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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

Overview / Corporate Philosophy


00 02 04 06 Preface Greetings from the Chairman Greetings from Vice-President 2007 Highlights 08 12 16 18 Overview of HMC Interview with the President Corporate Philosophy Environment Management 20 22 Ethics Management Corporate Governance and Board of Directors

Economy
25 25 26 Shareholder & Investor General Shareholders Meeting Strengthened Communication 28 28 30 31 Main Business Activities Status of Global Production Improved Product Quality in HMCs Cars Brand Value Enhancement

Environment Management
37 37 40 44 47 47 48 Efforts to Minimize Climate Change Regional Responses Development of Alternative Fuel Vehicles Improving Vehicle Fuel Efficiency Reduction of Gas Emissions Regional Responses Development of Environmentally Friendly Engine Technology 62 55 57 57 50 50 53 Increased Recyclability Improvement of Recyclability Rate Minimizing Use of Harmful Materials Life Cycle Assessment Green Procurement Supporting Environmental Management Systems of Partners Expansion of Environmentally Friendly Product Procurement 68 71 76 80 63 64 Clean Production Coping with Climatic Changes at the Production Fields Resource Circulation Reduction of Pollutant Emissions Environmental Cost Global Research Centers

People & Society


85 86 The Road to Growth, with All Stakeholders Core Growth Engine of Corporate Vision-Employees Employee Status Human Rights Protection Industrial Safety and Health Human Resource Development Building Trust A United Family 98 98 Companion for Sustainable GrowthSuppliers Mutual Cooperation Program 101 Transparent Purchasing 102 Customer-First Management 102 Practicing Customer-First Management 103 Customer Satisfaction 104 Customer Safety 106 Social Contribution, Center of the Sustainable World 106 Philosophy of Social Contribution 108 Three Promises for a Sharing World 109 Volunteers - Promoting the Value of Sharing 111 Field of Business-Sharing Big for Marginalized People 116 Racing Towards the Happiness of the Mankind - Contributions to Global Society

THE ROAD TO SUSTAINABILITY


HYUNDAI MOTOR COMPANY 2007 SUSTAINABILITY REPORT

86 87 88 90 93 95

120 Global Research Centers 122 GRI Index 126 Assurance Report 128 HMC 2007 Sustainability Report Review Opinion 132 Reference Material

Preface
To proactively and transparently disclose its sustainability-related activities to its stakeholders, including its own employees, shareholders, local communities, the government, and a wide array of NGOs, the Hyundai Motor Company(hereinafter HMC) published its Environment Report in 2002, and has been publishing its Sustainability Report on a yearly basis since 2003. This year is no exception. HMC is presenting its 5th Sustainability Report, bringing it one step closer to being a truly global company with outstanding sustainability and leadership that is based on understanding and cooperating with interested parties all across the globe. In 2006 and 2007, HMC has strived to attain sustainability by promoting performance improvements in the economic, environmental, and social aspects that relate to its business activities. Economically, HMC has shown strong growth in the quantities and qualities of its production output. Since 2003, when HMCs export value surpassed $10 billion for the first time, the figure has grown rapidly to exceed $15.3 billion last year. Moreover, the Grandeur, Sonata, and Tucson models have been recognized by the mass media, such as J.D. Power and Consumer Reports, for excellence in quality. Care of the environment has always played an important role in HMCs strategy. HMC took first place, winning the President Award, in the National Environmental Management Contest co-hosted by the Ministry of Commerce, Industry, and Energy and the Ministry of Environment. In particular, Avante has gained a good reputation for its excellent fuel efficiency and is designed to reduce driving costs amidst rocketing fuel prices. Pursuing the betterment of society is of prime importance to HMC. HMC has demonstrated this commitment by developing a vehicle called Easy Move for disabled drivers. Along with the first hybrid electric vehicles developed in Korea, Easy Moves were donated to those in need. Also HMC employees have participated in voluntary activities including flood disaster restoration, farm workforce augmentation during busy seasons, and raising funds to help the under privileged throughout the entire year. By publishing this 2007 Sustainability Report, HMC is looking back at the past years sustainability management performance in order to identify areas for improvement and convene action plans to become a true global leader in providing sustainable mobility to the world.

The Way Ahead

Writing Guidelines
HMCs 2007 Sustainability Report is based on the most up-to-date G3 GRI(Global Reporting Initiative) guidelines. The strategic objectives of our activities relating to the economic, environmental, and social aspects of HMCs business are shown in the report in accordance with the guidelines given in the G3 version of the GRI report. In many areas, we have tried to add additional content beyond what the guideline requires, and in some instances, have adopted the reporting formats of automotive industry leaders.

Collecting Relevant Data and Writing the Report


To achieve compliance with the G3 version of the GRI report, HMC in 2006, fully revised its internal guidelines for Sustainability Report Framing. Furthermore, HMC has been collecting relevant data from domestic and overseas business operation points through its intranet system, AUTOWAY, on a regular basis. Before publication, the Sustainability Report is thoroughly reviewed by relevant departments and top-level management.

The Scope of the Report


This report covers quantitative results from 2006 and qualitative events that occured between January 2006 and June 2007. For example, the economy and the environment sections only consider activities and events that occured in 2006, while the social section covers activities that took place between January 2006 and June 2007. The geographical reach of this report includes: HMCs headquarters; its domestic and overseas sales points; service center; distribution centers; training institutions, production factories, R&D centers, and other institutions owned and operated by HMC across the globe.

Degree of Compliance with GRI(Global Reporting Initiative) Guidelines


HMC Motors self-declares that this report meets the requirements for GRI's Application Level A+, which has been independently reviewed and agreed by Samjong KPMG.

