"Leading Future Car Development with Dual Domestic and International Investments"...The Background Behind Hyundai Motor Group's Continuous Investments

Hyundai Motor, Kia, and Mobis to Invest 63 Trillion KRW in South Korea Over 4 Years
Following Biden's Visit, 13 Trillion KRW US Investment Confirmed
"Korea to Develop Hyundai Motor Group as Future Business Hub"
Synergy Expected from Domestic Parts Suppliers and R&D Workforce Development

President Biden - Chung Euisun, Chairman of Hyundai Motor Company

[Asia Economy Reporter Choi Dae-yeol] Three major affiliates of Hyundai Motor Group have decided to invest 63 trillion won domestically over the next four years because they judged that domestic business sites are important as hubs to hone research and development and production competitiveness in the process of promoting future mobility (means of transportation) business.

Following the recent announcement of a local investment plan amounting to 13 trillion won coinciding with U.S. President Joe Biden's visit to Korea, a large-scale investment plan has also been finalized domestically. Given that research and development competitiveness is crucial in future new businesses such as electrification, eco-friendliness, robotics, and autonomous driving, the intention is to respond swiftly to the rapidly changing automobile industry.

Ahn Cheol-soo, Chairman of the 20th Presidential Transition Committee, visited Hyundai Motor Company and Kia Motors Technical Research Center in Hwaseong, Gyeonggi Province on the 8th of last month. He was escorted by the robot dog Spot as he moved to the Hyundai Design Building with Chung Eui-sun, Chairman of Hyundai Motor Group. Photo by Kim Hyun-min kimhyun81@

Intense Global Competition Amidst Automotive Industry Upheaval
Jung Eui-sun Encourages Employees as "First Mover"
Domestic and Overseas Mid-to-Long-Term Investment Plans Finalized

Summarizing the mid-to-long-term investment plan announced by Hyundai Motor Group on the 24th, the goal is to strengthen competitiveness centered on domestic business sites and lead the paradigm shift surrounding the automobile industry. Hyundai Motor Group's finished car affiliates?Hyundai Motor, Kia, and Hyundai Mobis, which mainly develops automotive parts and software?have business sites worldwide. The research and development hubs are Namyang Technology Research Center (Hwaseong, Gyeonggi), Uiwang, and Mabuk domestically, while production hubs include Ulsan as the pinnacle, along with Asan, Jeonju, Hwaseong, Gwangmyeong, and Gwangju.

The automotive industry is in a period of upheaval because the powertrain system centered on internal combustion engines, which has continued for over 100 years, is being replaced by electrification centered on motors and batteries. Additionally, new technologies such as autonomous driving, connectivity, and urban air mobility (UAM) are being integrated, fundamentally changing the definition of means of transportation.

Hyundai Motor Group is considered a latecomer compared to finished car manufacturers in Europe, North America, and Japan but has grown to rank 4th or 5th in terms of finished car production volume. However, there are ongoing concerns inside and outside the company that if it does not respond actively and preemptively during this upheaval, it could fall behind at any time. This is the background for meticulously refining existing businesses and carefully preparing future new businesses. Hyundai Motor Group Chairman Jung Eui-sun has encouraged employees to be "first movers."

Hyundai Motor Group Chairman Chung Euisun (from left), Korea Chamber of Commerce and Industry Chairman Chey Tae-won, and Korea Employers Federation Chairman Son Kyung-sik are attending the 'New Entrepreneurship Declaration Ceremony' held at the Korea Chamber of Commerce and Industry in Seoul on the morning of the 24th. Photo by Kim Hyun-min kimhyun81@

Expansion Around 2006 Alabama Plant in the U.S.
New Savannah Plant Expected to Play a Similar Role in the Electric Vehicle Era

The large-scale U.S. investment confirmed in conjunction with President Biden's visit is expected to create a virtuous cycle effect along with this domestic investment. Given the automotive industry's value chain characteristics, which are broadly intertwined between upstream and downstream industries, and the fact that research and development or software workforce training transcends national borders, there is a high possibility of synergy.

The dedicated electric vehicle plant starting construction next year in Savannah, Georgia, U.S., is already attracting attention as to whether it will create a "Savannah effect," likened to Hyundai Motor's first North American plant, the Alabama plant, in 2006. Hyundai Motor Group has a precedent of advancing to the global forefront, including the local market, around the time of the U.S. plant's operation in the mid-2000s. According to the company, Hyundai Motor and Kia's global market share was 5.1% in 2004 before the Alabama plant began operations. After fully launching global management with the U.S. plant, it soared to 7.9% last year.

It was not only Hyundai Motor and Kia that grew. Various parts suppliers also expanded globally and established supply channels to overseas finished car makers, playing a role in the growth of the entire domestic automotive industry.

Chung Mong-koo, Honorary Chairman of Hyundai Motor Group, is visiting and inspecting the Alabama plant in the United States in 2005.

The shift of the global automotive industry's focus to electric vehicles is also expected to be an important turning point. The market order is different from the past, with new companies like Tesla maintaining the top position for several years. Hyundai Motor Group's global electric vehicle market share last year was around 5%. It is particularly encouraging that electric vehicle sales are increasing in Europe and North America. The company aims for a 12% global market share by 2030.

A company official said, "The expected growth rate around the operation of the electric vehicle dedicated plant (7 percentage points) is much higher than the growth rate (3 percentage points) around the operation of the U.S. plant," adding, "The 'Savannah effect' will create a positive virtuous cycle for the domestic automotive industry that greatly surpasses the 'Alabama effect.'"

Hyundai Motor Group has selected the Bryan County Megasite area in Georgia as the site for its new electric vehicle-only factory in the United States.

The virtuous cycle of increasing overseas investment to raise market share or expand business and then increasing domestic employment has already been proven over the past 20 years. Hyundai Motor and Kia's employees increased from about 85,500 in 2004 to 107,500 last year. Research and development personnel doubled from about 5,900 in 2007 to about 11,700 in 2020.

As Hyundai Motor and Kia's finished car sales increased and their quality competitiveness was recognized, demand for Korean parts suppliers also increased accordingly. Domestic automotive parts exports rose nearly fourfold from $6.017 billion in 2004 to $22.776 billion last year.

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