Hyundai Mo­tor ex­ec­u­tives to take 10 per­cent pay cut

Enterprise - - International news -

Hyundai Mo­tor Group said about 1,000 of its ex­ec­u­tives will take a 10 per­cent pay cut, the first such move in seven years at South Korea´s sec­ond-largest con­glom­er­ate that shows the harsh im­pact of mar­ket share woes and labour strife at its flag­ship firm.

The pay cuts af­fect ex­ec­u­tives at 51 group com­pa­nies, a spokes­woman at flag­ship Hyundai Mo­tor Co said. The spokes­woman said the cuts are vol­un­tary and are ap­pli­ca­ble from Oc­to­ber but de­clined to say how much the group ex­pects to save from the move or which ranks of ex­ec­u­tives will be im­pacted.

Once in­dus­try out­per­form­ers, Hyundai Mo­tor Co and af­fil­i­ate Kia Mo­tors are grap­pling with fall­ing mar­ket share in their ma­jor mar­kets such as China and South Korea, as well as slow­ing de­mand in other emerg­ing mar­kets.

Hyundai Mo­tor Co, the world´s fifth-big­gest au­tomaker to­gether with Kia, is ex­pected by an­a­lysts to re­port a low­erthan-ex­pected third-quar­ter profit, squeezed also by a pro­tracted strike, which was re­solved ear­lier in Oc­to­ber, 2016.

“The pay cut is not that much, but sym­bol­izes the sever­ity of the dif­fi­cul­ties Hyundai Mo­tor Group is un­der­go­ing,” said Chung Sun-sup, chief ex­ec­u­tive of cor­po­rate re­search firm Chae­bul.com. Hyundai Mo­tor Co´s woes are also im­pact­ing the broader South Korean econ­omy.

The coun­try´s cen­tral bank said the econ­omy, pow­ered by ex­port-driven man­u­fac­tur­ing firms, would have grown faster in the third quar­ter, were it not for the set­backs suf­fered by Sam­sung Elec­tron­ics Co Ltd and Hyundai Mo­tor Co.

At a time when its ri­vals are ben­e­fit­ting from strong de­mand for sport util­ity ve­hi­cles, Hyundai Mo­tor Co is grap­pling with slow­ing de­mand for its main­stay sedans like Elantra and Sonata.

Hyundai is also heav­ily re­liant on sales in emerg­ing mar­kets like Rus­sia and Brazil, mak­ing them vul­ner­a­ble to slow­ing sales in those coun­tries. Ear­lier in Oc­to­ber, Hyundai Mo­tor re­placed the heads of both its South Korean and China op­er­a­tions. “We are wor­ried about next year´s out­look,” a group ex­ec­u­tive told.

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