Hyundai Mobis to set up parts, module arms

Hyundai Mobis, an auto parts affiliate of Hyundai Motor Group, said Thursday it will set up two manufacturing subsidiaries -- one in charge of modules and the other for auto parts -- that will be wholly owned by the company.

Its current module manufacturing units located in Ulsan, Gwangju and Hwaseong, Gyeonggi Province, will come under the module subsidiary, while the auto parts manufacturing units in charge of air bags, lamps, brakes, steering and electrification will come under the auto parts manufacturing subsidiary. 

Such system will allow Mobis to focus on developing future mobility technology and set up a business model for mass production, while the new subsidiaries are aimed at enhancing the in-house manufacturing technology.

In the long term, the new, integrated affiliates will expand business capabilities to digest manufacturing volumes of orders from global clients, Mobis added. 

The local manufacturing facilities will work as a major production base, it said.

Board members will discuss the restructuring in September for the official launch slated for November, Mobis said.

Market insiders have speculated that Mobis’ business restructuring is tied to the group’s attempt to put an end to its circular ownership structure, despite the company’s denial of such intentions.

Mobis is Hyundai Motor Group’s de facto holding firm that owns a 21.4 percent stake in Hyundai Motor. Hyundai Motor owns 33.8 percent stake in Kia, while Kia holds a 17.2 percent stake in Mobis. 

In 2018, Hyundai Motor Group sought to split Hyundai Mobis into two units --one responsible for key auto parts manufacturing and the other responsible for module manufacturing by merging the latter with logistics subsidiary Hyundai Glovis.

The idea was part of Hyundai Motor Group Executive Chair Chung Euisun’s plan to bolster control over the group by reorganizing his shares in Hyundai Glovis with shares in Hyundai Mobis. 

But the attempt failed as it faced strong opposition from Mobis shareholders, such as US hedge fund manager Elliott Management.

Chung currently holds a 2.6 percent stake in Hyundai Motor and a 0.3 percent stake in Hyundai Mobis. He owns a much more substantial 19.9 percent stake in Hyundai Glovis, as well as in Hyundai Engineering (11.72 percent), Hyundai AutoEver (7.3 percent) and Boston Dynamics (20 percent).

By Kim Da-sol (ddd@heraldcorp.com)