insight Kia Motors sustainability report 2008 execution · thinKing about Since 2003, Kia Motors...

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Kia Motors sustainability report 2008insight execution

231, Yang

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Kia M

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TEL: +82.2.3464.5166 E-M

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Kia Motors

sustainability

report

2008

002 I Sustainability Report Framework

004 I Message from the CEO

006 I Stakeholder Participation

007 I Materiality Analysis

012 I Corporate Overview

012 I Global Network

014 I Management Philosophy and Vision

016 I Sustainability Management

020 I Corporate Governance and Board

intro

econoMic value024 I Disclosure on Management Approach

025 I Operating Performance

032 I Financial Highlights

033 I Special Story: Design Management, Global Management

environMental value038 I Disclosure on Management Approach

039 I Environmental Management

040 I Eco-Friendly Product Development

054 I Eco-Friendly Workplace

063 I Environmental Management System

065 I Eco-Friendly Supply Chain Management

069 I Environmental Management Costs

070 I Eco-Friendly Achievements in Domestic Workplace

074 I Special Story: Countering Climate Change

social value078 I Disclosure on Management Approach

079 I Employees

092 I Business Partners

097 I Customers

104 I Community

111 I Special Story: Communicating with Stakeholders

outro112 I Third Party Verification

114 I GRI (G3) / BEST Index

117 I Sustainability Report Committee

thinKing about Since 2003, Kia Motors has published its Sustainability Report for stakeholders annually. With this report, Kia aims to

demonstrate its on-going effort to better its sustainable management practices and report performance in sustainable

development initiatives to stakeholders. Kia Motors strives to fulfill its responsibilities to stakeholders who demand a

company that builds safer and more reliable vehicles while being mindful of the environment and minimizing the impact

of its automobiles. Sustainability Report 2008 provides a thorough analysis of the magnitude of the sustainability

development impact encompassing the areas of economics, the environment and society. With stakeholders’

participation, the sustainability report focuses on the subjects that address their particular interests.

This report outlines major achievements in sustainable development in 2007 with an aim to deliver a clear and accurate

picture of one year’s progress towards being a more sustainable company. Incorporating environmental consciousness

into all facets of product development, from production to logistics to supply chain management, Kia Motors continues

to grow as a socially conscious organization as detailed in this report.

RepoRting guidelines

Kia Motors Sustainability Report 2008 is based on the GRI’s* Sustainability Reporting Guidelines

2006 (G3) and BEST Sustainability Reporting Guidelines** from IPS. GRI’s criteria for the contents can

be found in the Outro of Kia Motors Sustainability Report under section “GRI (G3) / BEST Index.”

* GRI: Global Reporting Initiative (www.globalreporting.org)

** The BEST Guideline (BEST Sustainability Reporting Guideline) was jointly developed by the

Ministry of Knowledge Economy(MKE), the Korea Chamber of Commerce and Industry (KCCI),

and the Institute for Industrial Policy Studies (IPS) and provides for five levels of reporting

rigor (Level 1 ~ 5).

RepoRt outline

PuRPOSE _ This report aims to inform stakeholders of the results of sustainability management

from a balanced perspective while providing a thorough internal review of sustainability

management activities over the year. This report also serves to reexamine Kia’s current position and

evaluate future directions.

ACCOuNTING STANDARDS _ Investment and expenditure of environmental and social costs are

approved by the Board of Directors, audit committee and external audit committee according to

financial accounting standards. The report reflects an investment rating system 2004 based on the

investment breakdown by investment type.

CHANGES _ There are no significant changes in standards for reported data from previous reports,

unless otherwise specified.

DOCuMENT VERIFICATION _ This published report is based on the information provided by the

Sustainability Report Committee of Kia Motors and is created to impartially monitor the progress of

sustainable management within the company. This report is also verified by IPS in its report review,

onsite inspection and review of the Materiality Test according to the verification criterion outlined

by the GRI (G3) guideline and BEST guideline.

toMorrowKia Motors is an entity continually evolving to better serve sustainable efforts. During the evolution of this report, there

are bound to be some growing pains such as the lack of thorough overseas business information in last year’s report.

Thus, extensive information has been added about our overseas business to better meet G3 guidelines. To grow

properly, Kia will create certain rules to which it will strictly adhere. At Kia Motors, full disclosure of sustainable

development in a transparent manner is a top priority.

By publishing the Sustainability Report, Kia Motors reflects on its current sustainability management status, looks back

to find ways in which to improve and looks forward to identify innovative solutions to better serve sustainable efforts as

a responsible corporate citizen.

scope of the RepoRt

THE REPORTING PERIOD AND SCOPE _ The report covers the period between 2005 and 2007. To

accurately depict the quantitative performance, the past three years of data were collected

(environmental data in year zero (2003) + every three years). Qualitative results from the 2007

achievements in this report have also been assessed. The reporting year coincides with the

company’s fiscal year that ends on December 31st of each year. This report’s monetary denomination

is based on Korean currency, the Korean won. All quantitative data is based on ton (t), kilogram (kg),

kilometer (km), square meter (m2), kilowatt (kW), and all other units are listed with their numerical

values.

REPORT TARGETS _ This report covers Kia Motors, subsidiaries of Kia Motors and joint overseas

corporations. Domestic facilities covered include Kia headquarters, Sohari, Hwaseong and Gwangju

plants, R&D Headquarters and Customer Service Centers. Additionally, overseas facilities covered

include Dongfeng Yueda Kia Motors, Kia Motors Slovakia plant, overseas technology research

centers and other overseas subsidiaries.

The 2008 report improved upon last year’s report by improving data collection methods and

filling in data gaps of overseas business activity.

REPORT PuBlICATION SCHEDulE _ The English version of the Sustainability Report 2008 was

published on June 5th of 2008, and The Korean version was published on March 21st of 2008 and

distributed at the general shareholders meeting. The Sustainability Report is published yearly, and

this is its 6th edition.

foR moRe infoRmation

Additional information can be found through the Internet and the Sustainability Management

Team of Kia Motors.

FOR MORE INFORMATION ABOuT KIA MOTORS, VISIT www.kia.co.kr or www.kmcir.com/eng/index.

aspx

TO VIEW THIS REPORT ONlINE, SEE englishdart.fss.or.kr (Repository of Korea’s Corporate Filing) or

www.kmcir.com/eng/index.aspx (Kia Motors website)

CONTACT: Sustainability Management Team, Planning Division of Kia Motors

TEL: +82. 2. 3464. 5166 E-Mail: [email protected] / [email protected]

Despite the unstable domestic and foreign business environment last year,

Kia Motors continued strengthening its business foundation to prepare for

future growth.

Business that adds economic value

2007 started with the long-term goal of establishing a brand identity unique to Kia

Motors. To that end, a design team was created in 2007 to build a brand identity

that stood above the rest and reflected a coherent design philosophy. Kia also

focused on improving profitability through cost saving measures to build a strong

stable economic foundation for the future. The recently erected production plant in

Slovakia, the second plant in China and new building in European facility allow Kia

to challenge the rapidly changing global market by increasing global production

and sales capacity. These pro-active steps also aid in the efforts to establish a strong

brand presence throughout the world. Kia Motors will leap onto the global stage

while solidly prepared for the future.

Business that pRomotes enviRonmental soundness

Environmental sustainability emerged as a global challenge for 2007. This challenge

fueled the need for eco-friendly cars that not only bolster increased performance

and safety but also feature eco-friendly designs. 2007 also became a year that

accelerated the development of an eco-friendly lineup of cars with technological

features like high fuel efficiency and low greenhouse gas emissions. Kia is especially

pleased to be acknowledged for its untiring effort in bridging automobile

development with environmental sustainability. Last year, Kia Motors was selected

as the third “most environmentally friendly automobile manufacturer” in the

United States, the world’s largest automobile market. Kia Motors was also voted

into the top tier of brands in terms of new car quality in the U.S. and European

markets as well as the domestic market. As an environmentally responsible

company, Kia is combating climate change through the reduction of greenhouse

emissions and hazardous waste material in the production process. Kia Motors

strives to minimize the environmental footprint of its products.

We continue in our pursuit to become

a highly competitive company built on a foundation of trust

with an exemplary track record of sustainable management.

Message froM the ceo04

05

socially ResponsiBle Business

Under the banner “Moving Together with the World,” Kia Motors actively

participates in community outreach and service activities. In 2007, Kia ran social

projects that promoted a culture of motor safety and provided aid to persons with

disabilities. Kia also expanded its employee volunteer service program with

emphasis on community service. The company implemented a structured social

contribution system to materialize the principles of corporate social responsibility. It

also devoted its energies to revitalizing the local business community by providing

tailored help to meet their needs. To bridge the disparity between small- and

medium-sized businesses (SMBs) and large conglomerates, Kia actively partnered

with them to provide support to foster healthy relationships. For example, Kia

ventured into overseas markets as equal partners, provided early business

stabilization support, and conducted technology seminars and R&D Tech days to

bridge the technology gap.

Economic value, environmental soundness, and social responsibility serve as Kia

Motors’ underpinnings of its sustainability efforts. To bring stakeholders’ happiness

and ensure a sustainable future for all, Kia Motors will always treat these three

issues equally and attentively.

As a company founded on trust, Kia Motors will play a crucial role in society as a

model corporate citizen fulfilling its responsibilities. As a highly competitive

company, Kia Motors will emerge as a model of sustainable management for others

to emulate.

We continue in our pursuit to become

a highly competitive company built on a foundation of trust

with an exemplary track record of sustainable management.

nam-hong cho

Kia Motors President and CEO

March 2008

Sustainable management begins with a belief that everyone is part of a community. Kia

Motors is a corporation that is part of a larger business community in which it operates and

shares its responsibility within the community. As such, sustainable management must always

consider the stakeholders in all matters of corporate activity. As the corporation’s size

increases, it becomes easier to lose focus on the people who matter. Through a variety of

communication channels, Kia is able to collect feedback and determine the needs of its

stakeholders. The means by which Kia can keep an open channel of communication with its

stakeholders is demonstrated below.

communication channel with stakeholdeRs

stakeholdeRs’ opinion suRvey on sustainaBility RepoRt 2007

Stakeholder opinions on Kia Motors Sustainability Report 2007, published on March 16th of

2007, helped identify key areas of improvement for the 2008 report. The 2007 report was

divided into six parts consisting of interesting parts, excellent parts, weakest parts, contents,

communication, and overall opinion. After, a sample of 67 stakeholders participated in a

survey to detail opinions expressed in each of those parts.

staKeholder participation

Reader survey Results and 2008 Report improvements

kia motors

shareholders & investors

customers

employees

Business partners

ngos & academia

government

Annual shareholders meeting

Customer satisfaction surveys

Addressing customer complaints

Report committee

Report survey

Seminars, forums, survey participation

Analyzing issues and reaction

Mutual business cooperation

Business partners’ feedback channel

Policymaking participation

sampling of stakeholder survey

• employees: 69%• Business partners: 4%• Customers:6%• sustainability management experts: 19%• miscellaneous: 2%

weak contents

50%

40%

30%

20%

10%

22%

14%

46%

18%

0%

economy environment society product

excellent contents

50%

40%

30%

20%

10%16%

43%

15%

26%

0%

economy environment society product

06

I 1 I Writing a report from a stakeholder’s perspective (with

footnotes to explain jargon)

Technical terms and internal jargon can be often confusing

and misunderstood. Confusion was minimized with the

addition of footnotes and detailed explanations of technical

terms and internal jargon used in the report.

I 2 I Sustainable management vision and objectives

The Materiality Test was applied to evaluate the future

direction of Kia’s sustainable management efforts. Contents

of sustainable management activities were expanded at the

beginning of the report. Also, the company's strategy,

performance status and business management goals in each

section of the report were expounded.

I 3 I labor relations-related issues

An in-depth report of social performance in the social value

section of the sustainability report was also included.

Information related to labor issues will gradually be added.

I 4 I Corporate governance

More detailed information on business ethics and corporate

governance were included.

I 5 I Report contents

The 2008 report cites corporate performance and plans based

on the principle of sustainable management while meeting

the guideline requirements.

I 6 I More balanced report (relatively insufficient data in

sections beside environmental value)

Entries on product development (including environmental

value) and social value that were insufficient in last year’s

report according to the stakeholder survey were also

strengthened.

I 7 I Visually aided report (including graph)

Graphs, information in Tp form and a special story to improve

readability were added.

I 8 I Supplementary information in comparison with other

industries

A report with a more balanced view was produced by adding

external evaluations of the company’s and industry’s

activities.

07

The Sustainability Report must incorporate relevant issues from both the company and its

stakeholders. Kia believes that management activity centered around stakeholders’ interests

is the key to becoming a company that opens the doors to a sustainable future. The

Materiality Test allowed key issues to be identified, which were then used to create strategies

to improve sustainability development. In addition, Kia clearly reported current plans and

activities in response to the Materiality Test in the Kia Motors Sustainability Report 2008.

mateRial issues (2008)

Materiality analysis

• employees: 69%• Business partners: 4%• Customers:6%• sustainability management experts: 19%• miscellaneous: 2%

+– (medium) (high)inteRnal conceRns

sustainaBle management

• StakeholderFeedback

economy

• DomesticandForeignMarketExpansion

• StrengtheningOverseasSales

pRoduct development

• Reusability(Recycling)•EmissionReduction

socially ResponsiBle management

• StableEmployment

• Discrimination-FreeWorkplace(HumanRights)

• WorkplaceSafetyandHealth

• ContributiontotheCommunity

enviRonmental management

• EnvironmentalLawCompliance

• ReductionofHarmfulGasEmissionsintotheEnvironment

• CleanerProductionTechnology

• EnvironmentalCosts(Accounting)


• SustainableManagementPlanning(Results&Goals)

economy

• FinancialPerformance

• BrandValue

pRoduct development

• AlternativeFuelVehicleDevelopment

• ProductSafety


• LaborRelations

• CommunityServiceProjects

• PartnershipSupport

• FairTrade


• ClimateChangeCountermeasures

• EnvironmentalManagementSystem

economic achievement

• ExecutiveLeadership•CorporateGovernance

• BusinessProcessInnovation(Reorganization)

economy

• IndirectEconomicImpact

pRoduct development

• ProductDevelopmentStrategy


• WorkandLifeBalance•EmployeeVolunteerWork

• LeadershipTraining


• EnvironmentalProtection•Eco-friendlyProductAcquisition

• ManagementofTransportationandLogisticsImpact

on Environment


• ManagementPhilosophyandVision

• BusinessEthics

economy

• RiskManagement

pRoduct development

• BetterFuelEconomy


• CustomerSatisfaction(CustomerService)

• WorkandLifeBalance

• EmployeeTraining

• EmployeeWell-being


• ConservationofEnergyandResources

+

–

(med

ium

)(h

igh

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xte

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al c

on

ce

Rn

s

what is the materiality test?

First, materiality should be defined. According to the GRI’s

Sustainability Reporting Guideline, materiality is defined as “the

threshold at which an issue or indicator becomes sufficiently

important that it should be reported.” Simply, the materiality test is

a test to see if an issue or indicator is relevant enough for this report.

Kia Motors defines the relevant issues which must take priority and

identified as high risk and/or high interest to stakeholders. In

addition, Kia Motors employed the IPS Materiality Test ModelTM to

determine the material issues. The IPS Materiality Test ModelTM is a

5-step test model subdivided into internal policies, norms and laws,

stakeholder feedback, industry benchmarks and media research. IPS*

created the IPS Materiality Test ModelTM in December 2006 to test

and derive material issues that match characteristics and present the

condition of each industry.

* One of the functions of IPS is to help form strategies for sustainable development.

test 2 norms and lawstest 3 stakeholder feedbacktest 4 industry Benchmarkstest 5 media Research

high Reporting priority2

4

1

3

ex

teR

na

l c

on

ceR

ns

inteRnal conceRnstest 1 internal policiestest 3 stakeholder feedback

as part of the journey, weathering both the good and bad is expected. sometimes, the journey

requires driving through the rain while hoping for clear skies ahead. kia motors has made it its goal to

not look for short-term gain, but instead focus on steady long-term gain. even in harsh weather, kia

continues to raise brand awareness and make its way towards a brighter future through continuous

investment.

08

continuance

Reaching the destination is not necessarily the goal. sometimes, it’s best to move aside to let others

pass. Because the road is shared, it is only courteous to share with others. these little acts of kindness

gather and are then “paid forward.” in the end, the journey goes faster in the right direction.

kia motors remembers that in all its activities, stakeholder happiness precedes all other priorities.

coexistence

09

along the road, there are a number of other creations that share the same journey. as such, it is im-

portant to clear obstacles for others on the way. when choosing a path wisely, looking back on the

road just traveled provides insight into how their journey is just as precious as one’s own. the dream

of a peaceful relationship between the automobile and the earth is what drives kia motors forward.

10

conservation

ahead of the tunnel there is a light but it does not symbolize the end. the journey continues on and

there are often rainy days. when traveling with others, the journey can slow so as to admire the beau-

ty of the land along the way. kia motors’ aim is not to travel the fastest or the furthest, but rather, it

is to ensure an enjoyable journey for everyone.

11

aspiration

conservation

company intRoduction

Since its establishment in 1944, Kia Motors has led the development of the then infant Korean auto industry and contributed to

building a strong national economy over the past 63 years. In 1975, Kia Motors’ first passenger car, the Brisa, became the first

Korean vehicle to be exported, which opened the floodgates to Korean exports. By 2000, through the establishment of a global

sales network, Kia has laid the groundwork to expand to every corner of the global market.

Domestically, Kia revitalized the local business community by creating employment, purchasing properties and partnering with

businesses to open overseas markets. In addition, Kia worked with local residents to find tailored solutions to each of the local

community’s problems. Through community service, Kia continually seeks ways to co-exist and cooperate with the community.

Kia Motors communicates tirelessly with the community to fulfill its duty as a corporate citizen. With concern for the

environment, Kia dedicates its energies and resources to becoming a part of the sustainable solution. Kia will build an unshakable

trust with customers by creating more value for customers who in turn will help the company grow. Ultimately, Kia Motors will

usher in a brighter sustainable future with its dynamic line-up of vehicles.

company status (as of december 31, 2007)

company Kia Motors

key executives Mong-Koo Chung / Eui-Sun Chung / Nam-Hong Cho

industry Cars and trailer manufacturing

product Cars and auto parts

headquarter 231, Yangjae-dong, Seocho-gu, Seoul, Republic of Korea

established December 11, 1944

total asset 12 trillion and 853.8 billion won

capital 1 trillion and 848.7 billion won

employees 32,977*AdditionalinformationisavailableontheweborEconomicValuesectionofthisreport.

coMpany overview

12

Kia Motors Japan

China Manufacturing Plant (Yancheng, Plant one & two with 3,367 employees)

Dongfeng Yueda Kia

Asia Regional Headquarters (Kuala lumpur, Malaysia)

South Africa Office

Middle East & Africa Regional Headquarters (Dubai, uAE)

Kia Motors Spain

Kia Motors Hungary

Kia Motors Czech s.r.o

Kia Motors Poland

Kia Motors Deutschland (Frankfurt)Kia Motors Ireland

Kia Motors uK ltd.Kia Motors Belgium

Kia Motors France

Kia Motors Austria

Kia Motors Central Europe

Kia Motors Sweden AB

Eastern Europe / CIS Regional Headquarters (Moscow, Russia)

Kia Motors Europe / Kia Motors European R&D Center / Kia Motors European Design Center (Frankfurt, Germany)

Slovakia Manufacturing Plant / Kia Motors Slovakia(Zilina, 300,000 units annual capacity, 2,601 employees)

Kia Motors Australia / Pacific Regional Headquarters

Kia Motors New Zealand

Headquarters – Seoul (32,977 employees, three manufacturing plants, two research facilities,

20 service centers, 340 sales offices)

13

majoR facilities

domestic

R&d Namyang R&D Center, Mabuk R&D Center

production •Sohari Manufacturing Plant: Annual Output 350,000 cars

(Carnival/Sedona and Pride/Rio models)

•Hwaseong Manufacturing Plant: Annual Output 600,000 cars (Sorento, Mohave/

Borrego, Cerato/Spectra, Opirus/Amanti, and Lotze/Optima/Magentis models)

•Gwangju Manufacturing Plant: Annual Output 420,000 cars

(Carens/Rondo and Sportage models, trucks, buses and military vehicles)

sales 17 Regional Offices, 340 Regional Sales Office, 424 Dealerships, 13 Shipping Offices

service 20RegionalServiceCenters,811ServicePartners,252VariousServiceProviders

overseas

R&d U.S. Technical Center, U.S. Design Center, Japan R&D Center, Europe R&D Center and

Europe Design Center

production • China Manufacturing Plant 1 & 2: Annual Capacity 440,000 cars (Rio, Sorento, Optima/

Magentis, Carnival/Sedona, Cerato/Spectra and Sportage models)

• Slovakia Manufacturing Plant: Annual Capacity 300,000 cars

(cee’d and Sportage models)

• Georgia Manufacturing Plant: Annual Capacity 300,000 cars (Under construction)

sales 165 Countries, 17 Subsidiaries, 148 Dealerships, 3,864 Dealers

service Located at Dealerships

Kia Motors Canada (Toronto, Canada)

Kia Motors Technical Center (Ann Arbor, Michigan)

Kia Motors America (Irvine, California)

Kia Motors Design Center (California)

Central & South America Regional Headquarters (Miami, Florida)

u.S. Manufacturing Plant / Kia Motors Manufacturing Georgia(West Point, Georgia / under construction / expected annual capacity of 300,000 cars)

China Manufacturing Plant (Yancheng, Plant one & two with 3,367 employees)

coRpoRate pRoduction

coRpoRate sales

Regional headquaRteRs

Regional offices

otheRs

global networK

innovation for

humanity

aim for the apex of the world

pursuing customer satisfaction

Reforms and challenges

aim for the apex of the world

Kia Motors will become a world-class

brand and overtake the position as the

apex of the global automotive industry.

In addition, Kia will build an ideal

structure that entwines both qualitative

and quantitative growth.

pursuing customer satisfaction

Customer satisfaction is the final goal of

Kia Motors. Trust and confidence is

earned by providing the best

technology, exemplary product quality

and excellent customer service.

Reforms and challenges

Kia will abandon preconceived notions

and practices. The company will find

creative and innovative ideas to pursue

its long-term vision of creating a society

that respects the environment and

humanity. Kia will work to advance a

corporate culture that contributes to the

prosperity of humankind.

ManageMent philosophy

and vision

14

15

management philosophy

The spirit of creative challenge is the underlying mentality and principle at Kia Motors. It is

the driving force behind the continued success of Kia Motors today and is what will allow an

active response to the changing business environment. With this spirit of creative challenge,

Kia hopes to create a rich and bountiful experience for its shareholders, customers,

employees, partners and the community.

Business policy

management confidence

Kia Motors facilitates business activities and increases the effectiveness of management by

fostering a mutual trust between employees and management. Kia believes that strong

confidence formed within the company will strengthen the company’s competitiveness and

organizational culture.

In turn, strong competitiveness and culture will boost operational efficiency, product

quality and customer service. Through strong management confidence, Kia insures worker

productivity, superior products and service, and stronger stakeholder confidence in the

company. In 2007, with the strong backing of its stakeholders, Kia took giant steps toward

becoming a world-class brand and competitor.

worksite management

Kia Motors enhances employee satisfaction and product quality through rapid decision-

making and immediate response to issues or suggestions that may arise in the field.

In 2007, through management of a global network, including regional sales headquarters

and overseas factories, Kia was able to provide early stabilization support and increase sales

capability. As a result, Kia’s ranking in IQS by JD Power and Associates jumped 12 spots from

2006 to 12th place with 125 points.

transparent management

In an effort to achieve sound governance and transparent management, Kia created a Board

of Directors, where the major corporate decisions are made, and established “checks and

balances” of management. To secure transparency of the decision-making process, corporate

governance was institutionalized. Kia Motors’ corporate governance is made up of the Board

of Directors, Audit Committee, Ethics Committee, and the Board Nominating Committee.

In 2006, Kia Motors received public attention due to a lawsuit against its executives for

their dealings with the management of company’s funds. Using this as an opportunity to

reflect, Kia Motors placed stronger re-emphasis on the fairness and transparency of decision-

making processes and proper business ethics.


Kia Motors began sustainability management based on the pressing need for accountibility

for the environment, now and in the future. In the past, the need for a more convenient

mode of transportation was the primary focus that shaped the automobile industry. However,

recent trends reveal the need for eco-friendly alternatives. In the 21st century, expectations

have changed and demand from the automotive industry to develop vehicles that maximize

convenience while minimizing their environmental impact is rising. All companies, regardless

of the industry, must exercise responsibility in generating profit and fairly distributing

revenue while keeping stakeholder interests in mind.

As part of the global automotive industry, Kia Motors proactively practices Environment-

ally Sound & Sustainable Development (ESSD) to fulfill its responsibility as a corporate citizen.

As such, Kia Motors hopes to grow with the community in a responsible manner. To help

achieve this goal, Kia created three models of sustainable development: environmental

management, community outreach and service, and business ethics.

All divisions of Kia Motors recognize the importance of sustainability management. Every

year, each department selects personnel to give a briefing on the current status of Kia in

improving the system one step at a time.

sustainability ManageMent16

sustainaBle development model

Sustainable Management

-Materialization

of Love for Humanity through

Automobiles

Business Ethics

Environmental Management Community Engagement

committee oRganization chaRt

economy

• PlanningOffice•FinanceCenter

pRoduct enviRonment

• Environmental Technology Institute

• Namyang R&D Center

pRoduction enviRonment

• Sohari Manufacturing Plant

• HwaseongManufacturingPlant

• GwangjuManufacturingPlant

• ChinaManufacturingPlant

• SlovakiaManufacturingPlant

• A/SDivision

• Production&DevelopmentDivision

community

• Management Support Division

• Procurement Division

• Domestic Sales Division

• Overseas Sales Division

social ResponsiBility

• Office of Planning & Coordination

• Management Support Division

• Regional Offices

Business ethics

• AuditOffice

Sustainable Management Supervision

-Sustainability

Management Team

sustainaBle development model

environmental management

Kia Motors’ environmental management aims to improve economic value and environmental

sustainability simultaneously. Kia sets environmental management as top priority for

sustainable management and seeks to expand the program. In June 2003, Kia Motors

unveiled a global eco-friendly management initiative called “ECO-GT5 2010”(Top 5 Global

Environmental Automobile Manufacturer by 2010). This initiative has laid a solid foundation

for creating sustainable values as Kia Motors fulfills its economic, environmental and social

responsibilities. ECO-GT5 2010 consists of environmental policy, environmental activity

guidelines, environmental goals, specific objectives, and implementation plans. The

Environmental Activity Guideline is comprised of the three-stage roadmap as shown below.

17

environmental activity

guideline

goals of enviRonmental management

Environmental Management Business Environment (Marketing, A/S, Sales)

Production Environment (Production, Procurement)

Product Environment (R&D)

enviRonmental declaRation

1. Share responsibility for the present

and future.

2. Make efforts in meeting environmental,

economic and social demands.

3. Strive to preserve life, diversity and the

Earth’s beauty.

4. Respect nature, and economic and

social justice.

enviRonmental policies

Concern for the environment is at the core of

Kia’s business management activity. As a global

stakeholder, Kia will do all it can to fulfill its social

and economic responsibilities.

Kia will actively lead the efforts in developing a

strong economy and protecting the environment.

Respect for the environment, present and future, is

what motivates the company.

enviRonmental management opeRation system

Environmental Management Plan Implementation

Environmental Management Strategy and Goals

Environmental Analysis and Performance Evaluation

PlAN DO

CHEC

K

A

CT

Kia MotorsImprovement and Application

Kia Motor's Long-term

Environmental Management

Strategies

Environmental Action Plan;

Three Rounds in Three Years

FIRST ROUND

2003-2005establishment stage

for environmental

management(Introductory Stage of Sustainability Management)

Building environmental management bases focused on domestic business sites

SECOND ROUND

2006-2008extension stage for

environmental management(Establishment Stage for Sustainability Management)

Reinforcing organizational competencies through extending environmental management of all business sites at home and abroad

THIRD ROUND

2009-2011growth stage for

environmental management(Extension Stage for Sustainability Management)

Pursuit of sustainable growth through environmental management

Business ethics

Working towards a more sustainable future is one of the responsibilities of corporate ethics.

Using a corporate responsibility model of fair distribution of earnings, Kia Motors adopted

the principle of fairness and impartiality as a model for sustainable management. Kia has

combined two corporate principles, building a trustworthy and transparent business, and

incorporates them into its corporate ethics code as a guideline for sustainable development.

Kia Motors’ ethical practices will serve as a medium to correct and improve faulty corporate

customsandcoststructuretoincreaseoverallcompetitivenessandEconomicValueAdded

(EVA®). The ultimate goal is to pursue business ethics that value stakeholders.

In an effort to become a trustworthy and transparent company, Kia adopted its code of

ethics in 2001 and issued a code of conduct for all employees. To ensure ethics compliance,

Kia conducts mandatory online education for employees and created a Cyber Audit Office to

enforce and oversee compliance.(1)

(1) MoreinformationontheCyberAuditOfficecanbefoundintheSocialValuesectionofthisreport.

By raising its competitiveness to world-class levels, Kia has been given the great responsibility to guide the growth of its national economy for the 21st century.

• Contribution to Society and

Country

• Promotion of Shareholder and

Customer Interests

• Respecting Human Rights and

Fostering Future Talent

• Establishing Respectable

Partnerships between Partners

• Establishing Transparent

Management

Code of Ethics Adoption

Strict Ethical Compliance

in Acquisitions Department

Adoption of Code of Ethics

Regulation of Workplace Ethics

Regulation of Gifts and Bribes

18

structure of Business ethics

Sections

Institutionalized Code Kia Motors’ Code of Ethics

Regulation of Workplace Ethics

Employee Ethics Compliance

Cyber Audit Office Cyber Call-in Center

Production and Distribution of Employee Ethics Guidelines

Ethical Guideline Publication and Cyber Ethics Education

19

community engagement

Kia Motors believes that community involvement is a natural extension of corporate social

responsibility as an active member of the community. Community service demonstrates the

company’s appreciation for its stakeholders and the community who have supported its

growth and made it possible for Kia’s current success. Kia Motors believes that the community

must be healthy in order for sustainable development to be successful. For this reason, Kia

adopted community outreach and service as its third criterion in its sustainable management

policy and continues to expand the scope and scale of the activity.

In 2005, Kia started a community service slogan, “Moving Together with the World,” to

move towards a better future with neighbors and the greater community. Kia’s community

activities encouraged comprehensive future-oriented activities as social welfare,

environmental preservation, next-generation growth support, cultural arts, healthy living

promotion and international exchange. Of those, Kia further focuses on motor safety and

convenient motor use within its community service activities. For example, Kia Motors started

the “School Zone Keeper Campaign” and other traffic safety campaigns to raise public motor

safety awareness. Also, the “Easy Move” vehicle development and accessibility campaign

creates a friendly transportation environment for persons with disabilities. Through these and

other programs, Kia employees have volunteered their time and energy to reach out and

serve the community. With the launch of overseas production facilities in 2007, overseas

headquarters and production facilities conducted community service in each of their

respective communities to reach the greater global community. Every part of the

organization, internally and externally, has taken active part in the effort to make sustainable

development successful.

Expansion of Motor Safety Culture

• Child Safety Motor Education

• School Zone Keeper Campaign

• Support Program for Traffic Accident

Victims and Surviving Children

Improving Motor Environment for the

Disabled

• Easy Move Vehicle Development and

Accessibility

• Improving Accessibility

• Supporting Disabled with Special Shoes

and Safeguards

Regional Social Projects

• Cultivation of the Environment and

Young Talent

• Development of Local Community

Employee Volunteer Work

• Social Volunteer Groups

• Volunteer Work by Affiliates

Kia Motors and Its Affiliates

Expansion of Motor Safety

Culture

Regional Social Projects

Employee Volunteer Work

Improving Motor

Environment for the Disabled

corporate governance

and board

Kia Motors’ corporate governance is a system created to insure soundness and transparency

of the corporation and manage the interest of Kia executives, shareholders and employees.

Kia Motors’ governance structure consists of the Board of Directors, the Board Committee

who voices the opinion of the external stakeholders, Audit Committee who closely watches

over the corporate management, the Board Nominating Committee, and the Ethics

Committee.

Board of directors

The Board of Directors is responsible for oversight and supervision of the overall affairs of the

company. More specifically, the Board of Directors not only undertakes the duties of the

articles of association as well as the duties entrusted by general meeting of shareholders, but

also oversees the company’s overall policy and management of the business. Additionally, the

board will appoint one of its members to be the chairperson of the Board to supervise

management. The Board of Directors consists of four inside directors and five outside

directors. The Board will meet regularly at appointed times and more meetings will be held as

needed.

Performance-oriented Compensation _ Kia Motors CEO, executives and senior managers

receive annual salaries which are determined by both personal achievement and

performance.

committee

Audit Committee _ The Audit Committee consists of four outside directors. The Audit

Committee’s role includes monitoring the fairness and transparency of business practices,

auditing the company’s operations, and investigating the company’s assets to assess business

performance. The Audit Committee also discusses the minutes of the annual shareholders and

Board of Directors meetings.

Board Nominating Committee _ The Board Nominating Committee consists of two outside

directors and two inside directors. The two outside directors are chosen at the annual

shareholders meeting.

20

the BoaRd of diRectoRs and committees

Board of Directors Ethics Committee

Board Nominating Committee

Audit Committee

21

Ethics Committee _ The Ethics Committee consists of five outside directors. The main goal of

the Ethics Committee is to maintain fair and transparent business practices. To achieve that

goal, the Ethics Committee reviews the "Monopoly Regulations and Fair Trade Law," enforces

the stipulation on favoritism in personal relationships in the "Securities Exchange Act," and

checksforcompliancewiththeFairTradeVoluntaryInspection.ThesocialfrontoftheAudit

Committee’s responsibilities also includes reviewing and evaluating community engagements.

Lastly, the Ethics Committee reviews the Code of Ethics and Code of Conduct within the

company and makes amendments to the Codes when deemed necessary.

Board structure as of December 31, 2007

Composition

Internal

External

Name

Mong-Koo Chung

Eui-Sun Chung

Nam-Hong Cho

Hee-Bong An

Jong-Chang Kim

Jong-Am Chung

Yul Choi

Dong-Sung Cho

Gun-Soo Shin

Position

Member of Board Nominating Committee

Member of Board Nominating Committee

-

-

Member of Board Nominating Committee,

Chairperson of Audit Committee, Member

of Ethics Committee

Member of Board Nominating Committee,

Auditor, Chairperson of Ethics Committee

Auditor, Member of Ethics Committee

Auditor, Member of Ethics Committee

Member of Ethics Committee

Remarks

Chairperson of Board

shareholders’ Rank as of december 31, 2007 (over 5% ownership)

Rank

1

2

3

Shareholder

Hyundai Motors

Credit Suise Financial

Treasury Stock Union

Number of Shares

134,285,491

29,583,586

24,719,219

Ratio of Shares

38.7%

8.5%

7.1%

2007 membership status of corporate associations

NO Association Membership Grounds

01 Federation of Korean Industries Mandatory

02 Korea Automobile Manufacturers Mandatory

Association

03 Korea International Trade Association Mandatory

04 Korea Economic Organization Council Mandatory

05 Korea Chamber of Commerce & Mandatory

Industry

06 Korean Federation of Science and Mandatory

Technology Societies

07 Korea Industrial Technology Mandatory

Association

08 Korea Management Association Necessary

NO Association Membership Grounds

09 Fair Trade Commission Necessary

10 Korean American Friendship Necessary

Association

11 Korea Association of Machinery Necessary

Industry

12 Ethical Management Forum Necessary

13 Korean Standards Association Necessary

14 Korea Logistics Association Necessary

15 Korea Association of Industrial Necessary

Designers

16 Korea Council for Sustainable Necessary

Development

For a car, the road is where it will find its true existence.

For a business, sustainable growth is the path that will add meaning to its existence.

When 20,000 moving parts come together, life of the automobile

begins. The power that moves the world comes from those that

gathered under the name of Kia Motors from all corners of the world.

The first mission of the company is generating profits. But Kia is not

only looking to add growth in the few sparks of visible performance.