Greetings from the Chairman

Sustainability and Competitiveness


On the occasion of the publication of the fifth edition of our Road to Sustainability report, I would like to express my deepest appreciation to all our stakeholders for their support and encouragement for this initiative which promotes sustainable growth and development at all levels of our organization. Since the launch of that initiative in 2002, HMC has made enormous strides both in quantitative and qualitative terms through global management, quality management and brand management. In the course of creating greater value, we have embraced our corporate social responsibilities by balancing our growth with expanded contributions to society. To address the problem of greenhouse gas emissions, the main environmental issue of our time, HMC has initiated the implementation of a systematic and strategic plan at both the local and global level. At the heart of our efforts is the development and commercialization of environmentally friendly vehicles and clean manufacturing technologies. And, through these efforts, we will enhance our reputation as a sustainable enterprise of the very first order. We have also opened a dialogue with our stakeholders on ways and means to achieve greater coordination and cooperation. In order to better support worthwhile social and cultural projects, we are gradually expanding and strengthening the structure of our organization. To promote sustainability on a global level, we will participate in more international events as well as host them. Such activities will also help stimulate economic growth, which I believe is the key role of enterprise. We still face numerous challenges, but through internal reform, innovation and your support, I am confident these issues can be solved. Our achievements-both quantitative and qualitative-and the experience we gain on the road to sustainability will strengthen HMCs competitive power and become our most precious asset. As an enterprise which embraces sustainable values and whose vision of the future is shaped by environmental concerns, HMC recognizes that sustainability management is the only way forward. By continually enhancing our sustainability management system, we will transform our enterprise, putting theory into practice and making sustainability a core factor in our operations and the driving force behind our growth. HMC will become a leader in sustainable development and this is the pledge I make to you now.

2007. 11

Mong-koo Chung
Chairman & CEO

Greetings from Vice-President

Last years decrease in exchange rates and depressed domestic demand created a particularly difficult business environment. However, HMC established local factories in North America and Europe to react faster to the requests of its main customers worldwide and to enhance its global production and sales system. In 1976 HMC exported its first technology dependent model, the Pony, to Ecuador and has achieved 15 billion dollars in exports in the 30 years since. These achievements have led HMC to be ranked among the Global 100 brands chosen by BusinessWeek for the past 3 years. In addition, its main vehicle models have been recognized for the competitive power of their quality by leading vehicle rating agencies like J.D.Power, raising the reputation of the company and the automobile industry of Korea. In addition to achieving these economic performance goals, HMC has enhanced each internal organization and its strategies to become more sustainable and raise the value of the entire enterprise. We have continuously strived to systematize all interested parties participation in these efforts. Noteably, in 2007, HMC was placed first in the Korean National Environment Management Awards, demonstrating its environmental leadership and national competitive power. We also implemented our specially developed management system to deal with global environment issues systematically and which is linked to HMCs environment committee and enhanced environment management strategy. In addition, to deliver mutual benefit, HMC has enhanced its contribution to society in a variety of areas as part of its mid- to long-term planning. Also, we instituted the Review committee of sustainability reports to reflect opinions of all interested parties for the development of our sustainability report. We intend to develop this further and enhance the power of key stakeholders to contribute to the sustainability of HMC. Even at this moment, about 75,000 employees of HMC all over the world are focusing their abilities and efforts

Continuous challenge to sustainability


HMC was established in 1967 as a representative enterprise of Korea and has been leading the economic growth of the nation for 40 years. In the early days, we could hardly imagine having our own technology amidst the challenges in Korea at the time. Despite these odds, HMC continued to develop its unique drive and mentality that has allowed it to become the worlds 6th largest automobile enterprise.

on the sustainable development of mankind through the intelligent coordination of concerns for the environment, individuals and society. In the future, HMC promises that we will give our best effort to become a leading global enterprise in all aspects of sustainability. To do this we will utilize our rich 40 years of business experience and work in cooperation and with participation of all interested stakeholders worldwide.

2007. 11

Dong-jin Kim, Ph.D.


Vice Chairman & CEO

2007 Highlights
1st Place Winner of the National Environmental Management Award
As a prerequisite for survival in the global business arena, environmental-management is of prime importance to every firm that strives to remain competitive. Environmental management not only enhances enterprises competitiveness, but also provides a solid base for the economic growth of the countries in which the firms operate. For these reasons, countries across the globe make every effort possible to support firms engaging in environmental management practices. The Korean Government promotes environmental management practices on a yearly basis by awarding the National Environmental Management Award to domestic companies with outstanding environmental performance. Well-recognized for its environmentally friendly business activities throughout the entire value chain and taking proper care of not only its own product development and clean production phases, but also supplier firms activities, HMC was honored to win the 1st prize in this award; the top award delivered in the name of the President.

Ranked in the 100 Top Brands for 3 consecutive years


Once every year, Interbrand, a well-known brand consultancy, and BusinessWeek, a weekly American economic magazine, together announce the 100 Top Brands. The selection of the 100 companies is based on the current status and the future prospects of the firms financial and marketing performance. After becoming the first Korean automobile company to debut on the list by taking the 84th place in 2005, HMC has been making steady progress and was ranked #75 in 2006, and #72 in 2007, with an estimated brand value of $4.5billion.

Greater Customer Satisfaction in the global market


An enterprises sales figures and brand value directly correlate with customer satisfaction. Like many other companies competing in the market, HMC devotes sincere effort to enhancing customer satisfaction by paying close attention to consumer needs and allocating all available resources to quality improvements, further solidifying its global presence. Consequently, HMC has enhanced customer satisfaction levels in major markets (i.e. US, Europe, and China). Furthermore, passenger cars by HMC took the 1st place in the Korean Customer Satisfaction Index over 13 consecutive years, while passenger cars and recreational vehicles produced by HMC were ranked #1 in the National Customer Satisfaction Index for seven and two consecutive years, respectively.

