Hyundai Motor Company Annual Report 2004 Constant Accelerating Climbing Motion! Hyundai A Company in Motion Table of Contents 03_ Letter from the Chairman Motion is 05_ Letter from the Vice Chairman 09_ Financial Highlights OurBusiness 11_ Brands/Awards At Hyundai, we are in the business of creating high quality 25_ Full Line up vehicles that meet peoples’ basic needs for mobility thereby 27_ Global Report enriching their lives. Hyundai as a company is also in motion. 43_ Concept Cars We are steadily getting closer to realizing our dream of 45_ Sports Marketing becoming one of the world’s best automakers by continuing 47_ Sustainability to develop innovative technologies that are benchmarks in 51_ Environmental Management the industry. At the same time, we are proving to be a sound 53_ Social Contributions financial investment by posting record sales increases 55_ Hyundai Motor Company Worldwide worldwide. We are a company on the move. 59_ Financial Statements We are a company in motion. Letter from the Chairman Hyundai Motor Company Annual Report 2004_04 What we’re driving towards... Hyundai Motor Company is at a dynamic stage in our quest to become the world’s leading automaker. We have made massive inroads in quality and our automobiles now rank highly in notable critics choice awards. Our sales have increased across the globe because discerning car buyers have come to accept that the Hyundai brand is synonymous with high quality. It is a quality that now speaks for itself, as we have proven to pro- duce a dependable, reliable, safe, and efficient automobile. We’ve got it right, and people know it! We’ve become a refined and con- fident company that is attracting independent individuals of a similar nature; individuals who pride themselves on possessing these same strong characteristics. We are constantly working and innovating to further improve our high quality standards, and develop classy, elegant and lux- urious automobiles that rival the current industry leaders. Our current line-up exemplifies and delivers this passion for independence and free- dom. We want you to drive your way, and to live your life as you see fit! Allowing your independence to shine, and for you to be in control of your life is our goal. Just like you, it’s what is inside of us that is driving us ~ an inner quality, and strength of character that just won’t give up! Chung Mong-Koo Chairman and CEO Letter from the Vice Chairman Hyundai Motor Company Annual Report 2004_06 The year 2004 was one of significant events both These accomplishments were the result of our large and small. With unstable oil prices in the efforts to increase our market share (which we global market and the continuing depreciation of did by 2.6 percent) through the launching of our the dollar, the overall economic environment in new model, the NF Sonata, as well as the remar- Korea deteriorated, and thus, the domestic mar- keting of our flagship models, the Santa Fe and ket this year was slow. Elantra. We have the flexibility to rapidly adjust to changing overseas markets as well, as evi- However, we at Hyundai Motor Company denced by our export of 1.127 million vehicles achieved solid financial results by selling 1.68 mil- this year. This corresponds to an increase of 11.4 lion vehicles and recording sales of US$26.3 bil- percent on imports over last year. As you can see, lion/27.5 trillion Korean Won, thanks in large we are continually enhancing our brand value in measure to the support and confidence you, our overseas markets. esteemed shareholders, have placed in the cur- rent management team. We will use this enhanced brand value to pro- mote high-end vehicles in the American market. Our efforts to make the most of overseas markets In the European market, we plan on launching paid off. Export sales increased by 2 percent new models. In India and China, which we con- overall this year, including a considerable boost sider to be regions with great potential, we have of 10 percent in countries where we are actively devoted ourselves to localized management, marketing, such as the United States. This more making it possible to increase our production than makes up for domestic losses of 13.2 percent capacity in those emerging markets very quickly, The ‘Yeas’ have it... in sales. as local demand dictates. The Motion is Unanimous Last year, Hyundai Motor Company recorded a Our product quality, the basic element of mar- profit of US$2.39 billion/2.5 trillion Korean Won keting, has been highly evaluated by authorita- with a net profit of US$1.72 billion/1.8 trillion tive foreign agencies and media. According to Won. These demonstrate an increase of 6.0 per- the Initial Quality Survey conducted by J.D. cent and 2.0 percent respectively, compared with Power and Associates in the United States, the the previous year. We also improved the debt Sonata was ranked Number One among ratio and