Instead, Kia sets its goal in tune with long-term sustainable

development. Korea, China, Slovakia, the United States, Europe and

Asia all gather to create the Kia Motors that is known around the world

today and are paving the way for the future.

econom

ic v

alue

Kia Motors is focusing on enhancing profitability, strengthening global management,

introducing flexible manufacturing systems and innovating corporate culture to realize

its goal of creating sustainable economic value. 2007 was an especially important year as

Kia announced the launch of its design management system, through which Kia will

enhance its brand value and aggressively roll out a differentiated Kia Motors design

identity.

KEy AChIEvEMEnTS And plAnS

CrITICAl ISSUES

Financial performance

In 2007, Kia Motors recorded operational losses due to a worsening business environment

that included high oil prices and a strengthening Korean currency. However, the business

loss contingency buffer created in 2006 and operating profit from the fourth quarter of

2007 allowed Kia to fortify the company’s financial health to respond to any changes in

the volatile business environment. A variety of new cars announced for 2008 will further

improve Kia’s financial performance.

Brand Equity

In 2007, the domestic and international communities recognized Kia Motors’ highly

competitive product quality by bestowing high marks in product quality and safety

evaluations. Kia has strengthened its design competitiveness and continuously improves

quality, which will ultimately translate into stronger brand recognition.

2007 performance• Promotion of Total Cost Innovation (TCI) • Quality improvement: IQS rises 12 spots• Erected a solid foundation for future growth

2008 plans• Secured successful entry into the new car market• Focused on strengthening total sales capacity

2007 performance• Established production plant in Slovakia• Established second production plant in China• Established new Kia Motors Europe headquarters

2008 plans• Strengthen global capability• Raise overseas subsidiaries’ profitability

2007 performance• Early operational stabilization and met mass-production schedule deadline • Secured engine and transmission production flexibility

2008 plans• Improve operating capacity, HPV (1) and organizational efficiency (2)

• Secure cost competitiveness

2007 performance• Fostered active corporate culture through bulletin board encouragements• Established and spread Kia Motors vision

2008 plans• Revitalize organization and improve corporate culture

Business profitability as

top priority

Build a flexible manufacturing system

Innovate corporate culture

Laid foundations for global

management

+ + +

Innovation for humanity (Innovation for Customers)

(1) HPV (Hour per Vehicle): The time it takes to build one car

(2) Organizational efficiency: the effectiveness of human resources management

(For example: if efficiency is below 60%, then 1.67 workers will do the work of 1 worker)

24

Disclosure on

management approach

25

The automotive industry’s activities have a wide ripple effect on other industries, ranging from

materials and equipment, to parts and manufacturing, transportation, sales and maintenance, oil,

insurance, and banking industries. The automotive industry has potential for high economic

growth and job creation as a leading labor-intensive national industry based on economies of

scale. In 2007, the domestic automotive industry and related industries employed an estimated 1.5

million persons, which represented 10% of total national employment. Last year alone, the

domestic automotive industry accounted for 14% of total national exports, amounting to

approximately 17% of the national tax revenue.

Hyundai and Kia Motors comprise Korea’s largest national automotive group and together

hold 75% of the domestic automobile market. As the leader of the Korean automotive industry,

the Hyundai-Kia Automotive Group is the driving force behind the nation’s economic

development. As a convenient mode of transportation for goods and people, the automobile

sustains modern life and economic activities. Kia Motors is Korea's second largest automobile

manufacturer with a sales network and production bases spanning 165 countries. As a global

company, Kia Motors has played a major role in the sustainable growth of national and

international economies by raising transportation convenience while minimizing its impact on the

environment. Through responsible corporate management at the national and international

levels, Kia will grow together with its stakeholders.

KEy MAnAgEMEnT ACTIvITIES And AChIEvEMEnTS In 2007

Kia Motors faced many difficulties in 2007 amidst a harsh business environment that was plagued

by high oil prices, currency exchange volatility, and the sub-prime crisis in the U.S. Even during this

difficult time, Kia maintained its focus on long-term sustainable growth and strengthened its

foundation for the future.

Kia Motors’ business activities in 2007 can be summarized into two parts: enhancing

profitability and laying the groundwork for future growth. Last year, Kia Motors addressed its goal

of enhancing profitability by improving product quality, boosting productivity and reducing costs.

Kia’s focus on product quality resulted in receiving top marks in quality surveys conducted by

independent research firms in the United States and Europe, thereby placing Kia’s quality in the

top tier among the world’s automakers. On the service front, Kia placed utmost attention on

operating performance

securing “customer satisfaction” as a top priority. As a result, the Korean Standards Association’s

'Korean Call Center Service Quality Index' survey ranked Kia’s customer service in first place, while

the 'Korean Service Quality Index' survey ranked Kia’s overall customer service in first place for the

fourth consecutive year. (1) Kia is becoming a company known for its customer service and

satisfaction. In addition, Kia introduced a design management system in order to secure

competitiveness and differentiate Kia Motors’ vehicles from the rest of the pack.

With the core business objective of strengthening international competitiveness, Kia erected

the Slovakia plant, a new European headquarters complex and a second production plant in China.

These facilities have secured the base for stable global production and sales capability for the

future.

Efforts made in 2007 have become a stepping-stone for 2008. Kia has laid out the key

challenges of “establishing a sales-oriented management system,” “securing profitability,” and

“strengthening core competencies” in 2008. The company’s goals for 2008 are the delivery of 1.69

million vehicles at home and abroad while achieving 23 trillion won in sales and operating margin

of 3%. With the release of the Borrego (Mohave) in January 2008, Kia is set to launch its restyled

Lotze (Optima/Magentis), next generation Spectra (Cerato), and all-new Soul for 2008. Two new

models are further planned for release in 2009. Enhancing its product lineup with the launch of

new models, Kia has orchestrated a turning point for sales recovery.

Kia will innovate management to ensure sustainable growth regardless of the business

environment. In 2008, the design management system will be leveraged to raise brand equity. In

order to establish an excellent workplace for employees,(2) the Great Work Place (GWP) program

was initiated to form close personal relationships among employees, the company’s first corporate

customer. In addition to building efficient overseas networks, Kia plans to conduct various

employee-training programs to strengthen global capacity in every sector of its business.

26

(1) More information on customer services can be found in the social value section of this report.

(2) Great Work Place refers to a workplace with three essential elements: a place where mutual trust between labor and management exists,

a place where employees are proud of their work, and a place where employees enjoy working together.

AnnUAl prodUCTIon Unit: Vehicles 2007 prodUCTIon By plAnTS Unit: Vehicles

total Domestic plants Overseas plants

236,628

387,579345,806

105,538148,569 145,158

Sohari Hwaseong Gwangju Seosan China Slovakia Total

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

400,000

300,000

200,000

100,000

0

2005 2006 2007

1,105,431

1,215,502

110,071 120,480

250,696

1,150,397

1,270,877

1,118,582

1,369,278 1,369,278

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

400,000

300,000

200,000

100,000

0

24

2532

33

Disclosure on Management Approach

operating performanceFinancial Highlights

Special Story: Design Management, Global Management

goAlS And AChIEvEMEnTS By SECTor

production and Sales

Despite high oil prices and unfavorable exchange rates in 2007, Kia Motors succeeded in boosting

production and sales. The production plant in Slovakia, for example, exceeded its first year sales

target. Although domestic production fell slightly, Kia Motors enjoyed an increase of 7.7% in total

production and doubled overseas production capacities from 2006 thanks to overseas production

achieving full operational capacity along with strong sales generated in Europe.

Although domestic sales rose only slightly, exports significantly increased. Since the first-ever

export of 10 Brisa pickup trucks to Qatar 32 years ago, annual exports totaled more than one

million vehicles for the first time. Kia’s continual effort to nourish the company’s growth produced

fruits of success as operating losses in 2006 were minimized and there was a return to operating

profit in the fourth quarter of 2007.

Key production performance and plan _ Although domestic manufacturing production fell

slightly, overseas production grew by 7.7% from last year with total production of 1,369,278

vehicles. Notable achievements in the manufacturing sector include creating an efficient logistics

system and Global Maintenance Management System (GMMS).(3) In 2006, Kia became the first

Korean company to utilize an advanced logistics system with Radio Frequency Identification (RFID) (4) during the manufacturing process. In 2007, Kia established the UCLIP system(5) to improve

reliability of its logistics system, share information with business partners in real time, and manage

inventories efficiently. With the UCLIP system in place, Kia Motors achieved cost reduction and a

competitive edge in the marketplace. Additionally, by using GMMS, it ensured increased capacity

and productivity while reducing costs through efficient management. Currently, Seosan and

Gwangju Plants utilize RFID, but the RFID system will be expanded to all Kia Motors facilities in the

future.

In 2008, Kia set its sights on improving product quality and achieving stable production

through the extension of domestic and overseas production facilities. Kia is planning to introduce

27

010203

04

01. Breaking Ground for China’s Second Manufacturing Plant

02. European Sales Office and Design Center in Kia Motors’ New European Headquarters

03. Transporting Kia Motors’ Vehicles at the Slovakia Plant

04. Eva Yanashova, Slovakia Plant Employee

(3) GMMS (Global Maintenance Management System)

(4) RFID (Radio Frequency Identification): Through Wireless and IC chips, RFID manages information through a variety of

next-generation object-recognition technologies

(5) UCLIP (Ubiquitous Cooperated Logistics Information Platform System): RFID-Integrated Logistics Information

(auto parts, logistics, finished vehicles) sharing system between small and medium-sized businesses (SMBs) and Kia Motors

zooM In » Kia Motors in Udmurtia, russia

MInI InTErvIEW » Eva yanashova, Kia Motors’ plant in Slovakia

“Kia motors created 10,000 jobs in Udmurtia”

On March 2007, Alexander Alexandrovich Volkov,

President of the Udmurt Republic, expressed his

gratitude for the contribution of Kia Motors to

the economy of Russia. Since 2005, Kia Motors has

manufactured the Cerato (Spectra) in the IshAvto

plant in Izhevsk, the second largest automotive

producer in Russia. Cerato (Spectra) is the best sell-

ing car in the Russian market.

According to Mr. Volkov, “Just one Kia Motors

assembly line created 2,700 jobs. It is supporting

approximately 10,000 citizens as it creates jobs

from affiliated business partners and surrounding

businesses. Introducing a cutting-edge Spectra

(Cerato) assembly line to Udmurtia expanded social

benefits to employees and increased tax revenue to

Udmurtia.” He welcomes a larger Kia Motors pres-

ence in Udmurtia.

“Everyone’s impressed when I tell them I work for

Kia motors.”

Hello, I’m Eva Yanashova of Kia Motors Slovakia.

Working for Kia Motors is a source of pride in

Slovakia. With high pay and great benefits, Kia Mo-

tors is the best place to work. Many friends of mine

want to work for Kia Motors and ask about open-

ings at the plant. Kia Motors has superior benefits

for female workers in comparison to other plants

in Slovakia. Recently, I read in the newspapers that

Kia Motors has created more than 8,000 jobs in

Slovakia along with new infrastructure. Kia Motors

is making our city a better place to live. Thank you,

Kia Motors.

0102

28

01. The refreshed for 2008 Morning (Picanto) has posted high sales figures.

02. Ceremony for the 100,000th cee’d produced at the Slovakia plant in September 2007

(6) More information on overseas facilities can be found on pages 34 to 35.

* ‘Others’ include commercial and specialty vehicles.

AnnUAl SAlES Unit: Vehicles SAlES By CATEgory Unit: Vehicles

total sales Domestic sales Overseas sales total sales passenger car RV Others

2005 20052006 20062007 2007

a Gamma engine facility with annual output of 100,000 units for small- to mid-sized engines in the

Hwaseong plant. The Gwangju plant specializes in bus production, and it is pushing to finish

renovation of production lines to churn out 2,100 buses a year such as the Granbird. As for

overseas manufacturing facilities, Slovakia has been fully operational since last year with an annual

production capacity of 300,000 vehicles, and Kia’s second plant in China came online in December

2007 with an annual production capacity of 300,000 vehicles. The construction of the U.S.

manufacturing facility in Georgia, which began in 2006, is on track for completion in 2009 with an

annual capacity of 300,000 vehicles. Kia is expecting its overseas annual production capacity to

reach 1.03 million vehicles by 2009. This global expansion will contribute to the stabilization of

production and sales while raising Kia’s brand equity.(6) In 2008, Kia Motors is aiming to produce

1.69 million vehicles (1.215 million and 0.475 million vehicles at home and abroad, respectively), an

increase of 23.5 % from last year.

Sales division Key performance and plan _ In 2007, Kia Motors’ domestic sales rose 0.8 %

with 271,809 vehicles. The domestic market shrank approximately 30% last year compared to 2002

due to high oil prices and the falling exchange rate, which devastated the export market and

created a rough year for every domestic automaker. Although no new models were introduced in

the stagnant domestic market, Kia launched restyled models with enhanced marketability and

environmental performance, while expanding customer marketing. These strategies allowed Kia

to weather the worsening market environment and end the year with improved sales and lower

operating losses. In the sedan segment, Opirus (Amanti) recorded first place in sales for 19

consecutive months, and the refreshed super compact Morning (Picanto) posted high sales volume

in the latter half of 2007. The sub-compact Rio (Pride) and Sportage compact SUV maintained top

market share in their respective segments as well. Recovery in the domestic market for 2008 is not

expected. By launching new models and enhancing customer satisfaction, however, Kia will

achieve its target sales goal of 322,000 vehicles and 25% market share in 2008.

265,825

623,151

1,215,849 1,215,849

950,024

481,422

111,27685,592 82,113

989,276

511,167

1,088,147

490,607

269,575

662,092

1,258,851 1,258,851

271,809

787,236

1,359,956 1,359,956

500,000 500,000

600,000 600,000

700,000 700,000

800,000 800,000

900,000 900,000

1,000,000 1,000,000

1,100,000 1,100,000

1,200,000 1,200,000

1,300,000 1,300,000

1,400,000 1,400,000

400,000 400,000

300,000 300,000

200,000 200,000

100,000 100,000

0 0

24

2532

33




Kia’s overseas sales division made significant accomplishments through export market

diversification and a stable global production system this year. Kia Motors enjoyed a sales

breakthrough with exports of 1,088,147 vehicles, a 10% increase from the previous year. Kia

focused on Asia, the Middle East, Central and South America, and emerging markets. These

diversified markets allowed Kia to increase exports by 26.3 % from the previous year. In addition,

Kia overcame difficulties and posted a 7% export increase despite high oil prices and the U.S. sub-

prime crisis. With successful operation of the manufacturing plant in Slovakia since last year, Kia

also grew by 10% in the European market.

Right on the tails of US and Europe, China is quickly emerging as one of Kia’s largest markets.

Although sales fell slightly last year in China, as many automakers introduced new models and

fierce price competition ensued, Kia plans to aggressively tackle the Chinese market with increased

production from its second plant in China and new models that satisfy Chinese consumers’ needs.

Kia expects the 2008 overseas market environment to stay unfavorable as oil and raw material

prices continue to increase and the dollar value remains low. Despite the worsening business

environment, Kia has set ambitious goal of exporting 1.363 million vehicles, a 25.2% increase from

2007. Kia plans to meet this goal by strengthening its product line-up, nurturing emerging

markets, taking advantage of its overseas production base, increasing dealer capacity, introducing

a 5-door Cerato (Spectra) designed exclusively for the Chinese market, stabilizing China’s second

plant, and expanding its overseas sales network.

Quality and r&d

In 2007, Kia Motors fortified its design capability, developed advanced technologies, reduced costs

and implemented quality assurance systems. Through these efforts, Kia received glowing reviews

on product quality from independent research firms, thereby raising its brand equity.

Key Quality performance and plan _ In 2007, Kia Motors received accolades from around the

world as its products earned top marks in product quality from various distinguished independent

research firms. More specifically, Kia is proud of its success in the U.S., most notably its results in

J.D. Power and Asociates’ 2007 Initial Quality Study (IQS), in which Kia’s ranking jumped 12 spots

from 2006 to 12th place overall, thus placing Kia in the top tier of automakers. The company’s

subcompact sedan, Pride (Rio), played a major role in enhancing brand value as it took first place

in the subcompact segment in both the 2006 and 2007 studies. Furthermore, the Total Quality

Study (TQS) by Strategic Vision (an American automotive research firm), U.S. Consumer group’s

Consumer Reports, and the European Car of the Year (COTY) jury all gave rave reviews about Kia’s

vehicle quality.

Kia works tirelessly to develop top-quality vehicles in order to become consumers’ number one

preference. For example, extensive tests are conducted to match driving performance with

intended usage and environment when designing a new vehicle. Kia has revitalized customer

services, such as the Auto Prosumer Systems, to reflect customer needs and wants. In addition, Kia

29

* ‘Others’ include commercial and specialty vehicles.

01. Kia Motors representative receiving the JD Power and Associates’ IQS award for the Pride (Rio) as a segment winner

02. 2008 Quality Meeting for acquiring top IQS ranking

Sales by region Unit: In million won

Total sales

Korea

overseas

north America

Europe

others

2007

15,948,542

4,852,075

11,096,467

4,879,604

2,860,028

3,356,835

2006

17,439,910

4,867,129

12,572,781

5,144,229

4,295,839

3,132,713

2005

15,999,356

4,471,757

11,527,599

4,297,325

4,492,756

2,737,518

2004

15,257,742

4,241,228

11,016,514

4,989,520

3,655,789

2,371,205

2003

12,839,881

5,126,358

7,713,523

3,731,397

2,145,117

1,837,009

2002

12,158,113

6,304,394

5,853,719

3,344,308

1,071,728

1,437,683

0102

30

0102030405

060708

vehicles rating history

vEhIClE QUAlITy EvAlUATIon In 2007

• Germany, Autobild, C-segment (1st place tie with VW golf)

• Austria, Autotouring, 1st place

• U.K., Practical Caravan, What Car?, and Camping and Caravan Club

eco-friendly vehicle and best hatchback

• Germany, ACE Lenkrad, C-segment 1st place

• Europe, 5 stars front and side impact tests, European New Car

Assessment Programme (Euro NCAP)

• Europe, 1st place in European COTY C-segment (4th place overall)

• Romania, 1st place COTY

• 1st class in offset impact evaluation by Korea Automobile

Technology Center

• U.S., 5 stars in impact tests by National Highway Traffic Safety

Administration (NHTSA)

• U.S., Consumer Reports Recommended model

• U.S., The Car Book “Best Bet”

• U.S., “Highest Ranked sub-compact car in Initial Quality Survey (IQS)”

By J.D. Power and Associates

• U.S., 5 stars in impact tests by the National Highway Traffic Safety

Administration (NHTSA)

• U.S., Best Medium SUV Ownership Experience in Total Quality Award

from Strategic Vision

• U.S., Highest possible rating in rear impact evaluation from Insurance

Institute for Highway Safety (IIHS)

• U.K., < Caravan Club Tow Car awards 2008> 1st place in Full-size 4X4

segment


• U.S., Motor Week “Best Minivan” from 2007 Drivers’ Choice Awards

• 1st place in minivan segment for five consecutive years according to

Korea Management Association Consulting

• U.S., 1st place in Total Quality Award of Strategic Vision for

Best Minivan Ownership Experience

• Australia, Royal Automobile Club of Victoria “Lowest cost of

maintenance”

• U.S., Highest possible rating in rear impact evaluation by Insurance


• U.S., 2nd place in Automotive Performance, Execution and Layout

(APEAL) Study by J.D. Power and Associates in 2007

• U.S., Forbes “The safest family car”

• U.S., Highest possible rating in safety evaluation by Insurance Institute

for Highway Safety (IIHS)


• U.S., US News & World Report, Best affordable Compact Wagon


• 1st class in offset impact evaluation by Korea Automobile

Technology Center

• U.S., Consumer Reports Recommended model

• U.S., Highest possible rating in side impact evaluation by Insurance


cee’d

sportage

pride (Rio)

sorento

carnival (sedona)

cerato (spectra)

Lotze

(Optima/magentis)

Opirus (Amanti)

01. cee’d

02. Sportage

03. Sorento

04. Cerato (Spectra)

05. Lotze (Optima/Magentis)

06. Pride (Rio)

07. Carnival (Sedona)

08. Opirus (Amanti)

24

2532

33




is stabilizing production lines and ensuring that its suppliers deliver high quality parts to gain a

competitive advantage through higher end-product quality. For overseas facilities, the quality

control manual, which consists of 10 categories with 180 checklists, is being prepared to improve

the product quality control system and enable them to perform their own internal quality control.

With a stabilized on-site work management system, Kia is working in overseas manufacturing

facilities to produce new models under strict quality control at an early stage.

Kia is never satisfied with past performances. Thus, despite excellent reviews on product

quality in 2007, Kia will make every effort to surpass 2007’s performance in 2008. According to the

Initial Quality Survey (IQS), Kia’s overall quality has improved by 53% since 2001. Kia’s

improvement is the result of the steadfast belief that product quality is the foundation of

competitiveness. Kia Motors is continuously improving product quality and raising brand value so

that customers will not only acknowledge the brand, but go beyond and recognize the brand as a

product that can be trusted and driven. For this to happen, Kia has taken three measures to insure

product quality. First, Kia comparatively analyzes its products against competitors to improve their

perceived quality. Second, Kia proactively checks quality parts for defects before they enter the

production cycle through careful monitoring of suppliers. Third and lastly, Kia has established a

three-tier quality inspection process to prevent problems in the production cycle to meet the

“Drive Defects to Zero” challenge.

r&d performance and plan _ In 2007, Kia’s R&D efforts concentrated on creating innovative

designs, strengthening technology and improving cost competitiveness through cost innovation.

Kia’s concept cars, based on the "simplicity of a straight line" design concept, captured the

world’s attention at numerous motor shows. The concept car line up included the 'Kue' large CUV,

‘ex_cee'd' convertible coupe, 'KND-4' mid-large size SUV, and ‘Kee’ sports coupe. In terms of cost

innovation activities, Kia came up with 20,000 cost saving ideas centered around streamlining

design and developing new materials with active participation from employees. Kia then

successfully implemented these ideas into its vehicles to improve profitability. Digital development

of automobiles and shared platforms and components are just some of the methods Kia is

exploring in order to save costs. But Kia is always looking for permanent cost saving solutions.

In order to strengthen Kia’s technological competitiveness, the company must focus its

attention on the development of eco-friendly and intelligent cars. To achieve that end, Kia has

formed a close partnership with parts suppliers and affiliated companies to secure electronics,

materials and environmental technolog components critical to the industry.(7) Additionally, the

Namyang R&D Center is the epicenter of support for the Eco-Technology Research Center and

overseas R&D Centers (United States, Europe and Japan) to strengthen its global technological

competitiveness. As a result, Kia received a favorable response from the European market when

launching the cee’d 3-door and wagon models. At the same time, in China and the emerging

markets, Kia strengthened R&D capabilities to respond immediately to local customers with

customized vehicles. For example, Kia has received superb response in China from models like the

Cerato (Spectra), Sportage, and Pride (Rio) with modified colors and body shapes that reflect the

tastes of local customers.

31

01. “ex_cee’d” convertible and “Kee” sports coupe receive worldwide attention at motor shows

(7) More information on the technology for eco-friendly vehicles, strategies for climate change and the technology for

intelligent vehicles can be found in the Environmental Value and Social Value sections, respectively, in this report.

01

Brand Management

Last year, Kia focused more on improving its core

brand values to spur more business activities

for sustainable growth. Kia continues to launch

tailored vehicles to match customer needs. Kia

will focus on today’s growth as well as tomorrow’s

anticipated trends in order to become a top global

brand.

Brand Management

PHASE 1

2005-2007laying a solid foundation for brand management • Brand management plan announced • Execution of the plan by division/region

PHASE 2

2008-2010Strengthening brand management • Build a system for brand management and evaluation • Launch new models with brand identity partially reflected

PHASE 3

2011-2015Accelerating brand management• Launch new models with brand identity fully reflected• Reinforce Global Brand Management System

production (vehicles)

Sales (vehicles)

Sales

operating profit

operating profit rate

Cash Flow(1)

Earnings Before Tax (EBT)

net Income

value offered to Stakeholders Unit: In million won

32

Key figures

2002

1,013,616

897,722

12,158,113

652,315

5.37%

2,105,670

851,393

670,820

2005

15,999,356

12,503,862

3,495,494

612,815

2,882,679

1,975,208

284,313

23,009

112,349

487,800

2003

852,797

858,697

12,839,881

805,537

6.27%

1,457,333

937,526

752,857

2006

17,439,910

14,085,595

3,354,315

709,719

2,644,596

2,155,284

310,574

26,097

152,641

0

2004

1,019,366

1,011,429

15,257,742

513,063

3.36%

1,621,855

840,078

662,026

2007

15,948,542

12,572,988

3,375,554

676,396

2,699,158

2,119,226

333,000

26,299

220,633

0

2005

1,105,431

1,105,841

15,999,356

74,002

0.46%

438,760

689,405

680,904

2006

1,150,397

1,140,734

17,439,910

-125,291

Deficit

-231,550

73,213

39,337

2007

1,118,582

1,114,451

15,948,542

-55,404

Deficit

28,240

24,968

13,563

Sales

Business partners

costs of goods and service

value-added Creation

Internal Buffer for facility and R&D Investment

Value Offered to stakeholders (Excluding Business partners)

Employees Total Wages

Benefits

Public Sector Tax and Cost of Social Contributions

Financial Investors Interests

Shareholders Dividends

* Based on 2007 Annual Report (excluding CKD and overseas production)

(1) Cash Flow from Operating Activities

• material costs

• Depreciation Expenses

• Value Offered to stakeholders (Excluding Business partners)

4.3%

16.9%

1.0% Government and Public Sector 90.8% Employees

8.2% Shareholders and Financial Investors

78.8%

Key Figures Unit: Vehicles, In million won

Kia Motors' advertising campaign slogan, “DE? GN,” sums up its design philosophy in one word.

“Design” does not merely mean the exterior shape or style of the car. Instead, “DE? GN”

demonstrates how Kia Motors is finding innovative answers to endless questions in order to improve

customer lifestyles with safe and convenient vehicles. In the slogan, “?” of the “DE? GN” designates

“curiosity,” just like the symbol itself. “ ” is a lightbulb that symbolizes “Idea” for solutions. Also,

“ ” carries a bigger meaning as it represents change, innovation and the creative mind of Kia

Motors’ “identity” that will foster the company’s endless growth.

design differentiation through differentiated brand identity

To establish a unique design identity for the company, Kia hired Peter Schreyer, a European

automotive designer touted as one of the top three in the world. Peter Schreyer became Chief Design

Officer of Kia Motors in 2006 to head Kia Motors’ global design initiatives and is based at Kia’s new

Europe Design Center which opened in September 2007. Kia Motor’s Europe Design Center is

responsible for strengthening competitiveness through innovative design. Peter Schreyer summed up

Kia Motors’ future design direction as “Simplicity of the Straight Line.” “Simplicity of the Straight

Line” means honest, simple but elegant design with aerodynamic forms to enhance driving

performance. It is the culmination of a perfect combination design elements.

33

Design management

special story

Quick-glance at Kia Motors' history

• ProductionofKoreafirsttruck,K-360

• ProductionofKoreafirstexportvehicle,BrisaB-1000pick-up

• ProductionofKoreafirstvan,Bongo

• World’sfirstsedan-compactSUVcrossover,Sportage

• ProductionofKoreafirstautomobilebuiltfromgroundup,Sephia

• Koreafirstconvertibletwo-seatersportscar,Elan

• Koreafirstminivan,Carens

• FormerAudi/Volkswagenheaddesigner,PeterSchreyer,hiredasChiefDesignOfficer

• Koreabrandperceptionchangingvehicle,Soul(2008launchdate)

“Simplicity of the Straight line” Explained by peter Schreyer, Chief design officer

Q: Why did you propose “Simplicity of the

Straight Line” as Kia Motors’ future design

direction?

A: “Simplicity of the Straight Line” is quite

philosophical. A straight line symbolizes purity,

persistence and honesty.

In the future, we can not copy existing concepts.

New thinking is needed. Clear simplicity, it is the

ultimate design that is impossible for anyone to

imitate. It is difficult to create something entirely

new, but with this philosophy, Kia Motors will

create a new design future through honesty,

purity and simple beauty.

Concept Cars designed under “Simplicity of the Straight line” design Concept

• Kue • ex-cee’d • pro-cee’d

• eco-cee’d • KND-4 • Kee

03

0102

01. pro_cee’d, a concept car designed under the “Simplicity of the Straight Line” philosophy

02. KND-4 mid-size SUV

03. World famous automobile designer, Peter Schreyer

Kia Motors has poured vast amounts of energy into building a solid global production and sales

network to ensure tomorrow’s growth despite the worsening business environment in 2007.

Kia held the official grand opening of the Slovakia plant, with annual production capacity of

300,000 vehicles, in April 2007; the second plant in China, with annual production capacity of 300,000

vehicles, in December 2007; and the Europe Design Center and new Kia Motors Europe headquarters

in September 2007.

These facilities are in tandem with the company’s vision to complete a comprehensive network of

production-sales-R&D operations in Europe.

EnhAnCIng BrAnd vAlUE In ThE EUropEAn MArKET

Completion of Slovakia plant construction

The 1.68 million m2 Slovakia manufacturing plant under Kia Motors Slovakia (KMS) was officially

opened in April 2007 and 300,000 vehicles are able to be produced annually.

Kia Motors Slovakia’s plant is located in Zilina, Slovakia where the cee’d and Sportage are

produced. With the completion of the plant, Kia Motors has erected a European management system

that encompasses R&D and production to marketing, sales and after service. This system represents

the company’s first step in entering the realm of true global management.

Through the Slovakia plant, Kia created jobs (directly and indirectly) for an astounding 10,000

people (as of December 2007, KMS directly employs 2,700 people, but Kia estimates that number to

increase to 3,054 in the future), and Zilina region’s unemployment rate fell from 13.2% in 2003 to

5.5% in 2007 as a result.

Kia Motors received support from the Slovakian government through its Foreign Direct

Investment (FDI) promotion policy, which should not exceed 15% according to the EU rules. The

Slovakian government’s support came in the form of free land, construction finance and tax benefits.

Kia Motors’ cee’d, a model tailored for Europe, has earned rave reviews in the European market

including being shortlisted in the 2007 “Car Of The Year (COTY)” Awards (top segment finisher) and

earned a perfect score (first for Korean branded vehicle) from Euro NCAP, an independent safety

assessment organization in Europe. Kia Motors’ products, such as cee’d, have raised the company’s

product reputation and enhanced brand equity.

To win a larger share of the European market, Kia introduced the pro_cee’d, the cee’d 3-door

model, in December 2007 and plans to introduce the eco_cee’d, an eco-friendly model with improved

fuel economy and reduced emissions towards the end of 2008.

Completion of the new KME headquarters office building

Kia Motors Europe (KME) opened its new corporate headquarters office building in Germany in 2007.　

The new office building is located in Europe’s commercial hub, Frankfurt, Germany, and houses KME

headquarters, the Europe Design Center and Kia’s German subsidiary sales office. The new office

building also serves as a strategic base of operations for all of Europe and a main point of contact for

European stakeholders.

34

global management

0102

special story

01. Slovakia plant grand opening ceremony held in April 2007

02. Production line of second China plant opened in December 2007

Sales and network overview

2003년

2004년

2005년

2006년

2007년

156,821vehicles

164,437 vehicles

352,531vehicles

329,026vehicles

343,090 vehicles

KMBL

KmAs

KmIb

Kmf

KmH

KMP

KMCzEurope plant

KME & KMd

KMSS

KMUK

KMAw

KMIe

BUIldIng A KIA MoTorS FoUndATIon In ThE ChInESE MArKET

Kia officially opened its second manufacturing plant in Jiangsu Province, Yancheng, China in December

2007.　The second plant, which employs 1,400 people, produces the Cerato (Spectra) with annual

production capacity of 150,000 vehicles (according to 2007 year end figures). Kia plans to expand its

operations in the second plant to employ 2,750 people and produce 300,000 vehicles per year by 2009.

The second plant, which was constructed in just two years, along with Kia’s first Chinese plant, will

play a major role in the Chinese automotive market, which is expected to become the world’s largest

automotive market by 2010.

SoCIAl EngAgEMEnT AS pArT oF gloBAl SoCIETy

Kia Motors refocused its community engagement on a group level in 2007 to better achieve its vision

for community service. As an automotive industry leader, Kia continually looks for ways for automobiles

to co-exist with the community in harmony. All Kia Motors employees work together under one

principle: to contribute to society by providing customized help to fit the needs and characteristics of

the local communities in which the company operates.

Community Engagement in China and Slovakia

The Slovakia plant and Dongfeng Yueda Kia plants in China are reaching out to local marginalized

neighborhoods with donations and volunteer activities and through business tours and sponsorships of

cultural and educational events. Through these activities, Kia hopes to improve the quality of life of its

neighbors.

gloBAl EnvIronMEnTAl MAnAgEMEnT SySTEM

The 'Environmentally Sound and Sustainable Development’ (ESSD) program, advocated by the Rio Earth

Summit in 1992, proposes methods for practically achieving business management and profitability

while successfully sustaining the economy and environment.

Kia declared its ambition for GT5 2010 and plans for environment and management systems at the

'ECO GT5 2010' press event.

35

International Standard ISo 14001 Environmental Management System Certification Status

• HwaseongManufacturingPlant • GwangjuManufacturingPlant

• SohariManufacturingPlant • A/SCenter

• DongfengYuedaKia(1stChinaplant) • SlovakiaManufacturingPlant

oversea plant Environmental data

Key Elements in Exhaust

Waterpollutants

Waste

toxic chemicals

Air pollutants

contents

total wastewater consumption (tons)

BOD consumption (tons)

cOD consumption (tons)

ss consumption (tons)

N-Hconsumption(tons)

total waste consumption (tons)

Recycling waste amount (tons)

Recycling rate (%)

poisonous material consumption (tons)

Dust (tons)

NOx(tons)

sO2 (tons)

cO2 (tons)

china plant

91,679

1.4

6.7

4.3

0.01

9,297

8,654

93.1

92.9

1.3

5.5

0.015

57,062

slovakia manufacturing plant

39,051

15.8

33.2

35.1

0.03

26,407

23,163

87.7

341.9

7.7

31.2

0.18

156,559

01. Slovakia plant awarded certificates

02. ISO 14001 certificate for Slovakia plant

0102

Kia Motors will protect nature’s beauty that both inspires and sustains.

envir

onm

enta

l v

alue Holding onto a grandmother’s hand and comforting her as she grieves

the loss of the oysters which once lined the coast of her small fishing

village. According to a newspaper article, Taean’s once lush coast

devastated by an oil spill would require at least 20 years to recover the

beauty it once had. On the way back to Seoul, thoughts turn to what

can be done for the environment.

Besides the clean up efforts on the polluted coast, Kia wanted to do

more by minimizing its footprint on the environment. As an automobile

company, Kia Motors, will develop cars and manufacturing process

from production to waste that are friendly to the environment. Kia

Motors will never forget the duties to protect and preserve the nature’s

beauty.

Kia Motors is implementing eco-friendly management in every facet of its activities, from

design to production to distribution. The management is on a global scale in every facility

by encouraging the development and production of automobiles that minimize the

negative impact on the environment.

EnvirOnMEnTAl MAnAgEMEnT PErfOrMAncE And PlAnS

MATEriAl iSSuES

Based on the Materiality Test, Kia Motors isolated material issues identified by

stakeholders and developed strategies to ensure sustainable management activities. Kia

Motors has further broken down each issue with plans and performances of each material

issue below.

2007goals of

Environmental Management

• Establishenvironmentalmanagementsystem.

• Implementenvironmentalmanagementsystemoverseas.

• Becomealeaderintheautomotiveindustryforenvironmentalmanagement.

2007Environmental Performance

• Developedalternativefuelvehiclesandreducedgreenhousegasemissionsinresponsetoclimatechange.

• Improvedenginetransmissionandreducedcarweighttolowergreenhousegasemissionsandimprovefuelefficiency.

• Increasedrecyclingratethrougheco-friendlydesigntechnology.

• AcquiredISOEnvironmentalManagementCertification(Slovakiaplantand1stplantinChina).

• 2007-2012,DesignatedSohariandHawseongplantaseco-friendlyfacilities.

• Promoteindustrialwastereductionthrough“ZeroIndustrialWasteDeclaration.”

2008 Plans

• Reducegreenhousegasinfacilitiesoverseastocombatclimatechange.

• Promoteresearchanddevelopmentofeco-friendlyvehicles.

• AcquireISOcertificationforthesecondplantinChina.

• Developandapplytechnologiesforcleanproduction.

• Discloseevaluationsofeachmodel’senvironmentalimpactontheKiaMotors’website

(IncludingLifeCycleAssessment(LCA)).

