Hyundai Motor Company Investor Presentation June 2013
Table of Contents 1. Executive Summary 2. Key Strengths for HMC 3. Future Strategies 4. Market Update by Region Appendix 1
1. Executive Summary
Executive Summary Current Outstanding Performance Prudent Future Strategies Strong Performance through the Cycle Value Growth Balanced Sales Growth and Diversified Portfolio Structural Improvement in Core Competitiveness Volume Growth Cost Structure Improvement Superior Performance Relative to Peer Groups Green Car 3
2. Key Strengths for HMC
1 Strong Performance Through the Cycle Steady Growth in Global Sales 1 (Unit:: 1,000 vehicles) +7.1% and Strengthening Global Market Share 5.7% 2,603 2,654 3,239 3,701 4,099 4,392 5.1% 5.1% 5.4% 3.9% 4.0% 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Supported by Relatively Higher Brand value Growth 2 than the Industry and Improving Residual Value of Vehicles 65% 61.7% 24% 19% 7% 9% 11% 6% 9% 7% 9% 8% (7)% (5)% 2007 2008 2009 2010 2011 2012 Automaker Value Growth HMC Value Growth 55% 45% 35% 59.8% 59.5% 46.5% 45.8% 39.4% '08 MY '09 MY '10 MY '11 MY '12 MY '13MY 1. Retail sales excluding CKD sales 2. Interbrand Elantra Sonata Santa Fe 5
2 Balanced Sales Growth through Global Manufacturing Plants 7 manufacturing plants ( ), 6 R&D facilities ( ), 14 direct sales subsidiaries ( ), sales in more than 190 countries globally 2012 1Q 2013 1Q (Unit: 1,000 vehicles) -10.9% +40% +0.5% 110 98-0.7% EU 181 252 163 164 China 155 154 US Korea +3.4% +7.9% 124 128 Middle East and Africa -4.6% 96 92 India 12 1Q 13 1Q 1,019 1,100 +40% 61 85 LatAm Worldwide US Plant China Plant India Plant Czech Plant Russia Plant Source: Company data (Retail sales excluding CKD sales) Turkey Plant Brazil Plant 6
2 Balanced Sales Growth by Diversified Business Portfolio Geographically Diversified Portfolio (%) Marketable Product Mix 2 (%) Hyundai 16.7 18.9 14.6 31.4 18.4 Hyundai 55.3 18.3 18.9 7.5 VW 14.1 8.2 30.9 31.5 15.3 VW 61.6 19.4 12.8 6.2 1 Fiat 27.5 25.8 46.7 Fiat 70.9 1.23.9 24.0 Toyota 28.2 25.4 10.9 18.0 17.5 Toyota 40.1 15.6 31.1 13.2 Honda 18.5 42.2 5.0 27.9 6.4 Honda 45.9 18.5 34.1 1.5 0 20 40 60 80 100 0 20 40 60 80 100 Domestic North America Europe Asia Others A+B+C D+E+F RV Others Source: Company data for HMC 2012 Global Retail Sales, Competitor information from public filings (2012FY Earnings Results) 1. Others include 38.0% of Brazil sales 2. A+B+C=Compact+Sub-Compact+Mini; D+E+F=Mid-Size+Large+Luxury; RV=SUV+MPV, Others=PUP and others 7
Structural Improvement in Core Competitiveness Enhanced Brand Value is leading sales growth and reduce incentive spending. Subsequently, reduction in incentive is resulting ASP increase and repeated Brand Value improvement. Structural Improvement from US Market Structural Improvement Enhanced Brand Value Sales Growth Reduction in Incentives ASP Increase US Market Brand Value ($ in Billion) Sales ( 000) M/S (%) (%) (%pt) Incentive (PNVS, $) (%) ASP (Sonata, $) (%) 2008 4.8 401 (14.0) 3.0 0.1 2,194 20.7 18,266 3.9 2009 4.6 435 8.3 4.2 1.2 2,506 14.2 18,019 (1.4) 2010 5.0 538 23.7 4.6 0.4 1,649 (34.1) 21,821 21.1 2011 6.0 646 20.0 5.1 0.5 1,005 (39.1) 23,148 6.0 2012 7.5 703 8.8 4.9 (0.2) 946 (5.9) 22,700 (2.4) Source: Auto data/pin Data, ASP based on actual transaction prices 8
