Hyundai parts affiliate sets revenue goal of 40% for non-Group orders by 2033

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Hyundai parts affiliate sets revenue goal of 40% for non-Group orders by 2033

Published: 19 Nov. 2024, 18:35 Updated: 19 Nov. 2024, 18:50

CHO YONG-JUN
[email protected]

Hyundai Mobis President and CEO Lee Gyu-suk during the company’s first CEO Investor Day event at the Fairmont Hotel in western Seoul on Tuesday. [HYUNDAI MOBIS]

Hyundai Mobis has set a target of 40 percent for revenue from non-Hyundai Motor Group parts orders by 2033 from the current 10 percent as announced during an investor event on Tuesday, where the company also outlined measures aimed at boosting shareholder value.

Hyundai Mobis, an affiliate of Hyundai Motor Group, has so far been focusing on developing and manufacturing automobile parts for companies within the group: Hyundai Motor, Kia and Genesis are responsible for 90 percent of parts shipments by Mobis as of now. To further diversify its revenue stream, the company will seek to attract more external carmakers in a push to raise the level of revenue from non-Hyundai manufacturers to 40 percent by 2033.

“Proven quality, accumulated through the years of working with Hyundai Motor Group and its subsidiaries, is the core of Hyundai Mobis’ competitiveness,” Hyundai Mobis President and CEO Lee Gyu-suk said during the company’s first CEO Investor Day event at the Fairmont Hotel in western Seoul on Tuesday.

“We will diversify the parts offered to our existing customers and secure contracts for more high-value products, while also attracting new customers,” the CEO said.

Hyundai Mobis will also increase its total shareholder return — which factors in cash dividends as well as share buybacks and cancellation — to 30 percent from the current 20 percent within three years.

"If the company believes that its share price is undervalued, it will focus on share buybacks, and pursue cash dividends for the opposite situation," the company said in the presentation Tuesday.

The company bought back 1.6 trillion won ($1.15 billion) worth of shares over the last six years and has retired all that were purchased in 2023 and 2024. However, over 30 percent of the shares acquired have not been retired yet.

The auto parts maker also hopes to achieve an average annual revenue growth of 8 percent and an operating profit margin of 5 to 6 percent by 2027, which will be made possible through the company’s “pre-emptive investments” in the past that will be fruitful in the days to come.

The company emphasized its role in the future of electric vehicles.

“While the EV market is experiencing a temporary slowdown in growth, we expect demand for EVs to recover in the not-so-distant future,” the CEO said.

To adapt to the new trend, Hyundai Mobis has been investing in Extended Range Electric Vehicles (EREV), powertrains for more budget-friendly EVs and battery technology that will slow down heat transfer to mitigate the risk of EV fires. EREVs are EVs with an internal combustion engine that, instead of powering the wheels, is used exclusive to charge the battery for more optimized energy usage.

Hyundai Mobis is currently developing parts for Hyundai Motor’s upcoming North American-market focused EREV that is expected to enter mass production by the end of 2026. It is also developing smaller-sized electric drive units combining the motor, inverter and controller for suitability in compact vehicles, which is set to be completed by the end of 2025.

The company will also revamp its automotive electronic parts to better adapt to the software-driven vehicle future of Hyundai Motor Group that puts more emphasis on software in the vehicle.

BY CHO YONG-JUN [[email protected]]