Overview of HMC
Since its launch in 1967, HMC has led the automobile industry in Korea. In 1976, HMC exported Koreas first independent technology domestic vehicle, the Pony, to Ecuador and 30 years later, HMC exports 2.5 million high quality vehicles, RVs, and trucks, making it the worlds 6th leading automobile maker. Right now, HMCs employees are investing their abilities and efforts to lead the sustainable growth of HMC to make it the worlds best company. They represent the very spirit of true corporate citizenship and by coordinating concerns for the environment, individuals and society, they are enabling the sustainable growth of HMC. With 40 years of technology leadership and potential acquired during the development of the Korean economy and its domestic automobile industry, HMC is poised to become a truly global company that contributes to the betterment of the world by providing responsible, sustainable vehicles.

Production & Sales (Date of 2006. 12. 31)


Production performance
(units: number of vehicles)

Sales performance
(units: number of vehicles)

In Korea Ulsan Asan Jeonju 1,289,313 279,760 49,195

In overseas countries HMI( India) BHMC(China) HMMA(USA) HAOS(Turkey) 301,590 290,088 236,773 60,870 889,321

In Korea Passenger vehicle 1,381,256 commercial vehicle 230,610

In overseas countries HMI(India) BHMC(China) HMMA(USA) HAOS(Turkey) 236,177 290,011 298,980 60,660 885,828

Total

1,618,268

Total

Total

1,611,866

Total

Hyundai Motor Company Profile


Hyundai Motor Company Headquarters: Seoul, Republic of Korea (231, Yangjae-Dong, Seocho-Gu) Industrial Sector: Manufacturing Main Product: Automobiles Chairman & CEO: Mong-koo Chung Date of Establishment: Dec. 29, 1967

HMCs employees
(units: number of employees)

In foreign countries: 19,781 In Korea: 54,973 Representative production vehicles per global facilities
Country USA China Main Product Type Sonata, Santa Fe Verna, Sonata, Avante XD, Tucson India Turkey Santro, Click, Verna, Sonata Verna, Starex, Lavita

Assets
2004 Won Dollar
Exchange rate (1043.8 Won/$)

2005 Won Dollar


Exchange rate (1013.0 Won/$)

2006 Won Dollar


Exchange rate (929.6 Won/$)

Basis

Total asset Net-sales Net-profit Liabilities Equity capital

24,420,522 27,472,457 1,745,441 11,335,743 13,084,778

23,395,787 26,319,656 1,672,199 10,860,072 12,535,714

26,661,326 27,383,737 2,348,721 11,608,362 15,052,964

26,319,177 27,032,317 2,318,579 11,459,390 14,859,787

26,429,958 27,335,368 1,526,063 10,379,130 16,050,828

28,431,538 29,405,516 1,641,634 11,165,157 17,266,381

Total annual assets Annual net sales Annual net profit Total liabilities Total capital

Reinforcing the basic for export Proprietary technology development Environment Nov 1991 Developed HMCs first electric automobile Feb 1992 Developed Koreas first domestic low pollution, alcohol-based automobile Oct 1994 Developed HMCs first hydrogen fuel cell automobile Aug 1998 Developed the worlds second solar energy automobile Economy Apr 1991 Advanced into German market Nov 1994 Annual production reached 1,000,000 units May 1995 Launched the Namyang technology institute Sep 1995 Established joint venture plant in Turkey Jul 1997 Established independent plant in Turkey

Technology advancement Development to become a global company Environment Sep 1999 Developed first domestic automobile fuel cell Jun 2000 Participant in the California fuel cell partnership Mar 2001 Launched Santa Fe, the first domestic fuel cell car Aug 2002 Launched 900 environmentally friendly buses globally Jun 2003 Announced global environment management officially automobile industry first Jul 2003 Established Koreas first domestic environmental technology institute Nov 2003 Santa Fe electric vehicle demonstrated exemplary operation Nov 2005 Established environmentally friendly vehicle recycling center Dec 2005 Tucson fuel cell vehicle began operation in America Economy Jan 2000 Opened factory in China with vehicle production capability of 300,000 units Sep 2002 Launched first automatic transmission medium-sized truck in Korea Feb 2003 Completed design center in North America Sep 2003 May 2005 Jul 2005 Oct 2005 Jan 2006 May 2006

Established European technology institute Opened US plant in Alabama Ranked among Global 100 companies Established Technology Institute in the US Selected as one of the best brands in China Grandeur took 1st place in AutoPacifics customer satisfaction inspection Jun 2006 Tucson ranked first in J.D. Powers Initial Quality Index (IQS) Apr 2007 Opened plant in Czech Republic Society Feb 1999 Selected as an official sponsor of the FIFA WorldcupTM Dec 1999 Official sponsor of the EURO 2000 soccer championship Aug 2003 Became a supporter of the worlds largest wheelchair foundation Dec 2003 Provided official automobile of the EURO 2004 soccer championship Jan 2004 Donated ambulances to Iran Feb 2004 Donated wheelchairs to disabled children Oct 2004 Donated ambulance to Africa as a part of health and medical business support Nov 2005 Established professional social service group (specialized in disaster relief) Sep 2006 Developed Easy-Move car

Corporate History
Establishment Advanced technology introduction Dec 1967 Establishment of Hyundai Motor Company Dec 1968 Began production of Cotina Dec 1975 Established automobile factory Development of HMCs own model Building lineup Jan 1976 Began sales of the Pony brand Feb 1984 Established Koreas first domestic automobile road test center Building technology independence Establishing a constituency for export Feb 1985 Established Excel factory with 300,000 units production capability Aug 1989 Total production reached 3,000,000 units Nov 1990 Total sales in America reached 1,000,000 units

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Global Network

Global Production Network

Global R&D Network

Korea plants
Ulsan Plant is a key plant of HMC producing an average of 5,600 cars a day and is also a green plant, with about 500,000 trees planted on site and up-to-date environment protection facilities. Asan Plant produces 300,000 motor cars for export a year. It pays special attention to considerations for workers and environmental protection. It has changed the atmosphere of the factory with bright colors and has installed various work convenience facilities for an optimum working environment. Jeonju Plant produces medium- to large-size buses, trucks and special equipment vehicles over 2.5 tons. It is recognized as the worlds largest commercial vehicle plant in terms of capacity and plant size. It also houses a commercial vehicle research center.

