Hyundai Mobis Achieves 3 Trillion KRW Sales in Electrification Division, Signaling Positive Outlook

First Half Sales Surpass 1.6 Trillion KRW
Up 37.1% Year-on-Year
Automotive Industry's Eco-Friendly Drive 'Anticipation'

Hyundai Mobis Yongin Technical Research Center (Photo by Hyundai Mobis)

[Asia Economy Reporter Kim Ji-hee] Hyundai Mobis's electrification business continues to show an upward trend despite the challenges posed by the COVID-19 pandemic. Related sales exceeded 1.6 trillion KRW in the first half of this year alone, signaling a positive outlook for achieving the '30 trillion KRW electrification sales target by 2020' set in 2018.

According to Hyundai Mobis on the 27th, the company's electrification sales in the first half of this year reached 1.6922 trillion KRW, a 37.1% increase compared to the same period last year. In particular, in the second quarter, sales nearly hit 1 trillion KRW, marking the highest quarterly performance ever. If the current trend continues, achieving the initially announced 30 trillion KRW sales target for the electrification sector by 2020 is highly likely.

Sales of electrification components applied to electric vehicles, hydrogen fuel cell vehicles, and hybrid vehicles have recently shown rapid growth. After just surpassing 1 trillion KRW in 2017, sales recorded 1.8047 trillion KRW in 2018 and 2.7968 trillion KRW in 2019, increasing by about 50% annually. Quarterly sales, which were less than 300 billion KRW in 2017, have surged to about three times that amount in just three years.

Notably, the upward trend has been maintained despite the global automotive industry's overall contraction due to the COVID-19 crisis this year. Due to reduced production at Hyundai Motor Company and Kia Motors through the second quarter, total core component sales, including electrification parts, decreased by 2.1% compared to the same period last year. Consequently, the proportion of electrification sales within core component sales surpassed 30% for the first time this year. The presence of electrification components is actually growing stronger amid the COVID-19 crisis.

Industry experts predict that this year's electrification sales could exceed not only the original target of 30 trillion KRW but also reach up to 40 trillion KRW. Moon Yong-kwon, a researcher at Shin Young Securities, said, "Thanks to the expansion of eco-friendly vehicle production by Hyundai and Kia in the second quarter, the sales proportion of the electrification sector reached a record high and is expected to continue relatively favorable growth. Starting next year, with the launch of electric vehicles based on Hyundai Motor Group's dedicated electric vehicle platform (E-GMP), battery pack sales will be added, anticipating high growth."

Analyses that the global automotive industry is accelerating its shift toward eco-friendly vehicles after the COVID-19 pandemic also brighten the outlook. Lee Dong-heon, head of regional analysis at Hyundai Motor Group's Global Management Research Institute, stated, "If the short-term stagnation caused by COVID-19 in the global electric vehicle market is resolved, it is expected to return to its previous growth trend, supported by government policy efforts and the automotive industry's electrification strategies."

Hyundai Mobis has designated this year as the inaugural year for securing leadership in the electrification field. Next month, it plans to complete a dedicated electric vehicle parts factory with a total floor area of 62,060 square meters in the Ulsan Ihwa Industrial Complex to meet the demand for parts to be installed in Hyundai Motor's next-generation electric vehicles. Hyundai Mobis plans to invest a total of 4 trillion KRW over the next three years to expand electrification parts production capacity and 3 to 4 trillion KRW in developing new technologies such as electric vehicles and autonomous vehicles.