Hyundai Motor Company. June 2013 Investor Presentation

Hyundai Motor CompanyInvestor Presentation June 2013

1

Table of Contents

1. Executive Summary

2. Key Strengths for HMC

3. Future Strategies

4. Market Update by Region

Appendix

1. Executive Summary

3

Executive Summary

Balanced Sales Growth

and Diversified Portfolio

Strong Performance

through the Cycle

Structural Improvement in

Core Competitiveness

Superior Performance Relative to

Peer Groups

Volume Growth

Value Growth

Cost StructureImprovement

Green Car

Current Outstanding Performance Prudent Future Strategies

2. Key Strengths for HMC

5

Strong Performance Through the Cycle

3.9%4.0%

5.1% 5.1%

5.4%

5.7%

2007 2008 2009 2010 2011 2012

7% 6%

(7)%

7% 8% 11%9% 9%

(5)%

9%

19%24%

2007 2008 2009 2010 2011 2012

Automaker Value Growth HMC Value Growth

2,603 2,6543,239

3,7014,099

4,392

2007 2008 2009 2010 2011 2012

Steady Growth in Global Sales1

(Unit:: 1,000 vehicles)… and Strengthening Global Market Share

1. Retail sales excluding CKD sales2. Interbrand

1

Supported by Relatively Higher Brand value Growth2

than the Industry… and Improving Residual Value of Vehicles

+7.1%

61.7%

45.8%

39.4%

59.8%

59.5%

46.5%

35%

45%

55%

65%

'08 MY '09 MY '10 MY '11 MY '12 MY '13MY

Elantra Sonata Santa Fe

6

Balanced Sales Growth through Global Manufacturing Plants

(Unit: 1,000 vehicles)2012 May (YTD) 2013 May (YTD)

Turkey PlantIndia PlantChina PlantUS Plant Czech Plant Russia Plant

US

296293

Korea

270268

EU

169188

Middle East and Africa

213210

India

151156

China

416307

LatAm

149102

Worldwide (YTD)

‘12 May ‘13 May

1,757 1,897

7 manufacturing plants ( ), 6 R&D facilities ( ), 14 direct sales subsidiaries ( ), sales in more than 190 countries globally

Source: Company data (Retail sales excluding CKD sales)

2

Brazil Plant

+46%

+7.9%

0.6%

+35%-9.9%

-2.8%

+1.6%

+1.1%

7

Geographically Diversified Portfolio (%)

Balanced Sales Growth by Diversified Business Portfolio

Marketable Product Mix2 (%)

10.9

27.9

31.5

17.5

15.3

18.5

28.2

27.5

14.1 8.2

42.2

25.4

5.0

30.9

25.8

18.0

6.4

46.7

0 20 40 60 80 100

Honda

Toyota

Fiat

VW

Domestic North America Europe Asia Others

1

Source: Company data for HMC 2012 Global Retail Sales, Competitor information from public filings (2012FY Earnings Results)1. Others include 38.0% of Brazil sales2. A+B+C=Compact+Sub-Compact+Mini; D+E+F=Mid-Size+Large+Luxury; RV=SUV+MPV, Others=PUP and others

2

18.9 31.416.7 14.6 18.4Hyundai

1.5

24.0

6.2

45.9

40.1

70.9

61.6

1.2

19.4

18.5

15.6 31.1

34.1

12.8

3.9

13.2

0 20 40 60 80 100

Honda

Toyota

Fiat

VW

A+B+C D+E+F RV Others

18.3 7.555.3 18.9Hyundai

88

Structural Improvement in Core CompetitivenessEnhanced Brand Value is leading sales growth and reduce incentive spending. Subsequently, reduction in incentive is resulting ASP increase and repeated Brand Value improvement.

