Hyundai & Kia will greatly increase its R&D investments starting this year. The company is forecast to become No. 3 in the automotive industry in terms of annual R&D investments. In particular, it is expected to lead the next-generation automotive technology development along with Volkswagen and Toyota. Although it is No. 5 in global sales, it has remained in the lower ranks in terms of R&D investments. Now Hyundai & Kia has laid the foundation for ‘completely changing’ its technological competitiveness.
According to industry insiders on January 19, Hyundai & Kia’s average yearly R&D investments (KRW6,775 billion) in the next 4 years are No. 3 in the global automotive industry following Volkswagen and Toyota. The company is planning to invest a total of KRW27.1 trillion in R&D from 2015 till 2018.
According to the R&D statistics (EU R&D Scoreboard) recently published by the European Commission (EC), Volkswagen invested the largest amount (about KRW14,720.5 billion) in R&D in the automotive industry (as of 2013), followed by Toyota (KRW7,859.6 billion) and Daimler (KRW6,742.8 billion.
Looking at the R&D funds for 2015 only, Hyundai & Kia rapidly rose to the No. 3 position just below Toyota in the industry. The company invested KRW2,219.3 billion in R&D in 2013, ranked No. 15 in the automotive industry including automobiles and parts. However, in just 2 years, its R&D investments increased more than three times, and the company became a top ranker in quantitative terms. As a result, its competition with other auto makers in Germany, Japan and the US over next-generation technologies is forecast to intensify further.
Hyundai & Kia is planning to concentrate its R&D investments in the environment-friendly and smart car segment, which will determine the future market trends. In the environment-friendly car segment, the company will invest KRW11.3 trillion by 2018 to develop various new cars, build an environment test lab and a proving ground and expand the engine and transmission production facilities. It will also invest KRW2 trillion in the autonomous driving system and automotive IT innovation.
In particular, 49% of its total R&D investments will be concentrated in environment-friendly cars and smart cars. It is expected to dispel the public concern that Hyundai & Kia is not entirely satisfactory in securing future technologies since it is concentrating on development of new cars, which is most urgent. Increased R&D investments are directly connected to manpower expansion. The Hyundai Motor Group is planning to hire a total of 7,345 R&D employees, including 3,251 environment-friendly and smart car developers, by 2018.
“34% of the total investments the Hyundai Motor Group will execute by 2018 will be concentrated on automobile (Hyundai & Kia) R&D,” said a Hyundai & Kia insider. “We will secure future core technologies and enhance our quality competitiveness and brand value through R&D.”