Name: Fervensiness Sutnga

PRN: 1062211846
MBA IB Trimester 1
Managerial Economics Research Assignment

Publicly traded corporation: Hyundai Motor Company

About the company:
Hyundai Motor Company is a South Korean multinational automotive manufacturer
headquartered in Seoul, South Korea. Hyundai Motor Company was founded in 1967.
Hyundai operates the world's largest integrated automobile manufacturing facility in Ulsan,
South Korea which has an annual production capacity of 1.6 million units. The company
employs about 75,000 people worldwide. Hyundai vehicles are sold in 193 countries
through 5,000 dealerships and showrooms.

World renowned brands owned by Hyundai:

Currently, the company owns 33.88 percent of Kia Corporation, and also fully owns two
marques including its luxury cars subsidiary, Genesis Motor, and electric vehicle sub-brand,
Ioniq. Those three brands altogether comprise the Hyundai Motor Group.

Global Wholesales
(Units: thousand units)

Classification 2020 2019 2018 2017

Korea 788 742 721 680

Overseas 2957 3684 3868 3817

Total 3745 4426 4589 4506

From the table above, we observe that the sales of Hyundai are highest in 2018 and lowest
in 2020. The reason for the decrease in sales is probably due to the pandemic. As we all
know during the pandemic the automobile industry was one of the most affected industry.
Sales in Korea incremented year after year whereas sales globally decreased slightly in 2019
and significantly in 2020.

Balance Sheet
(Unit: billion
KRW)

Classification 2020 2019 2018 2017

Assets 209,344
194,512 180,656 178,199
Current assets
83,686 76,083 73,008 73,976

Non-current
assets
125,658 118,429 107,648 104,223

Total liability
133,003 118,146 106,760 103,442

Debt
91,407 81,372 73,296 72,001

Shareholder’s
equity
76,341 76,366 73,896 74,757

Total asset
growth
7.6% 7.7% 1.4% -0.4%

Income Statement
(Unit: billion KRW)

Classification 2020 2019 2018 2017

Sales revenue
103,998 105,746 96,813 96,376

Operating
income 2,395 3,606 2,422 4,575

Income before
income tax 2,093 4,164 2,530 4,439

Profit for the

year 1,925 3,186 1,645 4,546

Sales growth
-1.7% 9.2% 0.5% 2.9%

Profit growth -39.6% 93.7% -63.8% -20.5%

 Classification 2020 2019 2018 2017

Liability to
equity
174.2% 154.7% 144.5% 138.4%

Debt to equity
119.7% 106.6% 99.2% 96.3%

Return on sales
1.9% 3.0% 1.7% 4.7%

Basic EPS 5,454 11,310 5,632 14,993

Financial ratio
(Unit: %, KRW)

The debt-to-equity (D/E) ratio compares a company's total liabilities to its shareholder
equity and can be used to evaluate how much leverage a company is using. Higher-leverage
ratios tend to indicate a company or stock with higher risk to shareholders.
Return on sales (ROS) is a ratio used to evaluate a company's operational efficiency. This
measure provides insight into how much profit is being produced per dollar of sales. An
increasing ROS indicates that a company is improving efficiency, while a decreasing ROS
could signal impending financial troubles. ROS is closely related to a firm's operating profit
margin.
One of the first performance measures to check when analysing a company’s financial
health is its ability to turn a profit. Earnings per share (EPS) is the industry standard that
investors rely on to see how well a company has done. Basic earnings per share is a rough
measurement of the amount of a company's profit that can be allocated to one share of its
common stock.