Eco-friendly production

• Reducingharmfulpollutants

• Technologyforcleanproduction

• Respondingtoclimatechange

• Environmentalmanagementsystem

• Observingenvironmentallawsandregulations

Eco-friendly product

• Strategyfordevelopingproducts

• Developingalternativevehicles

• Reducinggreenhousegasemissions

• Recycling

38

Disclosure on

management approach

39

Inthe21st century, the most critical issue around the world is climate change caused by global

warming. This climate change is accountable for abnormal weather patterns, occurrences of

diseasesandextinctionofspeciesoffaunaandflora.Awarenessofglobalwarminginrecentyears

has increased public demand for countries and companies to provide viable plans and policies to

reduce greenhouse gases. To overcome this crisis of global warming, both industrial development

formoreeco-friendlyproductionandactiveenvironmentalpreservationeffortsarerequired.To

pursue sustainability that does not restrict future generations and in accordance with the needs

of the present and future, companies must comply with its social obligations by providing

productsthatincreasequalityofalifewhileminimallyaffectingtheenvironment.

Undereco-friendlymanagement,KiaMotorsdedicateditsR&Dtodevelopingtechnologies

thatraisetheefficiencyofitsproductbysavingenergy,reducinggreenhousegasandCO2

emissions, and developing vehicles using alternative energies. Kia Motors devoted great efforts in

providing practical solutions for immediate problems to fundamental solutions for greater

society.

environmental

management

To develop vehicles that reduce their impact on the environment, Kia Motors established four

R&DdirectivesfortheEnvironmentalTechnologyResearchCentertoheaditsresearchandeco-

friendly efforts. The four directives are as follows.

Firstdirective,developalternativefuelvehiclesandexpandeco-friendlytechnology.Second,

develop efficient engines, exhaust systems and transmissions that reduce gas emissions. Third,

improve fuel economy through the application of new technology and lightweight bodies. Fourth

directive,increaserecyclingbasedonLCA.

AlTErnATivE fuEl vEHiclE

Fossil fuels are considered a major accelerant of global warming since they discharge large

amountsofaircontaminants,suchasCO2, in the combustion process. Unfortunately, as a result,

automobiles powered by fossil fuels partly caused the increase of global warming. Moreover,

these fossil fuels are natural resources with limited reserves, so the development of automobiles

4 Product development directives

four directives

Eco-friendly vehicle

reduce gas emission

improve fuel economy

increase recycling

Plan

• Developnextgenerationalternative

fuel vehicles.

• Developlowpollutingenginesandefficient

transmissions.

• Developlowpollutingexhaustsystem.

• Developlightweightmaterialsandnew

production methods.

• Developandapplynewtechnologyfor

engine / transmission.

• Developeco-friendlydesigntechnology.

• Developmaterialrecyclingtechnology.

• Developautosalvageanddismantling

technology.

• Developtechnologytoimproveproduction

environment.

Environmental management goals

• Hybridmassproduction(2009)

• Promotemassproductionoffuelcell

vehicle(2012).

• Regionalexhaustgasregulationsresponse

• ReducedCO2emissions(2012,130g/km).

• Regionalfueleconomyregulations

response

• Improverecyclingrate(newcarsasof2008).

:Reclaimmorethan85%

:Recovermorethan95%

40

eco-FrienDly proDuct

Development

withalternativefuelshasbecomeevenmorenecessary.Intheefforttocreateanalternativefuel

vehicle, Kia Motors set the immediate goals of mass-producing hybrid electric vehicles, which

combineelectricandfossilfuelpoweredengines.Asamid-longtermstrategy,KiaMotorswill

focus on developing fuel cell vehicles with zero greenhouse gas emissions to replace current fossil

fuel vehicles. Through the development of eco-friendly automobiles, Kia Motors will strengthen

competitiveness through sustainability efforts and play a leading role in establishing a society

that utilizes advanced energies.

Hybrid Electric vehicles

HybridElectricVehicle(HEV)utilizesbothagasolineengineandelectricmotorconcurrentlyinits

operations.Thisconcurrentutilizationenhancesfuelefficiencyandreducesgasemissions.Asa

result,HEVsarebecomingthemostviableandrealisticsolutiontocommerciallyavailableeco-

friendlyvehicles.Bytheendof2009,KiaMotorsexpecttoproduceHEVsthatwillreduceair

pollutantsbymorethan30%andincreasefuelefficiencyupto50%,whencomparedtoexisting

gasoline-powered vehicles.

Technology development Status _In2002,KiaMotorssucceededindevelopingahybrid

electric system that is more fuel-efficient than legacy vehicles with an internal-combustion

41

0102030405

01. NamyangR&DCenter

02. EnvironmentalTechnologyResearchCenter

03. U.S.TechnologyResearchCenter

04. JapanR&DCenter

05. KiaMotors’EuropeanR&DCenter

global research & development network

namyang r&d center

Kia Motors integrated all research function in

KoreaundertheNamyangR&DCenter.Thecenter

houses a driving test site, the wind tunnel test site

and a design institute. The center is responsible

for the entire vehicle development process, and

research and development of advanced technolo-

gies.NamyangR&Dcenterisabletooperatean

efficientKiaMotors’R&Dprogramthroughthe

centralization of research personnels on one cam-

pus, enabling research expansion and technology

sharing at lower costs.

Environmental Technology research center

Intheaimofestablishingaconsistentenviron-

mentalstrategy,theEnvironmentalTechnology

ResearchCenterwasestablishedinSeptember

2005.Thecenterisresponsiblefortheapplication

of environmental plans during the entire product

cycle, from product development, production, sale,

aftersalestodisposal.TheCenterhasahydrogen

fuelcellstationwith700atmosphericpressure,

fuelcelldurabilitytestequipment,electricalpower

systems, and a scrap vehicle disassembly system.

TheCenter’s700atmosphericpressurehydrogen

fuel cell station is acknowledged as the standard

model for installation and expansion of all future

hydrogen fuel cell fueling systems. Facilities at the

EnvironmentalTechnologyResearchCenteroffer

an eco-friendly environment by employing a natu-

ral lighting system and vacuum sewage system. The

Center’sR&Dactivitiesfocusonthedevelopment

of future generations of eco-friendly technology

such as gas emission reducing technology and

eco-friendly production technology. These activities

playavitalroleinKia’seco-friendlymanagement

goals.

u.S. Technology research center

U.S.TechnologyResearchCenterisanexpansionof

theHyundai-KiaMotorsU.S.TechnologyResearch.

TheCenterperformsautomobileproduction

design, power train development, vehicle assess-

ments, regulation compliance, as well as product

design and planning.

Japan r&d center

TheJapanR&DCenterhasbeenconductingvarious

research activities that consist in the development

ofAdvancedSafetyVehicle(ASV),infotainment

(Information+Entertainment),comfort-focused

systems, and future generation vehicles, e.g.

hybrid electric vehicle systems and fuel cell vehicle

technology.

Kia Motors’ European r&d center

KiaMotors’EuropeanR&DCenter,basedinGer-

many, conducts major research activities consisting

of product planning, power train development,

and vehicle assessment and regulation compliance.

TheCenteralsoprovidesmanufacturingtechnolo-

giestosupportproductioninEurope.

42

engine,andatthesametime,allowsforasmootherride.KiaMotors’hybridsystemworksin

accelerationmodebyallowinganelectricmotortoprovidesupportpowersotheengine’spower

loadisreduced.Indeceleration,energygeneratedfromthereductioninspeediscapturedand

stored in the electric motor, which is then reused for acceleration. This cycle of storing and reusing

energiesenablesvehiclestoconsumefarlessfuelforoperation.Whenavehicleisinidlemode,

theenginecomestoacompletestop,therebyexpensingnofuel.Whenitreaccelerates,an

electric motor initiates the vehicle smoothly to ensure minimized usage of unnecessary fuel.

current distribution and Plans _ Kia Motors is expanding the production of hybrid electrical

vehicleswithGovernmentcooperation.Asaresult,in2005,121Pridehybridsweredistributedto

variouspublicinstitutionsinthecapitalarea.DistributedPridehybridsreducedairpollutionand

increasedfuelefficiencyby37%and44%,respectively,comparedtogasoline-poweredvehicles.

In2006,KiaMotorselevateditsemissionstandardsfromUltraLowEmissionVehicle(ULEV)levels

toSuperUltraLowEmissionVehicle(SULEV)andexpandeditsdistributionareatoincludeBusan,

Deagu,Gwangju,UlsanandDaejeon,whereanadditional146Pridehybridsweredistributed.In

2007,thenumberofdistributedPridehybridsincreasedto353.Kiaalsodonated47hybrid

vehiclestopublicwelfareorganizationsthroughCommunityChestofKorea.

lPi Hybrid Electric vehicle development and Sales Strategies _ In2009,KiaMotorswill

releasetheLPI-HEV,whichutilizesbothLPGfuelthatemitslowerairpollutantsandLPIengine

technologydevelopedthroughpilotprograms.LPIHEVcombinesbenefitsoflegacyvehicles

Pride (rio) Hybrid Electric vehicleSpecificationsdriving Method:

Paralleltype

HEv format: SoftHEV

Engine:1,399ccDOHC

fuel:Gasoline

Motor:Alternatingcurrent

motor(12kW/95Nm)

Battery:Ni-MH(144V)

Transmission:CVT

fuel Economy (lA4 Mode):

19.8km/ℓ

driving Performance

Maximum Speed:165km/h

0 > 100 (km/h):12.2seconds

gas Emission regulations:

SatisfyingSULEV

38

39

4054

63

65

69

70

74

DisclosureonManagementApproach

EnvironmentalManagement

Eco-friendly Product developmentEco-FriendlyWorkplace

EnvironmentalManagementSystem

Eco-FriendlySupplyChainManagement

EnvironmentalManagementCosts

Eco-FriendlyAchievementsinDomesticWorkplace

SpecialStory:CounteringClimateChange

development History of Eco-friendly vehicles

1986 •DevelopedthefirstKoreanelectricvehicle(Besta).

1991 •Developedleadcellelectricvehicle(Pride(Rio)).

1993 •Developednickel-cadmiumcellelectricvehicle(Sephia).

•SoldthefirstKoreanelectricvehicle.

1995 •Developedelectricvehicle(Sephia).

1999 •Developedelectricvehicle(Sportage).

•Developedhybridelectricvehicle.

2000 •ParticipatedintheCaliforniaFuel-cellPartnership(CaFCP).

•DevelopedthefirstKoreanfuelcellvehicle(Sportagemethanolfuelcellvehicles).

•Developedthefirstgenerationofhydrogenfuelcellvehicle.

2001 •Completedtheworld’sfirst3-axishydrogenfillingin350bar.

•WonamedalintheMichelinBibendumChallenge.

2002 •BecameamemberoftheJapanFuelCellAutoCommercializationProject.

•Completedfuelcellroadrally(480km,CaFCP).

2003 •WonamedalintheMichelinBibendumChallenge.


2004 •Developedsecondgenerationhydrogenfuelcellvehicle(Sportagehydrogenfuelcellauto).


•SelectedaspilotdrivingtestprojectoperatormanagedbyU.S.DepartmentofEnergy.

2005 •Developedhybridelectricvehicles(Supplied350Pride/VernaHEVs).

•BuilthydrogenfuelingstationsintheChinoLabintheU.S..

•Completedfuelcellroadrally(410km,EVS21:21stInternationalElectricVehiclesSymposium).

2006 •Developedhybridelectricvehicle(Supplied380Pride/VernaHEVs).

2007 •Developedhybridelectricvehicle(Planstosupply3,390Pride/VernaHEVintwoyears).

2009 •Developinghybridelectricvehicle(Plansmid-andlarge-sizedLPI-HEVcommercialsale).

•IndependentdevelopmentofFuelCellBusSystem.

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fueledbyLPGwiththoseofthehybridsystemtoensurehighfueleconomyandeco-friendliness.

LPIHEVwillbecomeacontributingfactortothenationalenergypolicyfordiversifyingnational

energysources.TheKoreanMinistryofEnvironment,agovernmentbodyinchargeofsupplying

HEV,disclosedaplantopromotetheuseofHEVbygivingvarioustaxbreakswhenthesevehicles

enterthecommercialmarketin2009.KiaMotorsisactivelyresearchingadvancedHEVtechnology

andexpandingmassproduction.By2010,KiaMotorswillinvestadditional300billionwonto

meetannualproductioncapacityof300,000unitsofcommercialhybridvehicles.

fuel cell vehicles

Today’sworldfacesstringentenvironmentalregulationsduetoairpollutionandglobalwarming;

demanding alternative energy sources are additionally being explored to replace diminishing

fossilfuels.Inthisage,nomatterhowadvancedafossilfuelpoweredvehiclemaybe,itcannot

avoid emissions of air pollutants. Fundamental eco-friendly solutions are in the development of

vehicles that do not use any fossil fuels. Fuel cell vehicles that utilize alternative energy are

gaining in popularity. They are considered as the model vehicle for future generations since they

pose no threat to the environment and no risk of exhausting natural energy resources.

Fuel cell vehicles utilize electrical chemical energy generated from a reaction between

hydrogen and oxygen in the air. Because this reaction uses sustainable fuel and produces only

water as its by-product, it solves both the environmental and alternative energy source problem

atthesametime.Withthebeliefthatfuelcellvehicleswillbethefutureoftheautomotive

industry, automotive companies around the world are investing heavily in the development and

commercialization of fuel cell vehicles. Kia Motors is no exception as it strives to lead the fuel cell

vehiclemarketandfurtheritsR&Dinitiativeswithitsalreadyadvancedtechnology.

fuel cell vehicle development _ Kia Motors attained major fuel cell system technology

throughin-houseR&Dandsecuredkeyfuelcellsystempartstoestablishafirmgroundforfuel

cell systems development. Kia Motors made improvements in output and density of cell stacks to

achieve80kWfuelcellstacksforthefirsttimeinKorea.This80kWfuelcellstackwasassembled

intotheengineroomoftheSportageandevaluatedthroughrealroadtestdrives.Intermsof

durability,KiaMotors’fuelcellsecuredalifespanofmorethan1,500hoursindiversevehicles.In

additiontostackcells,KiaMotorssucceededinthelocalizationof95%ofitsfuelcellsystemparts

that include hydrogen/air blowers and electric water pumps. Kia Motors developed fuel cell buses

with160kWoutputandcompressedhydrogenof350barenablingtotaldrivingdistanceof300

km with only one fuel charge.

InFebruary2005,KiaMotorsinconjunctionwithUTCPower,aU.S.-basedcompany,

developedthesecondgenerationhydrogenfuelcellSportage,whichshowcasedimprovedsafety,

drivingperformanceandpower,aswellasagoodstartingperformance.InMarch2007,a

hydrogenfuelcellvehicledevelopedin-houseprovedthesafetyofKia’shydrogenstoringsystem

throughrear-end-collisionandSLEDtestsoftheSportage.InJuly2007,KiaMotorsreached

vehicleunder-15°Cfreezingconditions.ThesetechnologicalbreakthroughstookKiaMotorsone

stepclosertofuelcellvehiclecommercialization.Inaddition,the100kWfuelcellstackwas

developedinMay2007asaresultofKiaMotors’effortstoenhanceaccelerationandperformance

byincreasingcellstackoutput.KiaMotors,equippedwithovertenyearsofdedicatedstackcell

development,improvedtheoutputofitscellstacksby30%whileretainingthesamevolumeof

80kWcellstacks.Thiscellstacksoptimizedheight,length,andwidthtobebettersuitablefor

incorporatingintoavehicle.Currently,KiaMotorsisfocusingonthedevelopmentofcost

effective metal plates, necessary for mass production of cell stacks and, also, the biggest hurdle

forfuelcellvehiclecommercialization.By2010,KiaMotorswillimprovetheoutputdensityofcell

stacksanddevelopeconomicallyviablematerialswhilesecuringastablesupplyofquality

materials to enable mass production of fuel cell vehicles.

Sportage Hydrogen fuel cell vehicleMain performances and specifications fuel cell stack:80kW(by

independentdevelopment)

driving system:

independent development

Battery system:20kW-LiPB

battery

Motor system:40kW/80kW

Hydrogen fuel tank:350bar

Weight of empty vehicle:

1,850kg

Acceleration performance:

18seconds

Maximum speed:150km/h

Pilot driving Tests in the u.S _In2004,KiaMotorswasselectedtoparticipateinconstruction

ofhydrogenfuelingstationsandafuelcellvehiclepilotdrivingtestproject,managedbytheU.S.

DepartmentofEnergy(DOE).KiaMotors’selectionandresultsoftheparticipationrevealedKia’s

world-classtechnicalexpertise.Currently,KiaMotorsiscontributingtothecommercializationof

fuel cell vehicles by leading efforts to collect vehicle development data and establish safety

criteriaforhydrogenfuelingstations.Also,KiaMotorssecured320,000kmofdrivingdistance

throughfiveinstitutionsinthreeareasoftheU.S.thattestdrove22Sportagefuelcellvehicles.

U.S.basedChevron’ssixhydrogenfuelingstationswillprovidefuelingforKiaMotorsfuelcell

vehicles.InFebruary2005,KiaMotorsbuiltandoperatedthefirsthydrogenfuelingstationin

ChinoLab,andfiveadditionalstationsareplannedforconstruction.

Pilot driving Test in Korea _ The hydrogen fueling station construction and fuel cell vehicle

pilotdrivingtestprojectsinKoreahavebeenon-goingsince2006.Undertheproject,eight

fueling stations will be built in major cities nationwide, and test driving will be conducted with

the participation of fuel cell research institutes, certification institutes, automobile manufacturers

and fuel suppliers. Kia Motors constructed a hydrogen fueling station at the Mabuk

EnvironmentalTechnologyResearchCenter,andplanstooperate30fuelcellautosandfourfuel

cellbusesinthecapitalareaandJejuProvince.Withthedatacollectedthroughthetestdriving

project,thusfar,KiaMotorshavebeenabletoimprovethefuelcellvehicle’sefficiency.Hydrogen

fuel infrastructures were evaluated to set guidelines for regulations. Kia Motors plans to promote

the fuel cell vehicle market and public transportation by encouraging the central government,

public institutions and public transportation operators to participate in test driving fuel cell

vehicles.

Biofuel vehicles

Biofuel is fuel extracted from the energy created or emitted from biomass, which is material

derived from recently dead biological material, including plants, animals and their by-products.

Unlike fossil fuels, biofuel is perpetually recyclable and considered pure, clean energy since it does

not cause environmental pollutants. The development of vehicles powered by biofuel is critical

for automotive makers in order to maintain a sustainable future.

Bio diesel vehicle _BioDieselwasthefirstcommercializedfueltosubstitutepetroleum

throughthekoreangovernment’smid-longtermdistributionplans.FromJuly2006,asa

voluntaryagreementbetweenoilrefineriesandtheMinistryofCommerce,IndustryandEnergy,

0.5%ofbiodieselwereaddedintogasoline.In2007,theoilrefineryindustryhadexpandedits

consumptiontoaround90,000tonsofbiodiesel.InJanuary2008,biodieselingasolineincreased

to1%,andthisratiowillincreaseinphasesupto3%,whichwillconsume540,000tonsofbio

dieselsby2012.KiaMotorsadoptedtechnologytoutilizeBD5(gasolinecontaininglessthan5%

ofBiodiesel)initsvehicles.Inajointeffortwiththegovernment-ownedEnergyTechnology

ResearchCenter,KiaMotorstestedtheBD5modifiedKiaSorentoonactualroadconditionsovera

longtermbasistoverifythesystem’sefficiency.Currently,KiaMotorsisdevelopingmaterialsand

partsthatcanproperlyadapttotheengineforBD5commercialization.

Bio Ethanol vehicles _Attheendof2007,theKoreangovernmentbegandistributing330,000

litersofBioEthanolfuelintwotypes,E3(BioEthanol3%+gasoline97%)andE5(BioEthanol

5%+gasoline95%).WhenfuelsaresubstitutedwithBioEthanol,CO2emissionswillbeZero

Countandanoctanerating(1) of gasoline will be enhanced by the ethanol mixture, as outlined in

theKyotoprotocol.Astudyindicatedthatoctaneincreasedtwotothreegradeswhen10%of

ethanol(E10)isaddedintogasoline.KiaMotorsalreadyimplementedcurrentvehiclestoutilize

44

(1) OctaneNumber:Itisameasureoftheanti-knockingofagasolineorfuel.Highertheoctanenumber,

the lower the knocking rate in the engine.

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gasolinethatcontainsupto10%ofethanol.KiaMotorsisalsooncoursetodevelopFlexibleFuel

Vehicles(FFV)whichcanadapttoethanolcontainingfuelorotherbio-mixedfuelsinspecific

proportions.

iMPrOvEMEnTS in fuEl EcOnOMy

Improvementsinfueleconomyareconsideredanapproachtoreducingclimatechangebysaving

energy and utilizing energy effectively. The industrial development boom brought increased fossil

fuelusagewhilediminishingfossilfuelreserves.Italsoledtofossilfuelpricesincreaseingand

acceleratedglobalwarming.ThesesituationsledKiaMotors’attentiontofocusonefficiently

utilizinglimitedenergy.Environmentsaroundtheautomotiveindustryaredemandinghigher

mileage vehicles to increase energy efficiency. Kia Motors responded to the market and customer

demandbydevelopingfueleconomyenhancingtechnologiestosavecustomers’bottomlineand

meet market demands.

improvements in Engine efficiency

The engine in a vehicle is like the heart in a person. Both serve the same critical functions, so

performance and efficiency of the engine can lead to overall improvement of the vehicle. Kia

Motors consistently strives to improve engine capacity, including any relevant parts to secure

efficiency.

cerato (Spectra) _PreviousCerato(Spectra)enginewasexchangedwiththeGasolineGamma

1.6CVVTenginethatislighterbyapplyingaluminumcylinderblockstotheengine.Newsmall

transmission,MotorDrivenPowerSteering(MDPS)andsilicatireswereinstalledtoenhancedfuel

efficiencyoftheCerato(Spectra)by6%from12.6km/ℓto13.2km/ℓ, compared to the previous

model.

new carens (rondo) _ThenewCarens(Rondo)receivedupgradestoitsenginetosecond

generationDieselD2.0VGT.NewCarensalsoreceivedVariableGeometryTurbocharger(VGT)

technology,asecondgenerationfuelinjectionsystemwith1,600barofhighpressureandan

enhancedlineupvariablesystem.NewCarensoptimizesitscombustionwithenhancedVGTthat

optimallycontrolsinhaledairflowthroughthehighpressurefuelinjectionsystem.Also,thelineup

variablesystemimprovedfuelefficiencybyapproximately9%byestablishinganoptimaldriving

lineupthatenhanceseffectivetransferresultinginfuelefficiencyof13.0km/ℓfrom12.0km/ℓ, compared to the previous model.

Sorento _ TheKiaSorentoisbuiltwiththedieselA2.5VGTEngineand1,600barhighpressured

second generation fuel injection system. By loading five-speed auto transmission and through

technologythatreducesCd(DragCoefficient),Sorentoimproveditsfuelefficiencyby

approximately12%,allowingfuelusageof10.7km/ℓfrom9.4km/ℓ, compared to the previous

model.

Enhancement in Transmission Efficiency

Transmission, which controls the speed of a vehicle, is a critical factor in delivering efficient power

generatedfromtheengine.Enhancementintransmissionleadstoefficientdeliveryofpower

generatedbytheengine,whichthenleadstoefficientfuelusageandCO2 emissions reduction.

Miniaturization and staging are the major factors that lead to the enhancement of the auto

transmission. Through constant research and development, Kia Motors develops improved

transmissions and commercialized mass production.

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0102

0304

01. 02. TheGammaengineoftheCerato(Spectra)withapproximately6%fueleconomyimprovementoveritspreviousmodel.

03. 04. SecondgenerationengineofnewCarenswithapproximately9%fueleconomyimprovementoverthepreviousmodel.

next generational Small Automatic Transmission _Asmallsizedautomatictransmission,

designed for small-mid sized vehicles, was adopted by new technologies such as the straight

torqueconverteranddisktypespringin2006.Itisalsoequippedwithanaluminumspoolvalve

andefficientoilpumptoenhanceefficiencyintransferringpowertoincreasefuelefficiency.Also,

99.8%ofthepartsweresuppliedbycooperatingdomesticcompaniestoestablishclose

relationshipstoopenroadstosustainablefuture.Intermsofsafety,highimpactgearmaterials

have been used, so the power generated by wheel rotation is capable for larger vehicles,

includingtheLotzewith2,000ccormore.

Highly Efficient five-Speed Automatic Transmission _ In2006,ahighefficiency5-speed

automatictransmissionwasdevelopedaftersixyearsofR&D.Thetransmissionimplemented

lineupspeedmanagementvalvebody,straighttorqueconverter,highimpactgearmaterialsand

high capacity bearing to improve drivability in speed changes and achieve high fuel efficiency.

Thenewtransmissionfeatureshighefficiency,highcapacityandlownoiselevels.KiaMotors’

revitalized domestic businesses and contributing cooperative companies increased their

competitivenessbylocalizing99%ofitstransmissionparts.

reducing Auto Body Weight

Autoindustriesaroundtheworldarecompetingtoreduceautobodyweight.Competitionis

intensifying as increased energy efficiency, minimization of environmental impact and improved

performancecanbeachievedbysimplyreducingautobodyweight.Lighterbodyweightwill

improvefuelefficiencyandreducetheamountofpollutantsemitted.Weightreductionsare

necessary in order to secure future competitiveness developing next generation vehicles that will

utilize fuels, other than fossil fuels. Through continual efforts to reduce auto body weight, Kia

Motors improves economical and environmental values, and actively respond to governmental

autobodyregulations.Weightreductiontechnologyrevolvesaroundreducingthechassisweight,

whichamountsto30%ofthetotalweightofthevehicle.KiaMotorsutilizedmaterialsas

aluminumandmagnesiumthatareatleast30%and40%lighter,respectively,thansteel.Kia

Motors also developed new materials that can be applied to plastics and carbon fibers, and

changedthecoatingmethodtoreduceweight.Atthesametime,KiaMotorsstrivestoachieve

safety enhancements and cost reductions through the application of new technology.

lightweight vehicles by using Alternative Materials _Lightrecyclablealuminumand

magnesium, considered as eco-friendly materials, are key materials for vehicle weight reduction.

KiaMotorsenhanceditswheelcore,airbaghousing,andsteeringcolumnhousing(handling)that

affect noise and vibration levels. Kia Motors applied aluminum to improve suspension parts,

which are directly linked to comfort level when driving. Magnesium has been applied to the body

andseatpartsaswellassuspensiontoimprovefueleconomyandcomfort.Approximately40%of

auto part weight was saved by using magnesium as a single casting material in place of several

steelweldedcomponents.Inautomobiles,reducingtheweightofpowertrainpartsisan

important factor to increasing performance and fuel economy. Kia Motors will continue to

develop magnesium power train parts that are designed to endure high temperatures.

Application of High-Strength Steel _Thechassismakesupabout30%ofavehicle’stotal

weight, thus using lightweight materials guarantees the overall reduction of vehicle weight. The

chassis is the skeleton of the automobile's frame where the engine, transmission and other

essential components are attached. Kia Motors utilizes high-strength steel to increase the

strength of the frame while reducing overall weight. Kia Motors is also developing advanced

lightweight high-strength steel to continue its sustainable efforts.

0102

46

01. Highlyefficient5-speedautomatictransmissiondevelopedoverasix-yearperiod.

02. PlasmaCoatingMethoddevelopedtoreduceenvironmentalimpactandvehicleweight.

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lightweight Technology by new Methods _ Kia Motors has developed and applied new

methods used for the production of its vehicle parts, thereby lowering the weight of each vehicle.

KiaMotorsappliedalongfiberstrengtheningPUfoamingmethodtothepackagetraypartsof

theOpirus(Amanti)model,insteadofapplyingtheconventionalheatingpressmoldingmethod

forresin-feltmaterials.Thisreducedtheweightofeachvehicleby800g.Additionally,vehicle

weightisalsoreducedwiththeincorporationofresin-feltandW/Stock.

lightweight Technology utilizing Eco-friendly Materials _VolatileOrganicCompounds

(VOC)suchasformaldehydeandtoluenecancauseeyes,noseandthroatirritations.KiaMotors

hasbeendevelopingVOCemissionreducingtechnologywitheco-friendlymaterialstoprotect

vehicle users and reduce negative environmental effects. Kia Motors have developed eco-friendly

water-solublecoatingagents(primerandtopcoating)andappliedthemtointernalparts(suchas

crashmatanddoortrim)oftheLotzemodel.Asaresult,VOCemissionswerereducedandthe

overallqualityoftheproductimproved(suchasloweringtwoodorlevels).KiaMotorsplansto

expand the application of new coating agents to other models in the future.

Auto lightweight Technology through the development of new Materials _Overall

vehicleweightcanbereducedbyapplyinglightweightmaterialstothevehicle’sproduction.By

applyinglightweightTALC-filledPolypropylene(PP+Talc5%)insteadofTALC(14%)-filled

PolypropyleneandPolyethylenematerialstotheplasticdoortrims,theCerato(Spectra)shaved

off0.3kgfromitstotalweight.

Other Eco-friendly Technologies developed to Produce lightweight vehicles _ Kia

Motors has also developed an eco-friendly plasma coating method that can replace conventional

andprimercoatingmethods,fortheapplicationofexternalplasticparts.Plasmacoatingisa

superior coating method as the polarity of the plastic surface changes to form a tighter bond with

thecoatingmaterial.ThePlasmacoatingmethodhasbeenappliedtothewheelcoverofthenew

Carenssince2006.

rEducing gAS EMiSSiOnS

NOxandParticulateMatter(PM)areemittedbyvehicleswithinternal-combustionengines.

Reducinggasempowersenvironmentalsustainability.KiaMotorsfirmlysetzerogasemission

targets and is striving to reduce gas emissions in phases by developing the necessary technology.

Currently,allKiaMotorsvehicles’gasemissionsaremanagedinaccordancewitheachcountry’s

emission regulations. Kia Motors is not satisfied by merely responding to pre-existing regulations,

butfocusesondevelopingtechnologiestosurpassfutureregulations.Effortstoreducegas

emissions can be identified into two categories, regional geographic response to emission gas

regulations and the development of eco-friendly engine technology.

regional response to gas Emission regulations

north America (gasoline Powered vehicles) _ TheU.S.hasthehighestsalesofgasoline

poweredvehiclesbutmaintainsitsfederal(Tier-2)andCaliforniastateLowEmissionVehicleII

(LEV-II)regulations.Thesetwotypesofregulationshaveseencontinuousevolutionsince2004,

andLEV-IIandZeroEmissionVehicles(ZEV)areconsideredastheworld’smostdemandinggas

emissionregulations.InresponsetoLEV-II,KiaMotorsiscurrentlysellingCerato,SuperUltraLow

EmissionVehicle(SULEV),withaBeta2Engine.Also,currentKiaMotors’modelsinthemarket

suchasthePride(Rio),Cerato(Spectra),Lotze(Optima/Magentis),Carnival(Sedona),Sportage

andSorentosatisfygasemissionregulations.

47

E.u. (diesel Powered vehicles) _ Traditionally, diesel vehicle demands have been high in the

E.U.,andE.U.RegulationsofPM(ParticulateMatter)andNOxemissionscontinuetoevolveover

time.CurrentEuro4regulationsinEuropewereestablishedin2005andallcurrentKiamodels,

suchasthePride(Rio),Cerato(Spectra),Sportage,Lotze(Optima/Magentis)andCarens(Rondo)

conformedtothisregulation.TheE.U.expectstostrengthenregulationstoEuro5,whichwill

reducePMsby80%ofNOxby30%comparedtoEuro4.TheEuro5regulationisplannedasearly

asSeptember2009.TheE.U.isalsointalkstoestablishEuro6regulationswhichwouldreduce

NOxemissionsby60%.Besidesstringentregulations,theE.U.demandsloweringCO2 emission to

130g/kmby2012.Inresponsetostrengtheningregulationsinthefuture,KiaMotorsplansto

applyDieselParticulateFilter(DPF)toitsdieselvehicles.KiaMotorsisalsomakingeffortsin

developingSelectiveCatalyticReaction(SCR)technologytoreduceNOxdramatically.Currently,

Morning(Picanto),Carens(Rondo),SportageandSorentoareavailableforsale.

Korea _ IntheKoreanmarket,withequaldistributionofbothGasolineandDieselvehicles

comparedtootherregions,regulationsareinplaceforeachvehicle.Since2006,Korean

regulationsareatequivalentlevelsasLEV-IIofCaliforniaforgasolinevehicles,andare

strengtheningmoreregulationsinphasesof25%.Fordieselvehicles,Euro4guidelineisapplied

andallKiaMotorsmodelsafter2006satisfythisregulation.Otherthantheseregulations

mentionedabove,On-BoardDiagnostics(OBD)requirementongasolinevehiclesaresatisfiedby

installingOBDonall2007Kiamodels.Currentvehiclesthatcurrentlysatisfylocalregulationsis

shown below.

Gasolinevehicles:Cerato(Spectra),Opirus(Amanti),Picanto(Morning),Lotze(Magentis/Lotze)

Dieselvehicles:Sportage,NewCarens(Rondo),Sorento,Mohave(Borrego)

development of Eco-friendly Engine Technology

PM reduced Emission diesel Engine _PMsedandieselengineadoptedCPF(Catalyzed

ParticulateFilter)todramaticallyreduceairpollution.Thisenginecomplieswithhighcapacity,

eco-friendly,andlownoiseregulationsofEuro4,andisequippedwithanadvancedfeaturethat

allowsmorethan90%purificationefficiency.Thiseco-friendlyengineisequippedwithafilter,

whichcanbeusedfortheengine’slifetime.KiaMotorsisthefirstautomotivemakerinKoreato

applytheE-VGT,highcapacityCGIcylinderblockandPiezofuelinjectionsystemtoachieve

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0102

01. Highlyefficient,environmentallyfriendlyandquiet,low-emissionsengine.

02. Eco-friendlyI-4GammaEnginethatboastslownoisequality,lightweight,improvedengineperformanceandreducedgasexhaust.

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3rd Place in the Most Eco-friendly Auto Maker 2007

cee‟d, Selected as Best car by Major Auto Magazines in Britain

KiaMotors,alongwithHyundaiMotors,took3rd

placein"themosteco-friendlyautomaker2007"

intheUnitedStates.TheUnionofConcerned

Scientists(UCS),anorganizationconsistingof

environmental scientists, has been selecting eco-

friendlyautomakerseverytwoyearssince1998.

USCevaluatesvehiclesforpollutantsandgasemis-

sions that contribute to smog and global warming.

Inthe2007evaluation,KiaMotorstook3rd place

followedbyHondaandToyota.UCSrevealedthat

KiaMotors‟vehiclesemit87%ofgaspollutants

comparedto100%industryaverage.

Britishmagazines,PracticalCaravanandWhat

Car?,bothselectedthecee’dasthebesteco-

friendly hatchback. These magazines evaluated

cee’dasahighqualityvehiclewithexcellentdriv-

ingperformance,fuelefficiencyandlowemissions.

TheyalsoreportedthatKiaMotors’highquality

vehiclesaremakingFord,VauxhallandRenaultin

Europenervous.

maximumhorsepowerof240andmaximumtorqueof46kg·m.In2006,PMsedandieselengine

received52ndIR52Young-SilJangAward,namedafteranacclaimedKoreanscientist.

i-4 gamma Engine _KiaMotorssucceededindevelopingtheI-4GammaEngine,agasoline

enginedesignedforsmall-midsizedvehicles,in2007.Thisengineisregardedasaneco-friendly

gasolineenginesinceitreducedtheweightoftheengine,yetimprovedtheengine’scapacityby

utilizinghighpressuretreatedaluminumblock.Exhaustmanifold,apartthatdistributesinhaled

air in cylinder, is made from plastic to reduce engine weight and noise levels while improving

engine performance. Kia Motors also arranged exhaust manifold in the back and applied

WOC+UCC,anefficientpurificationcatalyzertoreducecatalyzingtimetoaccomplishgas

emissionreduction.Intermsofdurability,KiaMotorsutilizedasilenttimingchainandhigh

performanceelectriccontrolsystemandproclaimedworld-classqualitybyguaranteeingits

enginefor10yearsor100,000miles.TheentireI-4gammaenginewasmadewithdomesticparts

andawardedwiththe17thIR52Young-SilJangAwardin2007.Currently,Cerato(Spectra)

contains the gamma engine. The gamma engine is planned to be installed in mid-sized vehicles

andCrossoverUtilityVehiclesinthefuture.

v6 S Engine _ Noise, vibration and starting delay have been known as the few drawbacks of

dieselenginesinthepast.Toovercomethesedrawbacks,theV6SEnginewasdevelopedin2006

byapplyingthePiezofuelinjectionsystem,highcapacitysteelcylinderandrapidthermal

generationcapability.In2006,V6SDieselEnginefor3,000ccvehicleswascertifiedasNew

ExcellentTechnology(NET)bytheMinistryofScienceandTechnologyandKoreanIndustry

TechnologyCommittee.

rEducTiOn in rESOurcE uSAgE And rEcycling iMPrOvEMEnTS

Steepincreaseinpopulationandrecklessusageofresourcesarecausingresourcescarcitywhile

contaminatingtheenvironment,threateningtheEarth’seco-system.Asacorporatecitizen,Kia

Motors realizes its responsibilities to actively respond to the resource scarcity. To fulfill its

responsibilities, Kia Motors is focusing on developing technologies that utilize alternative

resources and recycle resources whenever possible. To establish a recycling society, Kia Motors

applies eco-friendly concepts to every phase of its product development. Kia Motors designs

productsandactivelyevaluatesthemthroughLifeCycleAssessment(LCA)andEco-efficiency

Evaluationtomakeeveryeffortinwasterecyclingefficiency.

