Hyundai Motor Co says to step up monitoring of possible revisions of South Korea’s free-trade deal with the United States.
To raise the number of its SUV models in China to 7 by 2020 from 4.
To consider “flexible” cooperation on green cars with China’s local firms.
South Korea’s Hyundai Motor Co launched its first new sedan under the premium Genesis marque in Seoul on Friday, hoping to cement the brand’s place in the luxury segment and make up for its lack of a strong SUV line-up.
U.S. pop singer Gwen Stefani will perform for about 10,000 people at a gala event to launch the G70, the third sedan to carry the Genesis name but the first to be marketed exclusively under Hyundai Motor’s (005380.KS) fledgling premium brand.
Starting from $33,000, the sporty four-door offers bang for the buck as it takes on rivals including affiliate Kia Motor’s (000270.KS) Stinger sedan and BMW’s 3 series.
But analysts say the G70 will not solve Hyundai’s troubles in the United States, where sports utility vehicles (SUVs) are all the rage and the two previous Genesis-branded sedans failed to take off.
“Look at Cadillac, with just one crossover, the brand is struggling in the U.S. It will be much the same story for Genesis until they can get a crossover to market,” said Dave Sullivan, product analysis manager at U.S. consultancy AutoPacific.
“It’s not because the G70 will be a bad product … The sedan lineup just doesn’t match consumer demand.”
The G70 debuts in South Korea on Friday followed by the United States early next year. Hyundai has not said when it would enter China and Europe, which are dominated by German premium brands.
“G70 will pave the way for growth and expansion of the Genesis brand,” Executive Vice President Lee Kwang-guk told a media event.
Hyundai Motor expects annual sales of over 60,000 G70 sedans globally.
Hyundai has said the Genesis line-up will grow to six by 2021, with the addition of two SUVs and an electric vehicle.
Genesis division head Manfred Fitzgerald told reporters that the next Genesis model will be an SUV, without elaborating further.
Hyundai’s China sales tumbled more than 60 percent in the second quarter due to its lack of a strong SUV line-up and political tensions between China and South Korea over North Korea’s nuclear weapons program.
In the United States, SUVs made up 35 percent of Hyundai’s total U.S. sales from January to August this year, far lower than the industry’s 62 percent, according to U.S. researcher Autodata.
CRITICAL TEST
The Genesis project is being closely watched by Hyundai Vice Chairman and heir apparent Chung Eui-sun, as he prepares to take over the world’s No.5 auto group from his father, 79-year-old Chairman Chung Mong-koo.
As the first Genesis model which was not previously sold as a Hyundai, the G70 will be a key test of the two-year-old marque’s ability to survive in a fiercely competitive field.
Its chief rival will be Hyundai affiliate Kia’s slightly cheaper Stinger, which shares the same platform as the G70 and launched in late April. Other rivals include BMW’s 3 series, Audi’s (NSUG.DE) A4 and Mercedes-Benz’s C-class.
South Korea’s Hyundai Motor (005380.KS) said it had suspended production at one of its China factories on Tuesday after a supplier refused to provide parts due to delays in payment – its second such incident in as many weeks.
Frayed relations with suppliers to its venture with BAIC Motor Corp Ltd (1958.HK) are adding to headaches for Hyundai in China, where it has seen sales slump due to diplomatic tensions between the two nations and fierce competition from local brands.
Supplier sources familiar with the matter say that BAIC is in charge of payments and has been responsible for the delays.
The partners are fighting over their supplier strategy with BAIC favoring shifting to cheaper Chinese firms in the face of intense competition, while Hyundai wants to protect its South Korean supply chain, people familiar with the dispute said.
Hyundai declined to comment on the reason for the failure to pay suppliers. A representative for BAIC could not be immediately reached for comment.
Their joint venture had only just resumed production at four China plants on Aug. 30 after a suspension of about a week because one French supplier refused to provide fuel tanks due to non-payment.
This time, a German firm has refused to provide parts for air intake systems, a representative for Hyundai said, declining to identify the supplier. The joint venture’s three other Chinese factories remain operational.