3 Increased Resilience to FX Fluctuations HMC has reduced its exposure to FX fluctuations and made efforts to reduce risk from FX fluctuations Portion of Exports from Korea Plant OP Margin & KRW/USD Exchange Rate Trend (Unit: KRW/USD) 1,276.4 48% 41% 41% 40% 29% 30% 30% 28% 1102.6 1,156.3 1,108.1 1,126.9 10.3% 10.0% 8.8% 52% 59% 59% 60% 71% 70% 70% 72% 3.9% 6.1% 2005 2006 2007 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Korea Domestic & Overseas Plant Sales Export from Korea Plant HMC OP Margin KRW/USD Avg. HMC has implemented hedging, settlement currency diversification and improving export ASP to mitigate impact from FX Source: Company data * Hyundai OP margin for 2008-2009 based on K-GAAP, 2010 2012 based on K-IFRS 9
3 Brand Enhancement Enhancement in Brand Value Awards and Accolades (Unit: US$ in Millions) 72 69 4,846 4,604 +9.3% 65 5,033 +19.3% 61 6,005 +24.9% 53 7,500 (Ranks) Date Award Title Region Model(s) 2013.02 13 Car of the Year Canada Santafe 2013.02 Rank 1 st in VDS mid-size segment U.S. Sonata 2013.01 Future Auto Award 2013 Germany Ix35 FCEV 2012.11 Car of the Year 2013 Brazil HB20 2012.08 Car Buyer Car of the Year 2012 U.K. i30 2008 2009 2010 2011 2012 Highest growth rate among automakers for two consecutive years US Customer Retention Rate +4.0%p 3 1 +13.0%p (Ranks) 2012.07 Company Car of the Year Germany i40 2012.04 Car of the Year Russia Solaris 2012.03 Best Auto 2011 Russia Solaris 2012.03 Best Value in America U.S. Accent, Elantra, Coupe and Tucson 13 11 60.0% 64.0% 2012.02 Car of the Year U.K. i30 47.0% 47.0% 2012.02 Carmaker of the Year U.K. Hyundai 2012.01 Car of the Year China Sonata 2012.01 12 N. American Car of the Year U.S. Elantra 2009 2010 2011 2012 In US market, Hyundai achieved the highest retention rate among competitors in 2012 Source: Interbrand, JD Power 2011.12 Family Car of the Year Germany ix20 2011.04 Car of the Year Russia ix35 10
3 Utilization & Inventory High global utilization and low inventory level enables the company to promote value pricing strategy. HMC Global Utilization Trend (Unit: %) HMC Global/US Inventory Trend (Unit: Month of Supply) 4 107.4 108.4 100.6 3 94.4 89.9 91.5 2 1 2007 2008 2009 2010 2011 2012 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Overseas Inventory US Inventory Source: Company data/us Autodata 11
3 Value Pricing Strategy With value pricing strategy, ASP is keep improving while incentive spending is decreasing. Average Selling Price (ASP) by Export Market (Unit: USD 1,000) US Incentive Trend (Unit: USD) 18 16 US$15,000 Export ASP CAGR: +6.0% 2,600 2,200 2,427 2,206 14 1,800 1,804 12 1,400 10 8 1,000 872 946 865 6 2002 2004 2006 2008 2010 2012 600 2006 2008 2010 2012 LatAm Middle East and Africa Asia Pacific Total Export Hyundai Toyota Honda Source: Company Data, US Autodata, ASP is based on HMC headquarter results 12
4 Consistent Profitability Relative to Peers HMC has shown the most consistent operating performance relative to competitors during the past few years. Consolidated Operating Margin Trend 10.3% 10.0% 8.8% 6.1% 4.8% 6.9% 5.5% 5.6% 7.1% 6.0% 6.2% 5.7% 4.9% 5.2% 5.1% 6.3% 2.6% 0.9% 2.1% 1.8% 0.0% (0.2)% (3.7)% (3.0)% 2009 2010 2011 2012 Source: Public Filings Note: Based on Consolidated Financials, Calendarized Financials for Japanese Firms * Hyundai Financials for 2009 based on K-GAAP, 2010 2012 based on K-IFRS 13
3. Future Strategies
Sustainable Success Going Forward Key Strategy for Ongoing Growth in Earnings Consistent revenue growth and enhanced profitability to be achieved through structural improvement in product/brand value, balanced capacity expansion and cost structure improvement Value Growth Volume Growth Cost Structure Improvement Green Car Higher ASP and Lower Incentive Driven by Enhanced Product and Brand Value Balanced Capacity Expansion and New Model Launch Higher Cost Competitiveness from Vertical Integration Develop Independent and Distinctive Technology 15