Active Evaluation on Product Effects on the Environment and counter Effect Strategies

life cycle Assessment (lcA) _ KiaMotorsquantitativelyevaluatestheenvironmentaleffects

of its products through the evaluation of the full life cycle of its products, which includes

production,usageandwaste.LCAisapartoftheISO14040seriesthathasbeenstandardized

internationally.WhenLCAwasfirstintroduced,itgenerallyappliedtobumpers,dashboardsand

fender/hood,enginealongwithotherparts.Withaccumulatedexperience,beginningin2006,

newvehiclesnowgothroughTotalCarLCA.

AsaresultofTotalCarLCA,theMohave(Borrego),whichdebutedinJanuary2008,was

evaluated to be more eco-friendly than any other vehicle in the same grade. Kia Motors plans to

continuously support environmental sustainability by establishing complete cycle structure where

allnewvehiclesdevelopedwillattainLCAresultsofpreviousvehicles.

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0102

01. 200717thIR52Young-SilJangAward(forI-4GammaEngine)

02. WinnerinThirdNewExcellentTechnology(forV6SEngine)

Eco-efficiency _Eco-efficiencywasintroducedtoKiaMotors

in2007asanadditiontomanyotherenvironmentalindexesto

enhancesustainability.Eco-efficiencyisasustainability

evaluationmethod,whichevolvedinEuropeandJapanever

sinceitsinceptionattheWorldBusinessCouncilforSustainable

Development(WBCSD)in1994.Thecoreconceptofeco-

efficiency is to consider both aspects of environment and

economyduringproductionandservice.Inordertoimprove

eco-efficiency, environmental burdens need to be minimized

whileimprovingeconomicvalue.Sustainablemanagementis

only possible through these activities and respecting the

environment. Kia Motors evaluated its eco-efficiency through

in-house-research, which created indexes of relevant corporate business activities, productions,

vehicle’seconomicvaluesandenvironmentalburdens.

Toquantifyeco-efficiency,grosssaleswereconsideredasagaugeforeconomicvaluewhile

CO2 emissions and usage of resources were measured to determine environmental burden. This

evaluationindicatedthatKiaMotorsincreaseditseco-efficiencyinrelationtogrosssales,CO2

emissions,andresourceusageby3.2%and11.6%in2005and2006,respectively,comparedto

2004.Eco-efficiencyfor2007willbereportedin2009.

Eco-efficiencyisnotlimitedtocorporateeco-efficiencyandKiaMotorsplanstoexpandthe

evaluation’sboundarytoproductionandnewvehicledevelopment.KiaMotorsalsoplansto

incorporate systematic index management systems to support eco-efficiency improvements.

recycling rate yield Program (rAiS-H) _ InresponsetoEuropeanrecyclingcertificationand

regulationsineachcountry,awebsystem,RAIS-H(RecyclabilityAssessmentInformationSystem

forHomologation),wasdevelopedandimplemented.Thiswebsystemiscapableofcalculating

recycling rate yields and identifies non-recyclable materials so that these materials can be

eliminated during the eco-friendly design process. This web system simultaneously evaluates both

HyundaiandKiaMotorsvehicles,sosynergyeffortscanbeexpected.Aftercompleting

evaluationsonCarens(Rondo)andcee’din2006andMohave(Borrego)in2007,resultsof

evaluationssatisfiedbothrecycleratioof85%andrecollectionratioof95%,whichareregulation

standard.Newvehiclesarecurrentlygoingthroughtheseevaluations.TheRAIS-Hsystemwillbe

upgraded in the future to include the certifying process within the company. The upgrade will

allowforquickresponsestoappropriaterecyclingregulationsandisalsoexpectedtobeusedasa

basic guideline for eco-designing.

0102

50

Eco-efficiency

100

120

80

60

40

20

0

2004 2005 2006

100% 103.2%111.6%

01. RAIS-H(RecyclabilityAssessmentInformationSystemforHomologation)

02. CertificateofCompliancewithAnnexIV

(Eco-efficiency = Economic value ÷ Environmental Burden)

38

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Acquisition of E.u. certificate of compliance with Annex iv

InNovember2007,KiaMotorsacquiredthefirst

E.U.CertificateofCompliancewithAnnexIV

amongKoreanautomotivemakers.EUCertificate

ofCompliancewithAnnexIVisissuedbyRDW

(NetherlandsDepartmentofTransportation).The

RDWcertifiedKiaMotors’recyclingactivitiessuch

asrecyclingwithinKorea/Europe(Slovakia)facto-

ries, heavy metals abandoning policy and recycling

yieldprocesslevels.Throughthiscertificate,Kia

Motors earned objective credentials on its sustain-

abilityandrecyclingresearch.Withthecertifi-

cate,effective2008,KiaMotors’brandvaluewill

increaseintheEuropeanmarket.

7. Score Evaluation of Disassembly 8. Quick Interpretation 9. Help for Each Function

51

01

01. Eco-friendlyDesignDigitalVerification

Eco-friendly design digital verification _Productdisassembly,maintenanceandrecyclingis

setduringtheproductdesignprocess.Tochangetheproductafterproductionrequiresa

significantamountoftimeandexpense.Thus,beginningin2003,KiaMotorsimplementeda

digitalverificationsysteminordertocutdownonissuesarisingafterproduction.In2007,CAD

modelingforDfR(DesignforRecycling)andDfD(DesignforDismantling)wereaddedtothe

digitalverificationprocesstoachieveDfE(DesignforEnvironment)goals.

dfd System (design for dismantling) _KiaMotorsintegratedtheDfDsupportsysteminto

theCADmodelingverificationprocesstoanalyzetheprobabilityofdismantling,maintenance

and recyclability of a product to improve upon identified weaknesses in the verification process.

TheDfDsupportsystemisdividedintothreestagesofanalysis,evaluationandremodeling.A

product’s3Dmodelisenteredintothesystemtoanalyzedisassembledstructureandpath,whose

dataisthencollectedtomakemodelsforthedigitalverificationprocess.Anystructurallyweak

componentsareidentifiedbythesystemandredesignedbeforetheproductionstage.Withthe

DfDsupportsystem,designandredesigndurationhasdecreasedby30%andproductdismantling

reducedby20%;theproduct’smaintenance,reusabilityandreproduction-abilityhavebeen

improvedaswell.Whenthissystemisusedfordisassemblyandassemblyrelateddesignplans,

designandredesigntimedecreasessubstantially.TheCADlinkabledismantlingdesignsystemis

thefirstofitskindintheworld.Withthissystem,DesignforRecycling(DfR)andDesignfor

Environment(DfE)canbematerialized.

Main function of dfd System

disassembly design System Based cATiA

1. Structure / Path Generation 2. DfD Modular Design 3. Check Finished Component

4. Check Tool Application 5. Change Finished Component 6. Video Facilitated Component Verification

Minimizing Waste and improving recycling

Automotive recycling center _ Since2006,KiaMotorshasoperateditsRecyclingCenterwith

arecyclingcapacityof4,200vehiclesayear.TheCenterprovidestechnicalsupportfordesigning

recyclable vehicles, developing scrap vehicles and waste handling/recycling technology and

provides technical support for community business partners to build a recycling society. Through

theCenter,KiaMotorscollectsmorethan90%ofthevariousliquidsandgasinthevehicle

disassembly process to prevent environmental contamination. Kia Motors, also, collects and

separatsvariousinternalandexternalpartsforrecyclingwithanover85%recyclingrate.The

Centermanageswasteprocessingwithreal-timemonitoringsystemsforrecyclingandwaste

volumesthroughcuttingedgeubiquitoustechnology.KiaMotorsisstrivingtodevelopauto

dismantlingsystemsandequipmenttosupplytosmall-andmedium-sizedbusinesspartnersthat

areindifficultpositionstodeveloprecyclingtechnologiesontheirown.Since2006,KiaMotorshas

heldtheannual“ScrapVehicleHandlingTechnologiesExchangeForum”toshareinformation

about national and international auto regulations and scrap vehicle handling technologies with its

partners.BasedontechnologygainedfromtheRecyclingCenter,KiaMotorsplanstoestablish

parts-recyclingandeco-friendlymanagementstartingfromthedesignstages.Additionally,by

offering recycling operating know-how and technology to auto disassembly operators, Kia Motors

will set a standard for managing scrapped vehicles.

recycling through Automobile Shredder residue (ASr) _Recyclingautosalvagewasteby-

productisacrucialtechnologytopreservingtheenvironment.Duetoenvironmentalpollution

from waste produced by scrapped vehicles, countries have set stricter regulations, and countries

suchasinEuropeandJapansetgoalstoreducethewastefromscrappedvehiclesto5%by2015.In

responsetotheseregulations,KiaMotorshasbeenresearchingASRrecyclingtechnologywith

variousuniversitiesinKoreasince2000.From2005to2008,KiaMotorsparticipatedina

governmentalASRoptimizationresearchprojecttoimproveASRmaterialrecyclingratesby

securingdisassembledpartsrecyclingandmaterialtechnologiesthroughthestrictselectionofASR

qualitymaterials.KiaMotorsisalsoactivelydevelopingpuregasenergysourcesandindustrialheat

sourcetechnologiestoreacha95%scrapvehiclerecyclingrate.Atthesametime,KiaMotorsis

developing technology to completely remove toxic chemicals and harmful materials such as auto

refrigerants.

recycling Materials from dismantled components and Mass Production Technology _In

responsetoEuropeanregulationtargetof85%scrappedvehiclerecyclabilityby2015,KiaMotors

selects components based on eco-friendly level, economic valuation and work efficiency levels. Kia

52

flow chart of recycling Management

The Scrapped vehicle Handling System is capable of handling a large quantity of vehicles through its

conveyor-type system in eight recycling stages.

Explosive Removal Chamber

01.Determine Car Type

02.Explosive Material Removal Airbag,Seats, Pretensioners,

03.Hood, Battery and Tire Removal

04.Retrieval of Nine Types of Liquid such as Oil and Gasoline

05.Dismantling Exterior Parts, such as Bumper and Radiator

06.Dismantling Interior Parts

07.Dismantling Engine and Transmission

08.Compression

Liquid Retrieval Body Compression Press

ASr recycling Technology development

Scrapped Vehicle

Shredding + ARS

Material Selection

ARS Recycling

Material Recovery

Cement Heating Source

Reusable Gas By-product

recycling Process for nylon Type Mixed Waste

Material Selection

Compressing

Washing

Strengthening

Compressed according to

size for washing

Removing dust, sediments

and other contaminants

Mechanical property

uniformity and reinforcement

Separation of iron,

copper and rubber from

nylon material

38

39

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63

65

69

70

74









Motors applied and expanded material recycling technology from assembly lines in mass

production to new product development.

(Compound Polyamide (Nylon) Components Recycling): Nylon is the most popular material use for

radiatorcomponentsinsideanengine.Classifiedasapremierengineeredplastic,nyloncompound

materials used in radiator end tanks were mostly sent to landfill or incinerators because they are

difficulttorecycle.However,topreventnylonrelatedenvironmentalcontamination,KiaMotors

collects the nylon compound, such as radiator end tank, fan and shroud, from scrapped vehicles for

recycling while striving to develop more advanced nylon recycling technology to produce more

eco-friendly products. Kia Motors plans to apply recycled nylon re-compounded materials that

have the same level of physical properties as new materials in vehicle roof racks. Kia Motors

expectstoreduceroofrackmaterialcostsbymorethan20%andnylondisposalcostsby180,000~

220,000won/tonbasedonincinerationcosts.The2008GrandCarnivalandSportagewillcome

equippedwiththerecyclednylonroofrack.

(Reuse of Rubber Scrap): Oneofthevehicle’smajorcomponents,rubber,mustretainitskey

characteristics of elasticity by being permanently thermoset to prevent future melting.

Thermosettingisobtainedfromvulcanization,chemicalreaction,usingsulfurandperoxide.After

vulcanization, rubber is difficult to melt and thereby difficult to recycle. To address this problem,

KiaMotorsdevelopedandappliedFinePowderTechnologyforrubberrecycling.KiaMotors

developedthefirstFinePowderTechnologyintheworldforrubberrecycling.Thistechnology

allows thermoset rubber to be made into powder at room temperature for recycling, and this

recycledrubbercanbeusedonavehicle’sweatherstrip.Basedonthistechnology,KiaMotors

researchedpracticalusesforhighimpactelasticmaterialusingEthylenePropyleneDiene

Monomer(EPDM)rubberscrap,fluorinatedrubberscrapandend-of-lifeplasticpolymersince

2006.

component remanufacturing Technique _Wastematerialsfromrepairingorscrappingare

mostlyland-filledotherthanafewmetals.KiaMotors’researchoncomponentsremanufacturing

techniquewillimproveresourceandenergyutilization,reducenegativeeffectsonthe

environmentandreduceeconomicinefficiency.Remanufacturingtechnologyrestoresthequality

ofscrapvehicle’sreusablecomponentsbacktonewcomponents.KiaMotorsdecreasesdefective

rates with the analysis of major malfunction faults and patterns. Using the analysis, Kia Motors

minimizes vehicle component waste by repairing or scrapping vehicles by recycling their reusable

components through remanufacturing. Kia Motors also performs step-by-step research for

standardizingcomponents’remanufacturing.Inadditiontotheaboveactivities,KiaMotorsis

focusingoncreatingproductqualityguidelinestoreducequalitydeviationofremanufacturing

components, developing testing methods for reliability and researching ways to better calculate a

component’slifecycle.

KiaMotorshasalargenumberofpatentsregardingitsreprocessingtechnique,whichisatthe

coreofremanufacturing.Inalternatorsandstartmotors,KiaMotors,togetherwithKorean

research centers and industries, completed many projects utilizing the remanufacturing technology

andimplementationofitstestingsystem.Currently,KiaMotorsplansonlunchingremanufacturing

components, such as remanufactured alternators and starter motors, with the cooperation of

remanufacturingcompaniesandcontractors.Gradually,KiaMotorsplansmassproductionof

remanufacturedcomponentsinassortedfields.Superiorqualitywithreasonablypriced

remanufacturedcomponentsreduceavehicle’soveralloperatingcostandimprovesenvironmental

conditionsbyreducingCO2 usage, increasing reuse of natural resources and energy saving.

53

01

rubber Scrap recycling Process

Fine Powder Creation from

Rubber Scraps

Rubber Surface Creation

Recycled Rubber Processing

Master Batch

New Material for Vehicle

Component

component remanufacturing Process

Collecting Waste Components

Dismantling

Cleaning

Testing and Sorting

Repairing and Adjusting

Reassembling

Final Testing

01. Alternatorproducedusingremanufacturedcomponents

Thecurrentcentury’sglobalconditionsuggeststhattheentireglobewilltransittowardsresource

circulation by reducing, reusing and recycling wastes for the global environment. Throughout

production, Kia Motors strives to establish an eco-friendly circular system by minimizing resources

and maximizing waste recycling with the appropriate treatment of industrial waste. The efficient

use of resources and energy controls eco-friendly production and the minimization of wastes. Kia

Motorsisalsoadheringtoaccomplishingcorporateresponsibilitytoimproveitssociety’s

sustainability through complete environmental management and manufacturing process

development.

uTilizATiOn Of SuSTAinABlE rESOurcES

Kia Motors strives to reduce resource usage in production to defend non-renewable resources,

lower resource-intensiveness and raise economic efficiency. To efficiently utilize resources,

minimizing usage of raw materials and wastes is necessary throughout the production process.

Resourcessuchassteel,paint,thinner,aluminum,plastics,papersandpolyvinylareusedinvehicle

manufacturing;resourcesalsoincludeenergiessuchaselectricityandnaturalgas.KiaMotorsis

enhancing technologies for comprehending and minimizing the use of resources through tedious

monitoring of the manufacturing processes.To efficiently manage wastes, Kia is executing detailed

planstoimproverecyclingratesby3-5%,graduallyaimingfor0%waste.

Minimizing raw Materials

Rawmaterialsareessentialinvehiclemanufacturing.Generally,themorerawmaterialsused,the

moreenvironmentalpollutantsareemitted.Inthisregard,thereductionofrawmaterial

consumption is as vital as efficient management of environmental pollutants.

Steel, Paint, Thinner, and Wrap guard film _ Kia Motors aims at fully reducing the use of

typicalrawmaterialssuchassteel,paint,thinnerandwrapguardfilm.Kiareducesthequantityof

steel used in production by replacing it with recycled steel and adopting state-of-the-art

productiontechnologies;therebyimprovingthematerialyieldratio.Backedbytheseefforts,the

totalsteelusagein2007reduced8.9%comparedto2003.

54

minimizing environmental

impacts on proDuction

Notably,thesteelquantityforeachvehicleproduceddecreased19.9%.Kiautilizeshighly

efficientRobobellatomizerstominimizethequantityofpaintandthinnerforvehiclesurfacesand

topcoating;thinnersarecompletelyrecycled.Theamountofpaintandthinnerusedforeach

vehicleproducedin2007wasloweredby9.4%and8.0%respectively,whilethetotalusageof

thinnerincreasedby8.1%comparedto2003.Thetotalamountofwrapguardfilmin2007

decreasedby24.2%inadditiontotheloweredamountusedforeachvehicleproductionby33.4%

comparedto2003’sratios.

Toxic chemicals _ KiaMotorsbuilttheIn-houseEnvironmentalSecurityandHealth

managementsystem(i-ESH),allowingthecompanytomonitornoxiouschemicalsusage.To

manage these materials properly and prevent accidents in advance, strict employee training

programs in addition to periodical inspections are consistently operated. Kia Motors is putting

forth intense efforts to reduce the use of noxious chemicals by improving its management

approach.Priortopurchasingandapplyingnewchemicalmaterials,themanagementsystem

operatesatediousscreeningprocessforverificationpurposes.Kia’smanagementandchemicaluse

arebasedoncharacteristicsanddetailedinformationlaidoutbythei-ESH.ForKia’scompliance

withtheMontrealConvention,KiasubstitutesrefrigerantslikefreezersandCFC,anozone-

depletingsubstance,withHFCandreplacingoldequipmentwithimprovedtechnologies.

55

* Paintandthinnerusageprocesses:ElectroDeposition,SurfaceandTopCoating *WrapGuardFilmisthinPEcoatingforvehiclesurfaceprotection.

Steel usage

Thinner usage

Paint usage

Wrap guard film usage

Steel Usage(ton) Usage per Vehicle (kg/vehicle)

Thinner Usage (ton) Usage per Vehicle (kg/vehicle)

Paint Usage (ton) Usage per Vehicle (kg/vehicle)

Wrap Guard Film Usage (ton) Usage per Vehicle (g/vehicle)

220,000

10,000

25,000

500

240

5

15

250

210,000

8,000

20,000

400

220

4.5

12

200

200,000

6,000

15,000

300

200

4.0

9

150

190,000

4,000

10,000

200

180

3.5

6

100

180,000

2,000

5,000

100

160

3.0

3

50

170,000

0

0

0

140

2.5

0

0

2003

2003

2003

2003

2005

2005

2005

2005

2006

2006

2006

2006

2007

2007

2007

2007

204,247

4,365

12,489

217

196,809

4,376

13,438

225

188,873

4,439

13,833

189

186,110

3,572

11,669

164

240

5.1

14.7

254.5

206

4.6

14

234.6

189

4.4

13.8

188.6

192

3.7

12.0

169.6

~ ~

~ ~

Waste reduction

Most raw materials used during manufacturing processes are recycled through an in-house system,

with the rest carried out in waste form. From efforts to reduce wastes generated in plants, Kia

Motorsdevelopedatechnologythatreducesthequantityofwatercontainedinwaste-paintsof

surfaceandtopcoats.Withthisinstallment,wastesloweredby40-65%attheSohariplant.Kia

Motors is systemically executing activities to reduce waste through the improvement of control in

processes of waste-generating sources. Kia Motors operates the in-house recycling center to

regroup wastes after linear categorizing, consigning regrouped wastes to external specialist

contractors of wastes and scrap disposal.

Kia inspects its contractors at least twice a year concerning related laws and regulations of

wastemanagement.InFebruary2007,KiaMotorsdeclared“Zerolandfill”onthreedomestic

facilities(Sohari,Hwaseong,andGangjuplants)tophaseoutlandfills.Inthefirstphase,Kia

Motorsplannedareductionoflandfillwasteoflessthan1%outoftotalwastes.

56

Water and Weight ratio in Waste-Paints

Water Desiccant Waste-paint

100

80

60

40

20

0

Raw Sample 65% After Centrifuging 45%

Waste Reduction

After Adding Desiccant 40%

volume of Toxic chemical discharged

classification

Sohari

Hwaseong

gwangju

2006

617,402

2005

722,923

2006

123,315

10,088,372

177,433

2005

146,394

9,497,837

108,409

2006

54,858

161,789

41,617

2005

34,353

252,988

36,169

2006

15

20

17

2005

11

16

13

Volume of Toluene

Discharged(2) (kg/year)

Transferred Volume

(kg/year)

Discharged Volume to

Environment (kg/year)

Number of Toxic Chemicals

(Type)

Toxic chemical usage

Toxic Chemical Usage (ton) Usage per Vehicle (kg/vehicles)

5,000 3.0

4,000 2.5

3,000 2.0

2,000 1.5

1,000 1.0

0 0.5

2003 2005 2006 2007

2,2832,539 2,692 2,747 100kg

63.6kg 61.6kg

2.7 2.7 2.7 2.8

~

(1) VoluntaryAgreementonToxicsDischargeReduction(30/50Program):Inthevoluntaryagreementthatcorporate

facilitydesignated,thetoxicchemicalsreduceditsdischargeratevoluntarilyby30%,by200750%andby2009based

onvolumeofdischargesin2001.

(2) ThevolumeofToluenesummedbythreeplants.

38

39

40

5463

65

69

70

74



Eco-FriendlyProductDevelopment

Eco-friendly WorkplaceEnvironmentalManagementSystem





voluntary Agreements on Toxics discharge reduction - 30/50 Program (1)

Kia Motors signed a voluntary agreement on toxic

discharge reduction concerning its environment.

Based on this agreement, Kia Motors managed

toxic discharge volume through an ‘investigation

system to measure toxic discharge volumes. Kia

Motors also reduced toxic discharge volumes by

installingRegenerativeThermalOxidizers(RTOs)

for each painting process, injecting microbes in

circulation-tankbooths.Duringthesecondphase,

Robobellatomizersareappliedtothepainting

process,minimizingover-sprayin2008and2009

models. Kia Motors designated Toluene as the

majortoxicchemicalforreductionintheVA,as

a cause for discharging the most toxic chemicals

inplants.Asaresult,KiaMotorsloweredthedis-

chargerateby14.5%comparedto2005.Although

the total rate of paint and thinner usage increased

5.7%alongwiththequantitiesofchemicalquanti-

ties as a result of increased vehicles production, Kia

Motors reduced the increasing rate of discharged

volume using eco-friendly subsidiary materials of

new model manufacturing processes.

In2007,whilethelandfillratewasabout3.8%.KiaMotorsstoppedsludgedisposalatsea

locations.HwaseongandSohariplantsarehavebeenrecyclingsludgeentirelyasof2004and2007,

respectively.TheGwangjuplantisalsorecyclingslagwastesasindicatedinthe2007wasterecords.

Inaddition,KiaMotorswillcontinuetoincreaserecycleratesanddecreasetheamountof

incineratedwastesforexecutionplans.ThetotalwastegeneratedfromthreeofKiaMotors’plants

was202,701tonsin2007,with91.5%ofwastesrecycled.Wastesformanufacturingonevehicle

was231.4kgin2003,butdecreased9.7%to209.0kgin2007.

Minimizing Water usage

Currentlyhumanbeingsarefacedwithashortageofwaterduetotherapidindustrializationand

climatic changes. Kia Motors strives to minimize water usage in manufacturing vehicles to raise

environmental soundness. The main facilities consuming the most amount of water are painting,

engine&transmissionandfoundryfacility.WaterconsumedbyKiaMotorscomesfromawater

supplyfacilityandundergroundwater.Waterismainlyusedfromasource,butsmallquantitiesof

undergroundwaterareusedintheGwangjuplantalongsidewatersupplieswithnoimpacton

headsprings. Kia Motors purifies and discharges used water to minimize the effect on water

quality.Asof2000,KiaMotorsfocusedonreducingtheuseofwaterthroughits‘SaveWaterinthe

Workplace’campaignandequipmentinvestment,suchaswaterinstallmentsavingsystemsin

lavatories,increasingthecollectionrateofcondensedliquidfromsteam,aswellasimproving

cooling-toweroverflow.Asaresult,in2007,KiaMotorsreducedthetotalusagerateofwaterby

9.1%comparedto2003,butusageofundergroundwaterincreased19.9%comparedto2000.

57

volume of Waste generated recycling, incineration and landfill rate

Volume of Waste Generated (ton) Usage per Vehicle (kg/vehicle) Recycle Rate(%) Incineration Rate(%) Landfill Rate(%)

500,000 100250

400,000 80200

300,000 60150

200,000 40100

100,000 2050

0 00

2003 20032005 20052006 20062007 2007

197,180220,508 213,458 202,701

23184.9

8.6

6.5

230 88.6

6.0

5.4

213 88.2

6.4

5.4

209

91.5

3.84.7

~ ~

Water usage

Amount of Water Used (1,000m3) Amount of Underground Water Used (1,000m3)

Amount of Water Used per Vehicle (m3/vehicle)

10,000 7.5

8,000 6.0

6,000 4.5

4,000 3.0

2,000 1.5

0 0

2003 2005 2006 2007

6.7

5,719

1,323

5,853

1,762

6.1

5,771

1,589

5.8

5,198

1,586

5.4

~

EcO-friEndly PrOducTiOn TEcHnOlOgy

The environmental management of Kia Motors covers basic to eco-friendly production stages. The

basic stage is disposing of pollutants generated from production processes, and eco-friendly

production stages for promoting eco-designs in production processes. These efforts lead to

fundamentally reducing pollutants. The eco-friendly production system includes choosing raw

materials, designing the process of production, producing of products, as well as recycling by-

products. Many corporations reduce the cost of processing pollutants, energy saving, and

preventing potential safety accidents by making adjustments and applying eco-friendly

production technologies. Kia Motors is investing in the improvement of production processes and

facilities, as well as installing optimized pollutant reduction and prevention systems for

establishment eco-friendly systems.

These eco-friendly production technologies will be applied under the second mid-long term

environmentalmanagementstrategiescarriedoutbetween2006and2008.KiaMotorswill

extend the application of eco-friendly production technologies each year to minimize pollutants.

countering climate change in the Workplace

reduction of greenhouse gas Emissions _ Since2006,KiaMotorsadherestoenhanced

managementabilitiesconcerninggreenhousegasemissionsfromworksites,includingSohari,

Hwaseong,andGwangjuplants,anditsA/Scenters.KiaMotorshasexecutedthirdparty

verifications for clear and objective processes in inspecting greenhouse gas emissions, limiting

emission volumes, greenhouse gas inventory and database systems, and for the maintenance of

monitoring systems for the first time in the nation. The annual verification is being expanded

uponforexecutionreliabilities.KiaMotorsplanstoextenditsverificationsystemstoitsChina

andSlovakiaplants,updatingworkguidelinesandemissionstandardsofgreenhousegas.

Furthermore, Kia Motors has a plan to establish an inventory system for domestic and

58

reduced volume per vehicle Trends

Volume of Greenhouse Gas emitted (1,000 ton CO2/year) Volume of Greenhouse Gas emitted per Vehicle (kg/vehicle)

1,100

900

700

500

300

100

2000 2004 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

581

724

680

694

655

655

610626648

914918

789

599

934

596

942

volume Trends of greenhouse gas emitted (~2020)

gOAlS Of rEducing grEEnHOuSE gAS & lOng TErM PlAn

Volume of CO2 emitted (1,000 ton CO2/year) BaU

1,000

900

800

700

600

500

2000 2004 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

*BaU(BusinessasUsual):Indicationofincrementaltrendsinthevolumeofemissionsandenergyused,pervehicle,

producedif2006plansarenotexecutedconcerningemissionreductionsafter2007.

*EmissionEstimateCriteria

•Estimationisbasedonlowheatquantity.Estimateforareasone,two,andthree(ExceptquantityofHFCinareathree).

•ExcludingA/SCenters,theBoundaryappliestooperationcontrols.

581

694

908

938

751 894

952

923

1,007

934

1,030

942

1,043

38

39

40

5463

65

69

70

74









overseas locations, and examine emissions statuses, analyze potential emission volumes and lower

emissionvolumesfromgreenhousegases.Asof2008,Kiahasmadeplanstorigorouslyreduce

greenhousegasandwastes,settingthegoalfor2020mid-longtermpollutantreductionsin

joiningthe“VoluntaryIndustrialAgreementinResponsetoClimateChangeandProtectionofthe

Environment.”

Inlookingatvolumesfrom1990to2007,fromtheKoreaEnergyEconomicsInstitute’s

Roadmapestablishmentofmid–to-long-termplansforvoluntarygreenhousegasreductions,Kia

issettinglongtermgoalsforreducingvolumesby17.6%pervehicleproduceduntil2020by

developingvarioustechnologies.OtherthantheRoadmap,Kiaalsocontrolsemissionvolumes

within-housechecklists.In2007,thevolumedecreased25%pervehicleproducedcomparedto

2003.

Energy reduction _ From2000,KiaMotorscontinuallyparticipatesin‘VoluntaryAgreementof

SavingEnergy’forenergyreductionactivities.SinceTonofOilEquivalent(TOE)largelyconsistsof

electricpowerandLNG,Kiaiscurrentlyfocusingonelectricpowersavings.AttheHwaseong

Plant,KiaMotorshasinstalledinvertersinaircontrollingunitstomaintainsteadyandproper

indoortemperatures.Thisresultsinenergysavingsworth347millionwonperyear.Kiaalsosaved

energycostsof250millionwonperyearwithcoolingtechnologieswhichcondensetheairwitha

watersupply.ForthefirstandsecondplantsinGwangju,oldsteam-aircontrollingunitshave

beenreplacedwithdirectfiredsteam-aircontrollingunits.Theequivalentofsavedenergy

amountedto700millionwonperyear,andapproximately4,000reducedtonsofCO2 emissions.

Condensershavealsobeeninstalledinsubstationsofeachplanttobreakreversecurrentsof

powersupply.Theenergysavedanequivalentof250millionwonayearreducing2,000tonsof

CO2emissions.In2007,KiaMotorsinstalledSolarPhotovoltaicSysteminGwangju,Incheon,

Changwon,WonjuandCheongjufacilities,andaSolarHotWaterSysteminitsGangneungfacility

tosaveonenergycosts,usageandreducinggreenhousegasemissions.TheSolarPhotovoltaic

Systemhasbeendesignedtousesolarlightasanenergysourceandenhancetheeco-friendly

environmentofKiaMotors’facilities;savingelectricitycostsbyapproximately9.8millionwon

59

Total cO2 Emissions Unit:1000tCO2/year

Area 1,2,3 Area1,2

2,500

2,000

1,500

1,000

500

0

2003 2005 2006 2007

Total Energy usage Unit:1000TOE/year

LNG Fuel and Oil Electric Power

500

400

300

200

100

0

2003 2005 2006 2007

* AppliedtofourFacilities(Sohari,Hwaseong,Gwangju,andSeosanplants)

andA/Sdivision

* Appliedfrom2003duetoChangesofInternalCriteriafortheEstimate

• Area1 (Stationary combustion): LNG,LPG(Propane),LPG(Butane),Gasoline,Diesel,andKerosene

(Mobile Combustion):LPG(Propane),LPG(Butane),GasolineandDiesel

(Fugitive Emission):RefrigerantsforFreezers(HFC-134a),Substation(SF6)and

FugitiveinChargingRefrigerantsintoVehicles

(Process Emission): CO2(welding)andDetergent

•Area2 (Indirect Emission): ElectricPower

•Area3 (Indirect Emission): LPG(Butane),Gasoline,Diesel,andChargingRefrigerantsinto

Vehicles(HFC-134a)

Direct

Emissions

Indirect

Emissions

1,476

659

1,619

176

1518 18 16

106128 122 110

207 218207

783

1,555

734

1,449

678

~ ~

Solar Photovoltaic System

SolarCell50kW(220Wx252cells=50kW)

Utility-InteractiveInverter50kW(3,380V60Hz)

MonitoringSystem

KEPCO

PowerLinesfromKoreaElectricPowerCorporation

DataTransformer(SolarRadiation,ElectricPower)

everyyear,reducingapproximately33tonsofCO2 emission volumes. Kia Motors improved

environmentalsoundnessthroughtheinstallationoftheSolarPhotovoltaicSystem.Withsuch

improvements,KiaMotorswasawardedanexcellenceawardinthe“SecondRenewableEnergy

InstallationCompetition”bytheMinistryofCommerceIndustryandEnergyandKoreaEnergy

ManagementCorporationsintheprivatesectorofenergymanagement.KiaMotorswillinstall

fourmoreSolarPhotovoltaicSystemsby2008.

Air Pollutants

Inanefforttoreducetheairpollutantsgeneratedduringtheproductionprocess,KiaMotorsis

continuously applying eco-friendly production technologies, improving work processes, installing

optimized air pollutant prevention systems and utilizing materials containing fewer pollutants.

reduction of volatile Organic compounds (vOcs) _ InordertoreduceVOCsemissions,that

canadverselyaffectmen’sbodyandtheenvironment,thefirstpaintingplantofKia’sGwangju

facilityhasintroducedwater-solublepaints.Water-solublepaintcontainslessorganiccompounds

thanoil-solublepaints,whichcutdownVOCsemissionsduringtheproductionprocess.Thethird

paintingplantofHwaseong’sfacilitiescompletedtheinstallationofwater-solublepaint

60

cOd Emission

COD Emission (ton) Unit Usage (g/vehicle)

150 100 10

120 80 8

90 60 6

60 40 4

30 20 2

0 0 0

2003 2005 2006 2007

SS Emission

SS Emission (ton) Unit Usage (g/vehicle)

50

40

30

20

10

0

2003 2005 2006 2007

SOx Emission

SOx Emission (ton) Unit Usage (g/vehicle)

5 2.5

4 2.0

3 1.5

2 1.0

1 0.5

0 0

2003 2005 2006 2007

nOx Emission

NOx Emission (ton) Unit Usage (g/vehicle)

750 500

600 400

450 300

300 200

150 100

0 0

2003 2005 2006 2007

dust Emission

Dust Emission (ton) Unit Usage (g/vehicle)

1,500 750

1,200 600

900 450

600 300

300 150

0 0

2004 2005 2006 2007

BOd Emission

BOD Emission (ton) Unit Usage (g/vehicle)

125 50

100 40

75 30

50 20

25 10

0 0

2003 2005 2006 2007

1.1

564.9

623.9

1.3

1.3

496.9

519.0

1.3

1.2

483.2

482.6

1.2

1.1

387.8

399.9

407.7

33.4

62.1

7.7

9.0

72.939.2

478.4

471.5

39.4

66.1

9.6

10.0

69.1

41.2

492.5

451.0

32.1

69.5

6.2

6.269.532.0

450.5

405.0

30.6

65.2

4.6

4.7

67.231.5

417.6

1.1

~ ~

~ ~ ~

38

39

40

5463

65

69

70

74









Process of recycling waste heat from rTO system

Hazardouschemicalandodorremovalusinghightemperature(820°C)Collectedwasteheataresuppliedtohumiditycontroller

* RTO(RegenerativeThermalOxidizer)

RegenerativeThermalOxidizer(RTO)

RTO(high-temperatureheating) Heating/ACandhumidity controller

Heatexchanger

Paintingbooth

Wasteheatcollector

Atmosphericemission

applicationequipment.Kiawillextendtheuseofwater-solublepaintstoallKiaMotorsplants.In

addition,KiaimprovedtheworkplaceenvironmentbyinstallingVOCsthinnerfiltrationsystemin

ordertopreventitsemployeesintheServiceCenterfromVOCsexposureandbetterits

surroundingenvironment.KiaalsoinstalledtheRegenerativeThermalOxidizer(RTO)systeminits

paintingfacilitiestoremoveVOCsemittedduringthedryingprocess.KiaMotorsletsnoenergy

gotowasteevenduringtheRTOsystem.HighheatwastegeneratedfromRTOisfunneledback

to a heat exchanger to supply the air controlling unit for maintaining constant temperature and

humidity in the painting booth.

