Hyundai Motor: "Electric Vehicle Chasm, Opportunity to Widen Gap with Competitors... Increasing Investment"

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"I believe that the electric vehicle chasm (a temporary stagnation in demand before mass adoption) era is precisely the opportunity to widen the gap with competitors. Hyundai Motor Company has not reduced its electric vehicle targets. In fact, investments are increasing."

On the 5th, at the 'Value-Up Corporate CFO Meeting' hosted by the Korea Exchange at the Conrad Hotel in Yeouido, Seoul, Yoon Tae-sik, head of Hyundai Motor's IR team, made these remarks. On this day, Yoon introduced Hyundai Motor's value-up policy focused on shareholder returns and mentioned matters related to the use of net cash.

As of the third quarter of this year, Hyundai Motor's net cash holdings stand at around 13 trillion won. Yoon said, "Sometimes I get asked why Hyundai Motor, despite holding a lot of cash, does not provide sufficient shareholder returns. I rather respond by asking if now is not the time to invest."

At the CEO Investor Day last August, Hyundai Motor reaffirmed its long-term goal of selling 2 million electric vehicles by 2030. While competitors are reducing their electric vehicle sales targets and investments, Hyundai Motor has maintained steady electric vehicle sales targets and expressed a policy to increase investments. Yoon said, "With the advent of the electric vehicle era, brand perception of Hyundai Motor has definitely changed, and we are moving at Hyundai Motor's own pace," adding, "The right speed and production flexibility will serve as a catalyst to increase the overall company's value."

Hyundai Motor Company Yangjae Headquarters
Photo by Hyundai Motor Company

Hyundai Motor Group, having ranked third in global sales last year, is now aiming for second place. Hyundai Motor expressed confidence that through continuous quantitative growth, Hyundai Motor Group can reach second place. Hyundai Motor has reduced its factories in China from five to two and sold its Russian factory earlier this year. This has reduced global production capacity by up to about 1 million units. Yoon said, "In a situation where the China and Russia factories have disappeared, we contributed to increasing operating profit margins by maintaining 100% utilization rates at the remaining global factories."

He continued, "From the first week of October, the dedicated electric vehicle factory in the U.S. started operations, and the factory in India acquired from GM is also about to start soon," adding, "With that, there will be spare capacity, so I believe overall volume growth will continue."

The market also speculates about Hyundai Motor's active M&A possibilities due to its ample cash holdings. Hyundai Motor continues to invest in various future growth areas, and internally, the focus is on SDV (Software-Defined Vehicle) related fields. Yoon said, "Looking at internal circumstances, the focus is still on software," adding, "Since there is a shortage of companies compared to the global level, I think investments will be made in software and SDV."

Last August, Hyundai Motor announced a policy to pay a minimum dividend of 10,000 won starting this year and to repurchase a total of 4 trillion won worth of treasury shares over three years. It also announced a policy to maintain a minimum TSR (Total Shareholder Return) of 35% for three years starting in 2025. Previously, Hyundai Motor set the dividend payout ratio at 25% of net income, and with treasury share repurchases and cancellations combined, the ratio was increased by about 10 percentage points.

Additionally, considering the discount on preferred shares, Hyundai Motor mentioned a plan to flexibly repurchase preferred shares within the annual TSR range. Yoon said, "Currently, the three listed preferred shares have a significant gap compared to common shares," adding, "We plan to determine the scale of preferred share repurchases considering the discount on each preferred share."