Hyundai Mobis stronger overseas
In just 10 years since it began producing auto components, Hyundai Mobis has become a global player in the automotive market. The company has been able to raise its international profile as a main supplier to its affiliates Hyundai Motor and Kia Motors, and it is increasingly being recognized as a world-class parts manufacturer in tandem with the Korean automakers’ growing overseas success.
In March, BMW asked for a solo exhibition of automotive parts by Hyundai Mobis at its headquarters in Munich, an unusual request for a global automaker of BMW’s standing. Hyundai credits the improved quality of its auto parts.
In fact, BMW has seen its exchanges with Hyundai Mobis grow in recent years, with its officials being sent on tours of Hyundai’s module factory in Asan, South Chungcheong, and power steering plant in Poseung, Gyeonggi.
Hyundai Mobis is producing and supplying key modules to not only local factories but also to overseas plants of Hyundai Motor and Kia Motors, and it has helped the parts company improve its reputation, which has again led to more business for the Hyundai affiliate.
In 2009, it won a deal to supply $35 million of audio systems and $95 million worth of intelligent battery sensors, to Mercedes-Benz. It also signed a deal with Volkswagen to supply it with $20 million of lamps. It also won a contract to supply $80 million of rear combination lamps to BMW.
With a series of overseas contracts, its sales to major foreign automakers are growing rapidly. The figure stood at $790 million in 2007, rose to $1.15 billion last year and is expected to hit $1.51 billion this year, the company said. Meanwhile, its revenue from contracts with foreign automakers grew to 10 percent of the company’s total sales last year, up from 3 percent in 2002. Officials said they have targeted 20 percent by 2015.
“Foreign automakers are buying more components because they attribute the success of Hyundai Motor and Kia Motors to the quality of their parts,” a Hyundai Mobis employee said. “These rank in the top tier in international quality tests.”
“Within just 10 years, we have localized technologies for braking and steering systems, as well as for air bags, headlamps and car electronics to reach a world-class level,” said Lee Bong-hwan, a vice president of Hyundai Mobis. “We are concentrating on developing car electronics and environmentally friendly products.”
To continue its momentum, the company is building a car electronics research institute that is due to be completed by 2012. Two years ago, Hyundai Mobis acquired Hyundai Autonet, a maker of car electronics, including navigation and audio systems, and continued to invest in these areas.
Furthermore, it plans to increase the number of research personnel and double its spending on research and development to 650 billion won ($560 million).
Analysts say that Hyundai Mobis will be able to decrease its reliance on Hyundai Motor Group, which is likely to improve its operating margin. “The company’s exports to foreign automakers are still at an early stage, but this is definitely an area with much potential,” said Park Young-ho, a senior analyst at Daewoo Securities.
“But it will take some time for the company to see large profits from its overseas sales as it takes at least a few years to develop components for specific buyers,” said Song Sang-hoon, an analyst at Kyobo Securities.
The company is also investing more time and money in training its managers, with the Hyundai Mobis Business Academy launched in September to educate managers and help them adjust to the global business environment. It intends to create a pool of 1,200 engineers who can work at its overseas operations. The company also plans to send the cream of the crop on MBA courses.
“The business academy is part of our plan to seek continuous innovation so as to maximize the potential of our employees and improve the company’s internal communications,” said Chung Suk-soo, vice chairman of the company.
The parts supplier is also helping its subcontractors enter overseas markets, something that small- and medium-sized enterprises have found it difficult to do independently despite possessing the technology and capital. Hyundai wanted to help them find overseas buyers by using its brand power and global network, and Hyundai Mobis has held dozens of components exhibitions in countries like the United States, Japan, Europe and China since 2000, along with its suppliers.
This has resulted in a number of SMEs signing contracts to export auto components. Now several of Hyundai’s suppliers, including Dong Yang Piston and Daeseung, provide sensors and engine parts to Chrysler in the U.S.
By Limb Jae-un [firstname.lastname@example.org]
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