Hyundai Mobis Co., Ltd. Business Report FY ended Dec. 2019

Financial Overview (Consolidated)

(in billions of won)
FY ended Dec. 31, 2019 FY ended Dec. 31, 2018 Rate of change (%)
Sales 38,048.7 35,149.2 8.25
Operating income 2,359.2 2,024.9 15.51
Net income 2,294.3 1,888.2 21.51

 

Business Developments

<A plan to beef up local management at its entities in China>
-The Company unveiled on November 7, 2019, a new plan to beef up local management at its entities in China. The five China localization strategies for 2020 are going to cover the entire processes at its local bodies from business planning, research and development, production, to quality control. The plan focuses on five elements: localizing core technology development systems, ensuring higher cost competitiveness, creating a local purchasing system, developing a detailed sales strategy, and promoting its technologies locally. The company received orders for USD 150 million (JPY 16.34 billion) in 2015 and over USD 730 million (JPY 79.53 billion) in 2018. However, in 2019, it’s expected to expand the orders to more than USD 800 million (JPY 87.16 million). Hyundai Mobis now plans to win orders for core parts of USD 2.1 billion (JPY 228.8 billion) from global car manufacturers in 2019. When the strategy is successfully implemented, the sales in China will account for about 40%. The company intends to grow its product share in China continuously through the new localization strategy. (From a press release on November 7, 2019)

<5G connected car>
-The Company test-drove its 5G connected car at its proving ground in Seosan, Gyeonggi Province. In August 2018, the company signed a memorandum of understanding (MOU) with a South Korean telecommunication service provider, KT Corporation, regarding the joint development of 5G-based technologies. Based on the agreement, KT built 5G infrastructure in the test course at the end of 2018. Since January 2019, they've been developing real-time navigation update technology and the Cellular Vehicle to X (C-V2X) technology. The car for the recent demonstration is equipped with these two technologies. Therefore, it can use V2P (Vehicle to Pedestrian) communication skills to learn in advance when a pedestrian is crossing the road illegally; V2V (Vehicle-to-Vehicle) communication skills to change driving lanes automatically when a car in front of the vehicle in front stops suddenly or to update navigation map real-time based on road signs; and V2I (Vehicle-to-Infrastructure) communication skills to send data captured by sensors in an autonomous driving car or to create a 5G video streaming. Hyundai Mobis and K.T. are going to utilize 5G network to create a system to monitor autonomous driving cars on public roads remotely. They'll collect and track real-time data from the vehicles and use them to accelerate the development of related technology. (From some releases on October 22, 2019)

<A hydrogen refueling station>
-The Company will operate a hydrogen refueling station at its plant in Chungju, North Chungcheong Province, free of charge to the public. The purpose of the initiative is to expand the use of fuel cell vehicles (FCVs) and the company's green car business. The free hydrogen refueling service starts on June 20, 2019, and continues until the end of December. Hyundai Mobis now can supply 3,000 units of hydrogen fuel cell modules a year at the Chungju Plant. Also, it’s currently expanding the plant in Chungju to raise the production capacity to more than 6,000 units by the end of 2019. (From a press release on June 20, 2019.)

 

<Deep-learning-based image recognition technologies>
-The Company unveiled a plan to achieve deep-learning-based image recognition technologies by the end of 2019, for the first time as a South Korean manufacturer. According to the company, it intends to apply these technologies to front-view camera sensors for autonomous driving cars. Also, to expand the use of the deep-learning technologies in the camera segment, it plans to promote the joint development with Hyundai Motor Company. By doing so, it intends to expand the application of the deep-learning-based image recognition technologies further to 360-degree surround view monitors as well. Hyundai Mobis is actively utilizing its overseas research institutes to become globally competitive in the image recognition technology. In India, it’s developing 3D-based simulators that support AI-based learning and image composition. In Vietnam, it’s assisting the processing of autonomous driving data.Also, as part of its industrial-academic partnership initiatives, the company is now developing a technology to process deep learning data with KAIST, a national university in South Korea. This technology is expected to be established in the first half of 2019. (From a press release on April 1, 2019)

Contracts

-The Company is going to start mass production and shipment of the mid-range front radars and front camera sensors developed by the company for commercial vehicles of Korean automakers in September 2019. The company is going to supply sensors that can combine data collected by radars and camera sensors to support forward collision-avoidance assist (FCA) function. Meeting the safety regulations for commercial vehicles and incorporating future 5G communication-based vehicle control technology are part of the strategy of Hyundai Mobis for securing elemental technologies necessary for next-generation transportation systems such as driverless cargo trucks. (From a press release on August 13, 2019)

 