USA plant
HMCs Alabama plant, which has been operating fullscale since May 2005, was recognized with its best quality level ranking - 10th among 60 plants in the USA. in its first year of operation. J.D. Power expressed surprise, stating that Alabama plant of HMC would become a standard for new plants in the world automobile industry.

Hyundai-Kia R&D Center


Corporate Research & Development, located in Namyang, Korea is the backbone of the company. Equipped with cutting edge facilities, HMCs integrated R&D Division encompasses the whole design process from pre-design studies, prototyping and full-scale aerodynamic testing, crash testing and final test driving to advanced technology research. The test circuit provides 60km of proving ground, with 70 types of road surface. Namyang R&D serves as the hub of our global network and consolidates our research efforts around the world. Moreover, in order to attain global top R&D capabilities by 2010, Namyang R&D will concentrate more on design studies, development of next generation powertrain and core technologies, and development of vehicles with best performance, quality and value in their class.

Eco Technology Research Institute


The Environment Technology Study Center strives to achieve the environmental management goal of living together with nature, by developing products which meet and exceed domestic and overseas environment standards and key environment technology objectives. In particular, it takes the lead in developing next-generation cars in an attempt to solve continuing issues relating to the global environment by following global environmental management practices in order to meet our obligations as a worldclass global corporate.

Hyundai Motor Europe Technical Center


Located in Ruesselsheim, near Frankfurt, Germany, this is a state-of-the-art multifunctional compound designed to develop high quality vehicles catering to the tastes and preferences of our European customers. This center was specially designed to meet environmental standards in Europe, and to create vehicles that meet these same standards. HMETC is also actively participating in the development of diesel engine performance in response to the obligations for environmental regulations by 2015. Moreover, it is leading the development of exhaust systems, i.e.SCR(Selective Catalytic Reduction) that reduce harmful gases (Hydrocarbons, PM, NOx).

China plant
As a joint corporation with a local company, HMCs China plant not only has a symbolic meaning as the only car manufacturer in Beijing, the capital city of China, but also has an advantageous head start in the automobile market in China that will become the leading power after the Beijing Olympics in 2008.

India plant
The India plant of HMC is fully equipped, from production facilities to some research facilities, such as an efficiency test facility and road test center. It is an all-round automobile plant that can research and develop products suitable for the Indian market and independently address test, production and sales. In particular, it has rapidly grown to have the second highest market share in India in just two years.

Turkey plant
HMCs Turkey plant, which was established while the company was expanding overseas in earnest in 1997, is a strategic point for advancing into Europe, the Middle East and Africa, as well as the foundation cornerstone of HMCs global management.

Hyundai-Kia America Technical Center


Hyundai America Technical Center Inc. is making great strides to improve vehicle product quality and to develop products which suit the USA market. HATCI is based at the top quality comprehensive research institute in California (including HMCs Mohave road test center) and the design center and design improvement section of the Alabama plant. In addition, Hyundai America Technical Center Inc., in cooperation with Hyundais Integrated R&D Center, is developing technology specialized to the region, including multi-media and pre-development of a supercharger engine. In addition it is working on technology that can respond to the local energy policy which requires the substitution of 15% of the gasoline consumed with an environmentally preferable alternative fuel by 2017.

Hyundai-Kia California Design & Technical Center


Located in Irvine, California, Hyundai California Design & Technical Center develops the HCD concept car series. In addition to designing future vehicles, it also leads the world in trends for vehicle design through graphic and clay modeling technology and is responsible for research and design for developing ordinary vehicles for mass production that suit the region.

Hyundai Motor Japan R&D Center


Located in Chiba, on the outskirts of Tokyo, Japan R&D focuses on the development of advanced electronic components and hybrid electrical vehicle technologies such as motor and battery control. Japan R&D also focuses on the processes that distribute the power of engines and motors to gain maximum fuel efficiency. It focuses on development of next generation hybrid electrical vehicles and aims to achieve its performance targets by actively sharing information on advanced technologies with local suppliers.

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Interview

Interview with President

What does the publication of the 2007 Sustainability Report mean to you? This is HMCs 5th Sustainability Report. In order to proactively and transparently disclose its sustainability-related activities to its stakeholders, including its own employees, shareholders, local communities, the government, and a wide array of NGOs, HMC has been publishing Sustainability Reports every year since 2003. By publishing Sustainability Reports, HMC looks back at its past performance to identify areas in which further improvements can be made. Going through this process, HMC can focus on the causes

The key feature of 2007 Sustainability Report is that it incorporates stakeholder feedback generated from previous sustainability communications and engagements.

of any shortcomings and take necessary corrective actions to move one step closer to becoming a truly environmentally, socially, and economically sound corporation.