debt loan ratio from 94.0 percent and mid-sized cars. Also, it was gratifying to see that 20.7 percent to 82.5 percent and 13.6 percent the Hyundai XG, Sonata, and Santa Fe were all respectively. Because of the sharp rise in the cost recommended by the most influential consumer of raw materials this year, coupled with the products review magazine in the United States. won-dollar revaluation, our operating profits decreased slightly. However, our efficient man- We passed a major milestone this year when our agement, including our subsidiary operators, cumulative export total surpassed the 10 million reduced the total financial expenses of the com- mark — a remarkable achievement in just 28 pany. years. Our very first domestic model, the Pony, Letter from Vice Chairman Hyundai Motor Company Annual Report 2004_08 made its global debut in 1976 when we shipped During this coming fiscal year, we have set man- As you are well aware, attaining aggressive busi- Thus, we will actively execute our global man- six vehicles to Ecuador. We have come a long agement goals of selling 2.41 million vehicles, ness goals under adverse market circumstances agement goals by reinforcing the supporting sys- way since then. While it took 22 years to export with corresponding sales figures of US$34.96 such as a sluggish domestic economic environ- tem focused on export, securing the foundation our first five million vehicles, we doubled that billion/36.5 trillion Won. These figures repre- ment and overheated, incentive-driven overseas of overseas production bases, and reinforcing the number in just five and a half years. Hyundai sent an increase of 14.6 percent and 12.3 per- markets is not an easy task. However, we will global research and development capabilities. Motor Company currently exports cars to 193 cent respectively. We hope to increase domestic increase our competitiveness by realizing our countries all over the world. sales by 10 percent, and overseas sales by 58 long-term vision and management philosophy, As you are well aware, the unpredictability of the percent. Also, we aim to increase the ratio of increasing profitability through transparent management environment has increased. As a Hyundai Motor Company is leading the world overseas production in order to effectively over- management, considering our shareholders first, result, we will increase profitability by reinforc- to the era of futuristic vehicles. Last year, we come direct and indirect controls in overseas improving quality, and upgrading brand value. ing risk control management and maximizing invested US$95.79 million/100 billion Won for markets, reduce costs, and reinforce the local our shareholders’ interests. In addition, we will the development of our new second generation marketing capabilities. We at Hyundai Motor Company will take advan- recruit and train high caliber employees and fuel cell electric vehicle and hybrid car. Fleet tage of global markets through brand manage- improve management efficiency by ensuring that testing of our hybrid technology got underway We will offset the short-term decrease in profit ment, global management, risk control manage- only appropriately trained personnel are dis- when we donated fifty Click hybrid cars to the rates and expand long-term growth through ment, and people management. patched on overseas assignments. We will perfect Ministry of Environment in Korea for use by the expansion of research and development management, utilizing personnel to enhance our government agencies and civic groups. Our investment and brand value enhancement. We We feel we have already secured the engineering growth potential. goal is towards the mass-production of these will do this with an increase in market share and technological foundation required to vehicles, at an annual rate of 300,000. We have based on the stabilized operation of financial become the number one automaker in the world. We are well aware that these remarkable accom- earmarked an additional US$287.3 million/300 structures. We will maintain the scale of overall Now, we will focus our energy on brand value plishments would not be possible without the billion Won for research in this area prior to investments, similar to those we made last year. enhancement. We will successfully execute our support of you, our valued shareholders. Despite 2010. In addition, we will actively support the devel- global brand strategy by developing the best sell- the unpredictable management environment, opment of next-generation technologies by con- ing cars, improving quality, and communicating we have confidently set high management goals While the difficult global business environment siderably increasing our research and develop- continually with our customers. for this fiscal year in order to return value to you, is expected to continue into this year, we antici- ment investment to 6.2 percent of sales.