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Hyundai Motor Group promotes heir apparent

SEOUL — Hyundai Motor Group promoted heir apparent Euisun Chung on Friday to a role of overseeing the conglomerate, moving him a step closer to succeeding his octogenarian father as head of South Korea's second largest group. Chung, 47, who will assist his father and group chairman Mong-Koo Chung, was appointed as executive vice chairman to respond to "deteriorating global trade issues and changes in competitive dynamics in major markets," Hyundai Motor Group said in a statement. Chaebols like Hyundai and Samsung Group, which have grown into global firms from the rubble of the 1950-1953 Korean War, are undergoing a transfer of power to third- or fourth-generation leaders. "In his new capacity, Executive Vice Chairman Euisun Chung will oversee the entire Group's operations, aiding and reporting to Chairman Mong-Koo Chung," the statement said. The appointment also comes as Hyundai battles tumbling profits, mounting pressure from activist shareholders to improve its governance, and amid South Korea's trade tensions with the United States that threaten to disrupt its production plans. "This is a good sign," Park Yoo-kyung, a director at Dutch pension fund APG Asset Management, said of the appointment. "This will enhance transparency about who is controlling the group and who is making key strategic decisions," she said. Generational shift The junior Chung, currently vice chairman of the group's crown jewel, Hyundai Motor Co, has stepped up in recent years, attending motor shows and government meetings with business leaders on behalf of his 80-year-old father who has made few public appearances. Shares in Hyundai Motor ended up 0.8 percent on Friday, and affiliate Kia Motors fell 0.3 percent in a wider market that rose 1.4 percent. Chairman Chung, the all-powerful boss, has presided over Hyundai for about two decades, transforming the company into the world's fifth-biggest car maker along with Kia Motors. Hyundai is now struggling to reverse slowing sales in China and the United States, where the company has suffered due to its delayed response to booming demand for SUVs. The appointment is part of an effort to "improve future competitiveness and secure future growth engines" at a time when the auto industry is undergoing major changes, the group said. The junior Chung has led the group's efforts to develop future vehicles such as autonomous and connected cars, as well as Hyundai's fledging premium brand Genesis.

2015 Kia Soul EV Prototype

Spend a few days chatting with the good people of Seoul about their neighbors to the north, and you'll find a pattern emerges. When they first start talking, South Korea's citizenry speaks openly and ardently about seeking reunification with their North Korean brothers and sisters. Yet once you get beyond casual conversation, you'll find that those hopes and wishes aren't all that they first appear to be. Quite reasonably - and despite everyone's best intentions - there's genuine fear that opening the border with communist North Korea would severely tax South Korea's finances, infrastructure and daily lives. It's almost as if reunification feels like something the general public has to say they want, even if they're really not buying into the reality.
It's kind of like the way American consumers and the media have been crying out for electric and hybrid automobiles, yet when it comes time to vote with their pocketbooks, their hearts just aren't in it. There are potential financial and infrastructure concerns, along with lingering worries about how well EVs will integrate into their daily lives. Today, hybrids and plug-ins make up about three percent of new vehicle sales, and the vast majority of those models are gas-electric models - one in particular. Pure electrics aren't yet even a drop in a very large bucket. It's exactly this uncomfortable dichotomy that rings in our heads as we drive through the traffic in Namyang at the wheel of a 2015 Kia Soul EV prototype.
Of course, one can't blame Kia for developing an electric car - it has California's zero-emissions mandates to meet, regardless of whether the segment's sales suggest there's a sound financial strategy attached. Kia officials we spoke with at this early drive of the company's electrified 'box' car seemed to tacitly acknowledge the Soul EV's difficult business case, but pointed to the company's effort to reduce its CO2 output as part of its reason for being. And besides, their beancounters' industry-wide projection for global EV sales in 2018 is 600,000 units, so there's got to be room to grow, right?

Hyundai-Kia forecasts slowest sales growth in 8 years

Even with the arrival of the new Hyundai Genesis Sedan (above) and the expected introduction of at least two other new vehicles in 2014, Hyundai-Kia is estimating its sales will only increase by about 4.1 percent this year. Bloomberg has found that figure, which works out to a total of 7.86 million vehicles worldwide, to be lower than average analyst estimates of eight million vehicles. If the automaker is correct, that figure will represent the most sluggish growth for the Korean brands since 2006.
Based on an exchange rate of 1,050 won to the dollar - right now it's trading at anywhere from 1,050 to 1,052 depending on where you look - Hyundai is predicting a 3.8-percent uptick for sales of 4.9 million units, while Kia is expecting a 4.7-percent uptick for sales of 2.96 million units. That exchange rate is predicted to be part of what will hamper sales this year, with a stronger South Korean won making Japanese cars more price-competitive when cross-shopped. It's unclear how Hyundai derived its exchange rate, but 1,050 won to the dollar almost matches the 52-week high for all of 2013.
The company chairman mentioned a "low growth era" in the world economy, and weaker US sales are rumored to at least part of the reason John Krafcik recently vacated the post of Hyundai Motor America CEO, a post that has been filled by executive vice president of sales, David Zuchowski. That unexpected news capped a year in which two top execs resigned over quality issues and recalls and Hyundai agreed to settle a consolidated lawsuit over inflated fuel economy ratings for $395 million.