Any loss of production from this one factory is unlikely to have a major sales impact as Hyundai probably has sufficient inventory at the plant because its cars have not been selling well, said Ko Tae-bong, an analyst at Hi Investment & Securities.
“That is manageable. But if Hyundai’s Chinese partner is refusing to make payments, that’s a different story,” he said, adding that the issue could occur time and time again.
Scrambling to tackle problems in China, Hyundai said this week it had appointed a new head for its China operations. Tao Hung Than, who is of Chinese descent, took the helm effective Friday replacing Chang Won-shin, who lasted less than a year in the job.
The new China CEO, however, has a huge task in front of him if he is going to get Hyundai back on track in the world’s biggest auto market – one that accounted for nearly a quarter of Hyundai’s revenue in the last financial year.
A weakening brand image and a product line-up without attractive SUVs are only adding to pain from diplomatic tensions. Hyundai’s sales from its Chinese factories plummeted 64 percent in April-June first quarter, when the automaker posted its smallest quarterly net profit in five years.
South Korean firms have been hit by a Chinese backlash over Seoul’s decision to deploy a U.S. missile defense system to counter threats from nuclear-armed North Korea. China says the system poses a threat to its national security.
Hyundai and BAIC were also due to start operations at a fifth China car factory late last month but the timetable has been pushed back. Hyundai has declined to comment on the postponement.
Hyundai Motor shared fell 1.4 percent to their lowest level since April 19 on Tuesday and have declined 4.2 percent since the first reports of the supply disruptions emerged a week ago.
Hyundai Motor said on Wednesday it had resumed production in China after a supply disruption forced the suspension of operations last week, complicating its efforts to lift sagging sales in the world’s biggest auto market.
The production stoppage, although resolved, adds to investor concerns after the South Korean carmaker posted its smallest quarterly profit in five years amid political headwinds linked to diplomatic tensions between Seoul and Beijing.
Hyundai had to cut production at its four factories in China earlier this year due to slumping sales. Its fifth China factory was scheduled to start production this month.
Hyundai Motor’s sales from its Chinese factories plummeted 64 percent to 105,000 vehicles in April-June alone.
“The effects of the China production halt are yet unclear, but Hyundai’s third-quarter results are likely to be lower than the previous quarter partly due to continued weak performance in China,” said Park Sang-won, analyst at Heungkuk Securities.
Hyundai shares pared losses after skidding to their lowest level in more than four months on Wednesday, falling as much as 3.8 percent. They were trading down 0.4 percent at 0504 GMT, compared to a flat wider market .KS11.
Hyundai said earlier on Wednesday its joint venture with China’s BAIC Motor began shutting down production last week after a fuel-tank components supplier refused to provide parts due to non-payment.
BAIC declined to comment and Reuters could not immediately reach the joint venture, Beijing Hyundai, for comment.
South Korean firms are weathering a Chinese backlash over Seoul’s decision to deploy a U.S. missile defense system to counter threats from nuclear-armed North Korea. China says the system poses a threat to its national security.
Hyundai’s weak brand image has put it at a disadvantage in China versus local and global rivals such as Honda Motor (7267.T), Toyota Motor (7203.T) and General Motors (GM.N), which all saw higher China sales for last month.
Hyundai Motor plans to launch a pickup truck in the United States as part of a broader plan to catch up with a shift away from sedans in one of the Korean automaker’s most important markets, a senior company executive told Reuters.
Michael J. O’Brien, vice president of corporate and product planning at Hyundai’s U.S. unit, said Hyundai’s top management has given the green light for development of a pickup truck similar to a show vehicle called the Santa Cruz that U.S. Hyundai executives unveiled in 2015.
Hyundai currently does not offer a pickup truck in the United States.
O’Brien also said Hyundai plans to launch a small SUV called the Kona in the United States later this year.
People familiar with the automaker’s plans said the pick-up truck is expected to be launched in 2020.
They said separately that Hyundai plans to introduce three other new or refreshed SUVs by 2020.