Business Partnership

-The Company signed a strategic partnership agreement with a US technology company, Velodyne LiDAR, regarding the investment of around USD 50 million. The two companies aim at launching the mass production of level-3 autonomous driving vehicles (conditional autonomous driving vehicles) and LiDAR systems to enter the Asian market, including South Korea, in 2021. It also plans to expand the market to North America and Europe. Velodyne LiDAR is going to provide the latest LiDAR sensors to Hyundai Mobis. Using this LiDAR, Hyundai Mobis will collect data and process them with software developed jointly with Hyundai Motor. Then, the processed data will be used to construct an integrated software that can recognize things and obstacles correctly. Hyundai Mobis also plans to develop core sensors needed for autonomous driving, including LiDAR systems, step by step by 2021. (From some releases on October 23, 2019)

-The Company announced a plan to create a strategic alliance with a US high-end audio equipment manufacturer, Krell Industries, to increase its supply of premium car sound systems. Hyundai Mobis is now promoting open collaborations in the area of next-generation vehicle technologies, including autonomous driving and connectivity. The partnership with Krell is one of such initiatives for strengthening the strategic cooperation on premium sound equipment. The Kia K7 Premier released in June 2019 is equipped with Krell’s sound system. The system chosen for the Kia model has 12 speakers (a center speaker, surround speakers, door woofers, and tweeters) and 12 channel amplifiers. (From a press release on June 17, 2019)

-The Company signed a memorandum of understanding (MOU) with a Russian Internet search engine provider, Yandex N.V., regarding the joint development of deep-learning-based autonomous driving cars. Under the agreement, the two companies are going to develop a platform for fully-autonomous driving cars and complete performance tests. The platform will be based on the new Hyundai Sonata. The two companies are also planning to continue the joint initiatives toward the launch of driverless robotic taxi services in 2020. The services will be launched with up to 100 robotic taxis to test the business opportunities and promote global expansion. Also, the scope of the alliance will be extended to a wider variety of segments including the AI and infotainment technologies in the areas of sounds and images in the mid-to-long-term. (From a press release on March 20, 2019)

-The Company is going to make an equity investment of Korean won (KRW) 5.5 billion in a Chinese startup DeepGlint and form a strategic partnership with the AI technology developer. DeepGlint has a technology for recognizing and analyzing facial patterns and this technology can identify the face of one person among 1 billion persons at 50-meters in one second. Hyundai Mobis intends to use DeepGling technology to advance the development in areas of vehicle security authentication and driver status monitoring for example. (From a press release on March 13, 2019)

-The Company and South Korean telecommunication service provider, KT Corporation, announced that they tie up in the development of technologies for connected cars. The two companies have already started the development of real-time navigation-update technology and C-V2X (Cellular Vehicle to X) technology based on KT’s 5G network at Hyundai Mobis’ test driving site in Seosan, Chungnam, with an aim to establish technologies in these fields by the end of 2019. Hyundai Mobis is the first South Korean auto parts manufacturer to collaborate with a telecommunication service provider in developing technologies for connected cars. The two companies plan to expand the partnership in the future to cover the entire field of connected car technologies. (From a press release on January 17, 2019)

 

Business Developments in Korea

-The Company is going to acquire the real estate, product molds, and test equipment of the Daegu factory from its subsidiary Hyundai IHL Co., Ltd. for Korean won (KRW) 83.23 billion (JPY 7.74 billion). Hyundai Mobis plans to position the factory as its new production base. Headquartered in Gyeongju, Gyeongsangbuk-do, Hyundai IHL is a manufacturer of lightings for automakers including Hyundai/Kia Motor, Chrysler, and Subaru. (From a press release on October 24, 2019)

  

R&D Structure

Facility Location
Mabuk R&D Center Yong-in,
Gyeonggi-do,
Korea
Uiwang R&D Center Uiwang,
Gyeonggi-do,
Korea
Shanghai R&D Center Shanghai,
China
Detroit R&D Center Detroit,
US
Frankfurt R&D Center Frankfurt,
Germany
India R&D Center Hyderabad,
India

-The Company has launched an open innovation center, M. Cube, in Shenzhen, China. The M. Cube will look for new investment candidates from start-ups in several areas including autonomous driving, artificial intelligence (AI), robotics, and big data. By creating new partnerships with these new companies, it intends to boost the technical competitiveness of its core component businesses. In November 2018, Hyundai Mobis established its first M. Cube in Silicon Valley, the U.S., and the one in Shenzhen is the second facility for the company. (From several releases on June 6, 2019)

 

