Beijing Hyundai (joint-corporation by Hyundai Motor Company and Beijing Motors) requested Hyundai Motor Group to purchase some of the shares of Beijing Mobis, which is a Chinese corporation set up by Hyundai Mobis. Its attempt is to have itself secure part of rights to prices and supplies of automotive parts, which are fully controlled by Hyundai Mobis, as its sales volume within Chinese market began to drop sharply since last year.
Beijing Motors argued that there is progress in negotiation. However, Hyundai Mobis is countering that argument by saying that there has not been an argument at all in the first place.
According to Beijing Motors Group on the 5th, Beijing Hyundai is currently in a negotiation where Beijing Hyundai will acquire some of the shares of Beijing Mobis owned by Hyundai Mobis. Hyundai Mobis has entire shares of Beijing Mobis.
Beijing Motors pointed to high prices of automotive parts that are more expensive than its competitors as the reason of sharp decline of Beijing Hyundai’s sales that has taken place since last year. It is requesting Hyundai Motor Group to lower prices of automotive parts and some of the shares of Beijing Mobis, which is the major source of automotive parts for Beijing Motors, as it is saying that it is losing competitive edge in automotive markets.
“Although we have made huge progress regarding transfer of Beijing Mobis’ shares, we are not at a point where we can disclose detailed information.” said a high-ranking official from Beijing Motors Group. “This is our effort with Hyundai Motor Company to increase market shares of Beijing Hyundai within China.”
Beijing Motors is planning to materialize exact amount of shares that will be transferred and the timing of transfer through its negotiation with Hyundai Motor Group. There is a high chance that Beijing Motors will request internal information such as structure of production cost of automotive parts and transfer of its important executives and employees to Beijing Mobis depending on how its negotiation goes.

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<Beijing Motors Groups’ Headquarters in Beijing>

Beijing Motors has been requesting Hyundai Motor Group and Hyundai Mobis to lower unit cost of automotive parts while Hyundai Motor Company has been facing difficulties due to retaliation by Chinese Government for THAAD (Terminal High Altitude Area Defense). In December of 2016, Chairman Xu Heyi of Beijing Motors Group saw crisis of its business within Chinese market and visited Hyundai Motor Company’s headquarters in Yangjae. He met with Chairman Jung Mong-ku of Hyundai Motor Group and explained situations of Chinese markets such as trend of sales of Beijing Hyundai’s main model ‘Santa Fe’ and presented reduction of prices of automotive parts from Hyundai Mobis as possible solutions.
“We have yet to receive any official requests from Beijing Motors and we have not had any negotiations regarding transfer of Beijing Mobis’ shares.” said a representative for Hyundai Mobis.
Although there are many stories that are coming out regarding Hyundai Motor Company’s business within China, Hyundai Motor Group is saying that there has not been any talks or negotiations regarding transfer or changes in shares.
This is a part where it shows different point of views by Hyundai Motor Group and Beijing Motors.
Beijing Hyundai sold 816,000 cars within China last year, and this number is 27.8% lower than the number of cars it sold in 2016.
Beijing Mobis is responsible for about 10% of Hyundai Mobis’ entire sales. In 2017, Hyundai Mobis made $32.7 billion (35.1446 trillion KRW) in sales, $1.90 billion (2.0382 trillion KRW) in operating profit, and $1.47 billion (1.5787 trillion KRW) in net profit. Its sales and operating profit dropped by 8.1% and 29.8% respectively compared to previous year. Its net profit also dropped by 48.2%.
Staff Reporter Park, Taejoon | gaius@etnews.com