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SWOT analysis of Hyundai

By Ovidijus Jurevicius | 15.02.2013

This is Hyundai Motor Company SWOT analysis for 2013. For more information on how to do SWOT analysis please refer to our article.

Company Background

Name Hyundai Motor Company
Logo Hyundai Motor Company logo
Industries served Automotive
Geographic areas served Worldwide
Headquarters South Korea
Current CEO Chung Mong-koo
Revenue $ 70.226 billion (2011)
Profit $ 6.910 billion (2011)
Employees 57,105 (2011)
Parent Hyundai Motor Group
Main Competitors Bayerische Motoren Werke AG, Chrysler Group LLC, Daimler AG, Ford Motor Company, General Motors Company, Honda Motor Company, Nissan Motor, Tata Motors, Ltd., Toyota Motor Corporation, Volkswagen AG and many other automotive companies.

Hyundai Motor Company is a South Korean automotive corporation mainly producing passenger cars and commercial vehicles. It is the eighth largest automaker in the world and is a subsidiary of Hyundai Motor Group, the 4th largest automotive company in the world in 2011 by vehicle sales.
You can find more information about the business in its official website or Wikipedia’s article.

SWOT

Hyundai SWOT analysis 2013

Strengths

Weaknesses

  1. Growing brand reputation
  2. Strong focus on R&D
  3. Effective resource allocation
  4. Growth in Europe
  5. Successful marketing campaigns

Weaknesses

  1. Product recalls
  2. Hyundai has no presence in Japan’s car passenger market
  3. Negative publicity

Opportunities

Threats

  1. Increasing fuel prices
  2. Global demand for ecological vehicles
  3. Changing customer needs

Threats

  1. Exchange rates
  2. Rising raw material prices
  3. Decreasing fuel prices
  4. Intense competition

Strengths

  1. Growing brand reputation. Hyundai’s brand is the second fastest growing brand in the automotive sector. In 2012, Hyundai’s brand value grew by 24% to US$ 7.43 billion and became the 53rd most valuable brand in the world, according to Interbrand. This is a result of Hyundai’s excellent quality cars, marketing efforts and growing customer base.
  2. Strong focus on R&D. Hyundai has established R&D centers in 6 different locations and has smaller R&D offices all around the world. Firms commitment to innovation yielded positive results and the business has become one of the automotive leaders in producing high quality, reliable, durable and safe cars. It has received many rewards including the latest North American Car of the Year reward in 2012.
  3. Effective resource allocation. For the 2011 financial year, Hyundai’s ROE was 20.6% compared to GM’s 19.9% and Toyota’s 4%, generating very high returns for the shareholders. In addition, Hyundai was using its assets more efficient than competitors with 7% ROA compared to GM’s 5.2% ROA and Toyota’s 1.4% ROA.
  4. Growth in Europe. While the Europe’s car sales were falling in 2012, Hyundai was experiencing significant growth in the region. It grew its market share in Europe from 2.9% in 2011 to 3.5% in 2012. This growth led to a competitive advantage over its rivals, Toyota and Volkswagen that were incapable to grow their operations.
  5. Successful marketing campaigns. Hyundai has launched many successful marketing campaigns through their CSR programs, sponsorship of many sport events and using celebrities to promote their products, which resulted in increased brand popularity.

Weaknesses

  1. Product recalls. Over 2012, Hyundai recalled more than 300,000 cars in different regions to fix manufacturing and design defects. Product recalls negatively impact Hyundai’s reputation and could erode its competitive advantage.
  2. Hyundai has no presence in Japan’s car passenger market. Hyundai has pulled their passenger car division from Japan in 2009 due to low sales and weak brand perception. Japan represents a large automotive market and performing poorly in this market leaves Hyundai at competitive disadvantage.
  3. Negative publicity. In 2012, Hyundai has been accused over inflated fuel economy numbers. Now the business will face federal lawsuit and will have to reimburse all the damage done to the customers.

Opportunities

  1. Increasing fuel prices. Increasing fuel prices open up large markets for Hyundai’s hybrid, electric and hydrogen fueled cars as consumers shift towards cheaper fuel types.
  2. Global demand for ecological vehicles. Cars that emit large quantities of CO2 pollute air and negatively affect the environment. Consumers are aware of this negative impact and will likely choose fuel-efficient hybrid, electrical or hydrogen fueled cars that Hyundai is currently offering.
  3. Changing customer needs. By introducing new car models, Hyundai could satisfy varying consumers’ tastes and needs for more fuel-efficient, ecological cars and access wider customer group.

Threats

  1. Exchange rates. Hyundai earns more than half of its revenue outside the South Korea. Exchange rate fluctuations threaten Hyundai’s profits if the KRW would appreciate against other currencies.
  2. Rising raw material prices. Raw metal prices (main raw material for car manufacturers) are rising due to increasing global demand, negatively affecting automotive firms’ profits.
  3. Decreasing fuel prices. Some analysts argue that due to shale gases future fuel prices should drop as a result making hybrid and alternative fuel cars less attractive to consumers.
  4. Intense competition. Hyundai faces strong competition from other automotive companies and more than ever competes on price rather than differentiation lowering firm’s profits.

Sources

  1. Interbrand (2013). Best Global Brands 2012. Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx
  2. Madslien, J. at BBC Business News (2013). Hyundai and Kia gain from European crisis . Available at: http://www.bbc.co.uk/news/business-21686822
  3. Ingram, A. at Green Car Reports (2013). Hyundai, Kia Face Federal Lawsuits For Overstated Gas Mileage. Available at: http://www.greencarreports.com/news/1080295_hyundai-kia-face-federal-lawsuits-for-overstated-gas-mileage
  4. Hyundai Corporate Information (2013). Company overview. Available at: http://worldwide.hyundai.com/WW/Corporate/InvestorRelations/CorporateInformation/CompanyOverview/index.html
  5. Wikipedia (2013). Hyundai. Available at: http://en.wikipedia.org/wiki/Hyundai_Motor_Company

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