The combined sales of small and medium-sized first-tier suppliers directly supplying parts to Hyundai Motor Company and Kia have surpassed 90 trillion won for the first time. Hyundai Motor Group is strengthening the competitiveness of the Korean automotive industry and contributing to the national economy by fostering an industrial ecosystem.
According to Hyundai Motor Company and Kia on the 21st, the 2023 sales of 237 small and medium-sized suppliers among the first-tier parts suppliers amounted to 90.297 trillion won. This is the first time these parts suppliers' sales have exceeded 90 trillion won, which is 12 trillion won more than Hyundai Motor Company's sales (78.0338 trillion won based on individual financial statements).
This analysis was conducted on 237 small and medium-sized parts suppliers among Hyundai Motor Company and Kia's domestic first-tier suppliers, excluding Hyundai Motor Group affiliates, companies with less than 10% sales dependency on Hyundai Motor Company and Kia, and non-parts specialized companies (raw materials, chemicals, equipment, etc.).
These suppliers are continuously growing not only in sales but also in indicators that show corporate soundness such as asset size and debt ratio. In particular, sales have significantly increased since the 2000s when Hyundai Motor Company and Kia began to enter a full-fledged growth trajectory. The 2023 sales increased by 326% compared to 2001, 22 years ago.
A Hyundai Motor Company and Kia official said, "As the size and soundness of parts suppliers in the automotive industry value chain grow, the overall scale of the Korean automotive industry is expanding, and its contribution to the national economy is also increasing."
Sales trend changes of primary small and medium-sized parts suppliers for Hyundai Motor Company and Kia. Provided by Hyundai Motor Company and Kia.
Furthermore, using the Bank of Korea's input-output table to estimate the national economic ripple effects of these suppliers, the production inducement effect reached 237.8 trillion won, and the value-added inducement effect was 55.6 trillion won. The employment inducement effect was found to be about 600,000 people.
Meanwhile, the trend of large-scale individual suppliers is also becoming clear. The proportion of suppliers with sales exceeding 100 billion won increased from 62 companies (21%) in 2001 to 160 companies (68%) in 2023, far exceeding the majority. Additionally, among these suppliers, the number of listed companies rose from 46 in 2001 to 70 at the end of 2023, and during the same period, their market capitalization grew 11.6 times from 1.5 trillion won to 17.4 trillion won.
The average transaction period with Hyundai Motor Company and Kia's suppliers is 35 years, nearly three times longer than the average business duration of 13.5 years for domestic small manufacturing companies. The proportion of suppliers with over 40 years of transactions reaches 36%.
Hyundai Motor Company and Kia are expanding support not only to first-tier suppliers but also to more than 5,000 second- and third-tier small suppliers, providing multifaceted assistance to directly and practically help small suppliers, including ▲ management improvement and stabilization ▲ business diversification and competitiveness enhancement in preparation for the electrification era ▲ establishment of overseas factories and procurement of equipment and operating funds ▲ recruitment of excellent talent ▲ establishment of ESG management systems.
To this end, Hyundai Motor Group operates a win-win cooperation program worth a total of 2.3708 trillion won through direct and indirect financial support and capital contributions, and during holidays such as Lunar New Year and Chuseok, it advances payment of over 2 trillion won in delivery payments to help suppliers manage their funds.
In addition, for relatively smaller second- and third-tier small suppliers only, Hyundai Motor Company and Kia separately operate a 100 billion won supply chain stabilization fund, a 200 billion won win-win fund exclusively for second- and third-tier suppliers, and a 270 billion won joint project guarantee program for second- and third-tier suppliers.
Hyundai Motor Company and Kia also assist suppliers in securing global competitiveness. By establishing local production plants in major global regions such as the United States, Europe, India, Brazil, and Mexico, they have supported not only first-tier parts suppliers but also the joint entry of second-tier suppliers. Until 1997, the number of jointly entered first- and second-tier suppliers was only 34 companies, but by 2023, the total reached 690 companies, including 309 first-tier and 381 second-tier suppliers.
A Hyundai Motor Company and Kia official said, "Our philosophy that co-growth with suppliers is the source of finished vehicle competitiveness and our long-term partnership form the basis for operating diverse and practical co-growth programs to support the sustainable growth of suppliers."
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