Deployment of New Technology M&A and Innovative Talent
Accelerating Acquisition of Robotics, Hydrogen, and UAM New Business Technologies
Inheritance of Quality Management... 3.4 Trillion Big Bath Executed
Challenges Including GBC Construction and Governance Restructuring Remain
[Asia Economy Reporter Su-yeon Woo] Chung Eui-sun, Chairman of Hyundai Motor Group, will mark his 100th day in office on the 21st. Over the past 100 days, Hyundai Motor Group has accelerated its transformation into a future mobility solutions company by boldly implementing reforms such as securing new technologies through large-scale mergers and acquisitions (M&A), advancing innovative talent, and resolving quality issues.
Chairman Chung took office on October 14 last year and presented the group’s innovation direction with the keywords ‘Customer, Humanity, Future, Sharing’ as his inaugural message. In particular, he expressed his ambition to realize eco-friendly mobility solutions for humanity while attempting to transform the company into a future mobility solutions provider.
◆ Accelerating Acquisition of New Technologies in Robotics, Hydrogen, and UAM New Businesses= To realize the vision of becoming a mobility solutions company, Chairman Chung first pursued securing new technologies through large-scale M&A. In December last year, Hyundai Motor Group invested about 1 trillion KRW to acquire an 80% stake in the U.S. robotics company Boston Dynamics from Japan’s SoftBank Group. Chairman Chung even made a strategic investment using 240 billion KRW of his personal funds.
Earlier, Chairman Chung announced a long-term plan to allocate Hyundai Motor Group’s future business portfolio as 30% urban air mobility (UAM), 20% robotics, and 50% automobiles. To complete this blueprint, he made a bold investment decision and strategically bet on Boston Dynamics, which possesses world-class technology in robotics. Industry insiders expect that combining Boston Dynamics’ robot technology with Hyundai Motor Group’s mass production capabilities will create synergy capable of leading innovation in the mobility market.
Over the past 100 days, Chairman Chung has placed innovation not only in robot technology but also in new businesses such as hydrogen fuel cells and UAM. In the first executive reshuffle after his inauguration, 30% of the newly promoted executives came from new business, new technology, and research and development (R&D) backgrounds. He also promoted Shin Jae-won as President in charge of UAM and Kim Se-hoon as Vice Chairman responsible for the fuel cell business, strengthening these divisions.
Immediately after taking office, Chairman Chung attended the Hydrogen Economy Committee meeting to discuss ways to revitalize the domestic hydrogen economy with Prime Minister Chung Sye-kyun and other public-private officials. In October last year, he toured Hyundai Motor’s Ulsan plant producing hydrogen electric vehicles alongside President Moon Jae-in. He launched the hydrogen fuel cell brand ‘HTWO’ and is planning local market entry by establishing a hydrogen fuel cell production base in China. The UAM business also began developing unmanned aerial vehicles for cargo transport in November last year, aiming to commercialize passenger unmanned aerial vehicles in major cities by 2028.
◆ Continuing Quality Management… Implementing a 3.4 Trillion KRW Big Bath= Although the group’s head changed for the first time in 20 years, the ‘quality management’ principle emphasized by Honorary Chairman Chung Mong-koo remained unchanged. Chairman Chung set aside a provision of 3.4 trillion KRW in the third quarter of last year to cover recall costs, including those related to the long-standing Theta2 engine recall controversy. Industry experts view this as an unprecedented move to write off quality costs for the next 20 years at once, putting an end to quality controversies.
The value of this quality management continues into the electrification era, where the paradigm is shifting to eco-friendly vehicles. In his New Year’s address earlier this year, Chairman Chung emphasized, “Quality and safety are not tasks for specific parts alone,” adding, “Only when all employees and partners unite and pursue an uncompromising attitude toward quality and safety can customers truly trust us.”
In addition to strengthening eco-friendly vehicle quality, Chairman Chung faces numerous challenges ahead, including the construction of the Global Business Center (GBC) and governance restructuring. The GBC, a long-cherished project of Honorary Chairman Chung, has been delayed, prompting discussions about revising the existing plan. Governance restructuring, which has been stalled since its withdrawal in May 2018, is also an urgent task. As IT integration into automobiles accelerates and major IT companies enter the finished vehicle market, how Hyundai Motor Group sets its direction will be a critical test of Chairman Chung’s management capabilities.
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