Hyundai Motor Chief Technology Officer Quits Over Quality Issues

November 12, 2013 Leave a comment

Hyundai Motor Chief Technology Officer Quits Over Quality Issues

Hyundai Motor Co. (005380)’s chief technology officer resigned after a series of recalls dented the South Korean automaker’s reputation for quality. Kwon Moon Sik, who was president of the research and development division, quit yesterday along with two other executives over a chain of quality issues, the Seoul-based company said in an e-mailed statement today. It didn’t say who will replace Kwon.The resignations follow a series of recalls this year in the U.S., China, and most recently, the call back of its upscale Genesis sedan in South Korea over a faulty brake system. Hyundai Motor, which is preparing to introduce the new version of the Genesis later this month and the Sonata next year, is expressing its “strong will” to reinforce quality control, the company said.

“Hyundai is probably trying to refresh the atmosphere before the launch of its new models to show it cares about its quality,” Lee Sang Hyun, an analyst at NH Investment & Securities Co. “Hyundai has seen how poor quality control has hurt business at Toyota and other automakers and will try to avoid being the center of such attention at all costs.”

The company’s shares rose as much as 2 percent to 252,500 won in Seoul trading while the benchmark Kospi index gained up to 1.2 percent.

Hyundai and its affiliate Kia Motors Corp. (000270) recalled more than 1.7 million vehicles in the U.S. in April because their stop-lamp switches may malfunction and cause brake lights to not illuminate, the cruise control to not turn off and other faults that could raise the risk of a crash, according to filings posted on the National Highway Traffic Safety Administration’s website.

The company expanded the recall to Genesis sedans made between December 2007 and March 2012 on a faulty brake system, according to an e-mailed statement from South Korea’s transport ministry on Oct. 30.

Hyundai set aside 90 billion won ($84 million) in the first quarter this year to manage the recalls in the U.S. on the electronic defects, Lee Won Hee, chief financial officer, said in April.

To contact the reporter on this story: Rose Kim in Seoul at rkim76@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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