R&D Expenditure

(in millions of won)
FY ended Dec. 31, 2019 FY ended Dec. 31, 2018 FY ended Dec. 31, 2017
Amount 965,875 835,006 769,569
% of sales 2.8% 2.4% 2.2%

 

R&D Activities

-In 2018, The Company was awarded 640 new patents for technologies in the areas of autonomous driving, connectivity, vehicle electrification, and other next-generation vehicles. The patented technologies include those for core components such as rear and side radars and intelligent headlamps. In the fiscal year ended in December 2018, the company’s sales of the core components reached Korean won (KRW) 835 billion (JPY 76.82 billion) and accounted for approximately 9% of the entire sales. Hyundai Mobis plans to establish all the elemental technologies for the level-3 autonomous driving (conditional autonomous driving) by 2020. It also plans to complete the development of V2X (vehicle-to-vehicle/road-to-vehicle communication) technologies for fully autonomous driving and technologies for next-generation displays by 2021. (From a press release on June 10, 2019)

-The Company announced has joined with the Massachusetts Institute of Technology (MIT), in its MIT Industrial Liaison Program (ILP). The MIT Industrial Liaison Program (ILP) features a world-class caliber portfolio of core technologies with an annual patent-derived income of KRW 50 billion and a strong network of over 1,700 alumni startups. Known for its leading-edge competency in commercializing advanced concept technologies, the MIT Industrial Liaison Program also has participation from companies such as Hyundai Motor Company, BMW, Samsung, LG, Honda, and Denso. Hyundai Mobis plans to quickly apply the cutting-edge technologies of startups to its vehicle systems through the startup matching services provided by MIT. Hyundai Mobis expects to further accelerate its innovation initiative also through working with M.Cube in Silicon Valley, California, and developing prospective global startups. (From a press release on May 7, 2019)

 

Product Development

M. Vision S concept car capable of fully-autonomous driving
-On Dec. 19, The Company announced that it will exhibit its M. Vision S concept car capable of fully-autonomous driving at CES 2020, a four-day technology show in Las Vegas that starts on January 7, 2020. The M. Vision S concept car is equipped with an abundance of new technologies for the company’s next-generation vehicles, including autonomous driving sensors such as cameras, radars and lidars, communication lighting, virtual space touch, 3D rear lamps and the KRELL premium sound system. The M. Vision S is an advanced version of the M. Vision which was unveiled a year ago at CES 2019. The additional letter “S” stands for “sharable mobility”. Various technologies of Hyundai Mobis are integrated in this model. (From various releases dated December 19, 2019)

A new rear-autonomous emergency braking (R-AEB) technology
-The Company has successfully developed a new rear-autonomous emergency braking (R-AEB) technology using ultra short-range radar (USRR). The new technology is expected to contribute significantly to prevent unexpected backover crashes since it responds faster and has a wider detection range than conventional ultrasound sensors. "Hyundai Mobis has successfully finished validation of performance reliability of the R-AEB equipped with USRR in ride testing," the company said. "We will actively discuss the application and productions of the technology with domestic and foreign automakers," it continued. (From a press release on November 13, 2019)

A new brake system for vehicles with level-4 autonomous driving capacity or higher
-The Company has developed a new brake system for vehicles with level-4 autonomous driving capacity (the cars that can self-operate fully under certain conditions) or higher. The new system has the redundancy to self-activate emergency brake even if regular brake does not operate normally due to a failure of an electrical device or external impact. It has two electronically-controlled braking devices, an ECU for controlling them, and a software control platform. Usually, the two controllers exchange information with each other. However, when the primary controller does not operate normally, the other controller senses this and gives a drive command to the auxiliary device. (From a press release on September 19, 2019)

A new integrated controller for passenger protection functions
-The Company has developed a new integrated controller for passenger protection functions - electric seat belts and airbags. When external cameras and radar sensors detect something dangerous such as an obstacle on the road or a vehicle that stops suddenly, the integrated controller gives a warning to passengers via the vibration of electric seat belts. When a collision is predicted, it automatically activates emergency brake and adjusts electric seat belts to hold the passengers tightly in the seats. If the collision occurs, it activates pretentioners and airbags according to the strength of the impact. Hyundai Mobis is also trying to develop technology to optimally deploy safety devices such as airbags and seat belts according to the position and movement of passengers. The company is currently developing this technology with Hyundai Motor's research center in Namyang. The two companies plan to introduce the technology in mass-production models of South Korean automakers, mainly luxury sedans, in 2021. (From a press release on September 9, 2019)

