Preparing Future Growth Businesses
The author is an analyst of NH Investment & Securities. He can be reached at soohong.cho@nhqv.com. -- Ed.
Through our recent visit to HMC’s US plant, we confirmed both the growth potential of its future-oriented businesses (Boston Dynamics, Motional) and its improved competitiveness in the current US market (HMA, HCA). The firm is set to enjoy structural growth in the US market (2025 targets: sales of 1mn units, market share of 6%) in line with improved product competitiveness and successful business structure transformation.
Evidencing structural improvement in US market; firm targets 2025 sales of 1mn units, market share of 6%
Having visited HMC’s major US business facilities over Nov 14~18, we were able to confirm both the growth potential of its future-oriented businesses (Boston Dynamics, Motional) and the improved competitiveness of its existing US market businesses. To check on HMC’s US business strategies and to assess consumer brand preferences, we also visited US sales subsidiary Hyundai Motor America (HMA), financial subsidiary Hyundai Capital America (HCA), Hyundai Motor dealerships, and the LA Auto Show.
Expressing confidence in its future business prospects, HMA told us that its recent performance in the US market is not a temporary phenomenon, but rather tangible evidence of structural improvement (ie, rising product competitiveness and consumer awareness). Also boding well is HMC’s strengthening competitiveness in the EV market via the successful introduction of HMG’s EV platform (E-GMP). In a period of industry transition process, we believe that HMC is more successfully implementing an EV conversion strategy than its Japanese rivals. Although there are some uncertainties in play due to the passage of the US’s Inflation Reduction Act (IRA), when considering various conditions such as product competitiveness, we judge the expansion of HMC’s supply capacity as being a more important variable for its US market EV sales than tax credit changes.
Preparing future growth businesses
Although monetization in earnest still needs some more time, we positively view autonomous driving company Motional and robotics players Boston Dynamics as future growth drivers for the Hyundai Motor Group (HMG). Motional recently partnered with Uber to expand its Ioniq 5-based robotaxi domain. And, Boston Dynamics is proceeding smoothly with its development/commercialization strategies for both Spot (quadrupedal walking robot) and Stretch (logistics robot). Already boasting excellent mechanical capabilities, Boston Dynamics plans to beef up its AI capabilities going forward through both synergies with HMG and the establishment of a research center (Boston Dynamics AI).