Can you tell us what makes the 2007 Sustainability Report different from its predecessors? This years report reflects comments from our stakeholders. It not only features a list of the sustainable management performance, but also delineates the underlying reasons, implications, and future plans in detail. Moreover, the reporting scope of the 2007 Sustainability Report has been expanded to include standards stipulated in the GRI G3 guidelines, which allows us to engage closer with our stakeholders. Moreover, by providing details of the activities that pertain to hot issues, such as climate change and social responsibilities, the new report makes it easier for our stakeholders to precisely understand what we are doing. By making comparisons between our goals and performance, we plan to close any gaps in our sustainability performance, and by doing this, we hope to further enhance the trustworthiness of our sustainability reports and our company.

Can you tell us about the Sustainability Report Review Committee that came into effect this year? HMC recognizes its stakeholders opinions as the most solid basis and starting point for sustainable management. For this reason, we strategically collaborate with our stakeholders by continuously reflecting their ideas and opinions in the solution building process. As a part of this strategy, we formulated a Sustainability Report Review Committee, consisting of domestic and overseas experts in the field of sustainable management and sustainability reporting. The committee has evaluated this years report and has given invaluable advice on ways to make further improvements. We are considering turning to this committee if we face any sustainabilityrelated questions in the future.

What major sustainable management-related accomplishments has HMC made in 2006? We have won the 1st prize in the National Environmental Management Award in 2007 for exhibiting outstanding sustainable management-related performance in 2006. We have reinforced our company-wide system that responds to climate change issues and have made significant technological progress in developing environmentally preferable vehicles. Furthermore, in collaboration with our stakeholders, we have taken part in a wide array of social activities. Finally, cars made by HMC, such as the Grandeur, Sonata, Tucson, and Santa Fe, have been acknowledged as quality leaders by independent quality-rating organizations such as J.D. Power and Consumer Reports.

Enhancing employees awareness and economic growth are considered to be critical preconditions for sustainable growth. What activities are being done in support of these objectives at HMC? HMC has identified 5 major issues that need to be addressed in order to remain competitive in the dynamic business environment: First, process innovation through eliminating inefficiencies; Second, cost reduction through cooperation with supplier firms; Third, productivity enhancement through building mutually beneficial relationships with the labor union; Fourth, sales innovation through enhancing customer satisfaction; Finally, establishing constructive relationships between labor and management based on mutual trust. Successfully coping with these issues will greatly underpin our sustainability and enhance our competitiveness, allowing HMC to become a world-class auto manufacturer.

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Corporate Philosophy

HMC promises to become a corporation that understands the value of sustainability and offers a future vision built on cooperation and harmony with all stakeholders concerned.

Corporate

Philosophy Management

Corporate

Philosophy Management

Environment Ethics

Environment Ethics

management governance and Board of

management governance and Board of

Corporate

Corporate

Directors

Directors

Corporate Philosophy
Based on its creative, progressive and challenging spirit, HMC seeks to implement Trust-Based Management, Field Management and Transparent Management, share economic, environmental and social values with all stakeholders, and become a leading global sustainable enterprise which prioritizes the improvement of mankinds quality of life.

Transparent Management
In 2001, HMC drafted and announced a charter of ethics and principles for their implementation. Based on the companys approach to corporate citizenship efforts continue to build a corporate mentality for delivering transparent management. In 2005, the company drafted and distributed guidelines for employees ethical behavior so that individual employees can improve their

these have been revised in order to avoid those problems going forward. In particular, we will take advantage of this opportunity to practice more concrete and material social contributions to realize social harmony and coexistence. Also, we will do our best to make it a positive opportunity in the companys future for sustainability.

Management Philosophy
With the spirit of creative challenge, HMC is doing its part to create a more affluent lifestyle for humanity, and is contributing to the harmony and co-prosperity with its shareholders, customers, employees and other stakeholders in the automobile industry.

Management Policy
Since 2000, HMC has prescribed to Trust-Based Management, Field Management and Transparent Management as its three fundamental management policies. These policies serve as the strategic base for the core management activities pursued by HMC, such as global management, quality management and brand management.

understanding of ethical dilemmas and make ethical decisions in the course of their work. Decisions on main management issues are made by board of directors and approved by shareholders in the general meeting of stockholders. Also, the companys accounting affairs and entire operations are monitored independently by an outside auditor. In 2006, an internal accounting management system was built and upgraded the level of accounting transparency. HMC has continCustomer first management Strengthen risk management

2007 Management Objectives


Global management stabilization Develop effective and stable global production and sales system Raise customer satisfaction with strengthening of global sales and service network Strengthen ability to counter rapidly changing business environment Promote Sustainable growth through systemic risk management Consider the customer first when it comes to all management activities Increase value for customer by increasing brand image Optimize customer value by increasing competence in production cost Increase profitability by expanding sales of high value-added vehicles

This spirit of creative challenge, which has paved the way for its growth, is the core value at HMC. HMC looks to creativity and innovation to actively respond to changes in the business environment. Based on this philosophy, HMC aims to provide automobiles and related support services to enrich the overall quality of life for both domestic and overseas customers. In addition, HMC has taken steps with shareholders, customers, employees, suppliers, and local communities to build mutual trust.

