Hyundai Motor Under Pressure to Look for Partner
Renault-Nissan, GM, Ford Leading Reorganization of Global Auto Industry

By Kim Yon-se
Staff Reporter

Hyundai Motor, hit by the prosecution’s investigation and its union’s strikes this year, is now saddled with concerns from business alliances among global carmakers.

The triple alliance being discussed among General Motors, Renault-Nissan and Toyota Motor has been a severe pressure for Hyundai-Kia Automotive Group as it struggles to become the world’s No. 5 automaker by 2010.

Analysts say Hyundai Motor should focus on a global trend in which the U.S., European and Japanese competitors seek a tie-up amid close sales battles in worldwide markets.

Hyundai Securities analyst Song Sang-hoon said he believes the world’s automobile industry has already gone into a mating processes for survival. ``It is necessary for Hyundai to make new alliances with global carmakers.’’

A Hyundai spokesman said his company has begun to research the impacts of the automakers’ possible triple alliance. ``After our automotive research subsidiary makes a report, we will take comprehensive countermeasures.’’

He declined to comment on the possibility of tie-ups with other U.S. or European carmakers after the research.

In 2000, the largest automaker of Korea sought a joint development of new cars in coordination with Daimler Chrysler but dropped the partnership in 2004, citing profitability issues between the two sides.

Market watchers point out Mitsubishi Motor as a potential business partner of Hyundai Motor.

By receiving royalty, the Japanese automaker handed over its technology to Hyundai since the early 1980s.

Furthermore, Mitsubishi is poised to open a sales unit in Korea soon while there are already three Japanese automakers _ Toyota, Honda and Nissan _ operating here.

There are speculations that the automaker has been in contact with a couple of Korean automobile importers over the past few years and may open a showroom as early as the end of 2006.

Meanwhile, Goodmorning Shinhan Securities analyst Yoon Dae-in said Hyundai-Kia won’t be affected by the possible alliance involving GM.

``First of all, the focus is on GM saving itself from a lackluster performance. Their (GM, Nissan) cars are not selling well in the global market, and they are cruising towards financial instability and loss of market share. These wounds have required the automakers to quickly bandage themselves.’’

He said the goal of this realizable auto pact is different from the steel M&A deal between Mittal and Arcelor. The global steel powers tied the knot to raise their overall production capacity and market shares to a much greater level.

GM’s largest shareholder Kerkorian saw the need to restructure due to unhealthy sales, leading to the suggestion of forming a network with Nissan-Renault to help each other out in cutting costs, not in boosting auto-making.