1 Value Growth Product Competitiveness Elantra, Sonata, and Santa Fe are experiencing high demand with better specification. Specification Comparison Elantra (Compact Sedan) Specification Hyundai Elantra ( 11) Toyota Corolla ( 09) Honda Civic ( 12) Displacement 1.8L 1.8L 1.8L Max. Power 148@6,500 132@6,000 140@6,300 Mileage 28mpg / 38mpg 26mpg / 34mpg 28mpg / 39mpg Sonata (Mid-size Sedan) Specification Hyundai Sonata ( 10) Toyota Camry ( 12) Nissan Altima ( 13) Displacement 2.4L 2.5L 2.4L Max. Power 198@6,300 178@6,000 182@6,000 Mileage 24mpg / 35mpg 25mpg / 35mpg 27mpg / 38mpg Santa Fe (Compact CUV) Specification Hyundai Santa Fe ( 13) Toyota RAV4 ( 13) Chevrolet Equinox ( 10) Displacement 2.4L 2.5L 2.4L Max. Power 190@6,300 179@6,000 182@6,700 Mileage 21mpg / 29mpg 22mpg / 28mpg 22mpg / 32mpg Source: Company Data 16
Value Growth - Higher ASP Transaction price of major models in US market has improved with structural improvement. Transaction Price Trend in US Market Compact Sedan (Unit: USD 1,000) Mid-size Sedan Compact CUV 19.6 19.9 23.1 23.5 22.7 26.5 18.6 19.3 18.9 21.6 22.8 22.4 25.4 17.8 18.0 21.1 23.5 23.7 15.8 15.5 17.6 22.6 22.3 4-Cyl, 2WD 2007 2008 2009 2010 2011 2012 Elantra Corolla Civic 2007 2008 2009 2010 2011 2012 Sonata Camry Accord 2009 2010 2011 2012 Santa Fe RAV4 Equinox Source: PIN data (Annual average transaction price in US market) 17
2 Volume Growth HMC s global sales will be increased with capacity expansion and by maintaining high utilization rate. Capacity Expansion and Sales Plan Production Capacity Expansion Sales Plan by Plants (Unit: 1,000 Vehicles) 2011 2012 2013 (P) 2012 2013 (P) Chg (%) Korea 1,820 1,870 1,870 1,911 1,850-3.2 US 300 300 370 361 388 +7.4 China (BHMC) 600 900 900 856 970 +13.3 India 600 600 600 641 633-1.3 Turkey 100 100 200 86 89 +3.6 Czech 300 300 300 303 300-1.0 Russia 150 200 200 225 220-2.0 Brazil 150 150 27 150 +452.1 China (CHMC) 60 60 Overseas 2,050 2,550 2,780 2,499 2,810 +12.4 Total 3,870 4,420 4,650 4,410 4,660 +5.7 Source: Company data * Above sales figures are based on shipment ** BHMC : Beijing-Hyundai Motor Company / CHMC : Sichuan-Hyundai Motor Company 18
3 Cost Structure Improvement (Platform Integration) Platform integration will reduce development cost and realize greater economies of scale per platform. Platform Integration Integration Schedule Reduction of Model Development Time 2002 2009 2011 2013 (P) Integrated Platforms 0 6 6 6 Total No. of Platforms 22 18 11 6 Total No. of Models 28 32 36 40 40 Avg. of 40 months 19 months 33 19 2002 2009 2013 No. of Models per Type of Platform Mass Production Niche Market Increasing portion of models with integrated platform 2011 2012 2013 (P) Old 38% New 62% Old 25% New 75% Old 19% New 81% Small Mid-size Large Coupe Frame SUV LCV Source: Company Data 19
