Hyundai Motor Co.

Company Profile Reference Code: 12385 Publication Date: July 2006

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HYUNDAI MOTOR CO. TABLE OF CONTENTS

TABLE OF CONTENTS Company Overview ....................................................... 4 Key Facts........................................................................ 4 SWOT Analysis .............................................................. 5

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HYUNDAI MOTOR CO. Company Overview

COMPANY OVERVIEW Hyundai Motor Company is a leading automobile manufacturer. The company specializes in the production of automobiles, including passenger cars, minibuses and trucks. In addition, the company manufactures gasoline, diesel and industrial engines. It has manufacturing presence in the US, China, India, and Europe. The company is headquartered in Seoul, South Korea. The company recorded revenues of KRW58,830.6 billion (approximately $59.1 billion) during the fiscal year ended December 2005, an increase of 10.8% over 2004. The net profit was KRW2,323.8 billion (approximately $2.3 billion) in fiscal year 2005, an increase of 41.5% over 2004.

KEY FACTS

Head Office

Hyundai Motor Co. 231 Yangjae-dong Seocho-gu Seoul 137 938 South Korea

Phone

+82 2 3464 1114

Fax

+82 2 3463 3484

Web Address

http://www.hyundai-motor.com

Revenues/turnover

59100

(US$ Mn) Financial Year End

December

Employees

54115

Seoul Ticker

05380

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HYUNDAI MOTOR CO. SWOT Analysis

SWOT ANALYSIS Hyundai Motor Company is a leading automobile manufacturer. The company specializes in the production of automobiles, including passenger cars, minibuses and trucks. In addition, the company manufactures gasoline, diesel and industrial engines. It has manufacturing presence in the US, China, India, and Europe. Consistent revenue growth across all the geographic segments indicates that the company has been able to strengthen its market position. However, a weak market outlook in Korea is likely to affect its financial position significantly.

Strengths

Weaknesses

Strong revenue growth

Dependence on MK Chung

Strong focus on research

Performance in sub-compact sedan segment

Diversified geographic operations

Opportunities

Threats

Hybrid vehicles

Weak growth in Korea

Growing demand in emerging markets

Stronger Won

The Japanese economy

Rise in steel prices

Strengths Strong revenue growth For the fiscal year 2005, Hyundai’s total revenues increased by about 10.8%, reaching KRW58,830.6 billion (approximately $59.1 billion). This growth was realized across all geographic areas of the company: Korea (6.8%), North America (5.3%), Europe (36%) and Asia (24.1%). The company’s revenue growth was also higher than some of its key competitors such as DiamlerChrysler which recorded revenue growth of only 5.4%. The average revenue growth during 2001-2005 was 12.6%, significantly higher than industry average of 2%. Consistent revenue growth across all the geographic segments indicates that the company has been able to strengthen its market position, which increases its bargaining power. Strong focus on research

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HYUNDAI MOTOR CO. SWOT Analysis

Spanning three continents, Hyundai Motor Company’s R&D centers have played an important role in the company’s evolution into a technology-driven automobile manufacturer that enjoys a reputation for high quality, reliability, durability and safety. Hyundai motor company has a strong focus on research and development (R&D). The company’s R&D focus on developing environmentally-friendly technologies, including technologies related to recycling, exhaust emission reduction, fuel efficiency improvement has given it a competitive advantage. This strong R&D focus has helped the company in developing new products and differentiating its offering by offering superior quality, which has improved its brand image. Further appreciation of brand value is expected as the company’s solid fundamentals allow further investments in improving technology and design. Leveraging its R&D operations, the company aims at the sale of over 5 million vehicles by 2010 and become one of the top five global automobile manufacturers. Diversified geographic operations The company has presence in all major markets and is not over dependent on any particular geography. Korea, the company’s largest geographical market, accounted for 55.6% of the total revenues in the fiscal year 2005, while North America, Europe and Asia accounted for 23.8%, 14.2% and 6.4% of the total revenues in the fiscal year 2005, respectively. The company also has manufacturing facilities in Korea, the US and emerging markets like China, India and Turkey. The company’s diversified geographic operations help it in reducing costs and bettering its focus on regional needs.

