Chairman Chung Eui-sun: "Electrification transition, building a one-team collaboration system... We will support the auto parts industry"

Future Car Cooperation, Hyundai Motor Invests 5.2 Trillion Won

On the 19th, at Hyundai Motor-Kia Technical Research Center in Hwaseong-si, Gyeonggi-do, Prime Minister Han Duck-soo (left in the photo) and Hyundai Motor Group Chairman Chung Eui-sun (center in the photo) are listening to an explanation from a partner company representative.

[Asia Economy Reporter Choi Dae-yeol] The domestic automotive industry has decided to cooperate with the government, related organizations, and private companies to respond to the trend of electrification transition.

On the 19th, Hyundai Motor Group, the Ministry of Trade, Industry and Energy, the Ministry of SMEs and Startups, the Fair Trade Commission, the Korea Automotive Technology Institute, the Korea Fair Trade Mediation Agency, and the Automotive Parts Industry Promotion Foundation signed a business agreement at Hyundai Motor Group’s Technology Research Center in Hwaseong, Gyeonggi Province, to support “mutual growth in the automotive industry and strengthening competitiveness in the era of future cars.”

This move comes in response to criticism that the automotive parts industry has been relatively slow in adapting to the electrification transition. Attending the event were Prime Minister Han Duck-soo, First Vice Minister Jang Young-jin of the Ministry of Trade, Industry and Energy, Vice Minister Cho Ju-hyun of the Ministry of SMEs and Startups, and Vice Chairman Yoon Soo-hyun of the Fair Trade Commission, representing their respective ministries. From the company, Hyundai Motor Group Chairman Chung Eui-sun, Head of R&D Park Jung-guk, and President of Strategic Planning Gong Young-woon were present. Also attending were Na Seung-sik, President of the Korea Automotive Technology Institute; Kim Hyung-bae, President of the Korea Fair Trade Mediation Agency; Oh Won-seok, Chairman of the Automotive Parts Industry Promotion Foundation; and Shin Dal-seok, Chairman of the Automotive Industry Cooperative Association.

Chairman Chung Eui-sun said, “The domestic automotive industry is facing intensified difficulties due to global supply chain crises, and it is especially necessary to respond to the electrification of internal combustion engines at this time. For a successful transition to electrification in the automotive industry, complete vehicles, parts industries, the government, and related organizations must form one team and establish an organic cooperation system.” He added, “We will further expand mutual growth and support for the parts industry to strengthen competitiveness in the era of future cars.”

At the signing ceremony for the "Mutual Growth in the Automotive Industry and Support for Strengthening Competitiveness in the Era of Future Cars" held on the 19th at Hyundai Motor?Kia Technology Research Center in Hwaseong-si, Gyeonggi-do, (from left) Kim Hyung-bae, President of the Korea Fair Trade Mediation Agency; Gong Young-woon, President of Strategic Planning at Hyundai Motor Group; Cho Joo-hyun, Vice Minister of the Ministry of SMEs and Startups; Jang Young-jin, First Vice Minister of the Ministry of Trade, Industry and Energy; Han Duck-soo, Prime Minister; Chung Eui-sun, Chairman of Hyundai Motor Group; Yoon Soo-hyun, Vice Chairman of the Fair Trade Commission; Na Seung-sik, President of the Korea Automotive Technology Institute; and Oh Won-seok, Chairman of the Automotive Parts Industry Promotion Foundation, are posing for a commemorative photo.

According to the agreement, each ministry will provide multifaceted support to the parts industry during the technology development process. They will directly provide funds or establish a research and development fund together with Hyundai Motor Group. Hyundai Motor Group plans to promote a mutual growth cooperation program worth 5.2 trillion KRW. Support will be extended not only to first-tier partners but also to about 5,000 second- and third-tier partners who do not directly transact with the company.

First, the delivery price linkage system will be expanded. This is to ensure that partner companies can secure future competitiveness in a stable management environment. This year, Hyundai Motor Group is estimated to bear about 3 trillion KRW in increased raw material delivery prices for more than 300 first-tier partners, and an additional 400 billion KRW will be provided. Furthermore, to spread the delivery price linkage system to second- and third-tier partners, they plan to evaluate the level of mutual cooperation and reflect it in bidding scores from next year onward.

Additionally, Hyundai Motor Group will contribute 100 billion KRW to establish a supply chain stabilization fund. The Automotive Parts Industry Promotion Foundation will be responsible for recruiting and selecting support targets, and the Foundation for Cooperation between Large, Small, and Medium Enterprises and Agriculture, Forestry and Fisheries will manage and execute the fund. The fund will be fully disbursed in the first half of next year.

Hyundai Motor Group Chairman Chung Eui-sun and Prime Minister Han Duck-soo rode the autonomous driving vehicle Solati RoboTaxi.

Along with this, a business diversification support fund will be introduced, and a delivery price linkage system introduction support fund will be established to help first-tier partners pay loan interest. A loan interest support fund for second- and third-tier partners will also be prepared. An additional 100 billion KRW will be added to the existing fund for second- and third-tier partners, operating at a total scale of 200 billion KRW. Starting next year, a loan credit guarantee program will be implemented for partner companies facing difficulties in obtaining financial loans, and the advance payment plan for delivery prices, currently for first-tier partners, will be extended to second- and third-tier partners. From the second half of this year until 2027, about 1 trillion KRW worth of amortized mold costs will be paid to partner companies in a lump sum.

Hyundai Motor Group will also jointly invest 25 billion KRW each with the Ministry of SMEs and Startups to establish a joint research and development fund. They will prepare external management consulting and training courses, and assist in introducing the smart factory ‘eForest’ that incorporates artificial intelligence and big data technology. A dedicated organization for second- and third-tier partners will be established within Hyundai Motor and Kia’s purchasing headquarters to share information.

At the event, a case of an engine parts company transitioning to electrification parts was shared. Prime Minister Han Duck-soo and Chairman Chung Eui-sun rode the Hyundai autonomous vehicle Solati Robo Shuttle together to the Hyundai Design Center. In addition, they showcased key technology demonstrations such as robotics and test drove major eco-friendly vehicles including hydrogen cars.

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