Under the plan, Hyundai Motor plans to roll out a new version of its Santa Fe Sport mid-sized SUV next year, followed by an all-new 7-passenger crossover which will replace a current three-row Santa Fe in early 2019 in the United Sates. A redesigned Tucson SUV is expected in 2020.
So-called crossovers – sport utilities built on chassis similar to sedans – now account for about 30 percent of total light vehicle sales in the United States. Consumers in China, the world’s largest auto market, are also substituting car-based SUVs for sedans.
Hyundai’s U.S. dealers have pushed the company to invest more aggressively in SUVs and trucks as demand for sedans such as the midsize Sonata and the smaller Elantra has waned.
“We are optimistic about the future,” said Scott Fink, chief executive of Hyundai of New Port Richey, Florida, which is Hyundai’s biggest U.S. dealer. “But we are disappointed that we don’t have the products today.”
Hyundai’s U.S. sales are down nearly 11 percent this year through July 31, worse than the overall 2.9 percent decline in U.S. car and light truck sales. Sales of the Sonata, once a pillar of Hyundai’s U.S. franchise, have fallen 30 percent through the first seven months of 2017. In contrast, sales of Hyundai’s current SUV lineup are up 11 percent for the first seven months of this year.
“Our glasses are fairly clean,” O’Brien said. “We understand where we have a shortfall.”
Hyundai said on Thursday it was placing electric vehicles at the center of its product strategy – one that includes plans for a premium long-distance electric car as it seeks to catch up to Tesla and other rivals.
Like Toyota Motor, Hyundai had initially championed fuel cell technology as the future of eco-friendly vehicles but has found itself shifting electric as Tesla shot to prominence and battery-powered cars have gained government backing in China.
Toyota is now also working on longer distance, fast-charging electric vehicles, local media have reported.
The South Korean automaker is planning to launch an electric sedan under its high-end Genesis brand in 2021 with a range of 500 km (310 miles) per charge. It will also introduce an electric version of its Kona small sport utility vehicle (SUV) with a range of 390 km in the first half of next year.
“We’re strengthening our eco-friendly car strategy, centering on electric vehicles,” Executive Vice President Lee Kwang-guk told a news conference, calling the technology mainstream and realistic.
The automaker and affiliate Kia, which together rank fifth in global vehicle sales, also said they were adding three plug-in vehicles to their plans for eco-friendly cars, bringing the total to 31 models by 2020.
Underscoring Hyundai’s electric shift, those plans include eight battery-powered and two fuel-cell vehicles – a contrast to its 2014 announcement for 22 models, of which only two were slated to be battery-powered.
Hyundai also confirmed a Reuters report that it is developing its first dedicated electric vehicle platform, which will allow the company to produce multiple models with longer driving ranges.
Last year, it launched its first mass-market pure electric car IONIQ, but the vehicle’s per-charge driving range is much shorter than offerings from Tesla and General Motors (GM.N).
HYDROGEN SUV
Hyundai unveiled a near production version of its new fuel cell SUV with a driving range of more than 580 km per charge, compared with the 415 km for its current Tucson fuel cell SUV.
The mid-sized SUV will be launched in Korea early next year, followed by U.S. and European markets.
A fuel cell electric bus is slated to be unveiled late this year, while a sedan-type fuel cell car is also planned. Even so, analysts noted that gaining traction with fuel cells was going to be a long hard slog partly due to a lack of charging infrastructure.
“Hyundai will achieve economies of scale for fuel cell cars by 2035 at the earliest,” said Lee Hang-koo, a senior research fellow at Korea Institute for Industrial Economics & Trade.
“Before that, Hyundai has no choice but to rely on battery cars,” he said.
Hyundai launched the world’s first mass-produced fuel cell vehicle in 2013, dubbed the Tucson Fuel Cell, but sales trailed Toyota’s rival offering, Mirai.
Hyundai has sold about 862 of Tucson Fuel Cell vehicles since its 2013 launch, while Toyota sold some 3,700 Mirai Fuel Cell vehicles since its 2014 launch.
