INDUSTRY ANALYSIS OF

AUTOMOBILE INDUSTRY
WITH SPECIFIC REFERENCE
TO HYUNDAI MOTORS
NAME OF GUIDE- DR. BHAWNA SHARMA

NAME OF STUDENT- MEHAK VASUDEVA

PROGRAMME- B.COM(H)
BATCH 2017-2020
A3104617300
RATIONALE FOR CHOOSING HYUNDAI MOTORS
COMAPANY
• AUTOMOBILE INDUSRY is one of the most important industry that is becoming bigger
and bigger day by day with new cars and latest technology vehicles this automobile
segment is becoming popular.
• Automobile industry has a huge potential when it comes to contributing to the GDP of a
country or to increase the market potential of a industry and automobile industry is
perhaps the biggest industry doing daily import and export of millions of dollars and
millions of vehicles everyday. This is the reason we have selected this industry for our
analysis.
INTRODUCTION

• Hyundai Motor Company(HMC) is a Korean automaker which along with Kia, which was
acquired in 1998, comprises the Hyundai Kia Automotive Group, the world's fourth largest
automaker as of 2009. Chung Ju-Yung founded the Hyundai Engineering and Construction
Company in 1947, HMC was later established in 1967. As of 2009, it is the world's fastest growing
automaker. In 2008, Hyundai (without Kia) ranked as the eighth largest automaker. Headquartered
in Seoul, South Korea, Hyundai operates the world's largest integrated automobile manufacturing
facility in Ulsan, which is capable of producing 1.6 million units annually. The company employs
about 75,000 persons around the world. HMC vehicles are sold in 193 countries through some
6,000 dealerships and showrooms worldwide. In 2010, Hyundai sold over 1.7 million vehicles
worldwide 
• HMC is one of the most multinational companies in the world. It is currently operating in
193 countries which are widely spread throughout Asian Pacific, Europe, Middle East,
Africa, North America, and Central & South America  . There are nine types of operating
departments: headquarters, Regional headquarters, Regional Office, Distributor, Overseas
Subsidiaries, Overseas Sales Subsidiaries, R&D Center, Production Facilities, and CKD
Assembly Facilities  .
• International cost differences
• In Asia Pacific and Europe, most of the functions listed above exist due to the maturity of
the automobile industry in these regions. Therefore, in terms of transportation, the cost
would be relatively low since transport only takes place within the continent. However, in
European countries, wage rates are relatively high which could result in an international
cost difference.
PESTEL ANALYSIS OF AUTOMOBILE INDUSTRY
POLITICAL

• Political factors play an important role and have a direct impact on the profitability of
the automotive industry. Governments around the world are favoring low emission vehicles.
Moreover, taxes on the luxury vehicles and fuel guzzlers have grown higher. The markets like EU
and UK are providing government subsidy for the low emission vehicles. Environment friendly
vehicles have grown in demand globally. They are also receiving higher government
support for their low environmental impact. As such the government rules and regulations heavily
affect the revenues of the vehicle brands. Technology that is fuel efficient and low on emission
can easily pass government rules. Moreover, the import rules and taxes vary from country to
country. Overall, there are so many political factors affecting the auto industry. Changing
government regimes as well political regulation of the market can from time to time cause
favorable or unfavorable fluctuations.
ECONOMIC

• Economic forces are also of particular importance in the context of the automotive industry.
This sector was hit hard by the recent economic crisis. When the economic conditions are not
good, the sales of vehicles fall. The demand for luxury or high priced vehicles is also affected
poorly during poor economic conditions. Moreover, the taxes on the high priced vehicles are high
in several markets. If the economic conditions are good, the sales of vehicles can remain high. The
sales are generally higher in the developed countries. In the developing and under-developed
markets, they are comparatively low. The developed markets see higher sales as the purchasing
power of the customers is higher. In these markets, the sales of the higher priced variants is also
higher. The lower priced variants are generally in demand in the developing and underdeveloped
markets. 
SOCIO-CULTURAL

• The market is influenced deeply by the socio-cultural forces. The automotives industry is also
affected by the changing socio cultural trends and people’s preferences. Vehicle makers have to
adopt to these forces. Every year new models are released keeping people’s preferences in mind.
Moreover, specific styles are preferred in certain cultures. In some markets while the SUVs might
be in higher demand, in the others the sedans might be preferred. Age  distribution in the various
populations is also an important factor that  vehicle makers have to keep in mind while targeting the
consumers. They should release vehicles based on the preferences of their target population. Apart
from it from culture to culture, people’s style and preferences also differ. The result is that while a
particular model will sell in a market, it might not be as popular in the other. Social trends also keep
changing continuously affecting the popularity of brands and models. Changing trends may some
times make the older models obsolete or go out of fashion.
TECHNOLOGICAL

