Rolling Chassis Contract Sets Record

South Korean supplier Hyundai Mobis says its long-term contract with Chrysler Group in the U.S. to provide rolling chassis for Jeep models beginning in 2006 is the largest volume parts order ever signed by a Korean automotive company.

The contract is worth 180 billion won ($154 million) annually.

Chrysler announced its supplier selection for the new Toledo, OH, plant in August. Construction is set to begin this fall.

Hyundai Mobis reportedly will spend 35 billion won ($30 million), beginning this year, to build a 200,000-sq.-ft. (18,580-sq.-m) module-production facility at the plant site.

The painted vehicle body and chassis module will be sent on conveyor lines directly into the final assembly building, where all other vehicle components will be added.

“It is a great achievement for our business abroad,” Lee Yeo-sung, who heads Hyundai Mobis' overseas operations, says of the Chrysler contract. “We will make further efforts to sell our products to other global car makers and will steadily expand in the global parts market.”

The module — a chassis frame equipped with major components such as an engine and transmission — currently generates more than half of Hyundai Mobis' revenue. In the year's first half, the company's module sales grew 20.7% compared with like-2003 to 2.21 trillion won ($1.9 billion).

Lee tells Korean journalists the company's exports this year are expected to increase by 57%, to $1.15 billion, from 2003 and that the supplier intends to become one of the world's top 10 parts makers by 2010.

Hyundai Mobis' net profit in the first six months reportedly rose 34.8% to 359 billion won ($308 million) on sales of 3.89 trillion won ($3.3 billion) as its two largest customers, Hyundai Motor Co. Ltd. and Kia Motors Corp., continued robust sales overseas.

In March, Mobis announced a plan to invest 187.3 billion won ($161 million) to build a plant in Slovakia, following Kia's decision to build a production base there.

“We will increase our production overseas in line with expansion plans at Hyundai and Kia,” Hyundai Mobis Chairman Park Jeong-in said at the time.

Meanwhile, Dana Corp., which is based in Toledo and pioneered the rolling chassis in 1998 for DaimlerChrysler Corp. for the Brazil-built Dodge Dakota pickup, bid for the new Toledo Jeep program, says Dana CEO Mike Burns.

“You win some, you lose some,” shrugs Burns. Dana supplied the Dakota's rolling chassis in Brazil until 2000, when the program was canceled. “It's not as if we have a corner on the expertise,” Burns tells Ward's. “In effect, I think you will find it's more the accumulation of parts and putting them together.”

Burns says he understands Hyundai Mobis has logistics expertise that will be valuable in the program. He says he's not sure if Dana will supply components for the upcoming Jeep, such as axles or frames, because many contracts have yet to be awarded.

If the Toledo strategy is a success, Burns says additional rolling-chassis programs may arise in the future. “If we see more of it, are we (Dana) capable of doing it? Yes,” he says. “Might we have to beef up some of our logistics capability or find a partner who may have more expertise from a logistics standpoint? Possibly so.”