With Hyundai Motor Group's executive reshuffle imminent, attention inside and outside the group is focused on whether CEO Lee Yong-bae of Hyundai Rotem will win a third consecutive term. Lee is credited with improving both the profitability and the business portfolio of Hyundai Rotem, which had been posting large deficits.
However, some within the group say a third consecutive term may not be easy. That is because Hyundai Motor Group is reaching the point where the leadership transition that began when Chair Chung Eui-sun took office as executive vice chair in 2018 has run its course over seven years.
Most of the figures who led the group alongside honorary Chair Chung Mong-koo during the period when Lee served as Hyundai Motor vice president and Hyundai Motor Securities CEO have left the company. In addition, issues such as collusion uncovered at Hyundai Rotem during his term and lobbying allegations raised at the National Assembly audit are overhangs.
According to the industry on the 16th, Hyundai Motor Group will soon decide the future of CEOs across affiliates, including Lee, through an executive reshuffle. Lee's term runs until March next year. Since taking office in 2020, he has already been reappointed once and holds the title of the group's "longest-serving CEO." It is an unusual case at Hyundai Motor Group, where completing a full three-year term is rare.
Lee is seen as having successfully fulfilled the "relief pitcher" role that the group assigned to Hyundai Rotem. Hyundai Rotem's operating profit shrank to 45.4 billion won in 2017, then it posted operating losses of 196.2 billion won and 279.9 billion won in 2018 and 2019, respectively. It was called the group's "aching finger," and even rumors of a sale circulated.
Upon taking office, Lee activated an emergency management system and pushed for rigorous, profitability-focused internal management. He also moved to root out low-priced orders that had been eroding Hyundai Rotem's financial structure.
As a result, the company swung to a surplus in his first year with 82.1 billion won in operating profit. Last year, it posted an all-time high with 456.6 billion won in operating profit. This year, operating profit reached 783.2 billion won on a cumulative basis through the third quarter, a 150% surge from a year earlier, already surpassing last year's results.
In addition, sales in the rail business (rail solutions division), which had long struggled to gain traction, nearly reached 1.5 trillion won to date, completing the task of rebalancing the business portfolio. A Hyundai Motor Group official said, "Thanks to solid results, many expect Lee could win a third consecutive term."
However, some say the need for a leadership transition could be an obstacle to another term. Born in 1961, Lee is 64 this year. Among the 12 listed companies of Hyundai Motor Group, no CEO is older than Lee.
At major groups such as Samsung, SK and LG, the recent personnel keyword is leadership transition. Hyundai Motor Group also recently appointed Kim Jung-ah, born in 1973, as CEO of the full-service ad agency INNOCEAN.
Lee is effectively the only remaining figure from the era of Hyundai Motor Group honorary Chair Chung Mong-koo. Lee joined Hyundai Precision in 1987, which Chung led at the time. He later became an executive in 2005 as head of accounting management (director level) at Hyundai Motor, and went on to serve as head of Corporate Planning Office 3 (vice president) and CEO (president) of Hyundai Motor Securities. When honorary Chair Chung acquired Hyundai E&C in 2010—the flagship company that traces back to founder Chung Ju-yung's creation of the Hyundai group—Lee is known to have made a significant contribution by overseeing management planning.
In addition, the collusion and lobbying allegations that surfaced at Hyundai Rotem during Lee's term are cited as negatives. In 2022, Hyundai Rotem was caught colluding in a domestic train procurement bid and was fined a 32.3 billion won penalty surcharge, but controversy erupted when the entire penalty was later waived on the grounds that it was the first to voluntarily report the collusion. The other two companies that colluded with Hyundai Rotem, despite being small and midsize enterprises, had to pay penalty surcharges of 14.8 billion won and 9.4 billion won, respectively.
At this year's National Assembly audit, allegations were raised that Hyundai Rotem received preferential treatment under the Yoon Suk-yeol administration. At the time, lawmaker Cha Kyu-keun of the Rebuilding Korea Party pointed out that support for Hyundai Rotem from the Economic Development Cooperation Fund (EDCF) amounted to 24% of the budget for developing countries. Cha also argued, "With indications of lobbying between Hyundai Rotem and Myung Tae-gyun already revealed in a domestic project, a thorough investigation is needed to determine whether this extended to overseas orders."