Hyundai changes gearsHyundai Motor Group has decided to invest a whopping 80.7 trillion won ($73.2 billion) over the next four years. Despite some suspicions about a possibility of exaggeration and an over-concentration on real estate, we welcome the decision for two reasons.
First, the Korean economy desperately needs corporate investments in production facilities, as its reliance on the government and domestic consumption cannot turn it around. A virtuous cycle in the economy can be achieved only when the government’s lowering of interest rates and deregulations lead to an expansion of corporate investment.
Second, Hyundai’s aggressive approach in a tough time like this could be the way to a breakthrough for our economic slowdown. Given Hyundai’s track record of turning away from domestic investment due to its militant labor union and focusing on overseas investments, its decision to invest 76 percent of the money in the country is a meaningful change.
The car industry is a pillar of our economy due to its far-reaching impact, affecting the steel, materials and financial industries. It is also a unique market, capable of many surprises. Mercedes-Benz still dominates the premium car market 129 years after its foundation, whereas Hyundai has been elevated to the world’s No. 5 position from No. 10 in less than five decades.
The world automobile industry faces a turning point as electronic parts now account for nearly 35 percent of a car. Based on its IT power, even Google has entered the driverless car market. Riding the eco-friendly tide, Japan’s hybrid vehicles and Europe’s energy-efficient diesel cars are rapidly transforming the traditional market, which explains why Hyundai Motor’s Vice Chairman Chung Ui-seon is looking for creative ways to merge automobiles with information technology through annual visits to the international Consumer Electronics Show in Las Vegas.
Hyundai Motor has the capability to produce 8 million cars annually. It is time to throw the dice. Hyundai’s plan to focus on hybrid, electric and hydrogen fuel-cell cars is a rational choice. Only when the company puts its shoulder into its future can it survive.
Hyundai’s aggressive investments can work if it applies its productivity, technological edge and brand power. Hyundai has never coasted down an easy path over the last 48 years. It must prove its ability once again.
JoongAng Ilbo, Jan. 8, Page 34