Hyundai’s new sales chief, sales or lobbying expert?

[THE INVESTOR] Hyundai Motor, faced with increasing heat from the government, may be hoping to boost its lobbying capabilities with its new domestic sales chief.

Lee Kwang-guk -- who headed Hyundai Motor’s Washington D.C. office -- was appointed as the chief of domestic sales on Oct. 14, replacing Kwak Jin.

On the surface, the carmaker said that Lee was appointed for his “global sense and leadership,” which would help the company better respond to recent challenges. Hyundai is currently expected to miss this year’s sales target due to a combination of slumping domestic sales and sluggish performance in key overseas markets. 

Lee’s recent roles, however, hint that the real crisis may be somewhere else; appeasing the government.

Hyundai has recently come under the scrutiny of the prosecutor’s office for allegedly failing to report a fault in the air bags of some models, and the Ministry of Land, Infrastructure and Transport has launched an investigation into the Theta-II engine produced in Korea.

Defects in the Theta-II engine produced in the US has led to a massive recall and compensation program in the country.

Having headed a key lobbying channel in the US, Lee may have been brought in to smooth the carmaker’s frayed relations with the government, according to industry watchers.

“(Working with the government) could be a part of the reason (for Lee’s appointment),” an industry watcher said declining to be named. However, he added that the role of any high-level executive is not limited to that stated in the title, and can often involve government- or policy-related issues. 

Lee hasn’t been closely involved in sales in recent years. Even before his stint in Washington, he served as the chief of Hyundai’s overseas policy, and before that as the chief of the company’s brand strategy.

The office Lee headed most recently, Hyundai Washington Office, on the other hand, had major lobbying-related functions.

Founded in 1998, one of the key functions of the company’s Washington office includes “establishing friendly network with the (US) Congress, executive branch and opinion leaders.”

Although the office has a number of other functions, the overlap in its establishment and changes in Hyundai Motor’s lobbying expenditure suggest a certain emphasis on pulling strings.

According to the Center for Responsive Politics, a Washington-based nonprofit organization that researches the effect of lobbying, Hyundai Motor spent about US$20,000 each in 1998 and 1999 for lobbying-related activities. The figure jumped to US$80,000 in 2000, and to US$360,000 the following year. The peak was reached in 2011 when the figure came in at over US$1 million.

The office also has senior officials tasked with government affairs. Former employees include Christopher Spear, who was the vice president for government affairs at Hyundai’s Washington office in 2015, and served as the chief lobbyist for the American Trucking Associations in 2014. He is currently president of the organization.

By Choi He-suk (cheesuk@heraldcorp.com)