Source: Auto data/PIN Data, ASP based on actual transaction prices

Structural Improvement

EnhancedBrand Value Sales Growth Reduction in

Incentives ASP Increase

Structural Improvement from US Market

ASP (Sonata, $)

(%)

18,266 3.9

18,019 (1.4)

21,821 21.1

23,148 6.0

22,700 (2.4)

Sales (‘000) M/S (%)

(%) (%pt)

401 (14.0) 3.0 0.1

435 8.3 4.2 1.2

538 23.7 4.6 0.4

646 20.0 5.1 0.5

703 8.8 4.9 (0.2)

US Market Brand Value($ in Billion)

2008 4.8

2009 4.6

2010 5.0

2011 6.0

2012 7.5

Incentive (PNVS, $)

(%)

2,194 20.7

2,506 14.2

1,649 (34.1)

1,005 (39.1)

946 (5.9)

9

3.9%

6.1%

8.8%

10.3% 10.0%

1102.6

1,276.4

1,156.3

1,108.1 1,126.9

2008 2009 2010 2011 2012

HMC OP Margin KRW/USD Avg.

Increased Resilience to FX FluctuationsHMC 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

Source: Company data* Hyundai OP margin for 2008-2009 based on K-GAAP, 2010–2012 based on K-IFRS

(Unit: KRW/USD)

52%59% 59% 60%

70% 70% 72%

48%41% 41% 40%

29% 30% 30% 28%

71%

2005 2006 2007 2008 2009 2010 2011 2012

Korea Domestic & Overseas Plant Sales Export from Korea Plant

3

HMC has implemented hedging, settlement currency diversification and improving export ASP to mitigate impact from FX

10

4,846 4,604 5,0336,005

7,50072

6965

6153

2008 2009 2010 2011 2012

Brand Enhancement

Source: Interbrand, JD Power

Enhancement in Brand Value

US Customer Retention Rate

(Ranks)

(Ranks)(Unit: US$ in Millions)

+9.3%+19.3%

47.0% 47.0%

60.0% 64.0%1311

3 1

2009 2010 2011 2012

3

Highest growth rate among automakers for two consecutive years

In US market, Hyundai achieved the highest retention rate among competitors in 2012

+13.0%p

+4.0%p

Awards and Accolades

+24.9%Date Award Title Region Model(s)

2013.02 ’13 Car of the Year Canada Santafe

2013.02 Rank 1st 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

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

2012.02 Car of the Year U.K. i30

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

2011.12 Family Car of the Year Germany ix20

2011.04 Car of the Year Russia ix35

11

Utilization & InventoryHigh global utilization and low inventory level enables the company to promote value pricing strategy.

HMC Global Utilization Trend HMC Global/US Inventory Trend

Source: Company data/US Autodata

(Unit: %) (Unit: Month of Supply)

1

2

3

4

Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12

Overseas Inventory US Inventory

94.4

89.991.5

100.6

108.4107.4

2007 2008 2009 2010 2011 2012

3

12

Value Pricing StrategyWith value pricing strategy, ASP is keep improving while incentive spending is decreasing.

Average Selling Price (ASP) by Export Market US Incentive Trend(Unit: USD 1,000) (Unit: USD)

Source: Company Data, US Autodata, ASP is based on HMC headquarter results

6

8

10

12

14

16

18

2002 2004 2006 2008 2010 2012

LatAm Middle East and Africa Asia Pacific Total Export

Export ASP CAGR: +6.0%

US$15,000

3

2,427

946

1,804

865

872

2,206

600

1,000

1,400

1,800

2,200

2,600

2006 2008 2010 2012

Hyundai Toyota Honda

13

6.1%

(3.7)%

(0.2)%

1.8%

0.0%

(3.0)%

2.6%

6.9%

5.6%6.2%

5.2%

0.9%2.1%

7.1%

5.7%5.1%

10.0%

4.8%5.5% 6.0%

4.9%

6.3%

8.8%10.3%

Consistent Profitability Relative to PeersHMC has shown the most consistent operating performance relative to competitors during the past few years.

Source: Public FilingsNote: Based on Consolidated Financials, Calendarized Financials for Japanese Firms* Hyundai Financials for 2009 based on K-GAAP, 2010–2012 based on K-IFRS

2009 2010 2011 2012

Consolidated Operating Margin Trend

4

3. Future Strategies

15

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

Volume Growth

Balanced Capacity Expansion and

New Model Launch

Value Growth

Higher ASP and Lower Incentive Driven by

Enhanced Product and Brand Value

Cost Structure Improvement

Higher Cost Competitiveness fromVertical Integration

Green Car

Develop Independent and Distinctive Technology

16

Value Growth – Product CompetitivenessElantra, Sonata, and Santa Fe are experiencing high demand with better specification.

