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  • Posts Tagged ‘Hyundai’

    Hyundai Motor’s U.S. vehicle exports – 8 million mark (5 Things to Know)

    March 12th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Hyundai Motor’s U.S. vehicle exports – 8 million mark (5 Things to Know)
     
    1. Hyundai Motor’s recent sales environment in the U.S. and related challenges
     
    The post-2008 crisis period had an impact and placed additional competitive pressure on Hyundai Motor Company (HMC), as it did for many other corporates, both Korean and non-Korean. Sometimes, crisis periods can help domestic firms. For example, the 1997-98 Korean financial crisis led to a weakening of the Korean won, making Korean exported goods relatively less expensive, thus, boosting sales. The same export-related economic phenomenon occurred with HMC during and directly after the 2008 subprime crisis. However, the post-crisis so-called series of U.S. debt buybacks known as quantitative easing (QE) has acted to weaken the U.S. dollar relative to other currencies, including the Korean won, making Korean products appear less competitive compared to pre-QE. The average U.S. car purchase price is slightly less than $30,000. Approximately 2.4 million imported cars are sold in the U.S. annually.
     
    2. HMC’s weaknesses and strengths in the market
     
    HMC’s strengths include its ability to provide good value for money from the purview of U.S. consumers (American car buyers). The economic crisis motivated potential buyers to think more economically about their car purchases. So, instead of a well-known domestic (U.S.) or foreign (Japanese/European) car at a relative premium price point, a certain market segment of car purchasers opted to buy relatively lesser-known Hyundai vehicles (such as the Elantra, Sante Fe, and Tucson, to name a few).
     
    HMC’s weaknesses include its reliance on export markets, not only the U.S., but also in the EU, and more recently, in mainland China (where domestic competition is increasing on a daily basis) as well as its relative late entrance into the hybrid vehicle market sector.
     
    3. Hyundai’s post-2008 crisis strategy
     
    One notable strategy by HMC was the creation and implementation of the Hyundai “Assurance Program” (where buyers were able to return their Hyundai car within 1 year if facing unemployment), which linked to an extended warranty that covered vehicles for 10 years or 100,000 miles (above and beyond the market standard at that point). Together, this created a tipping point in terms of the perception of Hyundai and Hyundai cars, specifically, that it was more than just a company seeking to maximize profit, but rather, was a company that treated its customers as real people with real-life concerns.
     
    Much like with Japanese automobile manufacturers before it, Hyundai also began producing higher-end luxury sedans, such as the Equus (which was first introduced in 1999 and redesigned again in 2009). This was strategic since such upper-end luxury vehicles carry with it a significantly higher profit margin relative to other model types.
     
    4. Risks on the company’s future earnings
     
    The more notable risks for HMC going forward are several. First, a weakening yen/dollar rate, which could make Hyundai vehicles appear relatively more expensive when compared to similarly situated Japanese vehicle models. Second, Hyundai must continue to focus on quality assurance so that a Toyota brake pedal-type event does not occur. In the event of such occurrence, the reputational capital that HMC amassed could quickly dissipate car sales and market value. Third, increasing capabilities of domestic car manufacturers exist in large developing markets such as China and India, that could one day compete head-to-head with HMC on their home turf at some point in time. In 2012, China exceeded the U.S. as the largest automobile market at over 240 million cars.
     
    5. On HMC’s efforts building more manufacturing plants in the U.S. export market, and global trends of the automobile industry that the company. HMC, should consider
     
    Hyundai has already established manufacturing plants domestically in the U.S. This is a strategic move done to avoid tariffs (import taxes) since tariffs are generally (but not always) placed on non-domestic (foreign) goods and services. In fact, given the relatively weak dollar, some onshore U.S. car manufacturers are seeking to export its vehicles outside the U.S. to offshore markets. Moving forward, HMC should continue establishing not only manufacturing but also research centers in key emerging markets such as China, India and other strategic locations.
     
    Future trends that should be relevant to HMC include the push towards more green and fuel-efficient cars, including electric vehicles (EVs) and smaller model cars. Notably, Hyundai recently introduced a hybrid version of its popular mid-sized car, the Avante, here in Korea. While this is a leap forward, it is also over a decade after Toyota introduced its hybrid car (the Prius). Hyundai could also focus on integrating technology into its vehicle such as with seamless wifi and higher fuel efficiency.
     
