Seoul: Hyundai Motor Co., South Korea’s biggest auto maker, is under threat from surging materials costs, a slowing global economy and rising competition, chief executive officer Chung Mong Koo said.
“High oil prices, a slowing global economy from subprime concerns, competition with advanced rivals in Japan and Europe as well as with emerging competitors in China and India—these all are threats for us that we should deal with wisely,” Chung wrote in a letter to shareholders published at the car maker’s annual meeting on Friday in Seoul.
Hyundai on Thursday agreed with a supplier’s group to pay as much as 20% more for auto parts because of higher steel prices. The Seoul-based car maker aims to boost sales in emerging markets to help offset its rising costs.
“We’ll beef up our efforts to take a lead in emerging markets, including the Middle East and Africa, which are benefiting from higher prices for their oil and raw materials,” vice-chairman Kim Dong Jin told shareholders at the meeting.
The car maker aims to sell 737,000 vehicles in emerging markets this year, including West Asia, Africa and Eastern Europe, 12% more than in 2007, it had said on 24 January. Total sales will rise 20% to 3.11 million autos from last year.
Hyundai shares rose 4.05% to close at 69,300 won (Rs2,886) in Seoul compared with the benchmark Kospi index’s 0.95% loss.
Chung also won approval for a fourth term as a board member, overcoming opposition from some shareholders who sought to oust him because of his embezzlement and breach of duty conviction last year.
The National Pension Service, South Korea’s biggest institutional investor, had said on 12 March that it wouldn’t approve Chung’s re-appointment. The tycoon’s criminal record disqualifies him as a board member, it said.
Chung, the eldest surviving son of Chung Ju-young who founded the Hyundai Group in 1947 and Hyundai Motor in 1967, was last year handed a suspended three-year jail term for fraud.
Reuters contributed to this story.