Specification Comparison

Elantra (Compact Sedan)

Sonata (Mid-size Sedan)

Santa Fe (Compact CUV)

1

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

Specification Hyundai Sonata (’10) Toyota Camry (’12) Nissan Altima (’13)


Max. Power 198@6,300 178@6,000 182@6,000


Specification Hyundai Santa Fe (’13) Toyota RAV4 (’13) Chevrolet Equinox (’10)


Max. Power 190@6,300 179@6,000 182@6,700


Source: Company Data

17

Value Growth - Higher ASPTransaction price of major models in US market has improved with structural improvement.

Source: PIN data (Annual average transaction price in US market)

Transaction Price Trend in US Market

Compact Sedan(Unit: USD 1,000)

Mid-size Sedan Compact CUV

26.5

22.3

22.6

23.7

25.4

23.5

2009 2010 2011 2012

Santa Fe RAV4 Equinox

23.5

22.7

23.1

17.6

21.1

22.421.6

22.8

2007 2008 2009 2010 2011 2012

Sonata Camry Accord

19.9

18.0

18.9

15.5

19.6

17.8

15.8

19.318.6

2007 2008 2009 2010 2011 2012

Elantra Corolla Civic

4-Cyl, 2WD

18

Volume GrowthHMC’s global sales will be increased with capacity expansion and by maintaining high utilization rate.

Capacity Expansion and Sales Plan

Source: Company data* Above sales figures are based on shipment** BHMC : Beijing-Hyundai Motor Company / CHMC : Sichuan-Hyundai Motor Company

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

2

19

Cost Structure Improvement (Platform Integration)Platform integration will reduce development cost and realize greater economies of scale per platform.

Platform IntegrationIntegration Schedule Reduction of Model Development Time

No. of Models per Type of Platform Increasing portion of models with integrated platform

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

Avg. of 40 months → 19 months40

33

19

2002 2009 2013

Source: Company Data

Small Mid-size Large Coupe Frame SUV LCV

Mass Production Niche Market

New81%

Old19%

2011 2013 (P)2012

3

New62%

Old38%

New75%

Old25%

20

Green CarHMC independently developed and obtained distinctive technology on HEV system.

Developing Green Cars: HEV

Hybrid Vehicle Strategy Hybrid Vehicle

HEV Performance Comparison

Sonata HEV

Displacement: 2.4ℓ

Max. Power: 206 hp

Mileage: 34 / 40 mpg

Commercial production: 2011 (US & Korea)

Source: Company data

4

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)

Enhancing fuel efficiency

Focusing on HEV system improvement and obtaining distinctive components technology

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

21

Green CarHMC has been chosen to participate in European FCEV demonstration program together with Daimler.

Developing Green Cars: FCEV

Fuel Cell Electric Vehicle FCEV Vehicle

Development Roadmap Assessment of Light-duty FCEV Manufacturers

Tucson ix FCEV

Max. distance: 650 km

Max. speed: 160 km/h

Fuel Efficiency: 31km/ℓ

Commercial production: TBD

Phase 1 (~2006)— Develop

Stack Technology

Phase 2 (2007~2011)— Improve

Performance

Phase 3 (2012~)— Commence

Small Production

Santa Fe FCEV

Tucson FCEV

Fuel Cell Electric Bus

Tucson FCEV (2nd Gen.)

Mohave FCEV

Fuel Cell Electric Bus (2nd Gen.)

Tucson ix FCEV

Source: Company data, Pike Research (August 10, 2011)

69.9 66.7 66.1 65.1

54.4

43.936.8

Daimler Honda Toyota HMC GM Nissan Ford

4

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”

4. Market Update by Region

23

Korea

Source: KAMA, Company data, YTD

Sales and M/S Trend (Retail Sales)(Unit: 1,000 vehicles)

1,464 1,474 1,411

1,490

45.0%46.4% 47.3% 48.0%

2010 2011 2012 2013 May

Industry M/S

161 170 162 55

226 250 231

93

94 77 112

53

177 185 162

69

2010 2011 2012 2013 May

CV RV Med + Large PC Small PC

658682 667

270

Market Strategy

New Model Launch

Maxcruse_Santa Fe Long body (Feb 2013) : Enhance sales volume and model mix with diversifying SUV model

