Hyundai to Make Massive Investment in R&D

Hyundai on Wednesday presented a blueprint for its future and pledged to invest W45.3 trillion, most of it in research and development (US$1=W1,119).

Advertisement

Until 2016, Hyundai allocated just 55 percent of its total spending to R&D and the rest to building factories and other facilities, but now that proportion is to rise to 77 percent.

In 2014 and 2015 when Hyundai and affiliate Kia saw automobile sales peak at 8 million vehicles a year, the automotive giant focused its investments in building factories in China. But sales have dwindled there ever since.

The new investment Hyundai announced is 1.6 times larger than the money it spent over the last five years, so the money for R&D has effectively doubled.

The spending plan is even more remarkable since Hyundai's operating profit fell from W8 trillion from 2011 to 2013 to W2.4 trillion last year.

"The automotive industry is experiencing a major transformation which hasn't been seen in a century and we can't afford to push back investment in future growth", a company spokesman said.

Out of the W35 trillion in R&D spending earmarked over the next five years, Hyundai plans to spend W14.7 trillion on self-driving car technology.

Another W20.3 trillion will be spent on developing new SUVs and premium sedans, which fetch higher margins, as well as cutting-edge engines.

The automaker also plans to expand sales in Southeast Asia and other new markets, while clawing back market share in China and the U.S.