From fast follower to first mover under Hyundai Motor's Chung

Hyundai Motor Group Chairman Chung Euisun emphasized “customers” as his management keyword when he took the helm of the largest automotive group in South Korea in October 2020.

Three years on, Chung’s customer-centered innovative management has led to a spectacular performance. Hyundai Motor Co. and its sister company Kia Corp. rose to the third position in combined global car sales from fifth in 2010.

At home, the two carmakers are the most profitable listed companies in terms of operating profit margins.

Chung, 52, turned the COVID-19 pandemic into an opportunity.

Amid automotive chip shortages, Hyundai had developed some components in-house due to delayed shipments from parts suppliers. It maintained its production capacity and continued to operate factories at home and abroad, leading to significant post-pandemic sales growth.

The Korean automotive group has also narrowed the gap with first and second-ranked rivals Toyota and Volkswagen. 

Both Hyundai and Kia’s global car sales shot up 61% to 3,657,563 units in the first half of this year, compared to the 2,272,075 units in the first half of 2020, before Chung took office later that year.

Those sales translated into 129.96 trillion won ($95.7 billion) in revenue in the first half of this year, nearly double the 73.11 trillion won in the first half of 2020.

PREMIUM CAR SALES

Hyundai’s premium brand Genesis and sports utility vehicles have enhanced its profit margins.

During the same period, the group’s operating profit surged almost sevenfold to 14.11 trillion won from 2.04 trillion won.

Its operating profit margin of 10.9% is on par with that of Mercedes-Benz and Tesla.

RECORD-HIGH PROFITS

Hyundai Motor Group is forecast to report a combined operating profit of 26.62 trillion won ($20 billion) this year, its highest-ever profits, according to a consensus estimate of brokerage companies.

The estimated sales break down to 14.79 trillion won for Hyundai and 11.83 trillion won for Kia.

FROM FAST FOLLOWER TO FIRST MOVER

In the era of electric vehicles, Hyundai is transforming into a first mover from a fast follower in the combustion engine vehicle market.

To lead the future vehicle market, it has developed an electric global modular platform (E-GMP) dedicated to top-selling EV models such as IONIQ 5 and IONIQ 6, as well as Kia EV6 and EV9.

Now it is evolving into a software-defined vehicle maker after new technology and future-oriented designs have placed Hyundai Motor Group in the top tier of future cars.

Both Hyundai and Kia sold a combined 80,099 eco-friendly cars such as EVs in the US in the third quarter of this year, a 94% surge from the prior year. It marked their largest-ever sales of those vehicles for a single quarter.

The upbeat results dispelled concerns about the impact of the US Inflation Reduction Act (IRA), which only provides subsidies for EVs manufactured in North America.

Over the past three years, Hyundai Motor Group has expanded its horizons into robotics and advanced air mobility sectors.

The acquisition of Boston Dynamics for around $1 billion in 2020 marked the culmination of his leadership. Boston Dynamics is a robotics company best known for its four-legged dog robot Spot.

Chung injected $176 million out of his own pocket in the deal.

Chung has also brought change to the automotive group's corporate culture to emphasize horizontal communication and autonomy among employees.

Last year, Chung was named the automobile industry's Visionary of the Year by Newsweek, which credited him for driving transformative change not only in his business group, but throughout the entire industry.

Write to Il-Gue Kim and Sungsu Bae at Black0419@hankyung.com
 


Yeonhee Kim edited this article