Hyundai Motor Expands Territory - May Sell Financial Services to GE

Seoul July 30, 2004; Seo Jee-yeon writing for the Korea Times reported that Hyundai Automotive Group (HAG) is expanding its business territory into steel and construction.

A consortium led by HAG¡¯s two steel units _ INI Steel and Hyundai Hysco, will sign a final contract to take over the troubled Hanbo Steel today for 910 billion won, narrowing the gap with Samsung in chaebol asset ranking.

Hanbo produces 3 million tons of hot- and cold-rolled coils and automotive steel each year and generated 437 billon won in sales in 2003.

INI will buy Hanbo's hot-rolled steel and steel bar producing facilities, while Hysco will purchase its cold-rolled steel plant.

Both companies will obtain Hanbo¡¯s managerial rights next month after gaining approval for the deal from shareholders.

The deal is expected to give the country's top carmaker greater access to steel supplies for car manufacturing.

HAG became the third biggest business group in 2003 with 2002 financial statements reporting assets worth 46 trillion won, coming after Samsung Group (174 trillion won), LG Group (76 trillion won) and just ahead of SK Group (41 trillion won).

The auto group has 28 affiliates, including its flagship Hyundai Motor, the nation's largest automaker.

The car group¡¯s ranking was automatically raised a notch after LG Group was split into two holding companies _ LG Corp. and GS Holdings on Jul. 1.

``The group will expand business in car-related sectors like steel or financial industries in a bid to raise competitiveness in our core business,¡¯¡¯ HAG officials said.

The group has already been in talks with General Electric Capital to sell up to 40 percent of their stakes in Hyundai Capital Services, its consumer finance unit. Through the sale, the group could pick up know-how on auto financing from the U.S. company, industry watchers said.

However, not all business expansion plans of HAG are related to the car sector.

AMCO, a construction arm of the group, yesterday announced it plans to enter the housing construction market. AMCO plans to sell 716 apartments in Inchon, 40 kilometers west of Seoul, in October this year.

AMCO, which was established as a Hyundai affiliate in 2002, has primarily focused on building and renovating Hyundai Motor 's plants and facilities.

``Since works on the facilities within the group offer limited opportunities for us in the long term, we are planning to expand our business to become more competitive,¡¯¡¯ an AMCO official said, on condition of anonymity.

Some industry insiders view the company's expansion as part of Hyundai Motor Group's efforts to tap into the lucrative housing construction market.

``With Hyundai's strong capital, it may be just a matter of time before AMCO becomes a major player in the local construction market,¡¯¡¯ an analyst said.