In Korea, there are 10 fuel cell charging stations, only one tenth of 100 in Japan, Hyundai said.
Country’s top two carmakers Maruti Suzuki India and Hyundai Motor India dominated the Indian passenger vehicle sales segment last month with their models occupying all the slots in the top ten list.
While car market leader Maruti has seven of its models in the list, rival Hyundai Motor India has three of its models in the top ten selling list of last month.
Toyota Kirloskar Motor’s Innova and Renault Kwid which were there in the June 2016 list have failed to find place in this year’s top ten list.
According to the latest data from Society of Indian Automobile Manufacturers (SIAM), Maruti’s Alto retained the top position in June with 14,856 units, as against 15,750 units in June last year.
Hyundai’s compact car Grand i10 stood at second position with 12,317 units. It was at third position in June 2016, with 12,678 unit sales.
Maruti’s compact sedan Dzire occupied the third position with sale of 12,050 units as compared with 15,560 units in June last year.
The car market leader’s compact hatchback Wagon R stood at fourth position with sale of 10,668 units during the last month.
Hyundai’s Elite i20 stood at fifth position last month with 10,609 units. The company had sold 8,990 units of the vehicle in the same period last year.
Maruti’s Swift retained sixth position with 9,902 units in June. It had sold 9,033 units in the same month of the last year.
The carmaker’s premium hatchback Baleno stood at seventh position with sale of 9,057 units last month, while compact SUV Vitara Brezza with sale of 8,293 units took eighth position in June.
Hyundai’s Creta retained ninth position with sale of 6,436 units in June. It sold 7,700 units in the same month last year.
Maruti’s hatchback Celerio stood at tenth place with sale of 6,375 units.
Hyundai Motor unveiled its first subcompact sport utility vehicle Kona for advanced markets, including the United States, Europe and South Korea, as it tries to offset sliding sales in China and catch up with rivals in the segment.
The South Korean automaker said it would also launch an electric version of the Kona small sport utility vehicle (SUV) next year and a smaller SUV and a large SUV by 2020.
This comes at a time when Hyundai looks set to miss its sales target for a third straight year due to the unpopularity of its mainstay small sedans and political tensions between Beijing and Seoul that have battered sales in China, the company’s biggest market.
Hyundai, which together with its affiliate Kia is the world’s No.5 automaker, previously sold subcompact SUVs only in emerging markets, missing out on strong growth in the segment in South Korea, the United States and Europe.
The subcompact SUV is the top-performing segment globally, growing at an annual average of 46 percent from 2010 to 2016, Hyundai said, citing IHS Automotive data.
“Even as the global SUV market is nearing saturation, we believe that extra small or small SUVs have more room for growth than large SUVs,” Hyundai Motor Co Vice Chairman Chung Eui-sun said during a launch event near Seoul.
The automaker launched the Kona in South Korea on Tuesday, and said it would roll out the small SUV in Europe in August and the United States in December. It aims to sell over 200,000 of the vehicles globally next year.
The Kona will compete with Nissan’s Juke and Honda’s CR-V in the United States.
Hyundai and Kia in January said they aimed to increase global sales by 5 percent this year, but their combined sales fell 7 percent over January to May, hit by slowing Chinese and U.S. sales.
“Our sales plan has suffered a setback, but we will use this as an opportunity to overhaul our products,” said Chung, the only son of Hyundai Motor Group Chairman Chung Mong-koo.
He also said Hyundai would beef up cooperation with technology firms like Cisco, Baidu and Uber instead of buying other automakers.
Kia will join Hyundai in the launch of the former’s subcompact SUV, Stonic, starting next month.
The upcoming Hyundai Kona, the South Korean brand’s attempt to break into the hot subcompact crossover segment, will get “twin headlamps” with running lights positioned above the main lights as Hyundai looks to set its entry apart from an increasingly crowded field.
A teaser photo of the Kona released April 28 shows a frontal view with sliver-thin chains of LED running lights up high near the seams of the hood. The unorthodox arrangement is reminiscent of the funky placement on the Nissan Juke, another subcompact crossover known for its edgy styling.
