Hyundai, Kia’s top-tier suppliers hit W90tr in sales

Hyundai Motor Group’s headquarters in Gangnam, Seoul (Hyundai Motor Group)

Hyundai Motor Group announced Tuesday that sales of its top-tier suppliers have surpassed a record 90 trillion won ($62.6 billion), driven largely by the automaker’s global expansion.

The group’s 237 first-tier suppliers, most of which are small and medium-sized enterprises, reported combined sales of 90.2 trillion won in 2023. This figure exceeded Hyundai Motor’s own revenue of 78.3 trillion won for the same year and accounted for 66 percent of the combined sales of Hyundai and Kia brands.

Including the contributions of approximately 5,000 second- and third-tier suppliers, the total sales volume of all partner companies in 2023 is estimated to have exceeded the 100 trillion won mark, Hyundai Motor Group said.

Growing alongside Hyundai and Kia during their ascent, the sales revenue of the 237 first-tier suppliers surged by 326.3 percent since 2001 and 35.8 percent since 2013.

The economic ripple effect of these suppliers has also been significant. The production effect and value-added output — representing the additional value generated at each stage of production — were estimated at over 237.8 trillion won and 55.6 trillion won, respectively. These companies also created approximately 600,000 jobs during the same period.

The suppliers have demonstrated improved financial stability, with the average asset size per company increasing by 563.6 percent from 50.9 billion won in 2001 to 337.8 billion won in 2023. Meanwhile, the average debt ratio decreased from 152 percent to 110 percent over the same period.

“The growth of Hyundai Motor and Kia’s suppliers has been fueled by the automakers’ surge in overseas sales and the suppliers’ increased ability to provide components to other global automakers, leveraging the credibility of being associated with Hyundai and Kia,” said an official from Hyundai Motor Group. “Hyundai Motor and Kia remain committed to supporting the sustainable growth of their suppliers through various programs, based on the philosophy that ‘mutual growth is key to competitive advantage.’”

To this end, the automakers operate funding programs worth 2.4 trillion won for their partner companies, along with an additional 570 billion won in funds dedicated exclusively to second- and third-tier suppliers.

Hyundai Motor Group also emphasized its continued support for these 5,000 partner companies beyond its first-tier suppliers. This includes improving management practices, facilitating business diversification for vehicle electrification, securing funds for overseas production facilities, recruiting skilled talent, and enhancing environmental, social and governance practices.

In April last year, Hyundai Motor and Kia signed an automotive industry expansion agreement with the Ministry of Employment and Labor, launching a 12 billion won initiative to improve working conditions for second- and third-tier suppliers. This initiative includes programs for talent development, employee welfare and workplace safety.

Additionally, Hyundai and Kia are actively facilitating the entry of first- and second-tier suppliers into major global markets, including the US, Europe, India, Brazil and Mexico, where the automakers have local manufacturing facilities. While there were only 34 partner companies with global operations in 1997, that number had risen to 690 by 2023.

Hyundai Motor Group noted that during the early stages of its suppliers’ overseas expansion, it provided stable parts order volumes and business consulting to support their growth and integration into foreign markets.

By Byun Hye-jin (hyejin2@heraldcorp.com)

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