An Ambitious Sales Target

Hyundai Mobis aims to rank among top five auto parts makers in the world by 2020 with sales boosted to 21 tln won

Hyundai Mobis Co. has decided to post 21 trillion won in sales this year and invest 940 billion won in facilities, which will include hiring at its R&D facilities to bring the number of staff to 1,500, an increase of 20 percent from last year, in an effort to step up its R&D activities, the company said recently.
The sales target includes 11.9 trillion won at home and $8.9 billion from exports of its auto parts, which shows a 10 percent increase in domestic sales and 33 percent growth in exports. The company is a supplier of auto parts to both Hyundai Motor and Kia Motors, the two key affiliates of the Hyundai-Kia Automotive Group, and posted 17 trillion won in sales in 2009. The projected investment figures, up 50 percent from last year, will go to such areas as 550 cases of new technologies for the commercialization of environmentally friendly and intelligent vehicles and technology exchange with its overseas plants, among others. The company is also set to supply $780 million worth of modules to back up its automobile affiliates’ plans to produce 5.4 million cars this year. The company also plans to save some 70 billion won in production costs this year to make its auto parts more competitive.
Vice Chairman Chung Suk-soo said this year is the initial year for the company’s ambitious goal of becoming one of the top five auto parts makers in the world by 2020 by strengthening its core auto parts production facilities and focusing on technology R&D activities to build a base for the company’s great leap. The company will try to make contributions toward making Hyundai and Kia cars more competitive by supplying cost-competitive auto parts while at the same time supplying its auto parts to other global automakers. The company will supply competitive auto parts to overseas car plants operated by both Hyundai and Kia starting with the Georgia plant in the United States, scheduled to go online this year, and car plants in China, India, Europe and North America, to ensure their independent operations. The company will be ready to supply competitive auto parts to the plants to be built in Russia and Brazil and the third car plant in China this year or in 2011.
In the meantime, Hyundai Mobis said the sales of its audio-video navigation equipment shot up to 200,000 units last year, triple the figure for 2008, with sales of the equipment rising to 30,000 units on a monthly average during the fourth quarter last year.
The company said the sale of its before-market navigation should have reached the 250,000-unit level last year compared to 90,000 units in 2008, boosting its market share of the equipment to 12 percent from 5 percent in 2008. It was the first time since 1997 that its yearly sales exceeded 200,000 units, the Hyundai-Kia Automotive Group affiliate said. The company attributed the surprising record to upgraded quality and function of the equipment and lowered prices at the same time while the gadget came with various support equipment such as TPEG service; voice understanding ability; ground wave DMB; radio; DVD/CD/MP3; Brutus hands free; audio streaming; MP3 of USB; resurrection of mobile image; i-Pod support; and auto care support, among others, depending on car brands.
The company also made AVNs to fit various car models through tests on each new car model, as they took about two years to develop to install the best AVN for a new model, Hyundai Mobis said. The prices of the navigation equipment dropped to 1 million won per unit from 3 million won in 2007 and further now to from 400,000 won per unit to around 600,000 won for units for small sedans. Vice President Kim Soon-hwa, in charge of the AVN business department, said demand for various AVNs shot up greatly among all types including the cheaper ones costing from 200,000 won to 400,000 won per unit to the high-quality ones such as those that are built in high-priced car models, as the word spreads that they are great in quality as well as in price, bringing rapid growth in the AVN market. He said the trend is likely to continue for three to four more years, leading to an upgrade in quality of AVNs.
In the meantime, Hyundai Mobis won the top prize at the 2009 World Automobile Manufacturers Share Value Award held in Detroit, Michigan, the United States recently. The top award came in the area of the auto parts makers stock value increase. The event is an annual one sponsored by the Automotive News and Price Waterhouse Coopers, a renowned accounting firm in the Unites States, for automakers, auto parts makers and auto dealers to evaluate the performance of their shares in the stock exchanges in the United States. The company’s share prices in the past three years advanced 63.5 percent while the auto parts makers’ shares in general fell by 17.4 percent on average during the same time as evaluated by the accounting firm. The company cited continuous rational shareholder-oriented management for its winning of the award. nw

(left) Vice Chairman Chung Suk-soo of Hyundai Mobis Co. An executive of Hyundai Mobis gives a speech at the company’s management strategy seminar held early this year.