CostofsteamgenerationandLNGsavedbyRTOisapproximatelyonebillionwonayear.In

addition,KiaMotorsinstalledpaintingrobots,“Robobell,”insurfaceandtopcoatingprocesses.

With“Robobell,”KiaMotorsincreasedpaintingprocessefficiency,reducingtheamountofpaint

usedtherebyimprovingtheworkenvironmentbyreducingtheTotalPetroleumHydrocarbon

(THC)emissions.

SOx, nOx and dust reduction _ KiaMotorsinstalledtheTeleMeteringSystem(TMS)on

pollutantemittingcompenentssuchasboilersinSohariandHwaseongplantsinordertocomply

withtheNationalCapital’sSpecialEnvironmentalProtectionLaw.WithTMS,KiaMotorsmonitors

and controls pollutants, and the information gathered is sent to relevant government agencies to

ensure a dual surveillance system. Kia Motors will focus on establishing more eco-friendly

productionsystemswithadditionalinstallationsofTMSwithinthefirsthalfof2008.Through

Kia’ssustainabilitymanagement,thetotalemittedvolumeofSOx,NOxanddustwereloweredby

1.3%,0.7%and35.9%respectivelyin2007comparedto2003.Intermsofemittedvolumeper

vehicleproduced,numbersreducedby13.2%,12.7%and42.4%,respectively.

Water Pollutants

reducing the discharge of Water Pollutants through Appropriate Wastewater Processing

_ Kia Motors minimizes the discharge of water pollutants through appropriate wastewater

processingwhileusingaslittlewateraspossible.Inordertopreventpossibleenvironmental

contamination, Kia Motors constantly renovates its wastewater processing system and all facilities

while monitoring the concentration of discharged water with automatic and manual measuring

systems,includingTMS.In2008,KiaMotorswillenforcestrictmanagementofwaterpollutant

dischargewiththeinstallationofimprovedTMSinitsHwaseongPlant.ThedischargeofBODand

SSin2007wasloweredby8.6%and40.3%,respectively,anditsquantitypervehicleproduced

wasloweredby7.8%and47.5%,respectively,comparedto2003.

Managing the Source of Pollution _ The existing processing facilities generate oil waste and

oilmistfromcuttingprocessesthatcauseairandwaterpollution.Inanefforttosolvethis

problem,KiaMotorsinstalledDryHobbingMachinesthatusecompressedairinsteadofcutting

61

cOd Emission

COD Emission (ton) Unit Usage (g/vehicle)

150 100 10

120 80 8

90 60 6

60 40 4

30 20 2

0 0 0

2003 2005 2006 2007

SS Emission

SS Emission (ton) Unit Usage (g/vehicle)

50

40

30

20

10

0

2003 2005 2006 2007

SOx Emission

SOx Emission (ton) Unit Usage (g/vehicle)

5 2.5

4 2.0

3 1.5

2 1.0

1 0.5

0 0

2003 2005 2006 2007

nOx Emission

NOx Emission (ton) Unit Usage (g/vehicle)

750 500

600 400

450 300

300 200

150 100

0 0

2003 2005 2006 2007

dust Emission

Dust Emission (ton) Unit Usage (g/vehicle)

1,500 750

1,200 600

900 450

600 300

300 150

0 0

2004 2005 2006 2007

BOd Emission

BOD Emission (ton) Unit Usage (g/vehicle)

125 50

100 40

75 30

50 20

25 10

0 0

2003 2005 2006 2007

1.1

564.9

623.9

1.3

1.3

496.9

519.0

1.3

1.2

483.2

482.6

1.2

1.1

387.8

399.9

407.7

33.4

62.1

7.7

9.0

72.939.2

478.4

471.5

39.4

66.1

9.6

10.0

69.1

41.2

492.5

451.0

32.1

69.5

6.2

6.269.532.0

450.5

405.0

30.6

65.2

4.6

4.7

67.231.5

417.6

1.1

~ ~

~ ~ ~

oilonnewmicroATgearprocessinglinesoftheautomatictransmissionplantinitsHwaseong

facility.Inaddition,KiaMotorsreexaminedthesludgeformingprocessthroughvarioustestsand

solvents to reduce its viscosity in order to increase the collected volume, improve turbidity and

reduce the rate of clogged sludge machines. By doing so, Kia Motors lowered the amount of

waste paint remaining inside the settling bath, minimized the foul odor from the remaining

waste paints and reduced the amount of paints.

Establishing Efficient and Eco-friendly logistics Systems

Alargevolumeofgreenhousegasisgeneratedfromthetransportationofrawmaterials,parts

andvehicles.Eventhoughthereisnospecificgovernmentalregulationsongreenhousegas

emissions from product distribution, Kia Motors seeks to minimize air pollution throughout its

entirelogisticssystem.ToreduceCO2,KiaMotorsisplanningCO2 reduction methods based on

CO2volumeestimatesbasedonlogisticprocesses.Asof2007,KiaMotorspracticesaneco-friendly

distribution system by evaluating the condition of its entire distribution system to find and

implementpossibleimprovements.Asystematicplanwasdevelopedtobuildaneco-friendly

distributionsystemin2007.In2008,KiaMotorswillimplementtheplanandreportthe

performance of its eco-friendly distribution system in the future.

Product distribution _ Productdistributionorlogisticsconsistsofprocurement,production,

domesticsalesandoverseasexport.KiaMotorsisplanningtoreduceCO2 emissions by analyzing

thecurrentstatusofCO2 emissions from each distribution point, including production, domestic

sales and loading ports for overseas exports.

Efficiency through reduction of Each logistical Area _ Kia Motors estimated the volume of

CO2emissionsineachdistributionpointsasof2005.KiaMotorsalsoinvestigatedModalShiftto

energy-efficient transportation, methods in which to improve load efficiency, optimized

transportation paths, integrated transportation, building a center for integrated distribution and

large-scale transportation vehicles to raise efficiency through the reduction of each logistical area.

grEEn zOnE

Kia Motors is supporting its eco-friendly workplace by expanding the green area to secure its

greenzoneratioaccordingtothebuildingareaincreaseintheworkplace.Inaddition,Kiahas

managedfacilitiesthatmaycausesoilcontaminationsince2000.Currentlytheleakingout

accident did not occur even one case.

62

green zone

Sections

Site area (m2)

Building area (m2)

green area (m2)

green rate (%)

reforestation (trees)

Sohari

508,721

213,144

24,374

8.2

22,002

Hwaseong

3,251,923

987,538

637,000

28.1

228,752

gwangju

1,031,288

399,546

88,308

14.0

98,044

Slovakia

1,665,000

228,503

1,095,000

76.2

2,848

china

450,000

94,000

38,000

10.7

1,853

Automotive logistics flow chart

OrangePortion

isthefirstareain

reducingCO2 emissions.

PartsDivision Factory (Customers)

Port Export

Plant

Plant

38

39

40

5463

65

69

70

74









63

KiaMotorsinstalledanaggressiveEnvironmentalManagementSystemandestablishedhazardous

material management to actively support the growth of environmental sustainability.

EnvirOnMEnTAl MAnAgEMEnT PErfOrMAncE

fostering an Eco-friendly Workplace

Inordertominimizeenvironmentalimpactfromproductionandpursueenvironmentallysound,

sustainabledevelopment,KiaMotorsmetwiththestringentrequirementsofISO14001forthe

certificationin2003,andcompletedrenewalofthecertificationin2006.Eligibilityandvalidity

wasevaluatedthoroughlyaftercertificationexamination,later,in2007.KiaMotorsisbuildingan

eco-friendly work place and eco-friendly production systems by removing potential risk factors

and creating a cleaner production system. Kia Motors is improving areas identified by external

certifyingorganizationsandcreatedaself-auditingenvironmenttocomplywithISO14001

certificationsince2004.

In2007,KiaMotorsperformedathoroughexaminationofmanagement,unitimprovements

andwastereductionin85departments,A/Scentersandthreeplants,includingSeosanplant.

SpecialattentionwaspaidtotheenvironmentalfacilitiesandwastemanagementoftheA/S

centersin20regions.KiaMotorsmotivatedemployeesanddepartmentalsolidaritybyawarding

departments that contributed to environmental management. Kia Motors is striving to solve

problems identified in the environmental audit to ensure and expand sustainable business

activity.

Tomanageaunifiedinternalauditin2007,KiaMotorsselectedrotatingpersonnelfromeach

department for training as an internal auditor. Kia Motors elevated auditing objectivity through

departmental cross-examination departments and information exchange between auditors. Kia

Motorsplanstotrainallemployeesasqualifiedenvironmentalauditorstoencourageminimal

environmental loads and develop a sustainable environment.

environmental

management system

Self-inspection Service center designation

In2007,KiaMotors’servicecentersinWonju,Cheongju,Gwangju,andYeongdeungpo

designatedSelf-InspectionCentersinareasofairquality,waterquality,andwastedisposal.Self-

InspectionCentersystemworksthroughvoluntarilyactionofreportingpollutantemissionlevels

anddeterminingenvironmentalregulationcompliance.Designationisonlygiventoinstitutions

withcleanenvironmentalrecordsfortwoconsecutiveyearsandwhopossessadequate

management and facilities to handle hazardous emission and waste. Kia Motors contributes to

the improvement of the environment by elevating the level of environmental management so all

centers may receive the designation.

cOMPliAncE WiTH EnvirOnMEnTAl rEgulATiOnS

Kia Motors provides early environmental solutions through preliminary internal evaluations

before new legislation or amending environmental regulations take place. The countermeasure is

postedontheregulationinformationsectionofi-ESHtoinformemployees.KiaMotorssets

stricter internal criteria for managing environmental polluting materials than federal regulations.

KiaMotorsdevelopedtheGlobalEnvironmentalInformationSystem(GEIS)tofindearly

environmental solutions to stricter regulations that may restrict business and to send global

environmental regulation information to the entire company. Kia Motors will continuously

increase environmental performance by finding innovative solutions to environmental problems.

cOOPErATiOn SySTEM fOr ElEvATing EnvirOnMEnTAl PErfOrMAncE

Exchange between domestic Automobile companies

KiaMotors’HwaseongplanthostedtheEco-friendlyWorkPlaceWorkshopsponsoredbythe

KoreaAutomobileManufacturersAssociation(KAMA)for40environmentalmanagement

personnelfromfivedifferentautomobilecompanies.Atthisworkshop,industryexpertsheld

seminars dealing with the regulation status in automobile painting, issues in automobile painting

and a trend in developing paintings.

Afterwards,participantsinchargeofenvironmentaltasksintheirrespectivecompanies

presented countermeasures for climate change, examples of estimations and reduction of

greenhouse gas emissions, plans and results for reduction of wastes and discussed the direction of

productdevelopment.TheEco-friendlyWorkPlaceWorkshopisheldeveryyeartoimprove

environmental performance through cooperation between automobile companies, and it

contributes to information exchange between people in charge of environmental management

in the company.

Environmental conservation initiatives for community

Kia Motors is actively communicating with the local community by holding community meetings

to introduce environmental management activities and tours of its environmental facilities. Kia

Motors is improving the local environment through the adopt-a-highway program, environment

preservation activities and monitoring odor and water pollution with local businesses. Kia Motors

isalsocleaninglocalriverseachmonth12timesayearthroughaprogramsimilartoadopt-a-

highway.

01. KiaMotorswasdesignatedSelf-InspectionServiceCenter.

02. Kia Motors employees engaged in local environmental clean-up activities.

0102

64 38

39

40

54

63

65

69

70

74




Eco-FriendlyWorkplace

Environmental Management System





65

Securingeco-friendlypartsforanautomobilethatconsistsofover20,000partsisacriticalfactor

for determining the extent of environmental impact. Kia Motors actively provides support to

partners to achieve eco-friendly management and eco-friendly competitiveness. Kia Motors will

improve eco-friendliness in every aspect of its automotive production.

EnvirOnMEnTAl TEcHnOlOgy SuPPOrT grOuP

Kia Motors provided partners with technical support by dispatching its environmental technology

supportgroup(fromSohari,Hwaseong,andGwangju)everyyearsinceDecember2005.The

support group offered their eco-friendly expertise and helped establish eco-friendly

management.In2007,KiaMotorsdiagnosedandconsultedtheentireenvironmental

management system, including the management of its eco-friendly image, pollutants, eligibility

in environmental partners and systematic environmental management for partners to help

establishtheireco-friendlyservice.Aviolationofenvironmentalregulationsbyapartnercould

damageKiaMotors’sustainabilityefforts.Additionally,mismanagementcancausetheproductto

negativelyimpactthecommunity’senvironmentandresultinacostlyrecallofthoseproducts.

Inordertominimizeextracostandnegativeenvironmentalimpact,KiaMotorspaysclose

attentiontopartners’difficulties.KiaMotorsprovidespollutantreducingenvironmental

technology support, information on emission reduction and prevention procedures, and new

environmentaltechnologiestoKia’spartners.

Kia Motors distributed books containing environmental regulations and management items

forpartnerstosupporttheirenvironmentalmanagement.Inaddition,KiaMotorsgives

environmentaleducationtopartners’employeesaboutdomesticandinternational

environmentalregulationsandKiaMotors’environmentalpolicyeveryyear.Toprevent

environmentalregulationviolationsbypartners,theGwangjuplantcollaboratedwithGwangju

Citytocreatetheenvironmentalguardiansystemtosupportpartnerseveryquarter.Fromnow

on,KiaMotorswillbecometheautomotiveindustry’sfuturelinktochainautocompaniesfrom

pre-to post production partners through the ongoing support for environmental soundness.

eco-FrienDly supply chain

management

PrOviding guidElinES fOr EnvirOnMEnTAl criTEriA

KiaMotorsdistributed‘EnvironmentalCriteriaforHyundai-KiaMotors’thatlistsKiaMotors’

environmental obligation for all auto parts and all parts supplying partners to comply and excel

atglobalenvironmentalregulations.‘EnvironmentalCriteriaforHyundai-KiaMotors’canberead

inKiaMotors’portalsite,Vaatz(http://www.vaatz.com).Thisguidelineprovidesinformationon

prohibited materials such as the four major heavy metals, lead, mercury, cadmium and hexavalent

chromium,andrestrictednoxiousmaterials.Italsoincludesamanualforinputtingmanufactured

partsIMDS(InternationalMaterialDataSystem),manualforsubmissionofRAISH(Recyclability

AssessmentInformationSystemforHomologation)andmanualformanagementofMSDS

(MaterialSafetyDataSheet).

Xrf AnAlyzEr JOinT PurcHASE PrOgrAM

TheX-rayFluorescence(XRF)analyzerallowsfortheanalysisofheavy(metal)elemental

compositionofanygivensample.Inordertooffsetthecostburdenofthisequipmentfor

partneredpartsuppliers,KiaMotors’purchasingdepartmentcreatedthe“XRFAnalyzerJoint

PurchaseProgram”forKia’spartnersinNovember2006.86partnerspurchasedtheXRFanalyzer

throughthisprogrambyDecember2007,andby2008,total100partnerswillhaveXRFanalyzers.

Forpartnersthatpurchasetheequipment,KiaMotorsoffersincentivesthroughinternal

performanceevaluationsafter2008andprovidespurchasecostoffsettingtoencouragepartners’

eco-friendly management.

66

Kia Motors’ Environmental Support group

• Establishingsupportplans for partners• Evaluatingpartner’s eco-friendly management• Trainingeco-friendly management and providing technical support(1)

• SupportingEMSconstruction• Evaluatingpartnersand offering incentives• Partners’registration management and other policies• Supportthrough participation of government environmental project(1)

Partners

• Trainingandconsulting servicesrequest (Evaluationoncompliance with environmental regulations and training on eco-friendlymanagement)• Technicalsupportrequest• Environmentalsolution request• Environmentalissue identificationandsubmitting improvement results

• Improvingcompanyimage• Providingafoundationfor sustainable development

• Expandingpartners’ eco-friendly management• Establishingeco-friendly management system• Findingsolutionsto environmental regulation problems• Resolvingmanagementrisk

Partners Support Model

38

39

40

54

63

6569

70

74






Eco-friendly Supply chain ManagementEnvironmentalManagementCosts



(1) Includessupportfromexternalexperts.

67

grEEn dEAlEr SySTEM

ThissystemisdesignedtostandardizeKiaMotors’salesdealershipsandpromoteeco-friendly

servicesinitsautorepairshops.Withthissystem,KiaMotors’branchesanddealershipsminimized

wasteandpromotedrecyclingsince2006.KiaMotors’eco-friendlyserviceisbeingpromoted

worldwidethroughthe“ActSmartCampaign”voluntarilyinitiatedbyautodealersaroundthe

world. Kia Motors also awards excellent dealers and sales offices to ensure active participation in

sustainable development of overseas subsidiaries.

EcO-friEndly PArTS SuPPly AgrEEMEnT

Kia Motors concluded an eco-friendly parts supply agreement with primary parts manufacturers

initssupplychaininFebruary2007.ThisagreementincludesKiaMotors’strongwilltobean

advanced company with environmentally friendly management for eco-friendly parts

manufacturing, ethical management and social responsibility.

Eco-friendly Parts Supply Agreement

ThisagreementismadebetweenKiaMotors(hereinafter“Company”)andpartner(hereinafter“Partner”)

to treat global environmental regulations that are strengthened continuously and contribute to the

community,andiseffectivefromthedatewhenCompanyandPartnersignsbelow.

I1I ThePartneragreesnottouseorincludeanynoxiousordangerousmaterialsforhealthof

humanbeingsortheenvironmentinmanufacturingpartssuppliedtotheCompany,andcomply

withthe“KiaMotors’EnvironmentalCriteria”fortreatinggloballylocalenvironmental

regulations.

I2I ThePartnershouldnotusefourmajorheavymetals(lead,mercury,cadmiumandhexavalent

chromium)forpartsthataresuppliedtodomesticoroverseasplantsbythescheduleprovidedby

theCompany.

I3I ThePartnerstrivestobuildaninternaleco-friendlysystemforpartssuppliedtotheCompanyto

be designed, produced, wrapped and transported in an eco-friendly manner.

I4I ThePartnershouldhavebotheco-friendlyandethicmanagementandpursuesustainable

managementthatgrowswiththeCompanyasanadvancedcompanyresponsibletostakeholders,

including employees, partners and community.

EcO-friEndly PrOcurEMEnT

Withavoluntaryagreementofeco-friendlyprocurement,KiaMotorsstrivestoexpand

boundaries of eco-friendly production cultures. The agreement refers to a system with company

participants who apply eco-friendly procurement procedures voluntarily for eco-friendly

production and procurement.

conclusion of voluntary Agreement

InSeptember2005,thevoluntaryagreementofeco-friendlyprocurementwasconcludedwiththe

purposeofestablishingasustainableeconomicinfrastructure.Asacorporationimplementing

voluntary eco-friendly procurement, Kia Motors contributed to establishing a sustainable society

that embraces a cycle of eco-friendly production, distribution and procurement.

Eco-friendly Procurement Performance

In2007,KiaMotors’performanceineco-friendlyprocurementincreased20%(inmonetary

standards),andwillcontinuetoexpandoneco-friendlyprocurement.

68

Eco-friendly Procurement Performance

Affiliated products

Products certified with environmental marks

Products with outstanding recycle marks

Products with reduced hazardous substances

(lead, Mercury, chrome and cadmium)

Total

In million won

9

174

8,116

8,299

Number of products

29

8

34

71

In million won

9

242

6,662

6,913

Number of products

30

7

35

72

2006 Performance 2007 Performance (Estimated)

38

39

40

54

63

6569

70

74






Eco-friendly Supply chain ManagementEnvironmentalManagementCosts



introductory Phase ofEco-friendly Procurement (first year from inception)

• Benchmarkingdistinguished

domestic and foreign cases

• Establishingexecutionplansfor

eco-friendly procurement

• Providinginformationfor

eco-friendly products

• Preparingthefoundation

throughMROcompanies

• Expandingproductscertified

with environmental marks in

response to increase in industry

demand

Proliferation Phase ofEco-friendly Procurement(Second year from inception)

• Enforcingeco-friendly

procurement in participating

companies

• Revisingconstruction

specificationsandmaintenance

of procurement systems of

goods purchases

• Trainingcooperativevendors

• Addingmoreindustrial

materials to eco-friendly

product list

Settlement Phase ofEco-friendly Procurement(Third year from inception)

• Inducingsettlementof

evaluation in raw and

subsidiary materials from

cooperative vendors

• Addingmoreindustrial

materials to eco-friendly

products list

• Planningonimproving,

evaluating and marketing

in voluntary agreements such

as eco-friendly procurement

69

AnnualenvironmentalmanagementcostsforKiaMotorsiscommissionedoverthreeplants;

Sohari,Hwaseong,andGwangju.Thecommissioniscomputedoverfivedifferentclassifications.

KiaMotorsalsosystematizedpreexistinginvestmentsystemssince2004,introducingthe

investment evaluation system that helps materialize specific ecological needs as well as reducing

costs;inadditiontosupportingeffectiveinvestmentseachyear.Thecosts,asof2007,totaled17.7

billionwon;directcostsshowedanincreaseof4%comparedtoitspreviousyear.Thecost

increasewasmainlyduetoincreasedeco-activitiesconcerningthecommunity.However,ithad

increasedthereductionenvironmentalpollutionasaresultoftheISOinspectionand

reappointingeco-friendlycompanies.Startingin2008,environmentalmanagementcostsfrom

overseasfacilitiesincludingthefirstandsecondplantsinChinaandSlovakiawillbetakeninto

account.

Environmental Management costs in 2007 Unit:Inthousandwon

classification

Total costs

Total costs

DirectCostsAssociatedwiththeReductionofEnvironmentalPollution(Costs

inInvestmentandMaintenanceforEnvironmentalArrangement)‟

IndirectCostsAssociatedWithReductioninEnvironmentalPollution(Costsin

EnvironmentalTrainingforEmployeesandEnvironmentalEvaluation)

EnvironmentalRiskMaintenanceCosts(CostsinEnvironmentalRegulation

ComplianceandAccidentPrevention)

WasteHandlingandRecycling(CostsinWasteConsignment)

SocialEnvironmentalActivityCosts(CostsinCommunityEngagementsand

AfforestationManagement)

Total

11,976,769

823,138

557,076

3,825,349

515,631

17,697,963

* Environmentalcostsrefertoexpendituresfrombusinessenvironmentmanagements.

* TheA/Sdivisiondoesnotincludecostsassociatedwithresearchcenters.

environmental management

costs

• Location:781-1Soha-dongGwangmyeongCity,GyeongGi-do

• Employees:6,778

• Established:July1973

•ManufacturingProducts:GrandCanival(Sedona),Pride(Rio)andEngine

• LotSize:508,721m2

• FacilitySize:213,144m2

• ISO14001Certification:December2003

Activity Overview in 2007

cO2 (Energy) reduction activity

Allemployeesarepartakinginthereductionof

CO2emissions,powersavingandLNGgasusage

with full awareness of the global warming crisis.

Waste reduction activity

The joint efforts of separate waste collection and

management of recycling companies is resulting

in continuous improvement of diminished waste

quantitiesandincreasedrecyclingvolumes.

Environmental data

Pollutants

Dust

NOx

Pollutants

Toluene

Di-EthylHexylPhthalate

EthylAcetate

HydrogenChloride

SodiumHydroxide

MethylEthylidene

Xylene

PotassiumHydroxide

NickelCompound

ManganeseCompound

Volume

868

273

226

110

84

79

76

35

31

31

Emission

Amount

39

0

11

0

0

0

3

0

0

0

Transfer

Amount

84

3

21

0

0

0

10

0

0

0

Consumption

Amount

746

270

194

110

84

78

64

35

31

31

Contaminants

pH

BOD

COD

SS

N-H

Plant Equipment

PaintingFacilities

DryingFacilities

DryingFacilities

Regulation

Measurement

100

100

200

Regulation Measurement

5.8~8.6

80

90

80

5

Actual

Measurement

2.1

2.8

22.4

Actual Measurement

7.1

3.0

13.9

1.3

0.8

incidents/lawsuits related to the Environment: none

communicating with community

Kia Motors continuously pursues close bonds with local communities, participating in worldwide

eco-activitycelebrationsofEarthDayandengaginginconservatoryactivitiessuchas,“onecompany

conservingonemountain,”and“onecompanyconservingoneriver.”

Environmental conservation initiatives

Air Pollutants in 2007 Tri chemicals in 2006

Water contaminants in 2007

* RegulationMeasurementUnitisDust:g/Nm3,NOx,andSOx‟ppm

* ActualMeasurementisameanvalue.

* Unit: ton/year

* Volume:Totalvolumeintheworkplace

* EmissionAmount:Volumeemittedintotheatmosphere,hydrosphereandsoil

* TransferAmount:Amountofvolumehandledbyoutsiders.

* ConsumptionAmount:Theamountofvolumeactuallyusedinbusinesses.

vOcs reduction activity

EachofKiaMotors’paintingplantsisputting

fortheffortstoincreaseefficiencyinitspainting

process as well as collecting process of the used

thinnerstodecreaseVOCsemissions.

BasedbySedan

VolumeofCO2Emitted(1,000ton/year)

VolumeEmittedbyaVehicle(ton/vehicle)

2005 2006 2007

500

400

300

200

100

0

2.5

2.0

1.5

1.0

0.5

0

TotalVolume RecycleVolume(1,000ton/year)

RecycleVolumeperVehicle(kg/vehicle)

2005 2006 2007

50

40

30

20

10

0

25.0

20.0

15.0

10.0

5.0

0

volume Trends of cO2 Emitted Waste Management Trends volume Trends of vOcs Emitted

VolumeofVOCsemitted(g/m3)

2005 2006 2007

100

80

60

40

20

0

70

eco-FrienDly achivements

in Domestic Workplace

sohari plant

Environmental Director and Executive Vice PresidentJong-gil choi

Plant Superintendent

* TherestraintvolumeofBODandSSisrepresentedbythemaximum(indailyaverage).

* mg/L&pHisexceptedfromUnit.

*pH:HydrogenIonConcentration*BOD:BiochemicalOxygenDemand

* COD‟ChemicalOxygenDemand*SS:SuspendedSolids

Actual Measurement

7.0

7.4

14.5

0.5

0.2

• Location:1714Ihwa-riUjeong-eupHwaseongCity,Gyeonggi-do

• Employees:12,130

• Established:April,1989

•ManufacturingProducts:Opirus(Amanti),Lotze(Optima),Sorento,andCerato

• LotSize:3,251,922m2


• ISO14001Certification:April,2003

Activity Overview in 2007


Theinstallationequipmentforcollectingwaste

heat in the second and third painting plants has

increasedenergyefficiency,hencesavingenergy

comparedto2006.


Separatewastecollectionandrecyclingwaste

hasresultedindecreaseddisposalquantityin

comparisonto2006.



Constantconservationactivitiesaretakingplaceinthevicinityofdecontaminatingplants(eachquarter

year),withwinter’swildanimalfooddispersalactivities,andlocalcommunityoutreachprogramssuchas

‘loveyourneighborwithgrainsupport,’and‘thehungermarch.’


Pollutants

Dust

NOx

SOx

Plant Equipment

ElectricFurnace

GeneralFacilities

DryingFacilities

DryingFacilities

Regulation

Measurement

20

100

200

500

Actual

Measurement

3.5

5.6

2.5

1.5

Environmental data

Air Pollutants in 2007

Pollutants

Toluene

Di-Phthalate

EthylAcetate

Xylene

PotassiumHydroxide

2-EthoxyethylAcetate

Methylethylketone

MethylAlcohol

HydrogenChloride

AceticAcid

Volume

1,891

508

507

324

127

67

60

47

35

24

Emission

Amount

101

0

29

22

0

4

3

2

0

1

Transfer

Amount

287

6

56

38

0

9

8

10

0

5

Consumption

Amount

1,504

502

421

264

127

54

49

36

35

18

Tri chemicals in 2006

Contaminants

pH

BOD

COD

SS

N-H


5.8~8.6

80

90

80

5




* Unit: ton/year




* ConsumptionAmount:Theamountofvolumeactuallyusedinbusinesses.* TherestraintvolumeofBODandSSisrepresentedbythemaximum(indailyaverage).

* mg/L&pHisexceptedfromUnit.

*pH:HydrogenIonConcentration*BOD:BiochemicalOxygenDemand



Thinnerrecoverysystem,RegenerativeThermal

Oxidizers(RTO)installation,andRobobellhelped

reduce the total emission volumes.

BasedbySedan

71



2005 2006 2007

1,000

800

600

400

200

0

3.0

2.5

2.0

1.5

1.0

0.5



2005 2006 2007

250

200

150

100

50

0

500

400

300

200

100

0


VolumeofVOCsemitted(ton/year)

2005 2006 2007

100

80

60

40

20

0



hWaseong plant

Environmental Director and Vice PresidentSam-ung lee

Plant Superintendent

• Location:700Naebang-dongSeo-gu,GwangjuCity

• Employees:6,675

• Established:April1989

•ManufacturingProducts:Carens(Rondo),Sportage,Bongo,Bus,andMilitaryvehichles

• LotSize:1,014,941m2


• ISO14001Certification:November2003


72

2005 2006 2007

500

400

300

200

100

0

2.5

2.0

1.5

1.0

0.5

0

2005 2006 2007

100

80

60

40

20

0

250

200

150

100

50

0

2005 2006 2007

100

80

60

40

20

0



gWangju plant

Environmental Director and Executive Vice Presidentnam-il cho

Plant SuperintendentActivity Overview in 2007


Althoughitsproductionvolumewasincreased,

compact production facilities and the waste

heat collection helped reduce the energy usage

on producing a vehicle and total energy usage

comparedto2006.


Kia Motors is reducing the volume of waste

disposal through recycling waste and separate

waste collection.


KiaMotorsincreaseditspaintingefficiencywith

theautomatedRobobell,anddecreasedVOCs

emissions with the recovery of thinner used in

washing painting gun.

BasedbySedan






VolumeofVOCsemitted(g/m3)



KiaMotorsiscontinuallyprovidingplanttoursforlocalresidentsthroughfieldtripsandopen

communicationactivities,engaginginactiveinformationdisclosuresandsharingsuggestions.Inaddition,

KiaMotorscleaneduproadsaroundplants12timeswithvolunteersin2007.


Pollutants

Toluene

Di-EthylHexylPhthalate

EthylAcetate

HydrogenChloride

SodiumHydroxide

MethylEthylidene

Xylene

PotassiumHydroxide

NickelCompound

ManganeseCompound

Volume

612

331

145

128

127

119

113

70

57

55

Emission

Amount

29

0

7

0

0

0

0

3

0

0

Transfer

Amount

78

7

20

0

0

1

2

10

1

1

Consumption

Amount

505

324

118

128

127

118

110

57

56

54

Tri chemicals in 2006

* Unit: ton/year




* ConsumptionAmount:Theamountofvolumeactuallyusedinbusinesses.

Actual Measurement

7.2

13.8

20.7

2.8

1.9

Contaminants

pH

BOD

COD

SS

N-H


5.8~8.6

80

90

80

5


* TherestraintvolumeofBODandSSisrepresentedbythemaximum(indailyaverage).

* mg/L&pHisexceptedfromUnit.*pH:HydrogenIonConcentration*BOD:BiochemicalOxygenDemand


Pollutants

Dust

NOx

SOx

Plant Equipment

PaintingFacilities

DryingFacilities

ElectricCastingFurnace

DryingFacilities

CastingFacilities

CastingFacilities

Regulation

Measurement

100

100

20

200

200

500

Actual

Measurement

9.46

8.14

8.48

13.38

11.63

Non-detected

Environmental data

Air Pollutants in 2007



Environmental education

Training courses for capacity development are

servedonaquarterlybasistoemployeesincharge

of service centers.

Environmental evaluation

ISO14001isrenewedbyexternalaudit

institutions.

2007 Environmental conservation initiatives Overview

frequency: 120times

Participants: 1,494volunteers

Activities: Mountain, river, park, road, building, and terminal clean-ups



Kia Motors as been strengthening its brand image as an eco-friendly management company by

participatingsocialserviceactivities.20directservicecentersinKoreaarecampaigningbimonthlyfor

environment preservation at community parks, lakes and on local roads.

investment in eco-friendly infrastructure

SolarPhotovoltaicEquipmentwasinstalledand

waste storage was also upgraded.

73

Solar Photovoltaic facility renewal Examination Meetingcapacity development Training for Environmental Activities

• Location:20locations,including996-3Siheung-dongGeumcheon-gu,Seoul

• Employees:1,820

• Established:1958

•MainService:WarrantyandGeneralRepairs

• LotSize:220,301m2


• ISO14001Certification:December2003

2005 2006 2007

25.0

20.0

15.0

10.0

5.0

0

50

40

30

20

10

0

2005 2006 2007

2,500

2,000

1,500

1,000

500

0

2.5

2.0

1.5

1.0

0.5

0




service centers


VolumeEmittedbyaVehicle(kg/vehicle)

TotalVolume RecycleVolume(ton/year)


volume Trends of cO2 Emitted Waste Management Trends

Environmental Director and Executive Vice PresidentJong-Oak Park

AS DivisionActivity Overview in 2007


Kia Motors has put in efforts to capture

renewableenergysources,installingtheSolar

PhotovoltaicSysteminfiveservicecenters.Kia

Motors has planned for further development

suggested by application results, with goals to

reduceCO2 emissions through the minimal use of

refrigerants in air conditioners.


Separatewastecollectionandrecyclingactivities

is allowing a consistent decrease of waste through

processesofwastelandfillandincineration.

Environmental management technology

support

Sincetheestablishmentoftechnicalsupport

in2005,KiaMotorshasbeenaidingpartners’

environmentalmanagementsystemswithKia’s

environmental management technology.

