Hyundai Motor Group's investment in automobile-related research and development (R&D) topped 11 trillion won last year. That was up 16% from a year earlier, signaling a determination to secure leadership in future technologies even as operating profit posted a double-digit decline. Global competition is intensifying and R&D intensity remains lower than in advanced economies, so aggressive investment is still needed, but investment capacity is being sapped by geopolitical risks such as tariff measures and the Middle East war.
According to business reports filed on the 24th by Hyundai Motor Group's listed companies directly engaged in automobile businesses—Hyundai Motor, Kia, Hyundai Mobis, Hyundai WIA, and Hyundai AutoEver—the five companies invested a total of 11.2987 trillion won in R&D last year. That was a sharp rise from 9.7419 trillion won a year earlier (up 16.0%) and 8.26 trillion won two years earlier (up 36.8%).
The average ratio of R&D expense to each company's sales is also on the rise, at 2.1% in 2023, 2.3% in 2024, and 2.5% last year.
R&D expense increased even as profit fell. The combined operating profit on a consolidation basis for the five companies came to 24.3632 trillion won last year, plunging 19.9% from 30.4234 trillion won a year earlier. Except for Hyundai Mobis (up 9.2%) and Hyundai AutoEver (up 13.8%), three companies saw sharp declines in operating profit. Hyundai Motor and Kia fell 19.5% and 28.3%, respectively, and Hyundai WIA also dropped 6.6%. Despite having less capacity to spend, they increased investment for the future.
By company, Hyundai Motor raised its R&D expense 20.6% to 5.5354 trillion won from 4.4894 trillion won a year earlier. Kia also expanded from 3.2473 trillion won to 3.7129 trillion won, up 14.3%. In growth rate terms, Hyundai AutoEver (80 billion won) was the highest at 17.11%. In addition, Hyundai WIA (93.6 billion won) and Hyundai Mobis (1.8774 trillion won) increased R&D expense by 7.61% and 7.28%, respectively.
Such R&D expense is translating into a range of technological advances. Looking at Hyundai Motor alone, it disclosed a total of 29 R&D outcomes. A representative example is a technique for assembling the side panels of purpose-built vehicles (PBVs)—whose body length and height vary by use—like Lego blocks instead of stamping them with a single large die. This not only cuts die-making expense but also makes design changes easier.
In addition, together with Kia, it secured the first mass-production technology for a "low-power mode" that records only when a moving object is detected at the front or rear of the vehicle, and a technology that, when there is an obstacle in the driving direction at vehicle start, detects pedal misoperation and limits acceleration or performs emergency braking. Hyundai Mobis, Hyundai WIA, and Hyundai AutoEver are focusing on improving and developing various automobile-related parts and software.
Recently, Hyundai Motor Group has been pursuing aggressive R&D to secure leadership in future global markets. Last year, it said it would invest $26 billion (about 38.9 trillion won) in the United States over four years, which includes a Humanoid Robot technology and mass-production roadmap. In Korea, it will invest 125.2 trillion won over five years starting this year. Of that, it allocated 50.5 trillion won to new businesses and 38.5 trillion won to R&D.
While R&D investment must be expanded continuously as global competition intensifies, growing management uncertainty from geopolitical risks such as tariff measures and the Middle East war is a stumbling block. Lee Hang-gu, a research fellow at the Korea Automotive Technology Institute, said, "As R&D expense is in the 3%–4% range of sales for automakers in advanced economies like the United States, Hyundai Motor Group's R&D intensity somewhat falls short," and added, "Hyundai Motor Group's investment will continue, but with profitability deteriorating this year, the investment momentum could weaken, which is concerning."