Photo credit: Bloomberg
September 14, 2018 09:51 CET
SEOUL — Hyundai Motor Group appointed heir apparent Euisun Chung as chief vice chairman, moving him a step closer to succeeding his father as head of South Korea’s second largest conglomerate.
Chung, 47, who will assist his father and group chairman Chung Mong-koo, was promoted to respond to “deteriorating global trade issues and changes in competitive dynamics in major markets,” Hyundai Motor Group said.
Conglomerates such as Hyundai Motor Group and Samsung Group, which have grown into global companies from the rubble of the 1950-1953 Korean War, are undergoing a transfer of power to third- or fourth-generation leaders.
“In his new capacity, Chief Vice Chairman Euisun Chung will oversee the entire Group’s operations, aiding and reporting to Chairman Mong Koo Chung,” a Hyundai Motor Group spokesperson said. The younger Chung has been vice chairman of the conglomerate’s top company Hyundai Motor since 2009.
The appointment comes as Hyundai battles tumbling profits, mounting pressure from activist shareholders to improve its governance, and amid South Korea’s trade tensions with the United States that threaten to disrupt its production plans.
Chung junior has attended government meetings with business leaders in recent years, replacing his 80-year-old father who now makes few public appearances. Chung senior, the all-powerful boss, has presided over Hyundai for about two decades, transforming the company into the world’s fifth-biggest automaker along with affiliate Kia Motors.
Hyundai is now struggling to reverse slowing sales in China and the U.S., where the company has suffered due to its delayed response to booming demand for SUVs. The appointment is part of an effort to “improve future competitiveness and secure future growth engines” at a time when the auto industry is undergoing major changes, the group said.
The junior Chung has led the group’s efforts to develop future vehicles such as autonomous and connected cars, as well as Hyundai’s fledging premium brand Genesis.
“Hyundai Motor will actively try to transform itself from a car manufacturer to a provider of smart mobility solutions,” Chung said in a speech at a forum in India last week. A major challenge for him will be how to consolidate his holdings in the group.
Hyundai Motor Group in May shelved an ownership restructuring plan that would have tightened the family’s grip and paved the way for a succession. The plan had been opposed by U.S. activist hedge fund Elliott Management.
“This is a good sign,” Park Yoo-kyung, a director at Dutch pension fund APG Asset Management, said of the appointment. “This will enhance transparency about who is controlling the group and who is making key strategic decisions,” she said.
South Korea’s government has called for reform of the country’s family-owned conglomerates, known as Chaebols, in the wake of a graft scandal that led to the ouster of a president, as well as the arrest of the Samsung Group chief.
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