Weaknesses Dependence on MK Chung HMC’s management relies largely on the decision-making and commitment of MK Chung, the Chairman and majority shareholder of Hyundai Motor Group. This has resulted in a lack of management focus since Mr. Chung was arrested on charges of misusing and embezzling company funds to bribe government officials in April 2006. The overdependence of Hyundai on one person could adversely affect the company’s growth plans in years to come. Performance in sub-compact sedan segment Since 2000, Hyundai Motor (HMC) and KIA have established themselves in the entrycar segment in the US, which enabled them develop long-term customer base for the upper segment as well. However, the company has been losing ground in recent

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HYUNDAI MOTOR CO. SWOT Analysis

years as indicated by the 50-60% cut in sub-compact sedan sales in the US. This has been primarily due to increased focus of Japanese car manufacturers on this segment. HMC and KIA have relatively weaker brand awareness as compared with other Japanese makers in the US market, such as Toyota. The loss of market share in the sub-compact sedan segment reflects poorly on the company’s capability to compete with Japanese manufacturers.

Opportunities Hybrid vehicles Worldwide demand for light hybrid electric vehicles (HEV) is estimated to reach 4.5 million units in 2013. Rising energy costs and increased emissions regulations are likely to drive this increased demand. The US is expected to experience the highest level of demand for HEVs, estimated at two million units in 2013. The company revealed a hybrid version of its sub-compact Accent at the third Guangzhou international exhibition in China in December 2005. The launch of hybrid vehicles will enhance Hyundai’s technological leadership in the growing hybrid vehicle industry. Growing demand in emerging markets Demand for automobiles in Central and Eastern Europe and Asia is increasing, fueled by growing personal incomes and booming economies. Hyundai is increasing its presence in high growth emerging markets. The company has established manufacturing bases in India and China, which should provide the opportunity to affect both costs and revenues positively by taking advantage of the low cost base and rapidly expanding demand in these countries. The Japanese economy Japan is currently the single largest market for automobiles in the Asia Pacific region and the recovery in the Japanese economy could prove to be a significant opportunity for the company. The GDP growth rate, which stood at 0.8% in 2004, is expected to rise to 1.9% in fiscal 2006. In 2006, Japan is growing at an accelerated pace. This will increase consumer spending and in turn increase the market for the company’s products and services.

Threats Weak growth in Korea

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HYUNDAI MOTOR CO. SWOT Analysis

Though the Korean car market has recovered marginally in last two years, sales have remained sluggish. Moreover, this trend is likely to continue in short term. HMC derives over 55% of its revenues from the domestic market. Consequently, a continued weak market outlook is likely to affect its financial position significantly. Stronger Won The foreign exchange rate has important implications for earnings and the share price for Hyundai. With a stronger Won against the US Dollar, the company receives less Won revenues and suffers from lower volumes due to a higher US Dollar price. HMC is highly exposed to currency risks, relying on exports for up to 44% of its revenues. For every 1% appreciation of the Won against a weighted average of the US Dollar and Euro, the company would see its operating margin contract by about half percentage point. In 2005, the won appreciated by 10.5% against a weighted average of US Dollars and the Euro, implying a 4.8% cut in the company’s operating profit margin from Won appreciation. If the Won continues to strengthen, the company’s financial performance would likely be affected. Rise in steel prices Steel prices, after declining by around 30% in 2005, have stabilized, but could still rise to higher levels if industry consolidation continues. Steel prices, after reaching historic highs in early 2005, underwent a correction toward the end of 2005, owing to the destocking of inventories and the switch of China from being a net importer to a net exporter. The price of cold rolled steel coil rose from $474 per ton in January 2004 to a high of $750 per ton in March 2005, and thereafter fell to $608 per ton in December 2005. Although steel prices have stabilized, they are still much higher than the levels seen in 2004. Ongoing consolidation in the steel industry (such as the Arcelor-Mittal deal) could yet push steel prices higher. The group’s operating profits were negatively impacted by rising raw material costs, including that of steel, in fiscal 2006 and any further increase could adversely affect the group’s margins..

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