Trust-Based Management
Starting in 2002, HMC has published its sustainability report every year to provide information on economic, environmental and social performance to all interested parties in Korea and overseas. Also, HMC launched its Investor Relations website in 2004, providing business information, such as, financial data, current stock price and sales records in real time. Through such efforts, HMC is communicating with all interested parties including, shareholders, customers, employees, suppliers and the local community about a variety of issues related to the

ued to develop structural measures to ensure transparent management in keeping with best practice in business management and will continue to strengthen its transparent management systems going forward. Reviews and decisions on key management matters are discussed by the Board of Directors and approved by the shareholders at the general shareholders meeting. With the checks and balances afforded by the Board of Directors, shareholders and outside auditor, HMC will make more transparent and ethical decisions. In 2006, HMC gained unwanted public attention due to lawsuits related to the past financial transactions of some of its executives. Extensive checks have been made to its internal decision-making procedures and where action was needed,

Innovate profit structure

2006 Management Objectives


Internal management culture Strengthen company-wide support system for overseas sales Build overseas production capacity Strengthen R&D capability Establishing systematic and efficient operation support system and encouraging cooperation Implement advanced, state of the art technologies Continually improve quality improvement Obtain outstanding design capability Cultivate global human resources Expand sales Strengthen emergency management capability Establish retrench management system, Establish advanced level of labor and management relationship Develop system to counter emergency management Pursue transparent and ethical management Handle all work according to transparent standard Maintain mutually fair relationships with business partners

Vision
HMC announced innovation for customers as its 2005 mid-to long-term vision with five core strategies:

automobile industry to establish trust and reliability.

Establish support system for global management

Field Management
HMC is enhancing its field management to ensure a fast communication process that facilitates decisions on countermeasures Management Policy
Strengthen emergency management capability

entally preferable ironm env contribute to the de- Crea g h he opl ting din hic lfare of t world e lea ies w nd we cen are an a g tra val ut in log ent a l to ue o no pm th d e o ce o

pewhich e in eing ltur zed as b u i c ss ile ogn succe ob ec ys m nd r pan a om C

Growin g maker, as a le b a with uildin din the g t g g glo rus lo ba t a lc o

and implementation of effective working process. To that end, HMC has ensured that employees can report production problems or suggestions without hesitation and these issues are then reflected in changes to R&D and planning. The top management of HMC regularly visits the field directly and shares knowledge gained with other employees. In particular, top managements global field management to the world sales and production offices is building closer relationships with the countries that HMC has advanced into and other new markets. Through this global field management, HMC has established an effective international network, which it is leveraging to improve the competitive power of Korea and raise the position of the nation in international society through various activities, like the 2012 Yeosu World Expo host campaign.

Trust-Based Management

Cr C

e tur ul ation e

G Orie lob nta a

Continual pursuit of transparent and ethical management

le obi om ut ect l a sp y ba d re unit n m m

n tio

Trust-Based
Management

Trustworthiness Trust-based management-labor, superior subordinates, company-customer relationship Cultivation of field knowledge, raise challenging spirits of field staffs Focus management capacity on the field Management strategy based on the field and promotion of R&D Establishment of the immediate response communication system

Putting custom e a business c rs first u further mov lture to c ec an re u s tom d to ate er s

f isten ex le and CoPeop ture Na

Cus t o m e Movin g r

Field
Management

Te c h n i c al I n n o v a ti o n
tec Innova ed ting for advanc ples hno logy c eo entred on p need s and desires

Field Management

Transparent Management

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

Gr te ow c ve h l

Transparent
Management

Transparent job specifications Transparency in transaction and fair trade Enhancing the ethics management system

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Corporate

Philosophy Management

Corporate

Philosophy Management

Environment Ethics

Environment Ethics

management governance and Board of

management governance and Board of

Corporate

Corporate

Directors

Directors

Environment Management
In 2003, HMC prepared its ideological base on global environment management. It then set its environmental management strategy within the context of the auto industrys value chain and established and implemented an environmental management system. With these global environmental management activities, HMC is taking a leading role as the one of the most progressive companies in Korea. Furthermore, HMC will continue its commitment to environmental responsibility as a global company to achieve sustainability and environmental protection.

Environment Management Organization


HMC has established environmental management strategies for the entire value-chain of the automobile industry including R&D, purchasing, production, logistics, and sales and service. These strategies are based on HMCs global environmental management principles announced in 2003 and the implementation of them. It also has systematized its environment management organization for effective accomplishment of these strategies. First, it organized an Environmental Management Strategy

promptly respond to global environmental issues with consistency and in keeping with related decision making, established environment management strategy by area, and suggested direction for implementation. In addition, it organized the Environment Committee, with the CEO as its Chairman, providing a clear link to the top decisionmaking organization. In addition, it established an organic, cooperative system for systematic implementation of environmental management strategies by organizing the committee into three strands representing product, production and management.

Environmental Philosophy & Policy


As a first in the local automobile industry, HMC introduced an environment management system in 1995, developing a structured operating system. This commitment and its implementation demonstrated HMCs desire to fulfill its corporate social responsibilities and is expected to enhance the overall confidence of stakeholders.

Environment Management Strategy

Planning Team at the chief executive level in 2003 in order to

Environmental Committee

Philosophy & Policy

Chairman of the Committee : Chairman

Environmental Product Committee


Fuel efficiency subcommittee Emission subcommittee Recycling subcommittee Next generation vehicle subcommittee

Environmental Production Committee


Production plant subcommittee Production technology subcommittee Environmental purchasing subcommittee Environmental logistics subcommittee

Environmental Management Committee


MarketingSales subcommittee Customer service subcommittee Environmental accounting subcommittee Environmental communication subcommittee

Organization & Strategy

Environmental Philosophy
For the harmony of mankind, the environment and society, HMC respects human value and fulfills its corporate social responsibility through environmental preservation.
Management System

Secretariat : Environmental Management Strategy Planning Team

R&D

Purchasing

Production

Marketing & Sales

Customer Service

Five Core Tasks for Environment Management


HMC selected five core tasks for environment management in Response to climate change
Reduction of automotive greenhouse gas Development and supply of alternative fuel vehicles Responses of variety of automotive fuel Reduction of greenhouse gas in workplace

Society

Environment

order to reinforce its ability to comprehensively respond to global


Philosophy & Policy Organization & Strategy Management System

environment issues and regulations. Each strand of environmenEstablishing environmental philosophy & policy Declaration of global environment management Establishing environment management strategy Operation of environmental committee Environmental accounting Establishing communication channels with stakeholders Sustainability training of all employees Sustainability report publication

tal management will execute existing strategies effectively by establishing its own processes, including setting clear goals and objectives.