• Technology and innovation have become important determinants of market share in the automotive
industry. The more innovative the company, the higher is its market share. Given this fact, all the
major players make huge investments in research and development. Brands like Toyota, Hyundai
and Ford are investing in low emission and  environment friendly vehicles. Toyota is even planning
to release a driverless car in the coming years. Not just this, the major technological players are
trying to enter this sector of the industry. In the recent years technological innovation has remained
a major basis of differentiation for the automotive makers. It is because the customers’ focus
shifted towards fuel efficient and high mileage vehicles. The sales of the low  emission and fuel
efficient vehicles is always high. It shows that technology is one of the most important factors
 affecting the sales and profitability of the automotive industry.
ECOLOGICAL

• The laws related to environment friendliness and carbon emissions are growing stiffer
around the globe. Given that all the major players in the automotive industry had to focus
upon low emission vehicles. The vehicles which are low on emissions and fuel
 consumption receive tax subsidies and are favored by the government and law.
The pollution tests have grown stricter and the vehicles passing these tests only are
allowed in certain markets including EU and UK. Environment friendliness has become
an important test for the vehicle makers in the 21st century as governments have
started focusing heavily on pollution control.
LEGAL

• Law is another important factor that gets to affect the profitability and performance of the
vehicle brands. Vehicles selling in the international market are subject to laws related to
product quality and safety. The pollution laws have grown stricter. The vehicles being exported
overseas have to pass strict  emission controls. Next are the laws related to product safety that
have an important impact on the sales of the vehicles. Recently, Toyota had to recall its vehicles
because of its faulty airbags. There have been similar cases in the past putting passenger safety
under question. Due to such accidents, governments have made laws related to passenger safety
stricter. Apart from it, there are environmental laws, tax laws and several other laws that the
vehicle companies have to deal with while operating in the international market.
SWOT ANALYSIS OF HYUNDAI MOTORS
STRENGTHS

• Fastest growing automaker by brand.

• Strong research & development; it has established eight Research and Development centers in different part
of the world.
• It has world largest automobile plant named “The Ulsan Plant” located in Korea.
• Hyundai vehicles are sold in 193 countries via 6000 dealers.
• It was ranked 8th in automotive brand ranking of 2013.
• Fastest growing company in automotive industry..
• Growth in Europe region sales.
• Strong revenues and profits in 2013.
• Hyundai’s brand value reaches $9 billion, ranking No. 43 in Interbrand’s 2013 Best 100 Global Brands
• Hyundai Motor to launch first electric car in 2016.
WEAKNESSES

• Low availability of spare parts due to unavailability of authorized dealers and distributors.
• Hyundai recalled cars on different occasions due to issues in seat belt and brakes.
• In 2013, the sales goes down by 4% in Korea.
• Production losses
• Lack of attractive car designs as compared to major competitors.
• Weak presence in Asia region.
• The sales are on lower side in Japan.
OPPORTUNITIES

• Manufacture low price and fuel efficient cars for third world countries
• Enter into untapped markets.
• Joint ventures to open assembling plants.
• The fuel prices are increasing therefore; it’s the right time for Hyundai to start focusing on manufacturing Hybrid
cars.
• It should launch its electric cars ahead of other competitor to get first move advantage.
• Provide training to dealers to improve customer services.
• Boosting fuel efficiency
• Increase production efficiency of manufacturing plants to increase global sales.
THREATS

• Conflict between South and North Korea could impact the largest production facility of
Hyundai Motors.
• Fierce competition in automobile industry.
• Unrest in Africa region.
• Raise in price of fuel might reduce the demand of Hyundai vehicles.
• Betterment in public transport infrastructure could decline the company sales.
• Fluctuations in currency exchange rate might negatively impact the company profit margin.
CONCLUSION

• Since it has established in 1967, HMC has grown up as a leader automobile company in
Korea, and world's fourth largest car producer as a result of their globalization strategies.
We have analyzed HMC with some theoretical methodologies including SWOT analysis,
Configuration-Coordination analysis, and Global integration-Local responsiveness
analysis. Based on these approaches, what we have found are HMC goes well with not
only in domestic market, but in overseas markets by diversifying its market, ranging from
US, Europe, to prospective emerging markets. When it comes to manufacturing system,
HMC's international plants are spread over the world, which enable efficient global
supply chain.
CONCLUSION

• In some aspects, however, we have also found that HMC need to complement its strategies to
follow with global automobile industry and take more market shares. So we recommended some
strategies in recommendation part based on these kinds of issues that HMC faces currently. One
unique issue in automobile industry is environment-friendly cars such as hybrid car and smart car.
To catch up with these global changes, HMC seems to need more effort to develop its new-
technology cars in near future. Going with this global trend, European market is highly attractive
market for hybrid car where people are much more interested in environmental problem than other
areas. Another one that we recommended is in Latin America market. We pointed out that HMC
doesn't have its manufacturing systems near Latin America compared to other emerging markets.
In order to capture growing demands on car, HMC need to be prepared to respond in the future.
THANK YOU