하나은행 하나금융경영연구소

Compact car market is expected to continue its trajectory of growth.

● Leading automobile manufacturers in the US and Europe are stepping up their production of high-efficiency compact car equipped with more fuel-efficient internal combustion engines based on improved engine control system.

- Carmakers need to improve fuel efficiency by 15% on average to comply with upcoming fuel regulations of the US.

- Despite high fuel efficiency, eco-friendly vehicles alone do not seem to be a reliable strategy due to their low sales and uncertainties on market demand.

● The high-efficiency compact car market is likely to continue to expand amid stricter environmental regulations in advanced economies and growth in emerging markets, presenting new opportunities to Hyundai Motors Group.

Under the circumstances, the quantitative growth strategy of Hyundai Motors Group is deemed still effective.

● The company has kept achieving quantitative growth by expanding overseas production, and its sales have also been on a upward trend owing to successful launch of new and strategic models after the financial crisis as well as growth of compact car market.

● Such strategy is likely to remain effective for Hyundai Motors Group.

- Boosted by rising sales, the company may see its production outgrow current capacity in 2011, with little sales uncertainty expected.

- As such, its current capacity is deemed not sufficient to meet growing demand, raising the need for new facility construction or expansion.

Attention should be paid to rising demand for funds in line with capacity expansion and auto loan market.

● Given the need for capacity expansion, there should be continued demand for more capital at Hyundai Motors Group and its suppliers operating in overseas markets.

● In addition, the Group's improved residual value based on stronger product competitiveness will spur more auto loans and leasing in overseas markets.

● In emerging markets, in particular, considering the small share of sales made with systematic financing methods, opportunities in the auto lease and leasing market there should be further explored by gaining a foot hold through Hana Capital.