Genesis (2H 2013) : Targeting luxury market with all new model to improve profitability and brand

Corresponding Measures on Increase of Imported Vehicle

Enhanced Credibility

ImprovePremium Image

Expand Diesel Line-up

Test drive for comparison with imported model

Develop options for domestic customers

Diversify product line up and Power train

Upgrade and expand sales/service network

Enhasing Diesel Line-up like Avante and Grandeur in domestic market to improve competitiveness

24

United States



11,590 12,778

14,492 15,250

4.6%5.1% 4.9% 4.6%

2010 2011 2012 2013 May

Industry M/S

184251 298

128

229

264 277

103

125

131128

65

2010 2011 2012 2013 MayRV Med + Large PC Small PC

538

646

703

296

Market Strategy

Face Lift Model Launch Equus (March 2013) / Elantra (2H 2012): Enhance the premium

segment volume to improve brand image and keep strong sales trend in non-premium segment by Face lift model

Premium PC Sales

25

China



11,12011,935

12,720 13,860

6.3% 6.2% 6.7% 7.0%

2010 2011 2012 2013 May

Industry M/S

519 472567

269

65 113

117

50

120 154

172

109

2010 2011 2012 2013 MaySUV Mid-size PC Small PC

704740

856

428

Market Strategy

New Model Launch Mistra CF (2H 2013) : Expand model line-up with customized

model to Improve customer profile and brand perception

Dealer Enhancement Plan

600

720

800860

2010 2011 2012 2013(P)Number of Dealers

Focus on improving customer services and brand image

Sonata HEV (2H 2013) : Launch Eco friendly model to enhance brand image

26

Europe

Source: Company data, ACEA, YTD


13,768 13,593 12,528 12,140

2.6%2.9%

3.5% 3.3%

2010 2011 2012 2013 May

Industry M/S

274 258 256

111

80 139 145

57

8

643

1

2010 2011 2012 2013 May

Others RV PC

362

403444

169

Market Strategy

New Model Launch

i10 (2H 2013) : Improve sales volumn by launching A seg model under economic downturn period

Expand Direct Distribution Coverage

Indirect57%

Direct43%

Indirect31% Direct

69%

2011 2012

Direct distribution coverage– As of 2011: UK / Spain / Italy / Norway / Poland

/ Czech (including Slovakia)– Newly established in 2012: Germany / France

Santa Fe Long body (2H 2013) : Enhancing SUV Line-up to improve sales and brand

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

27

India

Source: Source: SIAM, Company data, YTD


2,309 2,430 2,656 2,600

15.4% 15.4% 14.7% 15.3%

2010 2011 2012 2013 May

Industry M/S

357 373 391

167

247 242250

110

2010 2011 2012 2013 May

Export Domestic

604 615641

277

Market Strategy

New Model Launch Santa fe (2H 2013)

i10 (2H 2013)– Entrance to the Indian compact low market– Compete with Maruti Alto

Specification Comparison

Hyundai Eon Maruti Alto

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

28

Other Emerging MarketsAchieving consistent sales volume growth through the years.

Africa-middle East and LatAmSales Breakdown by Major Emerging Markets Sales Volume (000’s) and CAGR (%)

Source: Company Data, 2012 HMC Global Retail Sales (excludes CKD sales)

Korea15.2%

N. Am.19.1%

Europe15.2%

Chindia28.3%

LatAm6.1%

Asia-Pacific 3.8%

Africa-Middle East

11.2%

Turkey 1.1%

Africa-ME

LatAm

82115 128

165 177 185

237258 268

2004 2005 2006 2007 2008 2009 2010 2011 2012

118185 208

253292 316

419448

493

2004 2005 2006 2007 2008 2009 2010 2011 2012

+16%

+20%

Appendix

30

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 Equivalents1 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

31

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

EBITDA1 2,899 2,502

Source: Company filings (K-IFRS Consolidated)1. EBITDA = Operating Profit + Depreciation + Amortization

32

Financial Summary by Division

Source: Company filings (K-IFRS Consolidated)

(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%

Hyundai Motor Company. June 2013 Investor Presentation

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