4 Green Car HMC independently developed and obtained distinctive technology on HEV system. Developing Green Cars: HEV Hybrid Vehicle Strategy Hybrid Vehicle A Fast Second Company - strategy to quickly become a # 2 player by competing with industry leading players Gradual expansion of HEV applied automotives (mid-size, SUV, heavy vehicles) Sonata HEV Displacement: 2.4l Max. Power: 206 hp Enhancing fuel efficiency Mileage: 34 / 40 mpg Focusing on HEV system improvement and obtaining distinctive components technology Commercial production: 2011 (US & Korea) HEV Performance Comparison Specification Sonata HEV Camry HEV Altima HEV System Power 206 hp 200 hp 198 hp Battery Li-PB 34kW Ni-MH 33kW Ni-MH 30kW Mileage (City/Highway) 36mpg / 40mpg 43mpg / 39mpg 35mpg / 33mpg Motor 30kW (40.2hp) 105kW (141hp) 105kW (141hp) System Parallel System Power Split System Power Split System Source: Company data 20
4 Green Car HMC has been chosen to participate in European FCEV demonstration program together with Daimler. Developing Green Cars: FCEV Fuel Cell Electric Vehicle FCEV Vehicle Assuring FCEV Leading Maker position by demonstration program Commenced production of 1,000 vehicles from 2013 to 2015 Mass production technology in process through independently developed FCEV Stack Technology Tucson ix FCEV Max. distance: 650 km Max. speed: 160 km/h Fuel Efficiency: 31km/l Commercial production: TBD Development Roadmap Assessment of Light-duty FCEV Manufacturers Phase 1 (~2006) Develop Stack Technology Phase 2 (2007~2011) Improve Performance Phase 3 (2012~) Commence Small Production 69.9 66.7 66.1 65.1 54.4 Santa Fe FCEV Tucson FCEV Fuel Cell Electric Bus Tucson FCEV (2 nd Gen.) Mohave FCEV Fuel Cell Electric Bus (2 nd Gen.) Tucson ix FCEV 43.9 36.8 Daimler Honda Toyota HMC GM Nissan Ford Source: Company data, Pike Research (August 10, 2011) 21
4. Market Update by Region
Korea Sales and M/S Trend (Retail Sales) (Unit: 1,000 vehicles) Market Strategy 1,464 1,474 1,411 1,490 New Model Launch Maxcruse_Santa Fe Long body (Feb 2013) : Enhance sales volume and model mix with diversifying SUV model 45.0% 46.4% 47.3% 47.1% Genesis (2H 2013) : Targeting luxury market with all new model to improve profitability and brand 2010 2011 2012 2013 1Q Industry M/S 658 177 94 226 682 667 185 162 77 112 250 231 161 170 162 2010 2011 2012 2013 1Q Small PC Med + Large PC RV CV 153 40 29 54 30 Corresponding Measures on Increase of Imported Vehicle Enhanced Credibility Test drive for comparison with imported model Develop options for domestic customers Improve Premium Image Diversify product line up and Power train Upgrade and expand sales/ service network Expand Diesel Line-up Enhasing Diesel Line-up like Avante and Grandeur in domestic market to improve competitiveness Source: KAMA, Company data 23
United States Sales and M/S Trend (Retail Sales) (Unit: 1,000 vehicles) 11,590 12,778 14,492 15,250 Market Strategy Face Lift Model Launch Equus (March 2013) / Elantra (2H 2012): Enhance Premium segment volume to improve brand image and keep strong sales trend in non-premium segment by Face lift model 4.6% 5.1% 4.9% 4.7% Premium PC Sales 2010 2011 2012 2013 1Q Industry M/S 703 646 128 538 131 125 277 264 229 164 184 251 298 37 59 68 2010 2011 2012 2013 1Q Source: KAMA, Company data Small PC Med + Large PC RV 24
China Sales and M/S Trend (Retail Sales) (Unit: 1,000 vehicles) Market Strategy New Model Launch Mistra CF (2H 2013) : Expand model line-up with customized model to Improve customer profile and brand perception Sonata HEV (2H 2013) : Launch Eco friendly model to enhance brand image Dealer Enhancement Plan 720 800 860 856 600 704 740 172 120 65 154 113 117 519 472 567 261 66 28 167 2010 2011 2012 2013(P) Number of Dealers 2010 2011 2012 2013 1Q Small PC Mid-size PC SUV Focus on improving customer services and brand image Source: KAMA, Company data 25