“The new twin headlamp enhances the visual impact, with the LED daytime running lights positioned on top of the LED headlights,” Hyundai Motor Co. said in a release. “The separated lights at the front deliver a confident, progressive appearance with sleek and sharp shapes.”
Hyundai said the Kona will launch this summer.
The U.S. version, also named Kona in keeping with a Hyundai crossover nomenclature based on travel destinations, is expected to go on sale in the first quarter of 2018.
Kona takes its name from the lava-lined coastal district of Hawaii’s Big Island.
The vehicle fills another gap in Hyundai’s lineup.
Subcompact crossover sales in the U.S. climbed 15 percent in the first quarter, while compact crossovers were up 11 percent, even as the overall market retreated 1.5 percent.
Hyundai, a latecomer to the small crossovers, has been unable to tap that growth.
The Kona will deliver good driver visibility and comfort, with agile handling, Hyundai said.
“The imminent arrival of Kona,” Hyundai said, “marks Hyundai Motor’s bold first move into the B-SUV segment and leads the wider expansion of its SUV range.”
Hyundai Motor and Kia Motors are expected to recall more than a million vehicles in South Korea and the United States due to engine issues, the latest blow for two firms already struggling in key markets.
The recall, which could cost the two firms hundreds of millions of dollar each, comes as Hyundai and Kia face a sharp drop in China sales and sluggish demand in the United States and South Korea.
The two car companies said on Friday they will recall 171,348 vehicles in South Korea because of a manufacturing problem, which leads to possible engine stalling.
The South Korean automakers have also submitted plans to U.S. authorities to recall an unidentified number of vehicles in the United States over a “similar” engine issue, a spokesperson at the South Korean duo said.
Yonhap News Agency, citing Hyundai, said the U.S. recall would reach some 1.3 million vehicles, an amount close to the duo’s annual U.S. sales.
The U.S. recall alone could cost the companies as much as 250 billion won ($220.19 million) each, hitting earnings, said Koh Tae-bong, an analyst at Hi Investment & Securities.
A Hyundai official declined to confirm to Reuters the expected cost of the U.S. recall, nor the number of vehicles involved.
The recall helped push Hyundai Motor shares lower by as much as 2.7 percent, compared to a 0.4 percent decline in the broader market .KS11. Kia Motors were down 1.1 percent.
POSSIBLE ENGINE STALLING
The recall in South Korea covers Hyundai’s Sonata, Grandeur sedans and Kia’s K5, K7 and Sportage models equipped with a 2-liter or 2.4-liter Theta 2 gasoline engine produced before August 2013, the South Korean transport ministry said.
The ministry said metal debris in crankshafts could cause engine damage, leading to possible engine stalling.
“The recall is related to a manufacturing process problem, not the structural problem of Theta 2GDi engines and we have completed improvements through appropriate measures,” the companies said in a statement.
Hyundai will replace a defective engine with a new one after inspection. The recall will start on May 22.
In 2015, Hyundai Motor said it would recall 470,000 Sonata sedans in the United States to replace faulty engine parts, sparking questions of safety back home.
But Hyundai and Kia has said that engines produced at domestic factories were not defective. They instead extended the warranty period for five Theta 2-equipped models in South Korea.
The Hyundai spokesperson said the latest recall involves a new problem.
Hyundai Motor, Kia Motors sold 72,032 vehicles in China in March, down 52.2 pct from year earlier. Hyundai Motor China sales 56,026 vehicles in March, down 44.3 percent from year earlier.
Kia Motors China sales 16,006 vehicles in March, down 68 percent from year earlier.
South Korea’s Hyundai Motor on Monday said it had suspended production at one of its Chinese factories for a week, fueling concern that a diplomatic standoff may be hurting sales in the automaker’s top market.
South Korean companies, from cosmetics firms to retailers, say they are being targeted in China because of Beijing’s objections to a planned deployment of the U.S. Terminal High Altitude Area Defence (THAAD) system in South Korea. China worries the system’s powerful radar can penetrate its territory.
