Alabama Starts Hyundai Mobis' Expansion

The all-new Hyundai Mobis plant in Montgomery, AL, has completed its pilot runs and now stands ready to supply Hyundai Motor Co. Ltd.'s nearby new plant with an array of parts and modules needed in producing 150,000 '06 Sonatas annually.

The Hyundai Motor assembly plant celebrated its grand opening May 20. Mobis is supplying the car plant with front- and rear- chassis modules, cockpits, airbag systems, bumpers and door-trim packages.

At Hyundai Motor's South Korean plant in Asan, Mobis supplies the '06 Sonata with the same equipment, plus front-end modules and audio systems. Next year's throughput will be increased at the 118,116-sq.-ft. (36,000-sq.-m) Mobis Montgomery plant to also supply the next-generation Hyundai Santa Fe cross/utility vehicle.

The supplier can ship modules and systems for a combination of 300,000 units annually of both vehicles, says Sookyung Jung, Hyundai Mobis deputy general manager-automotive technical planning.

In addition to being Mobis' first module plant in North America, the Montgomery operation signals the start of a new “globalization phase” that follows the conquest of the South Korean market, Jung says.

Mobis has seen considerable growth since 1999, when it became a full-fledged auto supplier, and Jung acknowledges the Korean market pretty much is topped out. The supplier now relies on new overseas operations to expand, he says.

Starting with a sales base of just $300 million in 1999, the company realized a $1 billion increase (or better) in revenue in each of the five successive years. In 2004, it saw record sales of $6.4 billion. The forecast for 2005 is $6.8 billion.

Having squeezed enormous benefits from the domestic market, where Mobis provides more than 90% of its output to Hyundai and Kia Motor Corp., the Tier 1 supplier now looks to overseas operations to support growth.

Jung says Hyundai and Kia are enjoying global expansion and Mobis wants to do the same. The three companies are intricately related. Mobis is the biggest single shareowner in Hyundai, holding a 14.6% stake. Kia owns 18.34% of Mobis and Hyundai owns 37.33% of Kia.

Mobis' first overseas module plants were established in China. The Montgomery plant is the second major undertaking, and a rolling-chassis plant to supply the Chrysler Group in Toledo, OH, will be its third and is scheduled to come online in July 2006.

Another module facility is being constructed in Turkey, with completion targeted for November. Work also has begun on a module plant to supply Kia in Slovakia, with completion targeted for December 2006. Another module plant will be built in India, with startup set for December 2007.

Additionally, Hyundai Mobis will increase substantially its base in China this year, Jung says. Plans call for expanding its module plant in Jiangu that supplies the Dong Feng Yueda-Kia joint ventures.

A module plant in Beijing that supplies Beijing Hyundai Motor Co. Ltd. also will be expanded. And in 2006, a new module plant will be built in Jiangsu.

While Mobis supplied some 300,000 modules in China in 2004, that number will spike to 500,000 this year, Jung forecasts. Once the new Jiangsu plant comes online, production of modules in China should exceed 600,000 units, he says.

Jung does not project an increase for module production in South Korea but says output will keep pace with Hyundai and Kia vehicle sales.

In 2004, the company produced more than 5 million modules. These include 2.2 million sets of front and rear modules, 300,000 full-chassis or “rolling chassis” modules, 2 million cockpit modules and 600,000 front-end modules.

The revenue impact of the new overseas module plants is seen in projections made recently by Park Jeong-in, president of Hyundai Mobis. He says in published reports he expects annual sales for 2006 to reach 9 trillion won ($9 billion), with 2007 sales exceeding 10 trillion won ($10 billion).

That would represent year-over-year annual sales growth of 33% and 11%, respectively. The robust sales growth trend of $1 billion or more annually will be restored if the numbers prove true.

Of Mobis' current sales, about 65% comes from modules and approximately 35% is generated from afterservice parts. A small amount is garnered from exports.

Currently, the company is concentrating on four types of modules: chassis for front and rear applications; (rolling) full-chassis for framed vehicles; cockpits and front-end and electronic driver-information system modules.

The driver-information system modules are a new undertaking, integrating audio/visual, telematics, global navigation, speedometer and odometer and engine performance.

The modules are wireless and satellite-linked for cell-phone access, enabling an owner to check on the security of his vehicle from anywhere in the world.

Jung says the new electronic modules will be supplied to Hyundai and Kia this year but declines to identify the vehicle models involved. Published reports in the South Korean press identify one as the new Kia Carnival minivan, but Kia declines to confirm this.

“We have 100% function check of every module prior to delivery,” Jung says. “Our modules have a very favorable impact on vehicle quality. The cost savings for our customers is very big, but the amount depends on the platform.”

For the Kia Sorento, the cost savings is considerable. Mobis supplies the vehicle with a full-chassis module, cockpit, airbag system, antilock brake system and audio system — about 40% of total content.

The company produces complete rolling modules at its plant in Yongin, just south of Seoul, for just-in-time delivery to the nearby Sorento plant. The full-chassis module includes more than 350 parts and components including the engine, transmission, steering, driveline, axles and suspension/braking systems.

Jung says Mobis now has seven module plants in South Korea. In addition to Hyundai and Kia, the company provides parts to Ssangyong Motor Co. Ltd. and is actively seeking others. It also exports parts to DaimlerChrysler AG, General Motors Corp, Ford Motor Co.'s Land Rover brand and to Mitsubishi Motors Corp.

Meanwhile, Mobis has developed an advance head-up display (HUD) driver information system that projects 3-dimensional data on the windshield. Jung says customers currently are evaluating the product.

Also undergoing customer testing is a tire-pressure monitoring system that keeps the driver advised of pressure in all tires. Such systems become mandatory in the U.S. in 2006, and Jung says the global market for the product is projected at about $3 billion.