Future of Automobile industry

The automotive industry is shifting gears. Global disruption, technological advances, and
changing consumer behaviours are altering the auto industry on many levels all at once. The
traditional business model of designing, manufacturing, selling, servicing, and financing
vehicles continues. Yet at the same time, the automotive industry is racing toward a new
world, driven by sustainability and changing consumer behaviour, encompassing electric
vehicles, connected cars, mobility fleet sharing, onboard sensors, new business models, and
always-on connectedness. During the initial pandemic lockdowns, the automotive industry
was hit hard, as global supply chains ground to a halt, manufacturers and dealers
temporarily closed, and people stayed home and drove less. Despite that initial slowdown,
however, industry experts say the pandemic actually accelerated progress of digitalization in
the automotive sector. This is not the first, or even the last disruption that the auto industry
has seen. Some believe that the industry, particularly automotive suppliers, learned a lot
from the economic hardships of the past. The lessons learned from the economic downturn
in 2008-2009 ensured that automotive suppliers were better prepared, more resilient, and
able to rebound. Now, automotive manufacturers are contending with shortages of
semiconductor chips, which is impacting vehicle production. Overall, the continuous
disruptions of operations and supply chains have dramatically accelerated several
underlying business and technological trends in the automotive industry.
The availability and adoption of advanced technology solutions is driving the majority of the
underlying trends in the auto industry. Connected cars, sensors, electrification, and new
business models (including mobility-as-a-service) all take advantage of advanced technology
solutions. That’s where industry experts say the automotive industry needs to focus going
forward. The entire industry, from suppliers to automakers, is challenged to keep existing
operations profitable, while simultaneously building out capacity to tackle these new
innovations. Companies must find the right balance between continuity of a stable and
profitable business, while at the same time lead the way in disrupting their own business
models.
While many automakers and suppliers learned from the past to help them survive recent
disruptions and make their existing operations more efficient, some industry leaders say
that flexibility and innovation will be critical when it comes to the unique challenges facing
the future direction of the automotive industry.
In a recent webinar, Joachim Skarpil, Head of Automotive Suppliers at Capgemini explained,
“The future innovations will be achieved by software components, and each automotive
supplier needs to find its own individual answers. So, new products or other products with
new services and new business models need to be developed. In the future, automotive
suppliers will have to be more flexible and even faster than ever before.”
What will the future of mobility look like in the real world? There is so much collaboration
and innovation in this space, that e-mobility innovations are already underway.
Cars that are self-aware and provide a connected platform for new business models.
Vehicles with hundreds of Internet-connected engine control units (ECUs) and sensors,
providing data and insights. The capability to bundle vehicle sales with new subscription-
based offerings for parking, electric vehicle (EV) charging, rideshare, and car share services.
Algorithm-based insurance based on data from connected cars. Fleet services, which are
already at an all-time high, will continue to grow and expand to include charge point
operations, as more fleets become electrified.
Automotive companies need to innovate and develop solutions quickly in order to react fast
to changing customer demands and market opportunities. In a digital world, innovation
must become an integral part of each department and discipline, so the entire enterprise
contributes to generating top-line, bottom-line, and green-line improvements.

Competitions

Major names among Hyundai’s competitors include – Ford, General Motors, Toyota, Suzuki,
Volkswagen, Nissan, Honda, FCA (Fiat Chrysler Automobiles), BMW & Mercedes.
The competitive pressures in the automotive industry have also grown with time. the
industry is itself undergoing a major transition. these changes have made it compulsory to
place higher focus on technological innovation and marketing. Hyundai has an extensive and
strong supply chain and distribution network. Apart from that, the brand is focusing on the
development of eco-friendly vehicles to meet the changing demand of the customers. 2016
was a challenging year in several ways, however Hyundai’s performance despite the
challenging situation was very good. These uncertainties in various markets are expected to
stay for some years. However, Hyundai has planned to become a leading manufacturer of
eco-friendly automobiles and is making heavy investments in this area.
Up to March 2021 Toyota Group is on top of the market with 12.6% market share and 2.3
million sales Years to Date. In recent years they had great global coverage while managing
the brand portfolio quite well. Toyota is the main competitor of Hyundai in Asia and also
globally.