A camera monitoring system
-The Company has developed a camera monitoring system that will replace side-view mirrors for the first time as a South Korean manufacturer. With this new system, the sensors are mounted replacing conventional side-view mirrors. The sensors capture rear and side views as well as driving conditions and display the obtained information on monitors located inside the vehicle. The camera sensors’ field of view is about 35 degrees, which is more than twice that of the regular side-view mirror. Therefore, the driver can drive safely without having to check blind spots by turning their head. The new system will also make it possible to eliminate noises such as wind noise caused by the side-view mirror. It also reduces air resistance, thereby improving fuel economy as well. (From a press release on July 21, 2019)

An all-new driver state warning (DSW) system
ーThe Company announced that it has successfully developed an all-new driver state warning (DSW) system. This system can analyze facial biometric information accurately to warn drivers of careless driving. The mass production of this system will start in 2021 for mid-to-large-sized commercial vehicles of South Korean automakers. This system can identify drivers from biometric information on facial parts such as eyes, noses, mouths, and ears. It also tracks the movements of their eyes to improve the accuracy in detecting unsafe driving. When it identifies the risk, it draws the attention of the drivers by providing alarming sound, vibration, and such, to prevent accidents. At the beginning of 2019, Hyundai Mobis has established a strategic partnership with a start-up company, Deep Glint. The two companies are considering the launch of the joint development of a deep-learning-based passenger recognition algorithm. Hyundai Mobis intends to integrate deep learning into the driver recognition technology to perform video-based motion analysis and biometric recognition. Also, it uses heart rhythm and voice recognition systems in coordination with biological rhythm sensors to measure the level of the stress and alcohol consumption as well as emotions of passengers. (From a press release on July 15, 2019)

A new fully-autonomous driving vehicle
-The Company unveiled a new fully-autonomous driving vehicle. The company developed this model jointly with Yandex, the largest Internet portal service provider in Russia. They plan to test drive the car in Moscow, Russia, in the future. Also, by the end of 2019, the two companies will launch a trial operation of a robotic taxi service across Russia, using 100 units of them. At the end of March 2019, they signed a memorandum of understanding (MOU) on the joint development of the deep-learning-based autonomous driving platform. Since then, they’d been developing the model based on the new Hyundai Sonata. Yandex applied an autonomous driving algorithm to the platform, and Hyundai Mobis mounted sensors and controllers for autonomous driving to ensure the safety of the entire system. (From a press release on July 12, 2019)

Preview Air Suspension Technology
-The Company has developed Preview Air Suspension Technology. This technology automatically adjusts the vehicle height and absorbs road shock by proactively reading the maps of car navigation systems. Using the road information provided by the navigational systems, it activates within 500 meters of a target point on average. For instance, before entering school zones, it slowly lowers the vehicle height for improved view and adjusts suspension modes for smoother riding comfort. Also, when crossing windy bridges, it lowers the vehicle height to ensure a stable ride. On the contrary, at railway crossings and speed bumpers, the technology raises the vehicle height to mitigate the impact of the bumps and shocks on vehicles. The company has already completed the verification of the technology on real cars and roads in various driving conditions. It also has a plan to develop another new air suspension technology that combines with the company’s proprietary camera sensors in 2020. (From a press release on Monday, April 29, 2019)

 

Capital Expenditure

(in billions of won)
Projects Purpose of investment FY ended Dec. 31, 2019 FY ending Dec. 31, 2020
(Planned)
Korea
New plant construction, complementary investments Facility improvements to improve capacity utilization rates 1,103.8 1,225.3
Overseas
225.9 366.9

 

Investment in Korea

-The Company celebrated the construction launch of a new plant in the Ulsan Metropolitan City on August 28, 2019. The new Ulsan plant will be built on a site of 150,000 square meters with a capital investment of KRW 300 billion (JPY 26.1 billion). It will produce core components for electric vehicles (EVs) such as front and rear-wheel drive motors, inverter modules, battery systems, and integrated products of converters and bi-directional chargers. The production launch is scheduled in 2021, and the company plans to produce the components for 100,000 vehicles per year. The company intends to meet the demand for components for vehicles based on the Hyundai EV platform, E-GMP. Also, in the mid-to-long-term, the company will promote export to global automakers. The plant in Ulsan is the second eco-friendly vehicle components production site for the company, following the one in Chungju-si, Chungcheongbuk-do. The new Ulsan Plant, located approximately 15 kilometers away from Hyundai's Ulsan plant, is also expected to make the company's supply chain more efficient. (From various releases on August 28, 2019)

-The Company began the construction of its second hydraulic fuel cell plant in Chungju at the end of 2018. Upon completion, the new plant can allow the company to expand its hydraulic fuel cell system production capacity by 13 times to 40,000 units in 2022 from current 3,000 units per year. (From a press release on February 13, 2019)