News of Hyundai’s China plant closure, first reported by online media ChosunBiz on Sunday, drove shares of the company down as much as 3% on Monday. The shares recovered slightly to end down 1.2%.
Shares in Hyundai’s affiliates, Kia Motors and Hyundai Mobis, also finished lower.
Hyundai said it had suspended the plant in Hebei Province, from March 24 to April 1, in order to check its production line to modify technology. The automaker has three other passenger car factories in China – a country that accounts for about a quarter of its total sales. No further details were available.
Industry officials and analysts say the suspension may be aimed at bringing down inventories given slowing sales in China, due to political tension and rising competition.
Ko Tae-bong, an analyst at Hi Investment & Securities, said Hyundai’s March sales in China may have fallen year-on-year due to the political spat, after gaining in January and February.
China Competition
The automaker is already grappling with falling market share in China with a product line-up that features more sedans at a time when sport utility vehicles have become more popular.
China’s Geely Automobile Holdings recently reported its biggest profit growth in eight years, underlining a threat from Chinese makers armed with cheaper SUVs.
Hyundai makes Verna subcompact cars at its Hebei plant, which came online less than six months ago.
The automaker plans to start production at a fifth China factory later this year. Hyundai’s China operations are a 50-50 joint venture with state-owned Beijing Automotive.
Hyundai officials have previously said the company’s business ties with Chinese firms meant they were less likely to be the main target of any punishment resulting from the diplomatic standoff over the deployment of the THAAD.
The chill in business ties between the nations is evident from the fact that China’s tourism ministry has instructed tour operators in Beijing to stop selling trips to South Korea, while state media has called for a boycott of South Korean goods.
Chinese authorities have also closed nearly two dozen retail stores of South Korea’s Lotte Group, with some workers saying the closures were fire-safety related. Earlier this year, Lotte approved a land swap outside Seoul that will allow South Korea to install the THAAD.
Hyundai Department Store Group plans to open a 14,005 sqm duty-free store in the CoEx Convention and Exhibition Center in Samseong-Dong, Seoul, late this year.
Hyundai joined rivals Lotte Duty Free and Shinsegae in securing five-year licences last month to run downtown duty-free stores in Seoul. The SME licence went to TopCity, with Alpensia and Busan Duty Free winning licences for stores in Gangwon Province and Busan.
Hyundai Duty Free merchandising manager Hyunjin Lee says CoEx attracts independent travellers who are willing to experience Korean culture (K-wave).
“This place will grow into a worldwide landmark in a few years when there is a Hyundai Global Business Center, underground transit complex and the Jamsil Sports Complex extension,” says Lee.
“We will provide a differentiated duty-free store with luxury boutiques and customer lounges.”
A wide selection of luxury items and Korean cosmetic products will be offered, says Lee. “We also plan to develop Kangnam tourist attractions, co-operating with entertainment companies and local government.”
A key element in Hyundai Duty Free’s licence proposal was agreeing to a memorandum of understanding with the government to invest in tourism infrastructure development plus a commitment to contribute US$50 million in social welfare funds.
Hyundai Motor and affiliate Kia Motors said on Monday they aim to increase their combined sales to 8.25 million vehicles globally in 2017, despite rising competition.The 2017 target is slightly higher than their 2016 goal of 8.13 million vehicles. The South Korean automakers’ final sales figures for 2016 are due out later on Monday, with analysts expecting a miss due to weak demand in emerging markets.
“The 2017 goal is slightly higher than my projection,” said Ko Tae-bong, an auto analyst at Hi Investment & Securities, adding that the performance of new models would be the key to success after some disappointments in recent years.
With emerging markets such as Russia stabilizing, and with Hyundai and Kia Motors gearing up to boost vehicle supply to the United States and China, sales could get a lift this year.
But Hyundai Motor and Kia Motors – which together rank fifth in global sales – plan to add capacity in China and Mexico this year, just as those markets and the United States are seen slowing, likely pressuring margins.