Climatechangesarecurrentlyposingthreatstopeaceandthefutureofhumanity.KiaMotorsis

cognizant of such significant climate changes. Kia Motors also responds to climate changes by

endeavoringtoreducegreenhousegasesfromvehiclemanufacturingprocessesandCO2 emitted by

vehicles. Moreover, Kia Motors established responding systems countering climate changes, enforcing

tasks in the workplace. Major enforced tasks are generally divided into two categories as follows:

Energyefficiencyimprovements(cleanproduction)anddevelopmentofhighlyfuelefficientvehicles.

cO2 reduction Overview by vehicles

Asclimatechangereliefactivitieshavebecomemoreandmoreglobalized,developedcountriesare

implementing various regulations and standards to reduce greenhouse gases emitted from auto

industries.Asaleaderinautogreenhousegasreduction,theEUisplanningtoenforcerestrictionswith

itsstandardof130g/kmfrom2012asaresponsetodisappointingresultsinvoluntaryagreementsfrom

thelate1990s.KiaMotorsconstantlystrivestoadvancetechnologiesandenhancefuelefficiencies.As

74

special story

Establishingreductiongoals and activity strategy for the discharged volume of greenhouse gasesExpandingontheverificationonthedischarge volume of greenhouse gases (Includingoverseasfacilities and managing greenhousegasinEMS)

3rd PHASEPromoting the

Reduction of Discharged Volumes

2007~

corresponding Production Trends

countering climate change

distributing Eco-friendly vehicles

(Enforcement)

• Developinghybridelectricvehicles

• Developingfuelcellvehicles

• Expandingnextgenerationdieselvehicle

distribution

• Developingtechnologiesinfuelefficiency

enhancement

• DevelopingtechnologiesforCO2 reduction

Establishing the foundation for responding to the

Kyoto Protocol (Enforcement)

• Establishingthefoundationforgreenhouse

gas statistics

• Jointresponsewithacademia,governmentandNGOs

• TrainingandPRdomesticallyandoverseas

• Introducingsupportprogramsforbusinesspartners

• Executinginternaltransactionsystemsof

discharging rights

countering Synopsis of climatic change convention

Enhancing Energy Efficiency

(Enforcement)

• ReducingCO2 in the workplace

• Voluntaryagreementtoreduce

energy usage

• Recyclingofwastereduction

• Rationalizingthelogisticssystem

2nd PHASEEstablishment of

Strategic Corresponding

System

Verifyingthedischargedvolume of greenhouse gas(PilotprojectofKoreaEnergyManagementCorporation):Hwaseongplant Developingcomputationguidelines(ver.2.0)toestimate total discharged volume and develop inventorysystems(GEIKver.1.0)Verifyingtotaldischargedvolume of greenhouse gas:SohariandGwangjuplants,andA/Sdivision

2006

1st PHASEEstablishing

Corresponding Infrastructures

Verifyingplansregarding greenhouse gas discharge volumes, called“GreenhouseGasInspectionInfrastructurePlans”Benchmarking the correspondence of Japanese companies for countering climatic change conventionKorea’sfirstgreenhousedischargequantityThirdpartyverificationandgreenhouse gasDevelopmentofcomputation guidelines (ver.1.0)forestimatingquantityofdischarge:Hwaseongplant

2005

proofoftheseconstantefforts,KiaMotorsreleasedthePicanto(Morning),asmallcompactvehiclewith

CO2quantityoflessthan120g/km,intheEuropeanmarketin2004andcontinuedtoproducevehicles

equippedwitheco-friendlydieselenginesin2005.Asaresultoftheseefforts,KiaMotorsachievedCO2

emissionsof167.3g/kmtosatisfyKAMA’smid-termgoalof170g/kmin2004andin2006,achievedCO2

emissionsquantityof163.5g/km,showinga3.8g/kmdecreasefrom2004.

consecutively Selected as an Outstanding company for the voluntary Agreement of

greenhouse gas reductions

Since2000,KiaMotorshasbeenconsecutivelyawardedasanoutstandingcompanyfortheVoluntary

AgreementofGreenhouseGasReductions,aidinginreversingthegreenhouseeffectandconsistent

environmental improvement activities.

Actively countering greenhouse gas from the Workplace

KiaMotorsisanactiveparticipantofVAprojectstoreducegreenhousegasandsaveenergy.Inits

HwaseongPlant,Kiainstalledavarietyofinverters(ductsystem,precipitator,coolantpump,exhaust

fan,pumpmotor,andetc.),boilers(automaticfuel-airratiocontrolsystem,economizer,andcontinual

blowdowninstallation),infrastructurecomplement,coolantwithdrawalsystemschange,air

compressor, cooling power complement, pre-treated coating exchange efficiency compliment, and

etc.;suchinstallationstherebycontrolactivitiesthatreduceunnecessarypowerusage.

cO2 reduction Trends in Europe Unit: g/km

KIA KAMA JAMA ACEA

220

210

200

190

180

170

160

150

75

2000 ~ 2004 2005 2006

Selected Plants as Outstanding facilities by year

Classification

Sohari

Hwasung

Gwangju

2003

◦

◦

◦

2004

◦

2005

◦

◦

◦

2006

◦

◦

◦

* ALVoluntaryAgreement:Non-regulatedagreementsignedbyGovernmentandCorporationtosetandachievea

common goal for saving energy and reducing greenhouse gas emissions

* Thehighestaward(MinisterAward)isincluded.

* Source-Kama-EU&KIA-AAA

Kia Motors’ Energy Saving Overview

Classification

Saving costs (In millions/year)

Saving amounts (TOE)

CO2 reduction (tCO2/year)

2001

3,079

8,526

4,821

2002

2,845

8,550

4,531

2003

2,780

8,970

5,448

2004

4,675

14,456

8,544

2005

3,586

9,992

5,975

2006

5,009

18,387

10,131

* TOE(TonofOilEquivalent):StandardunitofCalorie(Cal)foronetonofcrudeoilforvariousunitsofenergy.

* ResultsofVAProjectsforSohari,Hwaseong,andGwangjuplants

0102

01. AwardedforExcellenceinNewlyRecyclableEnergyAccomplishment

02. PresidentAwardinEnergySavingPromotionCompetitionbytheMinistryofCommerce,IndustryandEnergy

165 (KAMA)163 (K!A)

Roads are made to connect one person to another.

Kia Motors is a road to a sustainable society.

socia

l v

alue

Countless roads are built to facilitate convenient travel.

Our vehicles, our pride and joy, travel over these roads.

We bring peace of mind to our customers with never-ending efforts to

build safer vehicles for our customers.

Creating more convenient vehicles and preventing vehicular accidents

are the true profit of an automobile company’s responsibility.

Alleviating walking discomfort, attending to those working in the

vehicle production, as well as looking back at the people facing greater

hardship, Kia Motors will materialize the needs that will sustain the

company and society’s coexistence.

Kia Motors strives to maintain healthy relationship with two components of the

company’s driving force, its partners and employees.

Kia raised the bar with “Making a Great Work Place,” which boasts employees’

satisfaction, employment security, and employee’s rights protection. Kia is continually

expanding support for management stability and competitiveness of business partners.

Beyond offering excellent customer satisfaction, Kia Motors enriches lives with

comfortable reliable vehicles and active contribution to local communities.

Under the slogan, “Moving Together with the World,” Kia promoted harmony with

the community by contributing to the development of safer traffic culture and advancing

mobility for the people with disability and disadvantaged drivers. From 2007 onward, Kia

Motors continues to expand the community engagement with volunteer work and global

community activities.

MAteRiAlity AnAlysis Results

2008 Sustainability report amended expansive information in the social value section to

correct the inadequacies, noted in the last year’s stakeholders’ satisfaction survey. For the

issues below, Kia Motors’ categorizing system helped locate inadequacies in the report,

while valuable contents were organized into graphs to allow clarity of the data. Results

gathered from various outside parties are clearly organized for viewing.

78

Disclosure on

ManageMent approach

employees’ Rights and labor-Management RelationshipBenefits and trainingWorkplace safety

• Creating Jobs (for 220 people) and Awaiting Retirees Support• Running Committee of Employment Stabilities and Committee of Next Generation Management • “Making a Great Work Place” (Providing better benefits and training, events supported by employees, and cheerful culture)• Decreased 51 Industrial Accidents

Partnership supportFair trade settlement

• Operating Support System for Business Partners • Executing 5 Star System • Training Employees of Business Partners• R&D Partners Tech Day Meeting• Guest Engineering Program• Supporting Management Stabilization (Improving payment condition and financial support)• Joint Overseas Market Entry• 2nd Partnership Support Reinforcement• Settling Fair Trade System

Customers’ safetyCustomer service

• Development of Vehicle Safety and Intelligence• Demonstrated Superiority in Safety Evaluations • Awarded Best Service Satisfaction• Awarded 1st Place in Best Korean Standard- Service Quality Index (four consecutive years)• Awarded 1st Place in Superior Korean Standard-Service Quality Index by Korean Business Call Center• Operation of Auto Q Services and Before Services• Kia Motors America Awarded 1st Place in Best Website by J.D. Power and Associates

Community engagement

• Advancement of Transportation for the People with Disability and Disadvantaged Drivers (Easy Move)• Expansion of Safer Traffic Culture (Safe Move)• Employees Volunteer Services• Establishing Infrastructures for Regional Communities• Strengthening Global Community Service Activities• Total Expenditures in Community Engagement; 7.4 billion won

Employees Customers Local CommunityBusiness Partners

+ + +

79

Businesses focused only on the optimal allocation of resources and financial growth exposed

various problems. This initiated outcry from the world to change the corporate management

paradigm to focus on strengthening corporate responsibilities to the society. As a responsible

corporate citizen and a member of the community, Kia Motors seeks public and stakeholders’

optimal benefit, carefully dealing stockholder matters and working towards a common good.

Additionally, special attention is given to all stages of corporate earning distribution in a fair and

responsible manner with the stakeholders in mind. Large aspect of Kia’s community contributions

is creating new economic supplement to aid local communities and to further aid country’s

development. Kia Motors is generating economic values for local communities through job

creation, while its employees establish the company’s future values and aid in obtaining goals of

the sustainable management. Kia is made possible through people, just as Kia’s products are

made to better the lives of people. Caring for its employees is as important to Kia as its primary

goals of sustainable management growth and responsibility to the community.

eMPlOyees OveRvieW

employees and employment

On December 31st, 2007, Kia Motors reported a total of 32,977

employees. Through job creation, Kia seeks to improve the

economic value of its local communities and further improve

the nation’s economy. Each year through various public hiring,

Kia hires great number of new workers under equal

opportunity practice. In 2007, 220 new employees were hired.

employment loss Management and Retirees support

Kia Motors attributes foundation of business competitiveness

with hiring and retainment of highly valuable employees. In

order to comprehend the employees’ satisfaction, Kia examines and manages information

regarding employees’ age, gender, region, occupation changes and its turnover rates. For new

employees, Kia provides a mentoring system to aid the employees’ adjustment stage and prevent

skill relapses. Mentoring system is established through representatives of each department,

assigning team formations of either 1:1 or 1:3 to provide this system with guardianship. Once

employed, during the first six months, employees take turn at least once a month establishing a

eMployees

50,000

40,000

30,000

20,000

10,000

0

2005 2006 2007

32,745 33,005 32,977

total number of employees Unit: Employees

productive meeting to discuss various difficulties and socialize with other employees. In the

process of an employee’s retirement, Kia’s awaiting retirees are entrusted to outside consulting

agencies to provide psychological stability and facilitate reclamation of the employees’ own

paths. Kia also holds two weeks seminar to give valuable information regarding their health,

assets, and spare time management.

To raise employees’ morale by matching employees with their desired job, Kia utilize a system

of self-assessment report that are used to shift job position at the beginning of the following year

when any work difficulties or desired position are reported.

78

7992

97

104

111


employeesBusiness Partners

Customers

Community

Special Story: Communicating with Stakeholders

80

education for Awaiting Retirees

education Contents (a total of five days / 40 hours)

• Reality cognizance: retirement preparation, lifetime plan (prospectus), jobs after retirement, and sense of life

after retirement.

• Self care: image care, health care, and a happy marriage

• Future plans: property management, understanding and viewing company commencement, power resume,

and plans for off-hours.

number of trainees

• 37 retirees in 2006 and 26 retirees in 2007

Results from the satisfaction Report of Retirees

• “Contents are organized appropriately for the awaiting retirees that it will likely provide major help

after retirement.”

• “Education gave me friendly future direction and a welcome relief few months before the retirement.”

• “It was a period where I was given the chance to look back at life. My previously narrow outlook on life has widened

along with my heart.”

employees by Occupation Unit: Employees

Positions

2007

　

2006

2005

total

28,405

4,572

32,977

33,005

32,668

Other

183

-

183

336

395

sales

2,995

217

3,212

3,228

3,239

Research

108

140

248

250

253

technician

1,663

-

1,663

1,672

1,661

Production

21,711

21

21,732

21,774

21,554

General

1,745

4,194

5,939

5,745

5,566

union Member

non-union Member

　

　

　

* Standard for current employees based on assessment taken December 31st of each year.

employees by Occupation in 2007 Unit: Employees

employees’ location

Head Office

Apgujeong

Wonhyoro

sohari Plant

Hwaseong Plant

Gwangju Plant

R&D Center

Domestic Regions

Oversees Regions

total

Officer

-

-

-

-

-

-

-

-

2

2

General

30

2

1

22

50

17

11

3

　-

136

Production

　-

　-

　-

1

61

　-

　-

　-

　-

62

R&D

　-

　-

　-

　-

4

　-

　-

　-

　-

4

Privileged

4

　-

　-

3

7

2

　-

　-

　-

16

total

34

2

1

26

122

19

11

3

2

220

Retirees for 2007 Unit: Employees

Categories

Head Office

sohari

Hwaseong

Gwangju

R&D Center

Misc.

total

ResPeCt FOR DiveRsity AnD PROteCtiOn OF HuMAn RiGHts

Formation of non-discriminatory and Open Work environment

Kia Motors does not discriminate on the basis of gender, race, religion, or social standing. Each

opportunity is given according to each employee’s individual abilities. Kia’s Employment Stability

Committee is securing full employment of Kia’s employees and building a relationship of trust.

According to employment manual and public standards, Kia follows processes of fair

employment, thereby insuring Kia Motors with competent workers.

Respect for employees’ Diversities

Kia Motors’ overseas facilities are currently located in the United States, China, and Slovakia. As of

2007 in Kia overseas operations, native employees account for 7,407 employees, making up 18.3%

of all employees. Kia is reviving many regions’ economies through employment, while founding

suitable environmental and cultural formations to create and support enjoyable working

conditions for the native employees.

The ratios of female employees make up 2.5% of Kia’s employees with a total of 833 female

employees. Currently, there are no females in management positions. Kia Motors practices

management activities with an open mind and accepts differences in perspectives. Kia is putting

efforts to equalize gender in the workplace by progressively employing women and providing

comfortable working environments for both employees.

81

* Head office consists of Yangjae, Apgujeong, Wonhyoro, and oversees regions, and R&D Center consists of Namyang,

Mabuk, Shihwa, and Sohari R&D center.

Regional Job Creation Unit: Employees

Categories

Head Office

sohari

Hwaseong

Gwangju

R&D Center

Misc.

total

* Head office consists of Yangjae, Apgujeong, Wonhyoro, and oversees regions, and

R&D Center consists of Namyang, Mabuk, Sihwa, and Sohari R&D center.

Job Creation Unit: Employees

2,500

2,000

1,500

1,000

500

0

2005 2006 2007

1,499

572

220

2005

96

75

93

64

766

142

1,236

2005

48

150

147

1,101

47

6

1,499

2006

80

73

46

68

7

77

351

2006

52

108

278

99

17

18

572

2007

70

59

47

67

4

60

307

2007

38

26

122

19

11

4

220

01. Slovakia Plant’s Native Employees

02. Kia Motors’ New Employees in 2007

0102

82

employee Wage Unit: Employees, In million won

Classification

total employees

Consecutive years of employment

Annual Wage

Wage per employee

2007

32,977

13

1,894,262

57

2006

33,005

13

1,844,824

55.90

2005

32,745

12

1,752,972

53.53

Personnel evaluation and Performance Based Compensation

Kia Motors preserves all matters regarding personnel evaluation, equal treatment of employees,

and job promotion management as stated in Article 36 of the Collective Agreement, and Article 4

in the Rules of Personnel Management. Employees are paid according to the wage criteria

regardless of gender and by objective validity of the employee’s duration of services. Personal

evaluation system objectively measures individual services for improving the employee’s

capacities. Promotion system requires that the official examination board makes consideration on

the basis of various diverse objective data to deal fairly and to advance further objectives.

employee Representative Assembly Guarantee

According to the 8th Article of the Collective Agreement, it secures union association and the

liberty of their activities. According to the 18th Article in Rules of Employment, if a dispute shall

rise between labor and management, disadvantages may not be charged to employees

participating in a strike. Agreement regulates that the labor and management settle their issues

through negotiations. In addition, for improvement of employees and social welfare, a

conference concerning the collective agreement and labor management is held every two years.

Deliberations regard factors such as cost of living, productivity increase, wage settlement, and

wage negotiations. In order to build collaborative labor relations, a Labor and Management

Council is being operated at least every three months.

The collective bargaining which applies to union members makes up 28,405 members. With

the exception of employees at or above management levels or positions managing any of the

company’s major policies, employees are allowed to obtain union membership. Through the

collective agreement, the labor and management mentions, “following the fundamental

mentality of Constitution and three labor rights, and the ILO, as being in a reciprocally equal

position to being under the faithful principles, union member’s labor conditions, maintenance

improvement, politics, economy, community, and cultural elevation of statuses,” thereby securing

rights and interests.

Human Resources Management

To efficiently resolve employees’ grievances, Kia Motors established consultation service standards

called Human Resources (HR) Ombudsman Services. Located in each business department, various

employees’ personal concerns of promotion or proposals regarding promotion-related operations

are treated and collected with additional aims to improving HR management policies. In addition

to each division, an “Employee Grievance Handling Committee” has been established to help

resolve concerns about an employee’s job allocation. Promotion management keeps all matters of

employees’ concerns confidential to prevent any discrimination against employees.

Correspondingly, in order to resolve employee rights, systems, or general matters, a civil corner

via intranet can be accessed by employees.

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education for Protection of Human Rights

To protect the basic rights and privacy of employees, Kia is raising protection standards especially

concerning sexual harassment. HR lectures and workshop programs are given to all employees

each year for sexual harassment prevention. Lectures educate employees with real life and legal

cases in a variety of sessions. Lectures are intended to raise moral consciousness in a societal

working environment with Kia Motor’s goal of obtaining its culture of gender equality. Personal

consultation services for employees are provided in addition to the establishment of personal

consultation committee for female employees.

Prohibition of Child labor and Forced labor

Kia Motors is pursuant to employment principles only accepting candidates of at least 18 years of

age. Following the 26th Article of the Collective Agreement, no enforcement of work may be

applied on holidays for labor extension. Kia does not take advantages of employees with labor

service extensions.

Win-Win PRACtiCe FOR eMPlOyees

Management Disclosure Practice

Following the 14th Article of Collective Agreement providing notification of liabilities, Kia Motors

is making great strides through management disclosure practices. Contents which require

notifications of alterations or changes are trades and incorporations and employment rules;

personnel regulations whereby affecting union members’ by regulations enactment and

reorganizations, appointment and dismissal of directors; position changes, employee

identification changes, audit reports, management performance, and decisions made by the

board of directors. Such notification matters are immediately transferred as documents in

effectively building positive reliability. With the above mentioned and separately, Kia Motors is

regularly (monthly, quarterly, and biannually) disclosing operating results to labor unions for

reciprocal understanding and improvement of joint efforts.

employees’ Management Participation

Employment Stability Committee formed by employees at Kia Motors, as well as Next Generation

Committee inducing active management participation, keeping ears open to employees’ views.

employment stability Committee _ Employment Stability Committee follows 53rd Article of

the Collective Agreement. As an established committee, meeting is to be held once a year, for a

period of two to three months in which the committee discusses general matters and bring

conclusions covering employment and production at Kia Motors. Operations related solutions are

reflected upon directly. In each plant, subcommittees are separately assigned by their

departments, deliberating employment for each plant’s unit and discussing production-related

matters. In 2007, Employment Stability Committee held a discussion ending with a mutual

agreement on labor management in allocating Opirus production line to Sohari plant and

producing a brand new AM, in Gwangju plant.

83

education for sexual Harassment Prevention

• All employees require education in first and second half of each year

(Education from Lieutenant operated separately in each department).

• Education includes laws and regulations concerning sexual harassment, company guide to sexual harassment

prevention, handling procedures, and management standards.

next Generation Committee _ Next Generation Committee allows exchanges between middle

management and top management, exchanging ideas and increasing consensus through direct

consultation. Committee is continuing to play a vital role conveying business policies, expressing

Kia Motors’ vision to all its employees, in addition to communicating employees’ various

suggestions to top management groups.

With purposes of resolving crucial pending issues and problems, with a total of 16 committee

members from each division (6th standard: 16 headquarters and operating departments) during

one term of one year, each member attend workshop every month and promotes one subject

quarterly. From 2001, Kia Motors encouraged employees to participate in the management as

Next Generation Committee. Kia finished six terms of the committee throughout seven years, and

18 subjects were applied to operate businesses.

Co-ownership of ideas

Kia Motors administered an online community for each management department to promote a

knowledgeable community, where new employees to top management committees are given

rights to voice their opinions. Through the community knowledge base, employees may present

suggestions or serious concerns to top management groups and relevant government ministries.

Starting with cost reductions, various ideas for improvements that emerge while on duty may be

presented. Such suggestions or ideas are reflected upon by the administration and top

management groups to aid future activities.

Growth of a “Cheer” Culture

At Kia Motors, in order to maintain a spontaneous atmosphere where employees are encouraged

to have high morale and strive in their operations, a change in company culture is being

promoted by praising Kia’s workers. In 2007, through KIA world and CS plaza, a “cheer relay” and

“cheer board” was newly established to further expand the “cheer” culture. Similarly in 2008, Kia

Motors plans to continue its support of a company culture where employees can effectively

support and actively encourage one another.

eMPlOyees CARe eFFORts

employee training

In order to develop and strengthen Kia employees’ abilities, Kia Motors established educational

program system with training provision to raise ability of Kia workers. This has benefited the

company for multilateral management and control. The company is especially focusing on the

training processes of employees that will initiate innovative thinking and cultivate coping

abilities.

training Programs

Kia’s training program is divided by positions (general administration, Production, R&D, repair

and sales) offering basic skill training, OJT, key human resources, development training, and other

courses for specialty training. Aside from basic training courses, Kia also operates a useful

selection of training programs for employee family members. For welfare of employees, Kia

Motors offers financial support to highly qualified employees as part of its academia-industry

programs.

training Curriculum _ Employee training curriculum includes management training, OJT, key

human resources, productivity improvement training, and internationalization courses. Training is

divided by employee’s position and executives according to level; leadership training, specialist

0102

84

01. Signing 2007 Wage Negotiations

02. Cheer Board within the Company for Encouraging Employees

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training, performance improvement, and overseas human resources training. Kia offers support

training that is best suited to each employee’s own capacities for continual progress and rise in

employee’s ability.

Online training (www.hkhrd.com) _ Kia Motors was acknowledged by Korea Management

Association and the Ministry of Labor in 2001 and 2004 for the development of employees’ skill

and the online training system. From 2005, online training systems is being expanded and applied

to the employee community base for exchange and application of ideas. Ministry of Labor rated

Kia Motors “A” grade for three consecutive years.

85

2007 training Guidelines

Guidelines

Creating Performance-oriented Goals

Global Capacity Reinforcement

Laying a Foundation for Capacity

Training

Reinforcing Self-training

HRD Capability Improvement

Directional Focus

Enhancing Training Aimed at Settling Workplace (Headquarter) Issues,

Measuring Effectiveness of Training as a Management Performance

Internationalization Training Centered on Results, Systematic Development of

Overseas Regional Specialists, and Overseas Training Support Systemization

Reinforcing the System of Capacity Training by Occupation and Business

Division

Individual Development Plan, Training Based on its Own Needs

HRD Management in Global Level, Systematic Development of HRD Specialist,

and Reinforcement of Overseas HRD Benchmarking

training Contents

Category

Business Management

OJT

Key Human Resource

Product Quality Training

Globalization Training

Others

Total

training by Position

Director Training, New Employee Training, Capacity Training, Promotion

Candidates Training, and Cyber Training

Computer, IE, CS, Worksite Improvement, CALS/CIM, Patent, Job Transfer,

CAD/CAM, Auto Disassembly, and Repair and Maintenance Training

Overseas Education/Training, Graduate Schools, Global Experts, and

Overseas Regional Experts Training

Six Sigma, ISO, Divisional group, Proposals, Logistics, VE, and Partners’

Product Quality/Logistics Training

Foreign Language, Language (Including Cyber Training), Telephone

English, and Overseas Residents

External Training and Workshop

training Hours

235,853

691,137

16,340

44,814

118,378

403,255

1,509,777

number of trainees

10,060

39,815

32

4,410

5,335

55,722

115,374

Category

Directors and Leadership Training

Specialists Development

Promotion of Capability

Overseas Specialists Training

training system

training Contents

New Directors, Executives' Forum, Core Capacity Education (Training people

who were promoted), Leadership Development, Human Resources, and

Promotion Candidates Curriculum

Training by Occupation : General, Research, Production, Repair, and Sales

On the Job Training (OJT): 28 Cyber and Assessor Curriculums

Natives and Residents training

Online College for Housewives (http://hyundai-kia.cyberjubu.com) _ To aid continuing

education and self development of its employees’ family members, Kia offers free Online College

for Housewives that provides up to 60 lectures every month. The college offers special lectures,

standard lectures, as well as open lectures. Any members of the employees’ families are allowed

access to these lectures.

Children school and english Classroom for employees’ Children

(http://www.ilovehk.co.kr) _ Kia’s children school offers a broad range of content taught at

levels appropriate for children. Ranging from grades three to six, English Classroom for

Employees’ Children is offered during school break periods. Native English teachers and English

training specialists provide various programs such as regular ESS courses, drama courses, “Making

English Newspapers”, and presentation days.

training Facilities

The following lists Kia Motors’ training facilities for the development in vocational training:

Osan and Paju Human Resource Development Center, Gwangju and Goyang Training Institute,

Sohari Production Training Center, Hwaseong Carens Center, Cheonan Maintenance Training

Institute, Ulsan Seongnae Training Center, and Southern Auto Repair Training Center.

training evaluation index

Training Evaluation Index is divided into arrangement, training operations, and evaluation of its

employees. Training evaluations are conducted using manuals that utilize various evaluation

methods.

0102

86

01. Employee Training Center (Osan) responsible for employees’ OJT

02. English Classroom for Employees’ Children, one of many programs offered to employees to improve quality of life.

training status

Position

training expenses (in million won)

training expenses per Person (in thousand won/trainee)

training hours per person (hr/trainee)

2007

7,100

220

46

2006

9,400

290

64

2005

9,700

300

68

training Hours Unit: hr/employee

Position

General

Productivity

Repair

sales

2007

87

22

83

21

2006

98

138

82

51

training types and training hours Unit: hr/employee

training Category

Business Management

OJt

Key Human Resources

Product Quality training

Globalization training

Others

2007

7

21

1

1

4

12

2006

9

23

1

3

5

23

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Since 2007, training levels were based on one’s position and training processes with indices

gathered from each employee with total training hours. Promotion points are deducted for those

employees who do not take part in the course. Training Evaluation Index has been developed for

system management and operation of nurturing future talents, and it is used for making future

plans regarding employee training and evaluations.

In 2007, total training expenditures were 7.1 billion won, 220,000 won per employee, and 46

hours of training for each employee.

employee Welfare system

In 2007, Kia Motors contributed 333 billion won, 9.8% increase from previous year. For the

advancement of employee’s welfare system, Kia operates many programs such as National Health

Insurance System, Industrial Accident Compensation Insurance System, National Pension System,

Health Management System, and Unemployment Insurance. In addition, some specific items of

Kia’s employee welfare system are: daily life expense support, housing, retirement pensions,

health and safety, motivation, labor unions, and many others.

Kia Motors’ expenditures of employee welfare systems in 2007 were as follows: 46.8 billion

won for National Health Insurance, 43.6 billion won for Industrial Accident Compensation

Insurance, 63.5 billion won for National Pension and 20.7 billion won for Unemployment

Insurance. In the case of maternity leaves, 37 employees used a total of 3,403 days (92 days per

employee).

Outside legal affairs, Kia established employee welfare system with labor unions to ensure

the employees’ stability and morale, while maintaining positive relationship with labor unions. In

addition, 4,535 employees received interim payments for retirement pensions. A total of 52.4

billion won and 9.9 billion won were paid for supporting employees’ home visit and vacations,

respectively. Kia Motors also offered medical check-up services to 8,410 employees and 5,076 of

their family members. A total of 235 employees received Excellent Employee Awards in

recognition of their outstanding work performances.

employee Benefits

Kia is putting forth efforts to improve and stabilize the quality of life for its employees. Kia

Motors’ wage system guarantees wage above the legal minimum systemized for all businesses in

the country. Full time and part time employees (as well as hourly) are given nondiscriminatory

benefits. The differences in wages for full and part time (as well as hourly) employees are in grant

provisions relevant to the wages system.

87

0102

01. New Employees Camp 2007

02. New Employees Camp 2007 Graduation Ceremony

Annual Welfare Costs Unit: In billion won/In million won

Welfare Costs Welfare Costs per Employee

63,479

46,816

43,576

117,784

20,709

40,650

333,014

* Others include the following: 15,136 million won in Safety, Health, and Hygiene,

2,884 million won in Culture and recreation, 17,346 million won in Motivation.

500 25

400 20

300 15

200 10

100 5

0 0

2005

277.2

8.479.19 10.10

2006

303.3

2007

333.0

Details of employee Welfare Costs Unit: In million won

Category

national Pension

national Health insurance

industrial Accident Compensation insurance

life support and Conveniences

employment insurance

Others

total

inDustRiAl sAFety AnD HeAltH

industrial safety and Health Committee

Industrial Safety & Health Committee consists of seven members from labor union and

management. Through the committee, Kia Motors manages the company’s assets, safety

maintenance, and well-being of its employees by creating favorable working conditions.

Industrial Safety and Health Committees are located in each plant, consisting of labor union

representatives that seek to fulfill various safety needs of each plant.

industrial safety and Health Center Management

Kia motors’ Industrial Safety and Health Center provides medical care for the health maintenance

of employees in every plant. The center ranges in general medical services including treatment

facilities for musculoskeletal disorders. The center also runs free medical examinations and

treatments for business partners’ employees as well as Kia Motors’ employees.

Disease Prevention Management and Health Promotions Program

For health maintenance, employees undergo regular and special medical examinations, adult

disease examinations, and other examinations to detect any diseases at its early stages. Kia

Motors employee’s family members may receive financial support to cover medical expenses from

national health insurance or affiliated medical centers.

In 2007, Kia Motors supported 8,410 employees and 5,076 employees’ immediate family

members with a total of 9.3 billion won. Kia also established the online medical examination

center to expand the medical convenience and employee’s choices connected to Online Med Inc.

(www.onlinemed.co.kr).

Health centers (health gym, sports center) in every workplace allow for employees to maintain

their health. Kia Motors offers employees with musculoskeletal disorders with eight week health

programs prior to work, to prevent any relapses of musculoskeletal illness. Medical examinations

are conducted every three years to find causes and prevent employees’ musculoskeletal disorders

or illnesses that arise from repetitive procedures in the waist, neck, knees, and shoulders. Aside

from musculoskeletal services, Kia operates hearing care services to prevent loss of hearing in

addition to making improvement in the work environment. Through the Industrial Safety and

Health Maintenance, employees undergo routine and special health examinations to aid in health

improvements and working environment.

industrial Accident Ratio and total number of Days lost

In 2007, 661 industrial accidents were reported on company grounds. Total recovery days are

102,924, which decreased by 43,607 days compared to 2006. There was no record of sick leaves

from illness. The industrial accident ratio showed an increase in musculoskeletal sicknesses with

growing social concerns from 2000. However, there has been notable decrease in conventional

safety accidents. Kia’s production lines were reorganized to specifically prevent musculoskeletal

sicknesses. Enhancing treatment management, accident prevention, consistent safety

examinations, and diversified effort has resulted in a decrease of 20 cases since 2006.

0102

88

01. Hwaseong Plant’s Industrial Safety and Health Center

02. Employee’s medical examination appointment site (Online med)

industrial Accident Ratio

Classification

Kia Motors

Manufacturing industry Average

transportation Manufacturing industry Average

2007

1.9

　　(N/A)

(N/A)

2006

1.94

1.18

1.42

2005

2.03

1.16

1.62

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in-house environmental safety and Health system (i-esH)

The i-ESH is an organizational system for environmental, safety, health matters covering all of Kia

Motors’ production grounds. The system is not only for its efficiency of data organization, but for

disclosing environment safety related information for training purposes.

Certification of industrial safety and Health Management system

To prevent industrial accidents and for a pleasant working environment, Kia Motors operates the

Industrial Safety and Health Management. Sohari plant has acquired the KOSHA 18001

Certification, and Hwaseong plant obtained the OHSAS 18001 Certification as well as the KOSHA

18001 Certification.

89

010203

01. “My father is an art Ph.D,” art education program at Art Leum Museum in company HQ.

02. Competition event at new Visions Festival held from October to November of 2007.

03. Finalists of Best Dressers at one of the Visions Festival events

i-esH system

• Criterion Information• Waste Management• Environmental Goals• Soil Management• Noxious Chemical Management• Environmental Management Training• Emergency Procedures• Air Management• Environment Inspection• Water Analysis• General Environment• Partnership

environmental Management

• Criterion Information• Health Training• Physical Health Facilities• Equipment Management• Work Environment Examination• Safety Information• Musculoskeletal Illness• Health Information• Toxic Chemicals

Health Management

• Criterion Information• Dangerous Operations• Safety Goals• Partnership• Facilities Establishment• Emergency Procedures• Public Safety Information• Accident/Industrial Disasters

safety Management

• Common Factor Management• Environmental Management• Safety Management• Health Management

statistical Data

+ + +

MAKinG A “GReAt WORK PlACe” (GWP)

Kia Motors strives through a variety of programs

for its employees to come in harmony and enjoy a

“Great Work Place”.

Last year, the Art Leum Museum opened art

spaces at the Yangjae-dong headquarters lob-

bies for Kia’s employees to enjoy the art and for

mental /physical recharge. For employees and their

families, Kia Motors presented education programs

such as “My father is an Art Ph.D.” In November,

Kia held Visions Festival for its employees to pro-

vide unified group vision and culture. Employees

participated in group activities and forums that

focus on the company’s group vision and culture of

encouragement for each other’s brighter future.

Employees also enjoyed the Company Brand Day

events where Employees’ families could participate

in enjoyable family programs.

industrial safety and Health training

Category

safety and Health

Maintenance

training during

stated Period

expertise

specialized training

total Hours

Annual training Hours per Person

Remarks total: 32, 977 trainees (2007 standard)

Production

Sales

Technical

General

Supervisor

Industrial Safety and

Health Committee

Member

Administrative Staff

for Musculoskeletal

Illness

Health Promotion

Training

Sohari

Hwaseong

Gwangju

Sohari

Hwaseong

Gwangju

Sohari

Hwaseong

Gwangju

Services Center

Sohari

Hwaseong

Gwangju

Services Center

Sohari

Hwaseong

Gwangju

Participants

5,119

10,639

5,963

3,234

1,658

5,753

245

700

300

79

186

73

40

46

75

42

40

63

116

51

　

　

training Hours

2

2

2

2

2

2

24

24

24

8

8

8

8

16

16

16

16

400

400

400

　

　

Period (Month)

1

1

1

1

1

1

　

　

　

　

　

　

　

　

　

　

　

　

　

　

　

　

Period (year)

　

　

　

　

1

1

1

1

1

1

1

1

1

1

1

1

1

1

　

　

total training Hours

122,856

255,336

143,112

77,616

39,792

138,072

5,880

16,800

7,200

632

1,488

584

320

736

1,200

672

640

25,200

46,400

20,400

904,936

27.45

industrial safety and Health education

As stated in the 69th Article of the Collective Agreement, Kia Motors and labor union share the

common interest in maintaining the high priority in the matters of employee’s industrial safety

and health. Law-related matters of Industrial Safety and Health Rules (31st Article) were set forth

by the labor union according to the decisions of the collective agreement. Rigorous specialist

training is being employed to the head of production management and persons in charge of

musculoskeletal illnesses for Industrial Safety and Health Management. In addition, returning

personnel from industrial accident are given rehabilitation training to improve health conditions.

Kia safety Academy (KsA)

Kia Motors established Kia Safety Academy (KSA) to develop general safety maintenance for any

inadequacies in the work field. KSA’s programs include legal safety, health process, and in-house

inspectors training. In 2007, 1,015 employees received 12 different trainings to facilitate duties in

the health and safety management. With this academy, Kia Motors established the safety culture

and enhanced employees’ productivity.0102

90

01. Supervisor Management Safety Training

02. Cardiopulmonary Resuscitation (CPR) Training at KSA

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seCuRity MAnAGeMent AnD tRAininG

security Management system

Kia Motors is working to expand safety measures at a global level to meet the company

standards. Kia applied security procedures with standards guides, constructed security portal

systems, and raised PC management levels. In 2006, Kia Motors acquired the ISO27001

certification through an audit institution, BSI KOREA, obtaining the public’s trust for information

security management. The company is maintaining the certification twice a year through post-

inspection.

security training

Throughout the first and second half of each year, Kia operates collective training for the security

personnel for apt abilities in cases of unknown industry spies, information extrusion, company

security policies, and security management counterplan. Also for all security officers, workshops

are held twice a year. During the first Fridays of every month, the security supervisors offer

guidance training and examinations, which are required for following security management

procedures.

special security Management training

From 2005, Kia Motors’ directors and managers at headquarters undergo special security sessions

and training. The emphasis of security training is in raising security consciousness towards

preventing industrial data espionage, as well as company security countermeasures for providing

approachable methods to core security affairs. In 2008, there will be collective training for the

whole company for establishing security management values and raising security consciousness.

enforcement of Business information Management

Using International security certification (ISO27001) as a basis, evaluation in security

managements are held first and second half of the year. Security management conditions are

evaluated for any indicating issues that surface during inspection processes, and causes are

analyzed to prevent further relapses. Kia’s annual results from information management

evaluations show a steady annual improvement in security levels. Kia strives for excellence, which

is reflected in its results. Through early evaluation results, the company award departments who

achieve top security management and continually making improvements, while making careful

deliberations for less adequate departments.

security Related system

To prevent electronic document hacking, malicious codes, access in identity theft, and other data

abuses, the One Time Password system (OTP) is utilized. Also through Electronic Document and

Records Management (e-DRM) systems, documents and electronic blueprints are being encrypted

to prevent abuses. For protection and data evidence enhancement, data and output records are

preserved for future cases.

