By on March 23, 2017

Hyundai Logo. Picture courtesy of autoblog.com

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.]

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7 Comments on “Sleazy Presidential Scandal Leads to Restructuring Rumors at Hyundai...”


  • avatar
    RedRocket

    Hyundai sleazy? I’m shocked!!!

  • avatar
    Corey Lewis

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

    • 0 avatar

      That’s false. Hyundai has been hurting from an increase in imported car sales in South Korea (the German brands and Nissan have been doing well). Much like Australia, consumers are moving to imports now that tariffs are being eliminated. There’s been a fair amount of grumbling in recent years among capital markets types that the ownership structure is not ideal, and the stock price has suffered because of it. So, this story actually has some fairly broad implications for the company. I highly recommend the Twitter account @Inside_Hyundai – his insight into the company is uncanny, to the point where he must have insider information being fed to him.

      • 0 avatar
        Corey Lewis

        I was thinking more like housing/credit/banking/electronics entrenchment, in addition to cars.

        • 0 avatar
          aquaticko

          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.

  • avatar
    Corey Lewis

    “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.

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