Hyundai Mobis is seeking to target the global market by maximizing the production efficiency of its Chinese production bases and diversifying suppliers. China has the second highest share of its overall sales, following South Korea, and is the world’s largest automobile market in which global automakers compete.
Hyundai Mobis has 13 main bases in China, such as plants, research centers, quality centers and logistics centers. In particular, the company’s Beijing plant and Tianjin plant, which produce modules and automotive application components respectively, are playing the pivotal role to tap into the global market, including China. The Beijing Mobis third plant, which is 40 minutes away from the Beijing Capital Airport by car, is supplying three core modules – chassis, driver’s seat and front end – to Hyundai Motor’s production plant nearby. The two plants are connected with a 77 meter-long tunnel conveyor and are injecting modules to automobile manufacturing lines at the exact time and order. Hyundai Motor Group seeks differentiation with its own production system “Just In Sequence (JIS)” processing. Since Hyundai Mobis and Hyundai Motor share the condition of production in real time, they can secure a stable component supply and flexibly respond to the demand in the global market with great variability.
A car can be produced when combining the three modules with bumper modules. Using it to baseline, Hyundai Mobis manufactures 97 cars per hour – a vehicle in every 37 seconds. This is the output of Hyundai Motor. Considering the fact that other competitors that entered the Chinese market produce 60 cars per hour – one car in every minute, Hyundai Motor has a 50 percent higher productivity. The Beijing Mobis third plant has an annual production capacity of 450,000 units. About 40 partner companies are clustered around the Beijing Mobis plant and the plant has improved the production efficiency with the JIS system. In addition, its front chassis module manufacturing plant is equipped with engines and transmission unlike domestic module producing plants. Based on this, it has reduced the production time, pushing into the local market with the best quality and productivity
The Tianjin plant, which is located in the economic and technological development area (TEDA) at the Binhai new district in Tianjin, China, is also trying to change. It is lowering its reliance on Hyundai-Kia Motors in terms of sales by expanding the supply to global automakers and is securing a stable growth. The Tianjin plant produces automotive application components and currently supplies them to a total of 53 firms, including China’s nine automakers, 24 module and component makers, 10 foreign automakers and 10 foreign module and component makers. It is also expanding the supply channel further. In fact, the plant will supply ICS products to car models of Peugeot, starting next year.
Moon Kyung-ho, head of the Hyundai Mobis Tianjin, said, “We are planning to supply integrated switch modules (ICS) and automatic occupant sensing (AOS) systems to GM of the U.S. and PSA Peugeot Citroën of France. We will also continue to show a strong growth by strengthening business activities to global and local automakers in China.”
Tianjin Mobis is expected to see a slight increase in annual sales from US$683 million (755.4 billion won) last year to US$684 million (756.5 billion won) this year. However, the sales in 2017 will grow 9.6 percent to US$750 million (829.5 billion won) from this year through the diversification of supply chains, beginning from next year.