Hyundai Kia Motors Spent More on Preparing Future Cars Despite the COVID Crisis

R&D Expenses of 3.3279 Trillion Won Invested Up to the Third Quarter of This Year

Chung Euisun, Senior Vice Chairman of Hyundai Motor Group, was appointed chairman on the 14th, marking the full-scale launch of the third-generation management system of Hyundai Motor Group. Hyundai Motor Group, including Hyundai Motor and Hyundai Mobis, held an extraordinary board meeting that morning and approved the appointment of the new chairman, Chung. Accordingly, Chairman Chung became the undisputed head of the group just 2 years and 1 month after his promotion to Senior Vice Chairman of the group in September 2018, and 7 months after becoming chairman of Hyundai Motor's board in March this year. The photo shows the Hyundai Motor Group headquarters in Seocho-gu, Seoul on the day. Photo by Kim Hyunmin kimhyun81@

[Asia Economy Reporter Kim Ji-hee] Hyundai Kia Motors has invested the largest amount ever in research and development (R&D) costs through the third quarter of this year. This is interpreted as a determination to continue preparations for the era of future vehicles without disruption, despite the ongoing crisis caused by the COVID-19 pandemic.

According to Hyundai Kia Motors' quarterly report on the 29th, the R&D costs invested up to the third quarter this year amounted to 3.3279 trillion KRW. Hyundai Motor invested 2.0871 trillion KRW, and Kia Motors invested 1.2408 trillion KRW. Hyundai Motor increased its R&D costs by more than 10% compared to the same period last year, and Kia Motors recorded a growth rate of 5.8%.

Hyundai Kia Motors' R&D investment surged 8.9% compared to last year, reaching an all-time high as of the third quarter. In particular, despite the global spread of COVID-19 causing a decline in sales this year, R&D investment continued. The ratio of R&D costs to sales was 2.8% for Hyundai Motor this year, up 0.4 percentage points from 2.4% in the same period last year. Kia Motors also saw a slight increase to 2.9% compared to last year.

The increased R&D costs were allocated to future technologies such as electrification and autonomous driving. Hyundai Motor's major R&D achievements this year include Highway Driving Assist 2 (HDA2), Intelligent Speed Limit Assist (ISLA) functions, and Kakao voice recognition.

Hyundai Motor has set a mid-to-long-term plan to sell 1 million electric vehicles by 2025 and become a company with a 10% global market share. To realize this vision, it will launch the first model of the dedicated electric vehicle brand ‘Ioniq,’ the Ioniq 5, starting next year. Kia Motors is also accelerating its transition to a future vehicle-centered business system by introducing seven dedicated electric vehicles by 2027, beginning with the CV next year. In the autonomous driving sector, it has committed to expanding Level 2 to 3 autonomous driving technologies across all models by 2025.

In addition, Hyundai Kia Motors spent more on facilities and equipment investments this year, including new cars and new or expanded factories. Hyundai Motor invested the most in Korea, with 1.5397 trillion KRW. Due to the launch of various new cars this year, line replacements were necessary, and nearly 300 billion KRW more was invested due to large-scale construction ahead of the introduction of a dedicated electric vehicle factory next year. Overseas major factories in the United States (315.2 billion KRW), Turkey (141.9 billion KRW), and the Czech Republic (123.6 billion KRW), where operating rates fell to the 60% range due to the impact of COVID-19 this year, also increased their investment scale compared to last year. Kia Motors also increased investments mainly in its factories in Korea and the United States to improve operating rates and quality.

An industry official said, “The strategy is to prepare for the post-COVID-19 situation and future markets by continuing to invest in new technologies despite the current crisis.” He added, “Compared to global automakers, Hyundai Motor’s R&D investment ratio is not particularly high, so it is expected to continue increasing investments in line with mid-to-long-term strategies.”