Hyundai Motor's Blockbuster Year

Automaker posts record sales and profit in 2011 thanks to huge increase in sales in U.S. led by Elantra

Hyundai Motor Co. had an outstanding year in 2011, breaking all kinds of records in such key areas as sales and profit as one of its sedans, the Elantra (Avante in Korea), was named the Car of the Year in terms of quality in the United States.
The largest auto company in Korea posted 77.79 trillion won in sales last year, up 16.1 percent YoY, with operating profit running to 8.75 trillion won, up 36.4 percent YoY, and net profit of 8.1 trillion won. The company sold more than 4 million cars for the first time in its history at 4.05 million units, up 12.4 percent YoY compared to 3.61 million units sold in 2010.
Most of the sales came from overseas with only a 3.7 percent increase at home, while overseas sales posted a 14.3 percent rise over the previous year, due mostly to car designs and quality that appealed to overseas customers, Hyundai Motor officials said.
The two-digit increase in both sales and profit is owed to Chairman Chung Mong-koo stressing quality management, and it happened for the first time since the carmaker's split from Hyundai Group, which the chairman's father set up. Reduced costs through the operation of overseas car plants and platform integration also helped boost profit, the officials said.
Operating profit last year rose to 10.4 percent of sales, up 1.6 percent from 8.8 percent in 2010, compared to an 11.2 percent increase in operating profit for Samsung Electronics. Average operating profit for the manufacturing industry last year amounted to 6.9 percent.
Vice Chairman Lee Won-hi said the prices of second-hand Hyundai cars rose lately due to their improved quality and, from now on, the company won't have to discount its new cars put on the market.
The company's sales target for this year has been set at an increase of 5.7 percent over last year due to uncertainties in the world economy, which is a far lower increase rate than last year's increase of 12.4 percent. The officials said the European debt crisis continue to persist and is coupled with elections in many major countries creating political uncertainties that may lead to economic uncertainties.
They also said Hyundai Motor will introduce new sedans in the U.S. car market to fend off challenges from such carmakers as GM, Ford, and Chrysler in the United States, and Germany's Volkswagen.
A securities analyst said how well Hyundai would do against a marketing onslaught by the German carmaker and Japanese carmakers, which overcame the impact of the earthquake and tsunami, will decide Hyundai's performance this year.
Hyundai Motor Group will invest 14.1 trillion won this year, up 15.6 percent from last year, amounting to 12.2 trillion won, the group said recently, with the huge increase in investments reflecting Chairman Chung Mong-koo's idea that investments should be increased amid crises.
The group said 11.6 trillion won will go to domestic auto production facilities to help boost the growth of the national economy this year, up 27.5 percent from last year. About 5.1 trillion won will go to R&D activities this year, up 10.9 percent YoY, while 9 trillion won will go to auto production facilities this year, up 18.4 percent YoY, the group said.
The group will also employ the largest number of new employees this year at 6,500 in addition to 1,000 college student interns for a total of 7,500 to be added to its payroll, the largest number for a single year in the group's history, the conglomerate said. The new employees include high school and junior college grads for production jobs.
Major points in its investment strategy include the development of new technologies for car production and improving the auto production facilities to produce better quality cars. About 4.6 trillion won out of 5.1 trillion won, or about 90 percent, to be invested in R&D activities will go to the development of environment-friendly futuristic vehicles including hybrid cars, following the introduction of Sonata and K5 hybrid models last year. nw

Chairman Chung Mong-koo of Hyundai Motor Group.