Corporate Social responsibilities & Sustainability

In 2008, Hyundai Motors established a committee to oversee its Corporate Social

Responsibility programme. Among the programme's initiatives have been the "Happy Move
Global Youth Volunteers Program". The Hyundai Motors' India Foundation has invested
more than 20 million rupees in various corporate social responsibility programmes in India.
In 2011, it started the "Go Green" village adoption project in Tamil Nadu. Its aim was to
promote environmentally friendly products, increase the forest cover in Tamil Nadu, and
improve living and hygiene conditions in the region's villages. A number of schools have
been adopted for improvement with the HMIF donating around 450 benches to government
schools and drilling 10 bore wells.
The Green Light Project is a program that supports underdeveloped countries. It promotes
education and healthcare rights and helps local communities achieve self-reliance. From
2012 to 2019, Kia Motors established vocational training centres, schools, healthcare
centres, and environmental centres in 12 local communities throughout eight African
countries and one Asian country. In addition, the project increases accessibility through
services such as vehicle support and increases economic independence through the
operation of self-reliance projects suitable for local businesses. Once the regions that will
receive support have been determined, the Green Light Project identifies the needs of
citizens first and then provides continuous support for the next three to five years in order
to develop the region. This is the key difference between the Green Light Project and other
support programs. As of 2019, local communities in Tanzania, Malawi, and Mozambique
have completed the self-reliance support program and local community transfer. Domestic
and overseas employees of Kia Motors are actively participating in the project every year in
the form of local volunteering and 1:1 mentoring.
Hyundai Motor Group established Easy Move Inc. in June 2010 with the goal of creating a
sustainable social enterprise. Easy Move Inc. is Korea’s first manufacturer of mobility
assistance devices and technology developer for mobility-impaired individuals. Over the
past nine years, Easy Move Inc. has made every effort to change a market structure that
depends highly on expensive imported products and to improve mobility assistance device
manufacturing technology. Thanks to these efforts, it has drastically expanded the supply
rate of mobility assistance devices through aggressive localization and has obtained around
40 technology and design certifications and patents. In 2019, Easy Move Inc. received a
Presidential Award in recognition of its contributions. Through Easy Move, Hyundai Motor
Group provides direct support to vulnerable populations, including people with disabilities
and the elderly, and strives to develop high value added products and technologies.
Green Trip is a representative social contribution enterprise in Korea supported by Kia
Motors Corporation to help people with disabilities travel comfortably. In 2019, 10,447
people participated in the program. Green Trip provides vehicles for travel free of charge to
families with a disabled member and also operates 16 Easy Move Inc. Carnivals and one Ray
vehicle that can be operated by people with disabilities and can store electric and manual
wheelchairs. Moreover, an agreement was reached with Gangwon Province and the city of
Gangneung to revitalize tourism for people with disabilities and to sponsor extra services
including free entrance to local tourist attractions and free parking. In 2019, Green Trip also
reached an agreement with Jeju Doori, a specialized travel agency for people with
disabilities, expanding its services from the mainland to Jeju Island. In accordance with this
agreement, Kia Motors Corporation plans to operate a reservation system on the Green Trip
website and support families who wish to travel to Jeju Island and also plans to offer more
services in the future. Established in June 2012, Green Trip has strived for over 8 years to
improve mobility rights for the mobility-impaired and has provided travel opportunities for
over 50,000 families.
Conclusion
Hyundai Motor Group has been engaged in strategic investment efforts including seed
investments for new businesses and investments for fundamental technologies to support
existing businesses while trying to identify new business opportunities and promising future
technologies at the same time. Hyundai are conducting joint R&D programs with start-ups
to create the values for the future.
In addition to the existing automobile division, Hyundai Motor Group is building up its
strategic investment efforts to encourage and secure innovations in innovative domains that
span across the borders with other industries, AI, robots, energy, smart city, and mobility.
Also, in order to secure global innovation bases by establishing local offices in different
regions, they are strengthening their partnerships with specialized local venture capitals to
build up our global investment capabilities.