Hyundai’s Chung Warns of Tough Year Ahead for Auto Industry

UPDATE: Hyundai Motor Co. Executive Chair Chung Euisun has issued a stark warning about a challenging year ahead for the global auto industry, emphasizing the urgent need for the South Korean carmaker to enhance its artificial intelligence (AI) capabilities. In his New Year address, Chung pointed out that escalating global trade tensions and fierce competition could significantly hamper profitability in the sector.

Chung’s remarks come as geopolitical conflicts threaten to disrupt operations in various regions, potentially leading to a suspension of business activities. “This will be the year when the crisis factors we have long worried about become reality,” he stated, underscoring the gravity of the situation.

The largest South Korean automaker has faced major financial impacts from US President Donald Trump’s tariff policies, which impose a hefty 15% levy on Korean-made vehicles. In fact, this single policy has cost Hyundai approximately 1.8 trillion won ($1.2 billion) in the third quarter alone.

Adding to these challenges, a recent immigration raid on a Hyundai-LG Energy Solution Ltd. plant in the US has delayed construction timelines by at least two to three months, further complicating the company’s recovery efforts.

Chung also highlighted that Hyundai is lagging behind its rivals in the AI race, calling for collaboration with multiple partners to enhance its technological capabilities. “If we look coldly at reality, leading global companies have already secured a dominant position in this field through investments worth hundreds of trillions of won,” he remarked. “The capabilities we have right now are not yet sufficient.”

To combat this, Hyundai has been proactive in its focus on AI and robotics, launching the Robotics Lab in 2019 and acquiring Boston Dynamics Inc. two years later. The company plans to invest a staggering 125 trillion won in South Korea over the next five years to bolster its AI, robotics, and other emerging technologies.

“As the focus shifts toward physical AI, the value of our moving entities, such as automobiles and robots, and our manufacturing process data will become increasingly rare,” Chung explained. “This is a powerful weapon unique to us that Big Tech companies can’t easily imitate.”

In a bid to advance its autonomous driving capabilities, Motional, a joint venture with parts-maker Aptiv Plc, is gearing up to launch fully driverless Ioniq 5 robotaxis in Las Vegas by the end of this year, according to Vice Chair Chang Jaehoon.

With the automotive landscape shifting rapidly, all eyes will be on Hyundai as it navigates these turbulent waters. The implications of Chung’s warnings resonate not just within Hyundai but throughout the global auto sector, signaling potential challenges for manufacturers worldwide in the coming months.

Stay tuned for updates as we follow this developing story closely.