91

0102

01. International Security Certification (ISO27001) Certificate

02. International Information Security Management System Ceremony

Annual Results of information Management evaluation

Classification

Content

2007

98.7

2006

98.5

2005

98.2

Goal

100 pts

Vehicle industry requires technology-intensive and capital-intensive industrial values. Completed

vehicle is like a finished 20,000 piece puzzle. Similarly for composition of one vehicle, multiple

business partners form relationships with vehicle manufacturers for vehicle production,

development, and parts. Throughout the process, all of each partner’s specialty level determines

the quality of the finished vehicle. Vehicle manufacturing company like Kia is held together by

the supply chain of its suppliers and partners who provide timely, crucial parts and technology for

flawlessly orchestrated completion of a vehicle. In this respect, Kia respects its partners by

supporting competitiveness and survival of its partners for a mutual and sustainable growth.

Business PARtneR PROGRAMs FOR ACCOMPAnieD GROWtH

support for strengthening Partners’ Competitiveness

Partnership support _ On January 2007, Kia Motors founded Partnership Support Team with

Foundation of Korea Automotive Part Industry Promotion to strengthen the company culture and

promote global competitiveness with its small-medium business partners. Every year, Partnership

Support Team works with business partners for at least three months providing technical support,

quality directors, exports and management supports as part of the partnership management.

Partnership Support Team is made up of 20 full time officers excelling in each respective

management fields, serving two year terms.

Costs from consultation periods are fully supported by Foundation of Korea Automotive Part

Industry Promotion for Kia’s business partners to heighten partners’ management abilities.

Hyundai-Kia Motors group contributed a total of 3.5 billion won to Foundation of Korea

Automotive Part Industry Promotion in 2007. Partnership Support Team goes beyond providing

quality and technical knowledge by engaging in sustainable strategies with long-term values

placed on performance. In this process, expansive technical knowledge from former executives is

handed down to al l partners. From small-medium businesses, Kia Motors received

acknowledgment for its industrial precedent in partnership model.

execution of the “5 stars” system _ Since 2002, Kia Motors initiated the “5 Stars Quality”

system for improving partners’ parts quality and strengthening its competitiveness. Kia Motors

operated the system under three criteria: no recalls in the latest year, parts supply rate of at least

“4.5 Stars” rating, and 750 points in quality management systems. Partners that achieve the “5

Stars” can register for the “5 Stars Quality Club.”

92

Business partners

Reinforcement in Partners’ Core Capability • Execution of the 5 Stars System• Partnership Support• New Technology Exhibition and Seminar Opening• Guest Engineering Program

Reinforcement of Management stability • Supply Costs Settlement• Working towards a Common Goal• Funds Supports• Group Purchases

strengthening the Global Correspondence system• Joint Overseas Market Entry • Global Human Resources Program • Building Environmental Network

Reinforcement of 2nd Partners supports • SQ Mark Certification System• Management Innovation Seminar • Quality and Technology Volunteer Services • Group Purchases• Occupational Training Consortium Expansion

Direction of the Win-Win Practice

Companies awarded with “5 Stars” ratings heighten their status through credit rating

agencies with privileges of using “5 Stars” logos. From 2002 to 2008 January, a total of 15

companies were registered to the “5 Stars Quality Club.” Kia awards bids participation for new

vehicle development to those partners who score 50 points out of 100 in social responsibility

section of the “5 Stars” system. (Social responsibility standards consist of company operation’s

level of integrity, transparency, and internal HR policies.)

Partners’ employees training _ At Kia Motors, various programs are run to elevate technical

skills and operating competence of business partners’ employees. Every year, 32,000 partners’

employees train with specialists in collective and online setting. Kia also holds training session for

its partners in purchasing techniques to advance partners’ purchase systems.

tech Day Opening for Partnership R&D _ On November 2007 at the Namyang Research base

(R&D), Kia Motors held its “2nd Tech Day for Partnership R&D” for the 30 primary partners;

(Powertrain (10 companies), chassis (7 companies), assembly (8 companies), and car body (5

companies)).

For R&D and strengthening partnership efforts, Kia Motors held the “Partnership Skills Unity

Exhibition,” where Kia Motors gave partners the opportunity to present new R&D technologies.

‘R&D Partnership Seminars’ were also established to settle partners’ grievances and discuss

improvement plans. Kia Motors held the annual ‘R&D Partnership Tech Day’ events to expand the

scope of partners’ competitiveness. These events also offered an equal share of necessary skills as

well as idea exchange to build strong partnership based on open communications. Kia plans to

further expand the partnership program to encourage growth of its partners.

support for Partners’ Management stability

supply Costs settlement _ Kia Motors is furnishing ready funds to financially aid small-to-

medium businesses with inadequate raw supply expenditures. For larger companies, Kia has

reduced the pay periods from 120 to 60 days. To maintain payment systems, similar operations

will allow second and third partners to receive payments simultaneously.

Financial support _ To stabilize for business partners, Kia Motors supports raw material

purchases in addition to R&D costs. In 2007, Kia Motors funded 2.4 trillion won in supports and

plans to further expand the support scope.

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0102

01. Management Innovation Training for Partner’s Representatives

02. Hyundai-Kia Motors Partnership Convention and Seminar

(1) RFID (Radio Frequency Identification) : Through Wireless and IC chips, RFID manages information through a variety of

next-generation object-recognition technologies

PARtneR PRODuCtiOn systeM

Guest Engineering Program

Guest Engineering Program is Kia Motors’ represen-

tative partnership extension program. In order to

reduce auto part development periods and costs,

parts designers from partners and engineers from

Kia work together in vehicle development. Based

on monthly average, partnership program are oper-

ated in 43 companies with its 242 researchers at

Hyundai-Kia Motors research centers.

Establishing Logistics System (RFID) (1)

What is significant in the win-win practice with its

partners is the closely linked logistics system. In this

system, Kia Motors uses electronic tags called Radio

Frequency Identification (RIFD), which are applied

to the vehicle parts in the production process for

assembling identification. RFID emits signals that

are picked up by the computer servers. This allows

companies to use their free time to accurately

observe progress via the internet without having to

physically attend to each affair. In addition, compa-

ny trucks delivering auto parts also carry electronic

tags for comprehending each process of distribu-

tion; thereby, serving efficient supply management

and cost reduction purposes.

Practicing shared Achievement _ Kia Motors has been practicing Shared Achievement since

1990. Kia Motors utilizes Value Engineering (VE) that reduces cost at no expense of quality of

product or service. With collaborative efforts, imported parts are replaced with domestic parts,

which reduces Kia’s bottom line while nourishing Kia’s partners in win-win strategy.

Group Procurement _ For the material cost reduction of business partners, Kia Motors’

purchasing power was utilized for group procurement, spending 61.8 billion won in 2006 and

67.6 billion won in 2007. Kia Motors is expanding procurement from general resources to

stainless, aluminum ingot, and raw materials.

strengthening Global Correspondence system

Joint Overseas Market entry _ Kia Motors is entering the overseas market with its business

partners, focusing on smooth provision of parts and job creations in regional communities. To

strengthen partnership, Kia created supports system for its partners to minimize losses from trial

and error. For partners’ stable settlement in overseas market, Kia Motors provides partners with

employment, business material purchases, and legal consultation. Kia Motors’ current regional

procurement ratio for automotive parts is approximately 80%. Regarding overseas investment

difficulties of small-to-medium businesses, global support system is being utilized as an aid to

overcome this problem for small-to-medium businesses.

Global Human Resources nurturing Program _ Kia Motors offers various education

programs aiding partners’ executive management and small companies’ employees for acquiring

a variety of specialty knowledge. In 2007, a total of 32,000 partners’ employees were trained

through Kia Motors’ educational program. With partners’ entry into the global market, Kia plans

to further develop training program for its partners to meet this need with expanded scope of

global management and partners’ employee language training.

Reinforcement of second Partnership support

Kia Motors is constantly expanding joint efforts with its partners. For automotive part vendors’

quality improvement, Kia Motors is operating quality technology services. Kia Motors provides its

second partners with technology specialists and monthly seminar for intensive training in quality

systems, which receives great praises from business partners. In June of 2007, Kia Motors held 12

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DevelOPinG Win-Win COMPetitiveness in-BetWeen PARtneRs

At the Kia Motors’ Slovakia plant located in

Zilina, there are 13 business partners (parts

suppliers) including Hyundai Mobis, Sewon

ECS, Donghee Auto Co., Pyung Hwa Auto Parts

Company, and Halla Climate Control Corporation.

To ensure stable development of its partners, Kia

treats each fairly and honestly. Simple shout of

“me too” from any of the partners will set Kia

Motors into action by attending to each partners’

necessary processes and services.

(MInI InTERvIEW)

Seung-Gil Park, Corporate Director of Sewon ECS

“A variety of business affairs such as incentive

negotiations, memorandum of understanding

(MOU) conclusions, selection of factory sites are

resolved through Kia Motors. Due to Kia Mo-

tors, Sewon was able to eliminate unnecessary

processes of trial and error, time waste, and costs;

in order to focus primarily on plant operations.

After 2006 Slovakian governmental transition,

Sewon lost all its governmental contacts and

support during the crucial market entry stage.

Mong-Koo Chung, the chairman of Kia Motors,

and Eui-Sun Chung, president of Kia Motors

directly negotiated with the Slovakia administra-

tion to smooth out our market entry without any

negative repercussions.”

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business briefings focused on cost reduction methods through power of group purchase to its

second partners. To boost second partners’ competitiveness, Kia Motors plans further

engagement with persistent emphasis on joint effort programs.

settleMent OF OPen AnD FAiR PROCuReMent systeMs

Under the principle management ethics, all of Kia Motors’ partner transactions must be open and

fair (Open & Fair policy). For moral establishment in purchase system, published guides are

provided by the supervising system of the cyber audit offices and HR Ombudsman programs.

Purchase managements undergo purchase training in computerization of purchases through

Value Advanced Automotive Trade Zone (VAATZ) programs, where purchases may be practiced in

an open and fair manner. In 2007, fair transactions examination revealed three cases of

mismanagement that later received visible legal actions and penalties. Currently, three more cases

are undergoing inspection processes. Following inspection results, Kia Motors will acknowledge

any inadequate factors pointed out and reform them for preventative measure. Further, Kia will

perform comprehensive self-examination as a preventative measures to find any potential legal

violations and correct them. Kia Motors puts forth consistent efforts with consistent training and

transparent resolution practice.

Complying with ethics Charter

Ethics Charter of the purchasing department outlines fair and transparent purchase activities as

well as central values of Kia’s partnerships with domestic and overseas partners. In general, ethics

regulations are specified in factors such as receiving money, soliciting for meals and goods, or

abusing information in business activities. Following principles of Ethics Charter, Kia’s employees

may not receive any gifts or money from business partners over 30,000 won. Also, receiving direct

and indirect compensations from business partners are considered unethical behavior.

Guidelines for employee’s ethical Behaviors

Kia Motors’ previous Code of Ethics and Ethical Charter for employees’ ethical behaviors were too

vague for employees to comprehend. To make up for equivocal standards in business activities,

Kia distributed clear guidelines concerning the employee’s ethical behavior, clarifying where

ethical regulations lie at work and daily activities.

Cyber Audit Office

The audit office of Kia Motors runs field audit and cyber audits to operate ethical management

efficiently. The cyber audit office disclosed Kia’ Ethical Charter and Code of Ethics on Kia Motors’

website. It informed business partners and customers of basic ethical management mentality in

the field and practices; facilitating businesses work ethics to be reflected on Kia employees’

behalf. Especially with the foundation of Cyber Call-in Center since April 2004, customers,

companies, employees, and anyone interested in Kia Motors are allowed access via the internet.

This allows anyone to bring consciousness of any unjust and unethical behaviors within the

company. The helpful input provides for effective reflection on issues for system improvements

and Kia’s ethical activities. As a practical and transparent system, persons that report any

unethical activities are informed of the resolving processes and results. In 2007, Kia Motors

received five reports through the internet regarding employees’ unethical behaviors. Kia

investigated and took actions against those employees according to the corporate policies,

contributing to Kia’s business improvement. Kia Motors is striving to consistently prevent relapses

of unethical behaviors through ethical training.

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Acquiring Cost Competitiveness• Promoting Partners’ Active Participation through Proposals• Corresponding Price Advancement on Materials

improving Parts Quality • Stabilizing Parts Quality in New Models• Elevating Partners’ Quality Level• Improving Parts Quality on a Global Level

transparent Purchase• Promoting Transparent Transactions• Settling Business Ethics

Reinforcing Overseas Plants’ support• Expanding Value Advanced Automotive Trade Zone (VAATZ) in Overseas Plants• Supporting Group Purchases in Five Global Divisions

Procurement Policy

Operating Ombudsman Program for Business Partners

In order to build collaborative relationships between Kia Motors and its business partners, HR

Ombudsman programs are being conducted for partners’ employees. Business partners report

their concerns, suggestions, or report any unethical behaviors of Kia Motors’ employees. With this

program, Kia pursues reciprocal development.

Cooperation on Procurement by the vAAtZ system

Kia Motors is operating VAATZ to practice transparent and effective purchase systems. Kia Motors

built the Sapturn system(1) within the VAATZ, where business decisions can be achieved by simply

viewing computerized processes, consequently negating most personal interferences. The system

strengthened the transparent transactions at a much higher level and allowed comprehension of

purchases’ scope globally. Kia also conducts on-line bids through the VAATZ system for parts

procurement processes and selecting business partners to practice fair and transparent business

activities.

establishing Fair transaction system

training employees’ Fair transaction _ Kia Motors trains employees concerning issues such

as anti-corruption policies linked to Fair Transaction Laws. In 2003, Kia Motors started online

training for all of its employees to better inform transaction laws. In its inception, 4,500

employees began the online training. Currently, Kia Motors is offering the training regularly with

promotion of new candidates and new employees. Employees in purchase and fair transactions

sector also undergo specialized training processes. In procurement and sales departments, duty

training is operated at least twice a year (at least 2 hours per training) with external lecturers in

order to set solid foundation for corruption prevention.

voluntary Compliance Program for Fair transaction _ Kia Motors operates a Voluntary

Compliance Program for Fair Transaction to enhance transparent businesses culture and prevent

transaction violations. The program was established in 2002 November. In addition, Kia Motors

established a council for the voluntary fair transactions compliance. Managers appointed by the

Board report employees’ compliance results biquarterly to the Board. Kia Motors offers

employees various training programs for fair business transactions both online and offline. The

Voluntary Compliance Program contributes to reducing losses resulting in violation of fair

transactions.

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01. The Purchasing Process Computerized by VAATZ System

(1) Sapturn System: Electronic bid system

Anti-corruption training Program

Legal Processes of Fair Transactions for all Employees (in cyber training)

Training content: understanding fair transactions legal processes, blocking

unlawful transaction processes

Training date / hours: 20 hours

2007 trainees: 108 members (new members)

transparent Purchase training

Training content: Transparent purchase training and procurement ethics

compliance

Training date / hours: January 26 and March 5, 2007 / 1 hour

Trainees: total 47 members (41 promotion candidates in purchase

headquarters / 6 of new employees)

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Although a vehicle is a private possession, it is also a social possession. Vehicles, which allow

comfort and reliability, influence not only individuals but society as well. Automotive

manufacturing company is responsible for creating vehicles with maximum comfort and

reliability, while raising the quality of life through the motor lifestyle culture. Kia Motors

understands that with each vehicle comes a responsibility for customer’s life, thus Kia develop

safety features. Kia is making great strides to continually improve customer service.

In 2007, Kia Motors earned high scores in domestic and overseas safety evaluations, taking a

step further in materialization of customer safety. According to the outside research and

evaluation services, Kia Motors achieved first place in Korean Service Quality Index for four

consecutive years, in addition to first place for quality in Call Center Services Index. Kia also strives

to raise the customers’ lifestyle through various cultural and sports events.

CustOMeRs sAFety: veHiCle sAFety

One vital function of vehicles is ensuring safety of the driver, passenger, and pedestrian, because

accidents involving vehicles can be fatal. Kia Motors makes considerable efforts to design a safe

vehicle for its customers. This effort is made through Advanced Safety Vehicles (ASV) and

application of safety systems. Additionally, voluntary recall initiatives are set in place to respond

immediately in case any defect surfaces that may pose threat to the customer’s safety. Kia Motors

runs traffic safety campaigns for its customer and training sessions for accident prevention and

guarantee customer safety.

custoMers

Advanced safety vehicle

01

11

21

02

02

12

12 12

1212

22

03

13

23 23

04

14

24

05

05

05

15

2506

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26 07

17

27

08

1828

09

19

1020

Advanced safety vehicle (Asv)

To provide more than a general safety offered by safety belts and air bags, Kia Motors is

developing intelligent active safety system, Advanced Safety Vehicles (ASV), which will further

enhance safety and reduce the impact of vehicle collision. ASV perceives driving condition on the

road and the driver to readily and actively prevent accidents, reduce collision damage, confirm

collision safety, and minimize damage magnifications. ASV will be connected to the Intelligent

Transport System (ITS), which will bring the same safety features from the ASV to the roadways.

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(1) ITS: Intelligent Transport System (ITS) is next generational advanced traffic system to efficiently manage traffic confusions

and safety using telecommunications/electronic technology.

1. Road condition sensor

2. Magnetic sensor

3. Vehicle distance sensor

4. Forward obstacle sensor

5. Blind spot monitoring camera

6. Drive recorder

7. Side obstacle sensor

8. Air pressure sensor

9. Inside door lock/unlock

10. Rear obstacle sensor

11. GPS sensor

12. Airbag

13. Road-to-Vehicle / Vehicle-to-

Vehicle communication system

14. Rear view camera

15. Water repelling wind shield

16. Seatbelt pretensioner

17. Driver monitoring sensor

18. Headup display

19. Steering angle sensor

20. Electronic control throttle

21. Electronic control brake

22. Fire detection sensor

23. Vehicle speed, acceleration

sensor

24. Collision detection sensor

25. Pedestrian collision injury

reduction structure

26. Electronic control steering

27. Message display system

28. Hands-free system

seCuRinG DRivinG PeRFORMAnCe

sensOR siGnAls inseCuRe nAviGAtiOn COntROl

• Car wheel speed

• Deceleration

• YAW Moment

• Steering Wheel Rotation

• Pedal Response Speed

• Under Steer Correction

• Over Steer Correction

• Overturn Danger

• Emergency Brake Function

• Dynamic Brake Control (DBC)

• Hill-start Assist Control (HAC)

Rest time awaiting signal

Active ControlvDC

sAFety teCHnOlOGy in MOHAve MODel

vehicle Dynamic Control (vDC)

VDC provides additional eyes and hands to the driver as it assists in detecting potential hazards on the roadway and providing driving

support. VDC uses built-in sensors to detect the driver’s control and its road conditions for any potential dangers (Sideslip and Under/Over

steer), and then it independently controls a break system in each tire and engine output to avoid accidents.

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As a first stage of development, Kia Motors will focus on vehicle control, information

communications, and core systems technology.

Collision safety

vehicle Collision Analysis _ Kia Motors uses computerized Vehicle Collision Analysis to assess

safety performance of the vehicle from the designing stages for improving customer safety. Kia

Motors conducts collision analysis for passenger behaviors as well as safety for women and

children. For complete analysis of the vehicle and its passengers, multiple vehicle collision

simulations, and actual vehicle tests are taken. With computerized applications, various Vehicle

Collision Analyses are being widely applied for passengers’ protection.

Actual vehicle Collision tests _ In orders to fully maximize collision safety, numerous tests are

run under severe conditions with numerous road circumstances. These diverse multi-tests range

from front, side, back, offset crashes to car-to-car and car-to-pole crashes. With evaluation from

these tests, Kia increases chances of passenger survival and efficiency of protection systems. Kia

Motors consistently tests under various circumstances to satisfy global standards by conducting

tests utilized by various safety-related institutions.

safety Acknowledgements

Kia Motors is acknowledged nationwide for producing the safest vehicles. Kia Motors’ top safety

grading was determined through the national safety tests.

Korea _ Vehicle safety evaluation is operated through New Car Assessment Program (NCAP).

2004 Cerato as a 1500cc compact car (driver seat ★5, passenger seat ★4, sides ★4), and 2005

Sportage as a medium-sized leisure vehicle (driver seat ★5, passenger ★4, sides ★5) received the

highest evaluations in vehicle safety. Especially in 2007, Lotze as a 2000cc compact car acquired

five stars on all safety tests (driver seat ★5, passenger ★5, sides ★5) and established itself as one of

the nation’s safest vehicles.

Oversees _ In 2007 global market, cee’d received the highest safety rating of five stars in

European New Car Assessment Program. In New Car Assessment Program (NCAP) of National

Highway Traffic Safety Administration (NHTSA), Lotze (Optima), Sportage, Sorento, and Grand

Carnival (Sedona) received a five star rating in front and side impact tests, thus receiving

acknowledgement as safest vehicles. In NCAP of Insurance Institute of Highway Safety (IIHS),

Grand Carnival (Sedona) was also acknowledged as ‘Top Safety Pick’ on all front, sides, rear, and

collision impact test.

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0102

01. Front Impact Test

02. Airbag Expansion

Korea and America safety Collision evaluation

Model

Cerato

Lotze

Carens (Rondo)

Sportage

Sorento

Grand Carnival (Sedona)

(*) Kia Motors’ actual test results

Domestic nHtsA

Front

5★/ 4★

5★/ 5★

5★/ 4★ (*)

5★/ 4★

5★/ 5★(*)

5★/ 4★(*)

Side

4★

5★

5★(*)

5★

5★(*)

5★(*)

Front

5★/5★

5★/5★

5★/5★

5★/5★

5★/5★

5★/5★

Side

4★/4★

5★/5★

5★/4★

5★/5★

5★/5★

5★/5★

CustOMeR sAtisFACtiOn

For Customer’s Comfortable and Pleasant Experience Customer satisfaction is an essential value of

Kia Motors for sustaining its business and achieving its long-term goals. In customers’

relationships, Kia Motors fosters lasting impressions by contributing to customer values. In 2007,

Kia Motors aggressively addressed customer complaints and promoted proactive services for

employees’ Customer Satisfaction (CS) capabilities.

strengthening employees’ Capability for Cs

employees’ capability for Cs _ To assimilate CS culture throughout the company, Kia Motors

is providing employees with a variety of CS training programs through CS training classes every

month. At Kia’s headquarter, the company trains employees with business manners, a system for

employees’ mentality at work, and methods to raise employee morale. For employees in customer

service sector, Kia focuses on e-customer services, active organization creation, active response

and services with CS mentality.

Activities for Customer service improvement _ As a necessary inspection for customer

service standard compliance, mystery shoppers visited Kia’s auto sales and repair shops. While

pretending to be customers, mystery shoppers carried out evaluations of Kia’s customer services

to identify inadequacies for further improvement.

internal Customers satisfaction services _ To motivate Kia employees with CS formation

and to achieve top Customer satisfaction, Kia selects “Customer Applauds Employee” and “Our

Proud Kia Employee” every month. Selected employees are awarded with CS “applaud

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voice of Customer (vOC) system

• Collectingcustomers’opinionsandsurveyingcustomer’ssatisfactionlevelafter2monthsfromthevehicle

purchase date (monthly)

> Survey on 203,719 of Kia Motors’ vehicle buyers in 2007

> Total of 35,612 customers responded to the survey

> Feedback of each Division’s VOC analysis results (monthly)

> Second monitoring of customer complaints on product quality and A/S

vOC Activities

• Trainingallplants(Sohari,Hwaseong,andGwangju)employeesbasedontheirpositions

> Trainees: executives, managers, and field workers

> Content: major customer complaints

At Kia Motors’ Sohari, Hwaseong, and Gwangju plant, Kia is spreading VOC activities in its employee training

to reinforcing values of production in the workplace. Kia instituted quality consciousness in its employees with

understanding that even the small matters in production can affect customers and the company. With these efforts, Kia

and Kia’s employees produce quality vehicles appreciated by the customers.

satisfaction level to Resolve Complaints

• 6monthdeliveryperiod,1~3yeardeliveryperiod(monthly)

> Customer surveys after 6 month period: total of 59,744 ,Customer surveys during 1~3 year period: total of 116,013

• Customersatisfactionratingin6monthperiod:82.6(1.8risefrom2006)

> 1~3 years delivery service satisfaction rating: 75.7 (3.6 rise from 2007)

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acknowledgements” and showcased in each department for individual accomplishments.

Employee’s customer service levels are evaluated monthly to maintain excellent customer

satisfaction level.

Customer Relationship

various Customer services Programs _ Kia Motors is offering a vast array of customer service

programs with the aim of preventing customers’ inconvenience to maintain strong relationship

with its customers. These programs include VOC surveys, six-month monitoring calls for sold

vehicles, and “Customer Love Happy Calls.” These various program ranges from the new auto-

delivery phase to the auto scrapping phase. Kia Motors also sends out its auto magazines and

e-mails with beneficial information to its customers.

Auto Q service _ With improvement of previous Q services, Kia Motors is now operating “Auto

Q Services” membership program to its customers with high quality services for buying brand new

vehicles, maintaining vehicles, and various motor convenience. As an industry’s first auto service,

Auto Q Service is designed to maximize “Customer Lifetime Value” and provide Q Service

members with regular auto check-ups and repairs based on Kia’s standard customer service

manual. Through the Lifetime Customer Services program, Kia’s customers can acquire points on

the Kia Motors’ “Q membership” card for vehicle maintenance services.

Before service _ Unlike the A/S that are performed after malfunction, Kia Motors introduced

the Before Service (BS) with focus on service management, inspection, and malfunction

prevention. In 2007, Kia substantially raised its customer satisfaction with its BS. In figures, 11,820

technicians made 5,274 visits to customers, inspecting 142,125 vehicles for proper management.

Through “Q Members” website, Kia’s customers may register and schedule services.

Cs training support for Business Partners _ For Kia Motors’ business partners, Kia

established the CS Training Support to strengthen mutual relations and better the company’s

image. In 2007, 3,800 trainees from express bus and taxi businesses, customs, and district offices

received CS training, which received praises from participating partners.

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01. 02. Kia Motors’ Distinguished Customer Service, "Auto Q Service"

03. Kia Motors’ Advance Service, “Before Service” Providing Customers with Free On-site Inspection and Repair Services

AWARDeD Best seRviCe sAtisFACtiOn

From April 2006, the 5th Service Satisfaction Awards for the expansion of consumers’ satisfaction

awarded Kia Motors for best follow-up services. With a total of 329 companies competing in service

satisfaction awards in 2007, Kia Motors was awarded for its diligent efforts of customer care for during

and after purchase of vehicles.

Customer satisfaction index

1st place for four consecutive years in Korea standard-service Quality index (Ks-sQi) _

Managed by the Korean Standards Association, Korean Standard-Service Quality Index (KS-SQI)

selected Kia Motors for the best service for four consecutive awards since 2002, showcasing a

steady rise of quality.

The Korea Standard-Service Quality Index notes how real customers are treated by the service

benefit, level of customer satisfaction, creative services, promise keeping, response to customers,

accessibility, reliability, and the service environment. Kia Motors has received a superior

evaluation based on all 8 qualifications.

1st Place in 2007 Korean industry Call Center standard-service Quality _ Kia Motors’

customer service center receive suggestions from customers, promptly resolving customer

complaints, managing customers, and meeting customer’s demands. At 2007’s “Call Center’s

Korean Standard-Service Quality Index” held by the Korea Management Association, Kia Motors

was awarded 1st Place (95 points) keeping its streak alive since 2005. Kia Motors not only received

best results in the vehicle sector, but also topped the national rating for its consistent amiable

efforts in customer service in the Call Center Sector that envelops all of Korea’s businesses.

Customer information Protection

There were no cases involving any violation of customers’ personal information in 2007. To ensure

protection of customer information, all employees in customer service center sign the

“Nondisclosure agreement”. Kia Motors informs customers of their information rights through

“Agreement of customers’ personal information use” when consulting with Kia’s customer

support.

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01. 1st Place in Korea Standard-Service Quality Index Award

02. 1st Place in Call Center Korean Standard-Service Quality Index Award

80

75

70

65

60

55

2004 2005 2006 2007

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94

93

92

91

90

Kia Motors A B C D

Customer Consultation Center

• Offeringavarietyofcommunicationchannels

> Phone consultation: 080-200-2000

> VVIP exclusive consultation: 080-760-2000

> Cyber Counseling: E-mail consultation (ERMS), internet chat consultation (ITI)

(http://www.kia.co.kr, http://www.qmembers.co.kr)

• "CustomerSatisfactionSolutions"enablinghelpfulcooperationwithCustomerservicedepartment,givingprompt

feedback to customer complaints (suggestions) and undergoing management improvements

• Maintainingcustomersrelationshipthrough“CustomerLoveHappyCall”Program

> Furnishing variety of data each year

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62.7

58.0

61.3

64.3

65.2

62.2

71.5

69.3

70.5

72.2

66.2

68.8

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Korea standard-service Quality index evaluation Results

Kia Motors A B

Call Center Korean standard-service Quality index

evaluation Results 2007

Customer Marketing

Advertising _ For marketing, Kia Motors runs variety of events and communications activities.

No marketing events infringe on customer privacy, lay double standards, or influence children. All

marketing communications meet the ethical and cultural standards. Opirus’ newspaper

advertisement “Snowman” was a huge public hit and later awarded The Best Advertisement by

the Newspaper Advertisement Nominee from 2005 to 2007. The popularized Opirus TV

commercial “You are right” (featuring In-Pyu Cha and Ee-Rah Shin) received the best TVCF award

(Korea’s commercial award) in the broadcast category in the 4th Advertising Ethics Award of the

Republic of Korea. In overseas market communications activities, all commercial mediums (TV/

Newspapers/Magazines/Internet, etc.) and advertisements are executed through processes of pre-

auditing and accounting to meet native customers’ taste and standards.

Customer events _ Kia Motors is offering more chances for customers to experience its brand

through numerous yet diverse cultural offers. Kia strives to become a lively youthful company that

appeals to wider range of customers. In 2007, Kia Motors offered the holiday homecoming rides

assistance (New Years Day/the harvest moon festival), Grand Carnival airport limousine service to

provide cozy rides for tourists, Lotze driving school and Cerato beauty driving school to promote

safer driving. To expand on the customers’ engagement of cultural affairs, Kia Motors carries out

multiple cultural marketing, such as sponsoring the Pusan International Film Festival and various

other cultural events featuring movies, performances, and concerts. The Summer Auto Camp Zone

invites customers every summer vacation to rest and enjoy various fun filled activities. In 2007, it

celebrated its 23rd anniversary. Kia opened “Fun Kia,” online UCC website, to reach youthful

customers in their 20’s. Kia also opened “Kia-Buzz,” global online business blog, to communicate

with customers from abroad.

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01. Consumers' Selection of Good Advertisement Awarding Opirus Advertisement, “Snowman”

02. At One of the Customer Events Opened Lotze Mystery Event

03. Exclusive UCC Site 'Fun Kia' for 20’s

KiA MOtORs AMeRiCA’s WeBsite (WWW.KiA.COM) WAs evAluAteD By J.D. POWeR

Kia Motors America’s website (www.Kia.com) was

evaluated by J.D. Power and Associates as the best

website, and it offers prompt and accurate infor-

mation for consumers. J.D. Power and Associates

rated the website as “2007’s most useful automo-

bile manufacturer site” with a score of 868 out of

1,000. The website was acknowledged amongst 37

other automobile manufacturer websites. Kia also

placed first in 2003 and 2005 to make it its third

first place placement. “The most useful automobile

manufacturer website” recognition was a result

of comprehensive evaluation based on responses

from 11,280 consumers who planned on purchas-

ing vehicles within two years. These customers had

graded all 37 automobile manufacturer sites in

terms of information/content, speed, user friendli-

ness, and appearance.

Aside from financial contributions to the community as one of the corporate social responsibility,

Kia puts various efforts into providing vehicles with maximum comfort and stability. Especially in

regards to traffic convenience for people with disability, Kia Motors established the “Easy Move”

Campaign as well as “Safe Move” Campaigns for establishment and promotion of safe traffic

cultures. Also, active voluntary participations from employees have allowed voluntary activities to

expand into three major focuses. By investing in public infrastructure and various social

contribution activities, Kia Motors is continuously making efforts to create a better community.

+

traffic Convenience for People with Disability (easy Move)• Traffic Convenience Promotions Support for People with Disability

Promoting safe traffic Culture (safe Move)• Accident Prevention Education• Accident Prevention Campaign• Supporting Traffic Accident Victims

Global Community engagement• Global Relief Activities- Focus• Foreign Workers Support

Representative Company of Affiliates• Social Welfare • Young Generation Support • Human Resources • Environmental Preservation • Local Community Development

volunteer Group• Group Social Engagement • Social Engagement Campaign• Volunteers of Affiliated Companies

+

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coMMunity

Social Engagement

System

Traffic Convenience for

People with Disability

(Easy Move)

Global Community Engagement

Representative Businesses of Affiliates

Promoting Traffic Safety (Safe Move)

volunteer Group

Kia Motors made an establishment to sustain communities and allow harmonious

communications. At our domestic and overseas facilities, our former establishment was removed

for the construction of new facilities. Through mutual communications with local communities,

Kia is meticulously examining various regional and societal influences as well as establishing

security alarm systems. From a viewpoint of government relations regarding automotive

manufacturing industries, there must be a thorough inspection of the department prior to

community policy establishment and amendments. Kia Motors is establishing policy-making

through partnership amongst similar industries.

sOCiAl enGAGeMent PHilOsOPHy AnD systeM

After introducing our management philosophy slogan, “We usher human happiness through our

vehicles” and 2005’s social slogan, “Moving together with the World,” Kia set new boundaries as,

“a company leading in vehicle culture through eco-friendly economic activities and active social

responsibility, in pursuit of human happiness and a sustainable society.”

Philosophy: The pursuit of human happiness through vehicles

Mission statement: “Asaleadingautomotivegroup,wearecommittedtoourgoalsofa

sustainable society and human happiness through eco-friendly business operations and

achievingsocietalresponsibilities”.

105

Core values in social engagement

• We strive in eco-friendly business practices and environmental preservation.

• We act to fulfill social responsibilities through corporate citizenship.

• We act on partnerships with civil society for building a sustainable society.

• We act on social values upholding human dignity and happiness.

• We act on social needs timely and globally.

Mid- and long-term Plan of social engagement

settlement (2005-2006) Extending volunteer activities

Dissemination (2007-2008) Building global community care system

lead (2009-2010) Taking lead of Spreading community care models through society

social engagement Organization Chart

President of Hyundai Motors

Hyundai Motors

Officer of Hyundai Motors' Social Engagement

Hyundai Motors Social Engagement Council

(Coordinator of each region)

President of Kia Motors

Kia Motors

Officer of Kia Motors’ Social Engagement

Kia Motors Social Engagement Council

(Coordinator of each region)

President of affiliated companies

Social Engagement Council of affiliated

companies

Officer of Kia Motors’ Social Engagement

Management Support System of affiliated

companies

top managementGroup Council for Social Engagement

(The director of a bureau: Leader of Social

Culture Team)

Leader of Social Engagement Group

Head of Planning and Coordination Office

eAsy MOve CAMPAiGn

Looking to people less fortunate than us is to understand those we share lives with, imparting us

in our care for a sustainable world. As seniors or disabled people need medical equipments for

support, general vehicles are required to special implementation applied to vehicles. Republic of

Korea falls under UN standards of the aging society (advanced age population is 7%). Looking at

current increasing trends, the aged society (14%) would be come in the year 2020 and the post-

aged society (above 20%). With the trends, Kia Motors continues the persisting development of

Easy Move vehicles to facilitate transportation processes for disabled and disadvantaged drivers.