     

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    Hyundai Motor Company (HMC) listed stock details (in Korean won):
     
    Open: 210,500 Day’s Range: 208,500 – 212,000 Volume: 343,841
    Previous Close: 208,500 52wk Range: 195,000 – 272,500 1-Yr Rtn: -1.49%
    Stock Chart for 005380
    005380:KS 210,500
    1D1M 1Y
    3/119pm10pm11pm3/121am ET206,000208,000210,000212,000
    208,500
    10:40:00 pm
    210,500
    Interactive 005380 Chart

    Previous Close
    Key Statistics for 005380
    Current P/E Ratio (ttm) 6.6952
    Estimated P/E(12/2013) 6.0974
    Relative P/E vs. KOSPI 0.3465
    Earnings Per Share (KRW) (ttm) 31,515.0000
    Est. EPS (KRW) (12/2013) 34,604.9130
    Est. PEG Ratio 0.8240
    Market Cap (M KRW) 46,478,336.00
    Shares Outstanding (M) 220.28
    30 Day Average Volume 667,378
    Price/Book (mrq) 1.0079
    Price/Sale (ttm) 0.5215
    Dividend Indicated Gross Yield 0.90%
    Cash Dividend (KRW) 1,900.0000
    Last Dividend 12/27/2012
    5 Year Dividend Growth 13.70%
    Next Earnings Announcement 04/26/2013

     

     

     

    Education: The Rise of South Korea’s “corporate colleges” (Asia-Pacific Global Research Group – blog report)

    November 28th, 2012  by  Asia-Pacific Global Research Group - Jasper Kim

    1. LG Electronics as well as Hyundai Department store, two of the most prominent Korean conglomerates, opened their so-called “corporate colleges” last month. And I’m sure this sounds pretty foreign to many of us… Could you tell us a little bit about what these are?

    Students attending these so-called “corporate colleges” typically spend half of their day studying regular subjects and the other half working or receiving specialized job training. Accepted students are promised to have a full-time job at the company when they graduate. Most if not all of the programs are highly subsidized, sometimes free of charge.
     
    As one example, Hyundai Department Store will offer up to 450 hours of classes a year focused on teaching knowledge and skills necessary for retail workers. Hyundai’s corporate college has already accepted 31 high school graduates and has promised to hire them on a full-time basis after they complete the two-year program, which starts next year. The corporate college also offers a graduate-school-level program specializing in marketing, setting a new precedent. LG Electronics has decided to run 14 programs for 1,500 trainees a year.
     
    2. Are these corporate college programs linked to private sector Korean corporates backed by the government? What’s the government’s response to these novel institutions of education?
     
    South Korea’s Ministry of Employment and Labor is very supportive and cooperative. . Labor Minister Lee Chae-pil has stated: “Schools like these will help recruiters focus more on the practical abilities of job applicants [rather than just looking at their educational background]… We encourage large companies to build a quality labor force through operating such educational facilities.” The same Ministry plans to cover at least 80 percent of the education fees. It has also given the companies the freedom to weight the content of their curricula in favor of their specific industry or niche. The government is preparing to open up to eight more corporate colleges this year. “We want to show job seekers who only have a high school education that they can still pursue higher education while working,” said Park Sang-yoon, an official at the Labor Ministry’s human resources department.
     
    3. Are there other examples of models resembling ‘corporate colleges’ in different countries that are trying to deal with similar problems of unemployment and underemployment? Or is this a unique case?
     
    Corporate colleges outside of South Korea are still the exception, rather than the norm. But examples still exist. For instance, Pearson, the parent company for the Financial Times newspaper will launch Pearson College beginning September 2013. Admitted students will be given internships and a mentor, which will most likely link with Pearson’s many subsidiaries. Students still must pay tuition, but they are granted a final degree, validated by the University of London.
     
    4. What are some potential practical problems that you foresee with an alternative education system like this?

    Corporate colleges do not award an official degree, so it is no guarantee of getting a job at companies outside the one sponsoring the school. The education will also be very industry and company specific. So the skill sets learned will probably not be very transferable to other companies in and outside the industry. Still, a subsidized education linked with internship and job prospects will be very appealing for many, but not all, parts of the population.
     
    5. Do you think the attention and governmental support that corporate colleges are receiving, in conjunction with the bad rap traditional universities are getting for low employment figures among graduates, etc, will pressure those standard universities to take on reforms? If so, what kind?

    For many South Korean universities, the perception will be that corporate colleges are not a threat, namely for the reasons stated earlier, particularly that no degree is conferred to students. However, many local universities are becoming more focused on practical training. But this can be a challenge since many faculty are theory-based, rather than practice-based. The challenge is to blend both together for the benefit of the student (and future member of the global working population).
     
    6. As an educator and as someone who writes and speaks about education, does this give you cause for concern — the corporatization of education? Education being, in a way, defined and subsidized by moneyed interests?
     
    It does not. Rather, it gives hope to those who may not normally be able to receive education beyond high school, especially for the economically disenfranchised. In our free market system, the more choices the better. If the system of corporate colleges don’t work, then it can be eliminated later on.