Europe Sales and M/S Trend (Retail Sales) (Unit: 1,000 vehicles) 13,768 13,593 2.6% 2.9% 12,528 12,140 3.5% 3.2% 2010 2011 2012 2013 1Q 362 403 Industry M/S 444 Market Strategy Strategy to overcome the economic crisis Focus on qualitative growth over quantitative growth 5 major plan for qualitative growth Brand enhancement / improve product competitiveness / penetrate true fleet market / improve dealer network / strengthen services New Model Launch i10 (2H 2013) : Improve sales volumn by launching A seg model under economic downturn period Santa Fe Long body (2H 2013) : Enhancing SUV Line-up to improve sales and brand Expand Direct Distribution Coverage 2011 2012 Indirect 57% Direct 43% Indirect 31% Direct 69% 97 Direct distribution coverage As of 2011: UK / Spain / Italy / Norway / Poland / Czech (including Slovakia) Newly established in 2012: Germany / France Source: Company data, ACEA 26
India Sales and M/S Trend (Retail Sales) (Unit: 1,000 vehicles) 2,309 2,430 2,656 15.4% 15.4% 14.7% 3,000 20.0% Market Strategy New Model Launch Santa fe (2H 2013) i10 (2H 2013) Entrance to the Indian compact low market Compete with Maruti Alto 2010 2011 2012 2013 1Q Specification Comparison Industry M/S 604 615 641 247 242 250 Hyundai Eon Maruti Alto 357 373 391 163 61 102 Displacement 800cc 800cc Max. Power 56ps / 5,500rpm 47ps / 6,200rpm Mileage 21.1km/l 19.7km/l MSRP U$ 5,500 ~ 7,800 U$ 5,100 ~ 6,100 2010 2011 2012 2013 1Q Domestic Export Source: Source: SIAM, Company data 27
Other Emerging Markets Achieving consistent sales volume growth through the years. Africa-middle East and LatAm Sales Breakdown by Major Emerging Markets Sales Volume (000 s) and CAGR (%) Africa-ME +20% Asia-Pacific 3.8% LatAm 6.1% Turkey 1.1% 118 185 208 253 292 316 419 448 493 Africa-Middle East 11.2% Korea 15.2% 2004 2005 2006 2007 2008 2009 2010 2011 2012 LatAm Chindia 28.3% Europe 15.2% N. Am. 19.1% 82 115 128 165 177 185 237 258 +16% 268 Source: Company Data, 2012 HMC Global Retail Sales (excludes CKD sales) 2004 2005 2006 2007 2008 2009 2010 2011 2012 28
Appendix
Balance Sheet (K-IFRS Consolidated) (KRW in Billions) 2012 2013 1Q Change Assets 121,538 125,050 3,512 Current Assets 54,848 55,564 716 Cash and Cash Equivalents 1 19,143 19,861 717 Liabilities 73,620 75,344 1,723 Current Liabilities 32,836 33,156 320 Short and Long-term Debt 45,207 46,003 796 Provision 7,009 7,286 277 Equity 47,918 49,706 1,789 Current Ratio(%) 167.0 % 167.6 % Debt/Equity (%) 94.3 % 92.6 % Net Debt 26,064 26,143 Source: Company filings (K-IFRS Consolidated) 1. Cash and Cash Equivalents = Cash + Short-term Financial Instruments 30
Income Statement (K-IFRS Consolidated) (KRW in Billions) 2012 1Q 2013 1Q Growth Revenue 20,165 21,367 6.0 % Gross Profit 4,640 4,704 1.4 % Margin (%) 23.0 % 22.0 % SG&A 2,548 2,836 11.3 % Portion (%) 12.6 % 13.3 % Operating Profit 2,092 1,869 10.7 % Margin (%) 10.4 % 8.7 % Recurring Profit 3,150 2,744 12.9 % Margin (%) 15.6 % 12.8 % Net Income 2,453 2,088 14.9 % Margin (%) 12.2 % 9.8 % Depreciation 409 433 Amortization 207 201 EBITDA 1 2,899 2,502 Source: Company filings (K-IFRS Consolidated) 1. EBITDA = Operating Profit + Depreciation + Amortization 31
Financial Summary by Division (KRW in Billions) 2012 1Q 2013 1Q Growth Sales Revenue 20,165 21,367 6.0 % Automotive 17,249 17,663 2.4 % Finance 2,082 2,433 16.8 % Other 834 1,271 52.5 % Operating Profit 2,092 1,869 10.7 % Automotive 1,905 1,501 21.2 % Finance 371 295 20.5 % Other 40 81 103.2 % Consolidation Adjustment 224 8 95.9% Source: Company filings (K-IFRS Consolidated) 32