“With the global economy continuing its low growth, trade protectionism spreading and competition intensifying in the automobile industry, uncertainty is growing more than ever,” Hyundai Motor Group Chairman Chung Mong-koo said in his New Year message to employees.
Hyundai Motor likely clocked its fourth straight annual profit decline last year, hurt by its higher exposure to weak emerging markets, and a product line-up that features more sedans than sport utility vehicles, just as SUVs have become more popular across many global markets.
Hyundai Motor is targeting 2017 global sales of 5.08 million vehicles, while Kia Motors set its goal at 3.17 million vehicles.
Kia Motors Vice Chairman Hank Lee told employees on Monday that the automaker hoped to revive growth this year, after falling short of its 2016 sales target.
Hyundai Motor shares were flat in a wider market .KS11 that was down 0.4 percent in early morning trade, while Kia Motors shares were down 0.3 percent
Hyundai Motor shares fell for a third straight year in 2016, down 2 percent versus the wider market’s 3 percent gain. Kia Motors shares slumped 25 percent last year, making them the worst-performing stock among major car makers in the world.
A total of 33 relatives from the families that control Samsung, Hyundai Motor, SK, LG, Lotte and other conglomerates dominate the country’s wealthiest list. Unhealthy ties between Korean conglomerates and the government have long been cited as a factor that prevents Korea from moving forward.
A recent comment by a chaebol chief at a parliamentary hearing over the alleged connections between businesses and the presidential office was a reflection of the reality.
“It was near impossible to reject such a demand (from Cheong Wa Dae). That’s what it’s like in Korea,” said Huh Chang-soo, head of GS Group and chairman of the Federal of Korean Industries, at the hearing on December 6.
He was responding to lawmakers’ questions on why the FKI helped coerce conglomerates to donate funds to two foundations controlled by Choi Soon-sil, confidante of impeached President Park Geun-hye.
Another reflection of the business climate in Korea was that most of the chaebol leaders seated at the hearing were second to third-generation heirs of the conglomerates – not self-made businessmen.
They are also in the top tier of a list of Korea’s 100 wealthiest people compiled by The Superrich Team. Joining them on the list are their relatives. Only 10 self-made entrepreneurs made it to the list in the past year.
A total of 33 relatives from the families that control Samsung, Hyundai Motor, SK, LG, Lotte and other conglomerates dominate the country’s wealthiest list. The figure excludes the heads of major business groups.
The combined private assets of the business moguls stands at 39 trillion won (S$47.1 billion), higher than the annual budget of the Seoul Metropolitan Government at 27.5 trillion won.
Samsung Group
Lee Jae-yong, vice chairman of Samsung Electronics, and 10 other Samsung family members own 22.6 trillion won in total assets.
The assets of Lee Kun-hee, the bedridden chairman of Samsung Group, is 15.64 trillion won, accounting for the largest portion of the assets. His wealth includes real estate in Hannam-dong, one of the richest districts in Seoul.
Outside of the capital, Lee Kun-hee also owns a considerable amount of land in Yongin City in Gyeonggi Province, where the Samsung-made amusement park Everland and Ho-Am Art Museum are located. His properties there sit on 8,712 square metres of land.
In total, Lee owns 14 real estate assets nationwide, worth 938.9 billion won.
The women of the Samsung family also own a colossal amount of assets. The senior Lee’s wife Hong Ra-hee, director of Leeum Samsung Art Museum, and her two daughters Boo-jin and Seo-hyun, who lead Hotel Shilla and the fashion business at Samsung C&T, respectively, own 1.7 to 1.8 trillion won each. Lee Kun-hee’s sister Myung-hee, chairman of Shinsegae Group, holds 1.3 trillion won.
Hong’s siblings also dominate Korea’s business landscape including areas such as media, retail, investment capital and art.
Hong Seok-hyun, chairman of Joongang Media Network, a parent company of Joongang Daily Newspaper and television network JTBC, is one of Ra-hee’s brothers most known to the public.
Other siblings include BCG Retail Chairman Seok-jo, Bokwang Investment Corp. Chairman Seok-joon, and Leeum Samsung Art Museum Vice Director Ra-young. The combined value of the Hong family – excluding Hong Ra-hee – is estimated at around 1.24 trillion won.
