Hyundai seeks structural change to focus on future businesses

Lim Chang-won Reporter Posted : 2018-10-29 15:08 Updated : 2018-10-30 08:16
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Thomas Schemera [Courtesy of Hyundai Motor]

SEOUL -- South Korea's Hyundai auto group set up two new organizations in charge of hydrogen electric vehicles and artificial intelligence for smart mobility solutions in a structural change that reflects the group's aggressive push for design innovation and the development of future technologies.

The group said Monday that it established a fuel cell division and AIR (artificial intelligence research) Lab. Hyundai has promised to unveil mobility services that would combine future technologies such as autonomous navigation and artificial intelligence.

Thomas Schemera, a German expert in high-performance vehicles, was appointed as head of Hyundai's product and strategy division, which sets the direction for the development of technology related to autonomous driving, connected cars and mobility.

Schemera, who has played a key role at Germany auto giant BMW, joined Hyundai in March to head the High Performance Vehicle & Motorsport Division, which developed i30 N and Veloster N high-performance cars. Hyundai has steadily expanded its global presence in high-performance vehicles to compete with top-class foreign brands.

The change came amid widespread concerns about high labor costs, slow sales and trade protectionism which have clouded business prospects for Hyundai Motor and its affiliate Kia Motors. In the January-September period, Hyundai Motor's net profit fell to 1.85 trillion won ($1.62 billion) from 3.26 trillion won a year ago.

Experts have warned that South Korean carmakers were losing competitiveness in the global market due to high production costs and an unfavorable external situation. Frequent strikes, excessive demands by unions and their intervention in management have hurt Hyundai Motor's competitiveness, contributing to low productivity.

Lee Hang-koo, a senior researcher at the Korea Institute for Industrial Economics and Trade, said there has been no "horizontal cooperation" in the domestic auto industry because of exclusive trade with suppliers, while automakers in developed countries and China have expanded their strategic cooperation and alliance.

The Korea Auto Industries Coop. Association (KAICA), a parts maker group, has called for government help to receive a bailout of 3.1 trillion won (, including 1.7 trillion won for the extension of loan repayment, one trillion won for facility investment and 400 billion won for research and development.

The Korea Automobile Manufacturers Association has blamed South Korea's inflexible labor market on top of shorter working hours and wage increases for aggravating the bottom line of carmakers. "Our automobile industry continues to suffer from high cost, low production, low efficiency and low profitability," said Kim Phil-soo, an automotive engineering professor at Daelim University College.