Sleazy Presidential Scandal Leads to Restructuring Rumors at Hyundai

Matt Posky
by Matt Posky

Hyundai Motor Group has received added attention from investors this week over expectations that the family-run business could undergo a major reorganization into a public holding, with the same separate, multifaceted structure as Hyundai Heavy Industries.

News spread that Hyundai Motor could be preparing a restructuring campaign after it issued a disclosure statement last Friday that explained it would be charging Hyundai Steel and Hyundai Glovis Co. 13.9 billion won ($12.4 million) for the use of the Hyundai brand name. This is the first time the company has ever collected from either over the use of its corporate trademark.

It’s uncharacteristic of the automaker, but seeking royalties from companies operating under major holding entities is routine and may be the first step in Hyundai’s changing structure. Under the plan assumed by industry watchers like WardsAuto, Hyundai Mobis, which currently holds the largest stake in Hyundai Motor Group, would be converted into a holding entity — potentially shifting ownership.

However, the Chung family, who founded and maintain control the Korean company, could keep its ownership of the multi-business organization by holding the majority of shares in Hyundai Mobis. In fact, it would actually be easier for the Chung family to simply increase their stake in Hyundai Mobis while it’s still so much cheaper than Hyundai Motor’s. Of course, there is some minor speculation that the trio of Hyundai Motor Co., Hyundai Mobis, and Kia Motors could each be slit into holding and operating entities before being merged into one.

South Korea’s National Assembly is strongly encouraging various family-controlled conglomerates — including Hyundai — to reorganize into better regulated and more transparent organizations. Ideally, the country wants an emphasis on shareholder control and corporate responsibility. This added pressure stems from the recent impeachment of South Korea’s former president Park Geun-Hye, following news that some family-owned groups contributed massive donations to charities in exchange for special favors. Hyundai is among several companies that underwent investigation after the scandal’s emergence.

While the alleged misconduct hasn’t helped Hyundai’s image, speculation over the possible restructuring has driven up the stock prices of all three of its major affiliates this week.

[Image: Hyundai Motor Co.]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Corey Lewis Corey Lewis on Mar 23, 2017

    Koreans are so entrenched in their major 4-5 home market conglomerate brands, this sort of ding in reputation means very little.

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    • Aquaticko Aquaticko on Mar 23, 2017

      @Corey Lewis That's due to the way South Korea developed. The government told big businesses to do x. y, and/or z, and big businesses did it in exchange for cheap credit. We talk about wealth concentration being in the hands of a few individuals in the Anglo-Saxon world; in South Korea, it's in the hands of a few corporations, with Samsung (surprise) being far and away the wealthiest, followed by Hyundai and LG, then Lotte and Hanjin (last I heard. Basically all of the country's wealth is in the hands of a few corporations.

  • Corey Lewis Corey Lewis on Mar 23, 2017

    "This is the first time the company has ever collected from either over the use of its corporate trademark." I'm going to charge myself millions... and then move it from account A to account C.

  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
  • Carson D The UAW has succeeded in organizing a US VW plant before. There's a reason they don't teach history in the schools any longer. People wouldn't make the same mistakes.
  • B-BodyBuick84 Mitsubishi Pajero Sport of course, a 7 seater, 2.4 turbo-diesel I4 BOF SUV with Super-Select 4WD, centre and rear locking diffs standard of course.
  • Corey Lewis Think how dated this 80s design was by 1995!
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