Human

Establishment of circulation system for resources


Increase recycling rate Environmental preferable handling of scrapped vehicles

Global Environmental Policy


Based on a commitment to corporate citizenship, HMC is dedicated to respecting human value and preserving the global environment. We, thereby proclaim this Global Environmental Policy for a sustainable society. Recognize the environment as a core element of business and create corporate value by proactively pursuing environmental management. Promote the development and distribution of environmentally preferable products. Dedicate to reducing pollutants and to preserving resources and energy for sustainable use at all stages of our products life cycle, from development to production, sales, use and disposal. Endeavor to provide all employees with environmental training programs, support suppliers in environment management and contribute to public welfare. Comply with all international and national environmental regulations and agreements. Continue to improve environmental management and publicly disclose our performance.
Marketing & Sales Customer Service Production Purchasing R&D

Environmentally friendly design Fuel economy & vehicle emissions Expand Recycling Environmental information system Developing environmentally friendly vehicles Establishing green purchasing system Technical assistance for suppliers Establishing SCEP Logistics optimization

Response to climate change

Zero waste target

Reduction of air pollutants


Reduction of automotive gas emission

Establishment of circulation system for resources

Reduction of harmful materials

Reduction of air pollutants from workplace

Establishment of environmental management system


Establishment of environment KPI / environment accounting system Reinforcement of communication among stakeholders concerned both inside and outside the company Establishment of information system on global environment regulations

Development of cleaner production system Expending ISO 14001 certification Development of integrated environmental management system Establishment of environment management strategy Green marketing Green service Supporting Customer Service provider for EMS Green sales

Reduction of air pollutants

Establishment of environmental management system

Strengthening green partnerships with suppliers

Reduction of harmful materials


Establishment of global standard on 4 major toxic heavy metals Strengthening management for toxic chemical materials

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Corporate

Philosophy Management

Corporate

Philosophy Management

Environment Ethics

Environment Ethics

management governance and Board of

management governance and Board of

Corporate

Corporate

Directors

Directors

Ethics Management
HMC committed to clean environment activities and enhanced ethical management to ensure mutual benefit based on the mutual trust of all stakeholders, including employees, suppliers, customers, shareholders and the nation. To this end, HMC is supporting various kinds of ethical management programs, including cyber audits, to help employees to make ethical decisions in their work. There is also a committee which participates in the decision making process on main issues.

Regulation on Ethics at Work


HMC has established detailed procedures and guidelines related to work ethics and the relationships among employees, customers, suppliers and competitors and has supported employees in developing transparent and fair relations in terms of job performance.

4) We do not accept any profit from interested parties in relation to our work that may violate our principle of fairness, and strictly reject unfair requests made to employees and by leveraging employees. 5) We protect the sales and operation-related confidential information learned through work, and strictly cast away behaviors and relationships that conflict with the companys

HMC Regulation on Ethics at Work


Chapter 1 general provisions Clause 1 Clause 2 Clause 3 Clause 4 Clause 5 Clause 6 Chapter 2 guideline for ethics at work Clause 8 Chapter 3 actions for regulation infringement Clause 9 Clause 7 Purpose Application scope Organization Supervising team Definition of guidelines for ethics at work Application of related regulations Basic guideline for ethics at work Compliance with ethics guideline Reporting violation of ethics guideline Clause 10 Actions for ethics guideline violator Clause 11 Punishment for the violation of ethics guideline Chapter 4 Workplace Ethics Committee formation and operation Clause 12 Ethics Committee formation Clause 13 Ethics Committee opening Clause 14 Ethics Committee operation Clause 15 follow-up management

interest. 6) We increase our sense of pride and fulfillment by striving to work with a strong sense of responsibility and make every attempt to contribute to the nation, society and the companys advancement based on infinite self development.

Ethics Management History


1996 2001 Regulation on gift management drafted Declaration of HMC charter of ethics Charter on the implementation of ethics management enacted and committed to by HMCs employees Regulation on ethics at work drafted Purchasing Divisions charter on ethics declared 2002 2003 Cyber Audit Center established Declaration on HMC ethics management / transparent management Online training for managers on ethics management Ethics program for purchasing Launch of Vaatz*, online purchasing system 2004 2005 Cyber Audit Center revamping Publication and distribution of guidelines for employees on ethical behavior 2006 Announcement on measures for co-prosperity with partners Ethics management training for new managers
*Vaatz : Value Advanced Automotive Trade Zone

Ethics Charter
1) Contribute to the nation and the society We contribute to the national economy through the continual creation of jobs and trustworthy payment of taxes. We strictly comply with all laws related to the environment, spearheading the effort to protect the environment, and contributing to society through cultural and welfare initiatives. 2) Increase customers and shareholders rights We increase customer rights and value by optimizing products and services, safeguarding customer information, and fulfilling our promise made to customers. We increase management efficiency to ensure that our financial structure is viable, safeguarding and increasing shareholders assets. 3) We respect human rights and cultivation of competent human resources We respect the individual employee as an independent being and have created a sophisticated corporate culture based on mutual trust and understanding, while striving to prevent sexual harassment at work. We actively seek to increase our employees sense of ethics and support them structurally with a long-term view to cultivate them into independent, creative and competent individuals. 4) Establishment of partnership with suppliers We actively support our suppliers with technical knowledge and

Cyber Training
HMC conducts cyber training so that all of its employees can understand the specific details of the Ethical Charter and responsive measures. Through this mechanism, the company enables continuous, repetitive training as well as data sharing and collection on ethics management, encouraging and helping employees to increase their sense of ethics and comply with the regulations.

