Hyundai Motor Commands 26 Cos. High profits on 2nd Anniversery

The Korea Times reported that Hyundai Motor group, which was spun off during the dismantling of the Hyundai conglomerate in September 2000, is enjoying historic bullish sales and a tripling of the number of its affiliated firms in just two years.

Sales at the Hyundai Motor-led auto group are on track to make 2002 the strongest year for the Korean auto market in history, despite the sluggish economic recovery and labor strikes that disrupted car production from mid-May to mid-June that kept Hyundai Motor¡¯s sales down in the second quarter.

According to the nation¡¯s largest car manufacturer, the number of its affiliates, which were 10 at the time the chaebol was broken up back in 2000, had ballooned to 20 by September last year and as of the September this year the total number was 26 affiliate firms.

The auto group took over Rotem, formerly Korea Rolling Stock Corp., in November last year, and four car component producers that Hyundai Motor had held managerial control over, Wia Corp., Korea Precision Industrial (KPI), Wisco and Bontec Electronics were also officially incorporated as Hyundai Motor group subsidiaries between April and August this year,.

Following the increase in the number of subsidiaries, the Hyundai Motor group¡¯s total assets according to the Fair Trade Commission, amounted to 47.1 trillion won as of April this year, up 11 trillion won compared with 36.1 trillion won in April 2001.

Net profits at the three major arms of the auto group, Hyundai Motor, Kia Motors and Hyundai Mobis, surged considerably in the first half of this year to the highest level as domestic consumers, shrugging off economic concerns, thronged to car dealerships to take advantage of the just-ended special excise tax holiday.

Hyundai Motor chalked up 893.4 billion won in net profits in the first half this year, Kia 279.2 billion won and Mobis 213.1 billion won, whereas the three companies combined recorded net profits of little less than two trillion won for the whole of last year.

Hyundai Motor sold 814,809 vehicles during the six months, a rise of 1.3 percent on year, with local sales having climbed 17 percent on year to 6.92 trillion won, while exports increased 3.8 percent on year to 5.4 trillion won.

The net profit, sales and ordinary profit reports were historically high half-yearly figures following record high first quarter earnings, despite a labor union strike last May. Hyundai Motor had focused on selling cars domestically in the first half to settle a backlog of local orders seeking to benefit from the special tax cut.

Hyundai Motor aims to sell a total 1.732 million cars this year, about 756,000 units in the home market and about 976,000 units overseas.

Hyundai Motor, which sold 40,266 vehicles in the U.S. last month, up 16.8 percent from 34,474 units a year ago, expects the ``strong sales¡¯¡¯ to continue for the rest of the year and last week raised its export prices by an average of 3 to 5 percent to counter the strengthening won.

Kia also raised its export prices to the U.S. by an average of 1 to 3 percent since July this year for its 2003 car models. The Hyundai Motor group plans to apply the price increase to future exports to Europe as well.

Hyundai Motor has also virtually completed takeover of the former Hyundai group headquarters building in Kyedong in central Seoul, a symbolic reflection of the Hyundai Motor group chairman Chung Mong-koo succession to the Hyundai empire established by late Hyundai founder Chung Ju-yung.

The carmaker, which owned only five floors of the headquarters building at the end of 2000, bought up the fourth to sixth floors of the building previously owned by Hyundai Engineering and Construction and the 10th floor that was owned by Hyundai Oilbank. It has also purchased the second, third floors of the building that were owned by Hyundai Corp. as well as the swimming pool and parking lot.

Since the building has only 15 above ground and one below ground floors, it now pretty much owns the entire building.

Hyundai Motor, in a move to prevent customers from growing skittish about purchasing cars because of the restoration of the special excise tax, also said yesterday that it will roll out a ``Hyundai Auto Save Lease¡¯¡¯ together with Hyundai Capital and Hyundai Card, are launching today a buy-back arrangement that grants customers the option of getting on installment and returning the car to the automaker after three years, or to buy the vehicle outright by paying for the remaining 30 percent.

The new lease-to-buy deal will enable customers to pay just 8.25-percent in annual interest rate for a maximum three year loan from the automaker and have the option of renewing their vehicle at the end of the term.

sjkim@koreatimes.co.kr