In September of 2006, Kia Motors introduced various extensions of vehicle properties in Easy

Move models such as the Lotze and Carnival’s rear wheelchair slope, steering wheel lifter seat,

and wheelchair crane. Kia is undergoing various processes of R&D for adding extensions to more

model varieties.

To furnish transportation for disabled and disadvantaged people in a manner of establishing

societal sympathy, Kia Motors actively runs Easy Move campaigns. Kia’s special concerns of traffic

life for the disabled and disadvantaged were characterized by various support programs.

Disability Support Service programs provide various aids such as brails support and prosthetic

limbs. Promoting locomotory activities for people with disabilities is one of Kia’s central goals for

community engagement. Kia Motors will expand the range of locomotive support programs for

disabled and disadvantaged persons, through continual R&D and cooperative aid from related

organizations.

sAFe MOve CAMPAiGn

Majority of traffic accidents come from security mishaps that can be prevented simply by a

heightened surrounding awareness by drivers and pedestrians. As a vehicle production and sales

company, Kia Motors leverages responsible conscientiousness in actual traffic affairs with,

“Prevention Training, Field Prevention, and Service Support” programs to promote Traffic safety

culture.

Especially for advanced communities concerning children’s safety and growth, government

and associated organizations are establishing and promoting safety school zones (children’s safe

district) through campaigns. According to 2007 National Police Agency publications, consistent

school zone campaigns aided in the decrease of children’s death from traffic accidents by 57 % in

the last five years, precisely 468 children’s deaths in 2002 to 202 deaths in 2007. However, the

number of deaths still places a high rank for OECD members. Kia Motors plans further anti-traffic

accident campaigns to eliminate traffic disasters of children; also as post-support to traffic

accident victims.

0102

106

status of easy Move Activities

• Korean Differently Abled Federation , Community Chest of Korea: Reinforcement of accessibility to facilities

(Automatic door installation, slope supplement, handrail installation, and expansion of exit doors’ operating radius)

• Community Chest of Korea, Federation of Korean Industries: construction of integrated exercise facilities for

the disabled

• Community Chest of Korea: Prosthetic limbs support (176 amputees and physically disabled persons with lower

brackets of income)

• Community Chest of Korea, 4 regional integrated welfare centers: Specialty playroom establishment called,

“Kids’ Floor” for children with disabilities

01. Lotze Easy Move Model

02. Operating “School Zone Keeper Campaign” as Part of Safe Move Campaigns

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CommunitySpecial Story: Communicating with Stakeholders

eMPlOyees vOlunteeRs ACtivities

Kia Motors’ employees are putting forth efforts to better a society that is shared, through active

contributions to neglected neighborhoods; conforming to Kia Motors’ purpose through

participation and lively support. With Hyundai-Kia Motors Group composed of volunteer

employees, blood drive campaigns are held each year alongside social engagement campaigns at

the year’s end. In November 2005, specialized disasters relief corpsman and community volunteers

unified to restore its community of flood damaged regions.

In addition, Kia Motors has engaged in community activities, running community activity

campaigns from participation of employees’ families since 2007. For each affiliated company,

volunteer activities are being held not as a one-time event, but as a continual event through

coagulation of 362 volunteer sectors from 18 companies. Monthly or by a cycle of every other

week, the volunteers are forming connections with its community welfare facilities. The

companies are systematically unfolding various activities such as social welfare, the next

generation support, human resources, environmental conservation, and regional community

developments.

investMent OF inFRAstRuCtuRe FOR PuBliC BeneFit

Kia Motors considers livelihood of domestic and overseas community members while constructing

infrastructures. As a link to Kia’s Easy Move Campaign, sports centers have been erected for the

disabled and regional residents within the vicinity of its production plants. For overseas

community engagement, Kia Motors constructed educational facilities for lower class members in

India with social welfare organizations.

sports Center Operation

Hwaseong and Sohari plant Sports Centers opened integrated cultural spaces for all Kia Motor’s

employees, their families, and regional residents; alongside Shuttle bus operations for

comfortable access. Kia Motors operates programs for every center for quality livelihood of

regional residents and promoting sports culture. Also, Gwangju plants have allowed residents

access to swimming facilities, and headquarter in Seoul has opened health centers and swimming

facilities with Art Leum’s art exhibition space for residents.

107

0102

01. Nationwide Tour of Traffic Safety Schools for Children

02. Employees' Blood Donation Campaign

Keeping a safety school Zone Campaign

OperationYearSince: 2005 ~ Current

Activities:For preventing traffic accidents in School Zones (children protection zones), kick off campaigns taking

circular checks of school zones near business districts, establishing safe environments for children

PartnersOrganization:National Safety Association

safe Move Activities

Activities Details

Children’sTrafficSafetyCampaign • Safe Traffic Musical, “No No Story”

• Traffic Safety Content Disclosure

• National Tour Children’s Traffic Safety Education

• Broadcast Campaign

• Traffic Safety Mini Exposition

• Traffic Safety Classes for Employees

3CloverHunt • Fulfilling Wishes for a Child Victim in a Traffic Accident

Reinforcement of Accessibility to Facilities for the Disabled

Hyundai-Kia Motors Group contributed 5 hundred million won alongside Community Chest of

Korea and Korea Differently Abled Federation (KODAF) for 84 organizations established

nationwide for the people with disabilities. The contribution supported an arrangement of

impact absorption floors with elasticity and slippery prevention floors. Before the arrangement,

many people with disabilities were limited to exercise due to general equipments; however

enhanced facilities have allowed easy access for health maintenance and remedial exercises.

indoor Playgrounds support for Children with Disabilities

Hyundai-Kia Motors Group offered 500 million won with Community Chest of Korea and 4

regional welfare centers in contributions to support children’s specialized play rooms “Kids’

Floor”. The meaning of “Kids’ Floor” conveys children’s space that is provided for running around

playfully while being safety conscious (Floor space). Through specialized educators, obesity

prevention clinic, family education, and various educational programs have been established for

children with disabilities. Kia’s efforts aid children with disabilities to gain independence and

eventually lead confident and healthy lives in their own communities.

educational Facilities support for india lower Class

At northern part of India, in Dhaneshari region where there are untouchable villages, Hyundai-

Kia Motors Group constructed dormitories as extensions of an old building at the Sujata Academy

Facilities, which is an educational institute for neglected regions. Amidst the India’s identity caste

system, the class occupies 15% of India’s population. People who belong to that class face severe

discrimination their whole lives. Currently, Indian government prohibits discrimination, however

the society’s immensely potent caste system remains unavoidable; the outcast live amongst social

discrimination and complete poverty. Currently Hyundai-Kia Motors Group actively pursues

contributions for the social dream of the alienated class. Together with Community Chest of

Korea and Korea Join Together Society (JTS), 200 million won were contributed in the last two

years, in support of constructing a four-compartment, three-story high boarding house extending

off of an old building, measuring 1,785; Kia also supports the 1,000 people’s uniforms, bags, and

shoes in its donations.

sOCiAl enGAGeMent By issues

social Welfare and environmental Conservation

Every year, Kia seeks to contribute with various activities to neglected neighbors. In 2007, Kia

Motors kicked off three campaigns with Ministry of Information and Communication, and mobile

communication companies; the Give Phone Campaign, Lotze soccer tournament and lunch money

campaign for fund raising. To raise environmental concerns and promote clearing and

maintaining the environment, Kia Motors’ employees actively participated in “Love Green

Mountain” campaign for mountain climbers that pursue nationally famous landscapes. The Lotze

“King of fuel efficiency” contest for corporate taxi was held to promote energy saving as well as

to have a just traffic culture; In addition, Kia Motors held the Sorento national environmental

explorations for swamps at the demilitarized zones.

Growing Generation support

Every year, Kia Motors offers chances for the youth who do not lose hold of their dreams amidst

their difficult environment in order to give hope and a self-challenging mentality. The

0102

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01. Disabled Children's Playground "Kid's Floor" Establishment Support

02. Offering Donation for Compassion Korea

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opportunity is given to the Lotze Youth expeditionary team for teenagers and college students

dreaming of being next generation leaders. With such efforts, Kia supports potential global

leaders, raising quality of the youth through global work camps.

During May in 2007, Kia Motors contributed Compassion Korea for releasing children from

poverty with 30 million won. Out of poverty stricken countries for which Compassion Korea will

promote, one child is connected for monthly support of 35,000 won until the child finishes high

school education. To strengthen the release campaign, “having one child”, 66 Kia’s employees

joined the campaign and connected to 72 children.

Cultural Aspect

On March 2007, Hyundai-Kia Motors group opened “Yangjae Art Leum” art exhibitions space at

Yangjae-dong headquarters with work of various themes. To celebrate the space, famous

contemporary artists, Chang-Yul Kim, Sung-Tae Park, Yong-Duk Lee were first given private

viewing; operating two to three month periods of planning new exhibitions.

109

0102

01. Local Citizens' Ordinary Access of Art Exhibitions Space "Yangjae Art Leum"

02. Operating the "Future Car Technology Exhibitions" for College Students to Display Their Ideas

A letteR FROM inDOnesiA

To.Hyung-BaeYoon

Hello, how are you? I am doing quite well. I am

the eldest daughter of my family and am currently

living with my grandfather, grandmother, mother,

father, and younger sister. I wanted to thank you

for being my sponsor. Every Sunday I diligently

attend a nearby church and I am grateful for your

help. I will pray that all things will go well with you

and your family I will stay a good kid as well. Again

thank you.

Oza from Indonesia

Oza is an eight year old girl whom I met through

Compassions activities. I wanted to make provide

a sister to seven month boy, however upon seeing

Oza’s hanging picture from Love’s Fruit, and espe-

cially her large round eyes, I decided I had to im-

mediately take support of this child. As I received a

short, but a thoughtful letter, I once again thought

to myself what I could do to help this child. I am

thankful that such a small help could be of great

hope, but I should too hurry with my reply letter.

Domestic Communications Team: Manager Hyung-

Bae Yoon

ACADeMiC-inDustRiAl COOPeRAtiOn PROGRAM FOR HuMAn ResOuRCes

To expand on the development of human resources

and educational opportunities for students, Kia

Motors has joined with colleges for Academic-

industrial cooperation alongside technology

teaching supports and specialist seminars. Since

1985, Kia has financially supported teachers who

taught 4,200 students newest skills in technology.

Every year, Kia Motors offers 200 test vehicles and

engines to education organizations nation-wide

for testing transmissions and materials for train-

ing. From 2001, the annual “College Cooperative

System Technology Competition” gives opportunity

and the disclosure for students to test theories into

literal application practices.

FutuRe AutOMOtive teCHnOlOGy COMPetitiOn

In 1996, the Future Automotive Technology com-

petition was opened to domestic college students

to reveal their creativity and a chance of exhibiting

execution of their ideas. In 2007, Kia created a new

approach for preexisting real productions, expand-

ing the scope for participants, allowing ideas to

be executed in the medium video or simulation.

Throughout the competition, Kia motors supported

20 work productions, alongside an announcements

ceremony awarding scholarships of 100 million

won.

GlOBAl COMMunity enGAGeMent

Kia Motors is expanding marketing and production networking worldwide. Kia Motors is taking

Social contribution activities, raising community caring standards to a global level from Europe,

Central and South America, Canada, Australia, New Zealand, Asia and Middle East regions. Kia

Motors and overseas natives are together reaching materialization for particular necessities of the

communities.

europe

With focus on sales subsidiaries, Kia Motors is making efforts to contributing globally to

numerous regional communities in Germany, London, Slovakia, Czech, Austria, Hungary, and

central Europe. In Germany, 7 euros from each vehicle sales are endowed as contributions to

regional communities. Kia Motors continues its support in UNICEF and child cancer research

centers, solar energy developments, and International Fund for Animal Welfare (IFAW). Kia is also

supporting children for safe ways to school, in London, through sponsorship and vehicle design

competitions; alongside vehicle sales support for workers struggling financially and endowments

support women’s cancer research centers. In middle regions of Europe, Kia Motors is operating

various cultural activities, with participations in environmental improvement programs to support

lower class members of society.

Central and south America, and Canada

Kia Motors continues to expand societal contributions activities in the Central and South

American regions in nations of Chile, Atlanta, Panama, Peru, El Salvador, Paraguay, Ecuador,

Columbia, Nicaragua, and Haiti. In the poverty stricken nations’ poor working class, Kia is focusing

on activities with UNICEF, Red Cross and international organizations to develop and expand

support programs for the poor. In Canada, Kia’s vehicles are contributed for use in training for

technical schools in its communities other than donating funds for child patients’ care.

Australia and new Zealand

In Australia, Kia Motors focuses on expanding traffic safety culture with programs for younger

drivers’ safe driving and fundamental training. With drivers’ license requirement age of 15 years,

teenagers’ reckless driving still continues to be a dominant social issue in New Zealand. Kia’s

training programs focus on operating safety training and driving school supports for teenage

drivers.

Asia and Middle east

With a sharp increase in vehicle accidents in Malaysia, regional community’s issues of safety traffic

culture are prevailing. Concerning this, Kia Motors is kicking off campaigns for traffic safety. Kia is

also offering support scholarships for children who are unable to get any education due to

economic crises in most regions of Philippines and Vietnam. Kia Motors is also supporting

residents in poverty stricken Middle East regions.

110

01. Central and South America Regions' Car Seat Support for Infants

02. Safe Drive Training Aimed at Young Drivers In Australia

0102

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GlOBAl BlOG (KiA-BuZZ)

Kia-BUZZ opened in September 2007, to bring awareness to Kia Motors of and to expand

communications with overseas stakeholders. For domestic companies, this is the latest approach

to global networking. “‘Kia-BUZZ (www.kia-buzz.com)” is a communications base that surpasses

national communication boundaries for stakeholders worldwide.

‘Kia-BUZZ’ consists of eight categories of Business, Communications, Design, FYI, Kia Vehicles,

Motor Shows & Events, R&D, and Social Responsibility. During the first four months in opening,

international users from 123 nations accessed 7,101(28,403 total page views) times on monthly

average, with approximately 240 new subscribers. By end of December of 2007, there were 250

registered suggestion comments. Aside from direct registration of the website, various tracers

such as track pack/link/citation are popularizing, allowing facilitated methods to collecting

suggestions from stakeholders. President Eui-Sun Chung, Vice President Peter Schreyer,

management, as well as its employees are participating in posting to reveal new vehicle design

and teaser images. The posts include publicizing skill abilities, corresponding to false information

or reports, and introducing marketing strategies are conveniently categorized, effectively

expanding direct communications with stakeholders.

DisClOsuRe On HOMePAGe FOR enviROnMentAl inFORMAtiOn

In order to have fluid communications with stakeholders and reliance of transparent

information, Kia Motors’ website will disclosed environmental information on June 2008. Kia

Motors will adhere to Resources Circulation Law that requires the disclosure of information

regarding re-evaluation of hazardous materials and recycling-related information. Kia is also

consistently improving environmental assessment results for new vehicles. The results will be

shared with Kia’s stakeholders for active environmental communications.

enviROnMentAl iMPACt OveRvieW

OveRvieW OF tHe DisCHARGeD POllutAnts

111

coMMunicating with stakeholDers

special story

Category

Existing Models

Mohave

Results

Global Warming

(ton CO2eq.)

54.5

53.2

2.4%<

Photochemical

Smog

(kgetheneeq.)

52.1

51.6

0.9%<

Acidification

(kg SO2eq.)

135.9

131.8

3.1%<

Resources Drain

(year -1)

409.2

401.9

1.8%<

Eutrophication

(kg PO4 3-eq.)

17.8

17.0

5.1%<

Environmental Impact

* From the assessment of environmental impact, pollutants reduced at 1-5% / hazardous material reduction ratio:

90% of total environmental impact generated from the process of use / High Fuel Efficiency (3.7% >) in process of

use and gas emission reduction resulted in pollutant reduction.

* Due to the increase of total vehicle weight (BL: 2009kg > Mohave: 2152kg) and use of light weight materials

(Al and Cu), discharged pollutants was increased on producing and repairing phases.

Category

Existing Models

Mohave

Results

CO2

50,400

49,200

2.4%<

nOx

124

118

4.8%<

SOx

64.4

60.7

5.8%<

PM

36.2

32.7

9.6%<

Discharged Pollutants(kg)

enviROnMentAl inFORMAtiOn On HOMePAGe

the Resources Circulating lawToxic Chemicals ContentRecycling Information

supplementary environmental informationEco-Friendly Level of ProductsLCA ResultsFuel Rate (Volume of CO2 Emissions)Gas EmissionsNoise, etc.

+

01

01. Kia-Buzz Blog Screen

112

tO tHe MAnAGeMent OF KiA MOtORs sustAinABility RePORt 2008:

The Institute for Industrial Policy Studies1 (The Auditor) was engaged by Kia Motors to review information specified in its 2008

Sustainability Management Report (The Report) to provide independent third-party assurance on its contents. Kia Motors is responsible

for the collection and presentation of all information within The Report as well as the maintenance of the underlying data collection

system and internal controls. The key objective of our review is to provide independent assurance that all statements and data cited in

The Report are free of material misstatement or bias and that the data collection systems used are robust. On the basis of the above,

The Auditor presents the following third-party statement of assurance.

COntext AnD sCOPe

In its 2008 Sustainability Management Report, Kia Motors describes efforts and progress made toward sustainability management as

well as its plans for the future. The Auditor’s review examined the following.

• Reasonable assurance on whether: the financial data specified under “Economic Value” is properly derived from

Kia Motors’ audited Annual Reports for 2007

• Limited assurance on whether: the data specified under “Intro”, “Environmental Value”, “Social Value”,

and “Outro” of The Report are stated adequately and in full and are free of material misstatement or bias.

* Reasonable assurance constitutes a higher level of assurance than limited.

inDePenDenCe

The Auditor was not involved in the preparation of any part of The Report, and with the exception of this work has no other affiliation

with Kia Motors that might compromise our independence or autonomy or place The Auditor under Kia Motors’ influence, therefore

ruling out any possible conflicts of interest. The Auditor has no relationship with Kia Motors regarding any of its for-profit operations

and activities.

CRiteRiA

(1) The AA1000 Assurance Standard’s (AA1000 AS)* three core principles of Materiality, Completeness and Responsiveness; and

(2) The Global Reporting Initiative’s (GRI) G3 Sustainability Reporting Guidelines Version 3.0**.

(3) The BEST Guidelines (BEST Sustainability Reporting Guidelines)** for sustainability management.* AA1000 AS is an assurance standard for social and sustainable reporting developed by the U.K.-based Institute of Social and Ethical AccountAbility in November

1999. A nonprofit organization that promotes corporate social responsibility, business ethics and responsible business practices, AccountAbility aims to improve

the quality of social and ethical accounting, auditing and reporting through the AA1000 AS.

** The Global Reporting Initiative (GRI)’s Sustainability Reporting Guideline was jointly convened by the Coalition for Environmentally Responsible Economies

(CERES) and UNEP in 1997. The newly revised G3 version was launched in October 2006.

*** The BEST Guideline (BEST Sustainability Reporting Guideline) was jointly developed by the Ministry of Knowledge Economy(MKE), the Korea Chamber of

Commerce and Industry (KCCI), and the Institute for Industrial Policy Studies (IPS) and provides for five levels of reporting rigor (Level 1 ~ 5).

WORK unDeRtAKen AnD sCOPe

The Auditor reviewed the Materiality, Completeness, and Responsiveness of The Report through the process outlined below:

• a review of media reports relating to Kia Motors

• a review of information contained in The Report as well as the underlying data collection system

(validation of internal sustainability-related organizations, systems, and activities)

• data sampling and assessment of high-risk areas to support intensive review of key statements in The Report, internal policies,

documentation, and information system

• interviews with managers and staff in charge of sustainability management and reporting, as well as persons responsible for

The Report’s source information

• on-site workplace reviews

(1) The Institute for Industrial Policy Studies (IPS)

Established in 1993, the Institute for Industrial Policy Studies has accumulated broad expertise in the area of sustainability

management since 2002. “The Auditor” is composed of six individuals (Dong-Sung Cho, Seok-Young Lee, Sung-Pil Park,

Keun-tae Han, Hee-Jung Kim, Ji-yeon Ahn) - professors at Korea’s top universities or expert practitioners with professional

accreditation and extensive experience in sustainability management based on majors in business management, accounting,

environmental science etc.

thirD party's assurance

stateMent

113

COnClusiOns

On the basis of the above we provide the following conclusions. The Auditor did not find The Report to contain any material

misstatements or bias. All material findings of The Auditor are included herein, and detailed review findings and follow-up

recommendations have been submitted to the management of Kia Motors.

MAteRiAlity: Does the Report cover economic, social and environmental issues

of the greatest importance to Kia Motors?

The Auditor does not believe that Kia Motors has omitted or excluded any information of the greatest importance to itself. We were

able to verify efforts by Kia Motors to identify issues of the greatest material interest to its stakeholders through Materiality Testing (i.e.

examining internal rules, laws and regulations, international guidelines, stakeholder involvement, same-industry benchmarking, media

reports, etc.) to give priority to reporting issues of the greatest risk or importance. The Auditor recommends that Kia Motors continues

to further refine its Materiality Testing model to best identify issues of the greatest stakeholder importance.

COMPleteness: How reliable is the information and data stated in the Report, and is the underlying information and

data collection system complete and robust?

The Auditor took note that Kia Motors has been gauging and managing environmentally relevant issues through a company-wide

organization and underlying system for environmental management. Moreover, we confirmed that Kia Motors has adopted diverse

management systems such as i-ESH (integrated system for safety, health, and environment), and VOC (Voice of the Customer) designed

to analyze customer satisfaction regarding its products and services. However, The Auditor recommends introducing a permanent

organization to be in charge of sustainability management while spreading out its existing systems and organization throughout the

entire enterprise and improving upon its performance measurement and evaluation system for sustainability management.

ResPOnsiveness: How well does the Report address information of importance to

Kia Motors’ stakeholders?

The Auditor determined that Kia Motors has established stakeholder-specific channels of communication including management and

staff surveys and sustainability expert interviews to listen to issues and comments from stakeholders. We also found The Report to be

improved from the previous year in terms of the structure of contents and design thanks to incorporating findings from its 2007 Reader

Comment Survey. The Auditor suggests collecting stakeholder comments from more diverse communication channels to reflect into

future reports.

Relative to BEST Guidelines, in view of the level of reporting rigor and intensity of information provided, The Auditor finds The Report

to fulfill 83.8% of the reporting requirements necessary to qualify for a Level 4 Report (from among Level 1 ~ 5).

issues FOR FutuRe COnsiDeRAtiOn

For future publications, in the interest of continued qualitative improvements in sustainability management performance and

reporting, the Auditor recommends the following.

• Present targets for major issues in each dimension and indicate the percentage of actual performance achieved against targets

to better demonstrate Kia Motors’ commitment to keeping its promise to stakeholders.

• Refine the implementation mechanism for sustainability management to be more systematic to expand the scope of stakeholders

against whom sustainability management performance is aggregated and measured to better enhance data collection and

reporting for social and environmental sustainability performance.

• Enhance the Completeness of The Report by incorporating findings from its stakeholder communication channels into

Materiality Testing and disclosing the above.

Based upon the above review and recommendations, The Auditor suggests that Kia Motors establish a more systematic program of

sustainability management and reporting, and continue to follow up with ongoing improvements going forward.

March 7, 2008

yoon-Chul leePresident, The Institute for Industrial Policy Studies

114

gri(g3) /Best inDeX

Strategy and analysis

Organizational profile

Report parameters

Governance, commitments and engagement

PROFile

1.1

1.2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

2.10

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.10

3.11

3.12

3.13

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

4.17

Statement from the Board of Management

Impacts of operational activity, key risks and opportunities

Name of the organization

Primary brands, products, and services

Operational structure of the organization

Location of organization’s headquarters

Countries where the organization operates

Ownership structure and legal

Markets served

Scale of the organization profile

Significant changes regarding size, structure, or ownership

Awards

Reporting period

Date of most recent previous report

Reporting cycle

Contact persons for questions regarding the report

Process for defining report content

Boundary of the report

Limitations on the scope or boundary of the report

Basis for reporting on joint ventures

Data measurement techniques and bases of calculations

Restatements of information

Changes from previous reporting periods in the scope, boundary, or measurement methods

GRI Content Index

External assurance for the report

Governance structure of the organization

Independence of the Chairman of the Supervisory Board

Number of independent members in the highest governance body

Co-determination right of employees and shareholders

Linkage between executive compensation and achievement of sustainability goals

Process in place to avoid conflicts of interest

Qualifications and expertise of the highest governance body regarding economic,

environmental, and social topic

Values, mission statements, principles, and codes of conduct of the organization relevant to

sustainability

Oversight of the sustainability performance and relevant risks by the Board of Management

Assessment of the performance of the Board of Management regarding sustainability

Precautionary approach

Support for external economic, environmental, and social activities

Memberships in associations and representation of interests

Stakeholder groups engaged by the organization

Basis for identification and selection of stakeholders

Approaches to stakeholder engagement

Key stakeholder topics

A_1

A_2

A_3

A_4

A_5

A_7

A_7

A_8

A_9

A_10

B_8

CO8

B_3

B_8

B_6

B_9

B_4

B-1

B-2

A_6

-

-

B_5

B_10

B_7

GR1

GR1 GR3

GR2

GR12

GR7

GR13

GR4

GR5

GR6

GR11

GR10

A_11

C_1

C_2

C_1

C_2

C_3

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●

●

●

●

●

●

●

◇

●

●

●

●

●

●

●

●

●

●

●

◐

●

○

○

○

●

●

●

◐

●

●

4~5

7

12

12, 30

3

12~13

13

23

13

12

25-26

48, 78

3

3

3

3

6~7

3

3

2

3

3

114-116

112-113

20-21

21

20-21

21

20

20

20-21

16-18

-

-

-

56, 59, 68

21

6

6

6

7

NUMBER INDICATOR BESTREMARK PAGE

Economic

Performance

Market Presence

Indirect conomic Impacts

eCOnOMiC

EC1

EC2

EC3

EC4

EC5

EC6

EC7

EC8

EC9

Direct economic value generated

Financial implications due to climate change

Organization’s defined benefit plan obligations

Significant financial assistance received from government

Range of ratios of standard entry level compared to local minimum wage

Policy, practices and proportion of locally based suppliers

Procedures for local hiring

Impact of infrastructure investments and services

Indirect economic impacts

EC1

EC2

EC3

EC5

EM4

EC4

EC4

EC6

EC7

●

◐

●

○

◐

●

◐

●

●

32

74

87

-

87

94

79,82

107-109

27, 106-110

●

◐

○

◇

Fully Reported

Partially Reported

Not Reported

Not Applicable

115

Materials

Energy

Water

Biodiversity

Emissions, Effluents, and Waste

Products and Services

Compliance

Transport

Overall

enviROnMent

EN1

EN2

EN3

EN4

EN5

EN6

EN7

EN8

EN9

EN10

EN11

EN12

EN13

EN14

EN15

EN16

EN17

EN18

EN19

EN20

EN21

EN22

EN23

EN24

EN25

EN26

EN27

EN28

EN29

EN30

Materials used by weight or volume

Percentage of used materials that are recycled materials

Direct energy consumption

Indirect energy consumption

Energy savings

Energy-efficient products and services

Reduction of indirect energy consumption

Total water withdrawal

Water sources affected by withdrawal of water

Percentage of water recycled and reused

Production plants in protected areas

Significant impacts upon biodiversity in protected areas

Habitats protected and restored

Strategies for managing impacts on biodiversity

Endangered species in areas affected by operations of the organization

Direct and indirect greenhouse gas emissions

Other relevant greenhouse gas emissions

Initiatives to reduce greenhouse gas emissions and reductions achieved

Emissions of ozone-depleting substances

NOx ,SOx and other significant emissions

Total water discharge

Total weight of waste by type and disposal method

Significant spills

Cross-border transport or treatment of hazardous waste

Areas impacted by the organization’s discharges of water and runoff

Initiatives to mitigate of harmful environmental impacts of products

Percentage of products sold and their packaging materials that are reclaimed by category

Significant fines and sanctions for non-compliance with environmental laws

Significant environmental impacts of transporting products, goods, materials and members of

the workforce

Environmental protection expenditures and investments

EV10

EV11

EV7

EV8

EV5

EV5

EV5, EV25

EV9

EV20

EV18

EV22

EV22, EV26

EV27

EV6, EV26

EV28

EV12

EV13

EV4

EV14

EV15

EV17

EV16

EV21

EV29

EV19

EV23

EV24

EV31

EV30

EV1

●

●

◐

◐

●

●

●

●

◇

●

●

◇

◇

◇

◇

●

○

●

◐

●

◐

●

●

◇

○

●

◐

●

●

●


53-56

55,57

59

59

59

40-53

59

57

-

57

62

-

-

-

-

58, 70-73

-

58, 74-75

-

35,60

61

56-57

62

-

-

40-53

52-53

64

62

69

Employment

Labor Management Relations

Occupational Health and Safety

Training and Education

Diversity and Equal Opportunity

eMPlOyees

LA1

LA2

LA3

LA4

LA5

LA6

LA7

LA8

LA9

LA10

LA11

LA12

LA13

LA14

Breakdown of workforce by employment type, contract, and region

Employee fluctuation ratio

Benefits provided only to full-time employees

Percentage of employees covered by collective bargaining agreements

Minimum notice period(s) regarding significant operational changes

Percentage of total workforce represented in occupational health and safety committees

Injuries, occupational diseases, working days lost, absentee rate, and work-related fatalities

Preventive healthcare, counseling and training regarding serious diseases

Health and safety topics covered in agreements with trade unions

Education and further training measures

Skills management and lifelong learning that support the continued employability of employees

Employee performance and career development reviews

Diversity in senior management and employee structure

Ratio of basic salary of male and female employees

EM1

EM5

EM20

EM12

EM13

EM14

EM19

EM18

EM15

EM27

EM28

EM29

EM2

EM3

●

●

●

●

◐

●

●

●

◐

●

●

●

◐

●

79

80-81

87

83

83

88

88

87

82

86

79-80

84-86

82

82

●

◐

○

◇

Fully Reported

Partially Reported

Not Reported

Not Applicable

116

non-Discrimination

Freedom of Association

Child Labor

Forced and Compulsory Labor

Security Practices

Indigenous Rights

GRi Application levelKia Motors Sustainability Report 2008 is based on GRI’s G3 Guidelines, self-declared B+ on GRI’s application level table,

and received B+ from IPS as the third party verification.

HuMAn RiGHts

sOCiety

HR1

HR2

HR3

HR4

HR5

HR6

HR7

HR8

HR9

SO1

SO2

SO3

SO4

SO5

SO6

SO7

SO8

Investment decisions that include human rights clauses

Percentage of suppliers that have undergone screening on human rights

Employee training on human rights

Incidents of discrimination and actions taken

Operations with significant risk concerning the freedom of association and collective

bargaining

Operations with significant risk for incidents of child labor

Operations with significant risk for incidents of forced and compulsory labor

Percentage of security personnel trained on aspects of human rights that are relevant to

operations

Incidents of violations involving rights of indigenous people

Impacts of operation on local communities and regions

Number of business units analyzed for corruption-related risks

Employee training regarding anti-corruption

Anti-corruption measures

Public policy positions and participation in public policy development and lobbying

Financial and in-kind contributions to political parties and politicians

Number of legal actions for anti-competitive behavior

Number of fines for non-compliance with laws

PN2

PN3

EM30

EM7

EM8

EM9

EM10

EM31

CO2

CO2

CO5

CO5

CO5

CO6

CO7

CS3

CO9

○

◐

●

◐

●

●

●

◐

○

●

◐

●

●

○

○

○

●

-

92

96

82

82

83

83

83

-

104-110

95

96

95-96

-

-

-

95

Customer Health and Safety

Product and Service Labeling

Marketing Communications

Customer Privacy

PRODuCt ResPOnsiBility

PR1

PR2

PR3

PR4

PR5

PR6

PR7

PR8

PR9

Life cycle stages in which health and safety impacts of products and services are assessed

Incidents of non-compliance with regulations concerning health and of safety of products

Principles and measures related to product and service information and labeling

Incidents of non-compliance with regulations and voluntary codes concerning product

information and labeling

Customer satisfaction

Programs for compliance with laws, standards, and voluntary codes related to marketing

communications

Incidents of non-compliance with regulations and voluntary codes related to marketing

communications

Number of substantiated data protection complaints

Significant fines for non-compliance with laws and regulations concerning the provision and use

of products

CS4

CS11

CS5

CS12

CS9

CS13

CS14

CS15

CS12

●

◐

◐

○

●

○

◐

●

●

97-100

97

101

-

100-102

-

103

102

102

DisClOsuRe On MAnAGeMent APPROACH 24, 38, 78


●

◐

○

◇

Fully Reported

Partially Reported

Not Reported

Not Applicable

Community

Corruption

Public Policy

Anti-competitive Behavior

Anti-competitive Act

Compliance

Kia Motors

sustainability

report

117

sustainability report

coMMittee

Kwang-Joo Kim Executive Vice President Corporate Planning Division +82-2-3464-5077 [email protected]

Goan-Soo Shin General Manager Sustainability Management Team +82-2-3464-5165 [email protected]

Keuk-Jin Bang Deputy General Manager Sustainability Management Team +82-2-3464-5171 [email protected]

Chang-Muk Choi Deputy General Manager Sustainability Management Team +82-2-3464-5168 [email protected]

Jong-Oh Kim Assistant Manager Sustainability Management Team +82-2-3464-5167 [email protected]

Kye-Hwan Roh Assistant Manager Sustainability Management Team +82-2-3464-5166 [email protected]

Hyun-Jin Cho Staff Sustainability Management Team +82-2-3464-5169 [email protected]

Namyoung Lee Manager Public Relations Management Team +82-2-3464-5206 [email protected]

Dong-Eun Lee Manager Accounting Team +82-2-3464-5412 [email protected]

Pil-Sun Ryu Assistant Manager Treasury Team +82-2-3464-5463 [email protected]

Min-Seok Kim Assistant Manager Strategy Planning Team +82-3464-5170 [email protected]

Hee-Jeong Yim Senior Research Engineer Eco-Technology Research Team +82-31-899-3060 [email protected]

Yun-Dong Hwang Research Engineer HEV System Engineering Team +82-31-368-2088 [email protected]

Sang-Sun Park Senior Research Engineer Polymeric Materials Research Team +82-31-368-7408 [email protected]

Dong-Ki Lee Manager Safety & Environment Team +82-2-801-3058 [email protected]

Ki-dong Lim Assistant Manager Safety & Environment Team +82-31-359-5094 [email protected]

Dong-Keun Choi Deputy General Manager Safety & Environment Team +82-62-370-3341 [email protected]

Gill-Beom Nam Manager Service General Affairs Team +82-2-3271-2612 [email protected]

Eunhee Kang Assistant Manager Corporate Responsibility Team +82-2-3464-2066 [email protected]

Sang-HO Lee Manager General Affair Team +82-2-3464-5251 [email protected]

Seo Jang Won Assistant Manager HR Administration Team +82-2-3464-5322 [email protected]

Byung-Keun Ji Assistant Manager Human Resources Support Team +82-2-3464-5353 [email protected]

Jee-Eun Chung Assistant Manager Core Competency Development Team +82-31-950-1512 [email protected]

Ju-Hun Lee Manager Occupational Safety Planning Team +82-2-801-4982 [email protected]

Jae-Sun Lee Manager General Affairs Team +82-2-3464-5306 [email protected]

Ki-Bum Kim Assistant Manager Procurement Strategy & Planning Team +82-2-3464-0212 [email protected]

Seung-Jae Lim Deputy General Manager Audit Planning Team +82-2-3464-3499 [email protected]

Jin-Uk Jeong Assistant Manager Sales Planning Team +82-2-510-9691 [email protected]

Ki-Tae Ahn Manager Customer Satisfaction Planning Team +82-2-510-9445 [email protected]

Joung-Hoon Yeo Manager Customer Satisfaction Planning Team +82-2-2108-0502 [email protected]

Hyung-Bae Yoon Manager Domestic Communication Team +82-2-510-9242 [email protected]

Myeong-Kon Jeong Deputy General Manager Quality Strategy Team +82-2-3464-3016 [email protected]

COMMiTEE SUPERviSiON

ECONOMiC vALUE

ENviRONMENTAL vALUE

SOCiAL vALUE

• Editorial Closed March 3, 2008 (Annual)

• Published by Kia Motors

• Editing Sustainability Management Team

• Project Manager Kye-Hwan Roh

• Produced by Strike Communications

• Coordination Chang-Hyun Shin, Na-young Lee

• designed by Ju-Hwan Kim

• Printed by Young-Eun Printing

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