among global automakers has intensified due to increased adoption, Hyundai intends to enhance the product competitiveness of electric vehicles by introducing new models along with specialized services such as charging, maintenance, and financing. As part of its new business initiatives, the hydrogen business will establish a sales base focused on commercial vehicles in domestic, European, and North American markets.

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