Hyundai Group
The family of Hyundai Group may hold a smaller fortune than the Samsung family, but 12 of them are included on the 100 wealthiest people list, the largest number among the top five conglomerates.
Chung Eui-seon, vice chairman of Hyundai Motors and son of Chairman Chung Mong-koo, owns the largest value of assets at 2.32 trillion won. Hyundai Motor Group chairman’s younger brother Chung Mong-joon, the biggest shareholder of Hyundai Heavy Industries, follows with 1.17 trillion won.
Other assets of the Chung family surpass 500 billion won. Other family members include KCC Chairman Chung Mong-jin, Hyundai Development Chairman Chung Mong-kyu, Hyundai Marine & Fire Insurance Chairman Chung Mong-yoon and Hyundai Department Store Chairman Chung Ji-seon.
Hyundai Group Chairwoman Hyun Jeong-eun is also included in Korea’s top 100 wealthiest list, with 240 billion won. Hyun is the wife of the late Chung Mong-heong, the former chairman of Hyundai Asan.
Hyun was recently accused of intentionally omitting several Hyundai Affiliates on a list of companies subject to cross investment. The antitrust regulator Fair Trade Commission pressed charges against Hyun in October.
SK Group
SK Group, the country’s third-largest business group, has two businesspeople listed on the Superrich Team’s top 100 wealthiest list.
Chey Ki-won, a director of the board at SK Happy Nanum Foundation and younger sister of SK Group Chairman Chey Tae-won, is the richest SK Group family member.
Chey holds more than 1 trillion won worth shares in listed SK affiliates. In addition to the stock assets, she was paid an additional 18.75 billion won in dividends. The value of her paid dividends is the largest among the 125 relatives of the nation’s 17 superrich on a list by Forbes Magazine.
Chey’s massive real estate assets include a building that was the former headquarters of JYP Entertainment in Cheongdam, southern Seoul. Chey purchased the around 1,085 square-meter building for 7.6 billion won in 2014.
Another Chey family member, Chang-won, vice chairman of SK Gas and SK Chemical, was listed among Korea’s top 100 richest with 370 billion won of assets.
LG
LG has seven family members on the Superrich Team’s top 100 richest list.
Chairman Koo Bon-moo’s brother Bon-sik, who leads Heesung Group as its vice chairman, is the wealthiest among them with assets of more than 1 trillion won.
Another brother, Bon-neung, chairman of Heesung Group follows with 904.8 billion won. He is also head of the Korea Baseball Organisation.
The remaining five LG family members on the list include Chairman Koo’s wife Kim Young-sik. The combined assets of the five members are estimated to be worth around 2.5 trillion won.
Lotte
Lotte Group has two of its business moguls on the top 100 richest list.
One of them is Lotte Group founder Shin Kyuk-ho’s eldest son Dong-joo, who is the chairman of SDJ Corp.
While still in turmoil over power succession, Dong-joo stands strong, backed by 1.64 trillion won of publicly traded stock assets. Added to this, he also owns 27 billion won of assets from unlisted firms.
His father Shin Kyuk-ho’s wealth follows with 270.5 billion won, according to public data.
The value of real estate assets under the founder is astronomical. His land assets were estimated to be worth 18.6 trillion won in 1988. Shin was then picked as the world’s fourth-richest man by Forbes magazine.
Shin’s 15 real estate assets in Korea sit on over 1 million square meters of land worth 305 billion won. Apart from Shin Kyuk-ho’s private land assets, Lotte affiliates are known to own 5.7 million square metres of land in the country, a size that nearly doubles that of Yeouido in Seoul.
Prices of the land have seen a jump of 14 trillion won since Lotte Group purchased them. An industry source, on condition of anonymity, said following Shin Kyuk-ho can help “find gold in the real estate business.”
Out of the 125 rich businesspeople on the list of Korea’s wealthiest, 89 of them boosted their wealth through their family connections, while only 36 were self-made entrepreneurs.