Production Cost of New Porter to Rise by 5 Million Won Per Unit... Hyundai Reconsiders Utilization of Ulsan Plant 4

Hyundai Motor to Discuss Reorganization Plans for Plant 4 Site
Porter Faces Inevitable Structural Changes Due to Stricter Safety Regulations
Production Line Restructuring Considered Amid Rising Costs
Labor Union Opposition Emerges as a Key Variable in Labor Relations

Hyundai Motor Company is reviewing a reorganization of its production lines at Ulsan Plant 4, the main production base for its 1-ton truck, the Porter. With increasingly stringent safety regulations, aging plant issues, and the need to transition to future mobility, there is growing discussion about the possibility of structural changes across the entire Ulsan plant.

According to a comprehensive report by The Asia Business Daily on January 23, Hyundai Motor's labor and management plan to discuss a reorganization of the Ulsan Plant 4 site-which currently produces the Porter, Palisade, and Staria-during the third quarter of this year. It is reported that management intends to deliver a draft plan to the labor union in July.

The main reason Hyundai Motor is deliberating over the future of Plant 4 is the tightening of safety regulations surrounding the Porter. Stricter safety standards will take effect next year, making it inevitable for the Porter, the plant's flagship model, to undergo structural changes. However, with Porter sales on the decline, the significant reinvestment costs are proving to be a major burden.

In 2022, the Ministry of Land, Infrastructure and Transport announced plans to strengthen crash safety tests for light commercial vehicles under 3.5 tons. Previously, light commercial vehicles had been exempt from various crash tests, but due to criticism that their fatality and serious injury rates in accidents were twice as high as those for passenger cars, the safety standards were tightened. While the new standards will be applied sequentially starting in 2024, existing models like the Porter have been granted a grace period until 2027, taking into account their development timelines.

The key issue is the 'cab-over' design, where the engine is located beneath the driver's seat. This structure makes it difficult to secure space at the front of the vehicle to absorb collision energy, raising concerns about a higher risk of serious injury for both the driver and passenger. As a result, Hyundai Motor is considering switching from the cab-over design to a 'bonnet' type, where the engine compartment is positioned at the front. However, it is reported that the company is facing mounting concerns due to the combined burden of increased costs and declining sales.

The Porter is a representative domestic vehicle for ordinary consumers, making cost reduction through production efficiency a top priority. For this reason, reorganization of the production line has always been a primary topic of discussion. The recent sharp drop in sales has added to these concerns. Domestic sales of the Porter fell by 29% in 2024 and by 18% in 2025, marking double-digit declines for two consecutive years. Annual sales, which had hovered around 100,000 units, dropped to approximately 56,000 units last year.

An official from Hyundai Motor's plant stated, "Switching to a bonnet-type structure would increase production costs by about 5 million won per unit," adding, "Since the Jeonju plant already specializes in commercial vehicle production, there are even suggestions to repurpose the Plant 4 site for entirely different uses."

Hyundai Porter. Provided by Hyundai Motor Company

Industry insiders predict that the restructuring of Plant 4's facilities will spark a variety of discussions about the Ulsan plant's production lines. Plant 1, established in 1975, is reportedly experiencing significant aging of its facilities, while Line 2 of Plant 1, which produces the Ioniq 5, has seen its operating rate steadily decline due to slowing demand for electric vehicles.

The debate over restructuring the Ulsan plant is also expected to put pressure on labor relations this year. With a new executive team taking over the Hyundai Motor labor union for the first time this year, the union has already taken a hardline stance, opposing the transfer of production volumes overseas and the possible introduction of robots. Management, for its part, has signaled that it will not back down in the event of strikes or bonus negotiations. With the added variable of plant restructuring discussions, analysts predict that this issue could significantly impact overall labor relations at Hyundai Motor Company in 2026.