Market Diversification Efforts Paying off in U.S., China
Hyundai Mobis liquidated its Hungarian subsidiary, which was established in 2018, early this year, industry sources said on May 23.
Hungary is seen as a forward base for global carmakers to make inroads into Europe. The country is home to battery production bases of SK Innovation and Samsung SDI, which are seeking to penetrate the European electric vehicle market.
Hyundai Mobis also planned to supply parts to global carmakers by setting up the Hungarian subsidiary. In fact, a contract to supply parts for electric vehicles to Daimler, the parent company of Mercedes-Benz, once reached the final stage. However, as the supply contract broke down during a detailed negotiation process, Hyundai Mobis eventually decided to liquidate the Hungarian subsidiary and withdrew from the country.
Hyundai Mobis has been making efforts to diversify its sales outlets. Company president Park Jung-kook said, "The 2020 goal is to break away from sales dependence on Hyundai Motor Group." In 2020, Hyundai Mobis has set the goal of recording US$2.73 billion in sales to non-Hyundai customers, up 55 percent from 2019. The figure accounts for about 8.8 percent of its sales in 2019. However, it has become difficult for Hyundai Mobis to meet the target due to the COVID-19 outbreak. In 2019, 5.7 percent of its sales came from non-Hyundai customers.
However, Hyundai Mobis plans to continue its sales activities for global automakers from a long-term perspective. It believes that expanding "non-captive" sales is essential to maintaining its status of the world's seventh-largest parts maker.
Although an advancement into the European market is not easy, Hyundai Mobis' diversification efforts are paying off in the United States and China. It supplies such auto parts as head lamps, rear lamps, display modules, and central control devices to major companies such as GM and FCA. It is planning to supply not only existing parts but also newly developed devices such as head-up displays to local brands in China.