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Former Hyundai Motor Group Chairman Chung Mong-koo (left) and his son and current Chairman Chung Eui-sun on their way to a marriage ceremony at Myeongdong Cathedral in Seoul on Apr. 15, 2016. (Yonhap News)

Twenty years after the establishment of the Hyundai Motor Group, the next generation is taking over the tiller at South Korea’s second-largest conglomerate.

Newly appointed Chairman Chung Eui-sun faces the challenging task of guiding the group at a crucial moment in the competition over the vehicles of the future. There are diverging views in the industry about Chung’s leadership capabilities and about the group’s future prospects.

On Oct. 14, the Hyundai Motor Group announced that Chung had been appointed as chairman of the Hyundai Motor Company, Kia Motors, and Hyundai Mobis. Chung previously served as the conglomerate’s executive vice chairman.

Each group subsidiary held board meetings on Wednesday in which they decided to give former Chairman Chung Mong-koo the position of honorary chairman. Chung Mong-koo is the father of Chung Eui-sun. This is the first time the Hyundai Motor Group has replaced its chairman since its establishment in August 2000.

The industry will be observing how Chung handles intensifying competition over the cars of the future, including electric vehicles.

Since being named executive vice chairman in 2018, Chung has repeatedly emphasized the need for Hyundai to shift from automobile manufacturing to mobility solutions. Given rapid changes in the current industry paradigm of manufacturing and selling gas-powered cars, Chung says the group will have to cover the whole range of mobility manufacturing and services going forward.

“Our world-class hydrogen fuel cell technology will be used not only in automobiles, but also in various fields as an eco-friendly energy solution for the future of humanity. We will also realize the future of our imagination through robotics, Urban Air Mobility, smart city and other innovations,” Chung said in a video message on Wednesday following his appointment.

In a meeting with executives and staff in October 2019, Chung outlined a future in which cars would only account for 50% of mobility, with private aerial vehicles making up 30% and robotics handling the remaining 20%. He explained that Hyundai would become a company that provides general services under that framework.

The big question is whether Hyundai can succeed in its simultaneous push for electric vehicles and hydrogen vehicles, all without any cooperation with other automakers. The group’s goal is to release at least 23 electrical vehicles and sell a million units a year by 2025 and to gain a 10% share of the global market.

The group’s target figures for hydrogen energy are even more aggressive. By 2030, the group plans to manufacture 500,000 hydrogen vehicles and 700,000 hydrogen fuel cell systems a year. At present, the company’s yearly output of hydrogen vehicles only numbers in the thousands.

The industry believes that Chung’s leadership will be put to the test over the next two or three years. Though this is a critical time for massive investment in future vehicles, competition will probably heat up given the likelihood of the automobile industry facing a W-shaped recovery in the wake of the coronavirus pandemic.

Hyundai has been praised for its sales performance this year in the EV market, where it ranks fourth, after Tesla, the Renault-Nissan-Mitsubishi alliance, and Volkswagen. Another apparent advantage for the group is that it has taken less damage from COVID-19 in terms of manufacturing and sales compared to automakers based in other countries.

At the same time, the Hyundai Motor Group has its share of obstacles to overcome. Challenges cited by experts include Hyundai’s overemphasis on business diversification, its inadequate software capabilities, and its poor performance in the Chinese market.

Since the shifting industrial paradigm demands massive R&D investment and workforce expansion, some say that Hyundai ought to focus on building its capabilities. Another challenge — as indicated by recent fires in Hyundai’s Kona Electric vehicles — is how to manage uncertainty, which is exacerbated by technological convergence and competition. It’s also unclear whether Hyundai’s long-standing strategy of “benchmarking Toyota” will remain valid in tomorrow’s car market.

“If you pour your energy into a wide range of businesses without having enough innovative capabilities, you run the risk of not reaching the threshold in any of those areas. [Hyundai] needs to focus its capabilities based on a more rigorous analysis,” said Lee Hang-gu, a senior analyst at the Korea Automotive Technology Institute.

By Lee Jae-yeon, staff reporter

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