Cyber Audit Center Operation and Publication of Guidelines for Employees Behavior
Cyber Audit Center
HMCs Auditor Center executes cyber auditing in conjunction with field auditing with a goal of realizing transparent management. In 2006, seven cases were registered, including three cases of corruption or corporate misdeeds, and in keeping with HMCs

Ethical Charter for Employees


HMcs employees realize that acting in an ethical manner is the foundation of company competitiveness and promise to actively join in the effort to realize the spirit of the Ethical Charter so that HMC can become a company that is trusted by the public and wider stakeholders. Its employees promise the following: 1) We will behave with a sense of pride and the knowledge that we are responsible for the Korean car industry, and will cast away all types of unethical behaviors in our everyday life and during job execution. 2) We will spearhead the effort to form a viable corporate culture that abides by the basic principles of compliance to all related laws and guidelines for company management when it comes to executing our work. 3) We protect customer information, tell only the truth to customers, and keep our promise to our customers, without exception.

internal regulations, three employees were fired or subject to a severe disciplinary measure. The other cases were handled with a discussion with the relative department and the employees in question were required to adjust their behavior. HMC sent an internal notice to the employees about these issues and instituted follow-up training to prevent recurrence.

Ethics Management Structure


Ethics Management Structure Charter
HMCs charter on ethics Regulation on ethics at work Charter for employees to act on ethics

management guidance to ensure co-prosperity in the long-term by securing competitiveness in the international arena. We deal with the suppliers as equal partners and do not make any unfair demands by leveraging our position. 5) Establishment of transparent management We deal with all tasks in a transparent manner and have established an honest corporate culture that garners trust by maintaining fair trade relationships that guarantee transparent transaction conditions with all business partners and customers. We reject all types of requests from all stakeholders that may infringe upon fairness and objectivity in our operations and do not pursue unlawful profit.

Cyber Audit Center operation

Operation of cyber reporting center Distribution of guidelines for employees ethical behavior Bulletin of ethics management materials and cyber training

Distribution of Guidelines for Employees Ethical Behavior


HMCs Ethical Charter and the Regulation on Ethics at Work are drafted for practical use in the company, but the contents are rather high level, and thus difficult to use in practical situations for making detailed decisions on ethical and moral behaviors. To this end, HMC has distributed guidelines for employees ethical behavior that present specific guidance on what to do and not do, centered on common cases that may occur during work and in everyday life, so that employees can use the guideline for making ethical decisions.

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Corporate Governance and Board of Directors

Board of Directors & Committee of the Board of Directors

HMC formed and operates a Board of Directors and Audit Committee and an outside Director Candidate Recommendations Committee, which is under the supervision of the Board of Directors. As of June 30, 2007, the Board of Directors is comprised of four internal and five external directors. The Board of Directors makes decisions on matters defined by the laws or articles of incorporation, matters delegated by the general shareholders meeting, and key matters related to the basic guidelines for company operations and work execution. Moreover, it has the authority to supervise matters related to the general shareholders meeting and wider issues on company management and financial affairs. General meetings of the board of directors are held regularly and also when necessary, extraordinary meetings are held. Under the supervision of the Board of Directors the Audit Committee, comprises four external directors, was instigated on June 30, 2007. The Audit Committee is responsible for company finances and audits. It also reviews reports on sales from the executive directors and monitors the companys assets. Matters addressed by the Audit Committee include those related to the general shareholders meeting, to the directors and the Board of Directors, and to audit issues. Also there are internal measures to access management information needed for audit. From June 30, 2007, all candidates for external directorships are recommended by and are under the supervision of the External Director Candidate Recommendations Committee, which includes two internal and two external directors. The limit on remuneration of directors approved in the 2006 general shareholders meeting is 10 Billion Won, and remuneration for internal and external directors for the period between January 1 and December 31, 2006 was 7.249 Billion Won.

Ethics Committee

Our company formed and operates an Ethics Committee with the goal of reviewing transparency of internal transactions and for the pursuit of ethics management. The Ethics Committee consists of five external directors, one member of the executive management team, and two advisors (persons from outside the company) (as of June 30, 2007) The Ethics Committee, a sub-committee of the Board of Directors, reviews transactions between entities as defined by the Laws on Monopoly and Fair Trade and Securities Trading Law, checks execution of fair trade, enacts and revises key policies related to ethics management and contributions to society, and evaluates execution of these issues.

Status on the Composition of the HMC Board of Directors

Board of Directors

Ethics Committee

Audit Committee

External Director Candidates Recommendation Committee

Composition of the Board of Directors (As of June 30, 2007)


Name Chung, Mong-koo Kim, Dong-jin Choi, Jae-guk Yoon, Yeo-cheol Kim, Dong-gi Outside Director No No No No Yes Remarks Member of the External Director Candidates Recommendation Committee Member of the External Director Candidates Recommendation Committee Member of the External Director Candidates Recommendation and, Audit Committees Kim, Gwang-nyeon Yes Member of the External Director Candidates Recommendation and, Audit Committees Kang, Il-hyung Lim, Young-cheol Lee, Sun Yes Yes Yes Audit Committee Member Audit Committee Member -

Status on the shareholders with at least 5% of the company shares (As of June 30, 2007)
Rank 1 2 3 Total Shareholder Hyundai Mobis Hyundai Steel Chung, Mong-koo Shareholding (number of shares) 32,927,828 12,854,195 11,395,859 57,177,882 Percentage shareholding(%) 15.00 5.86 5.19 26.05

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Economy

Shareholder Main

& Investor

Business Activities

Shareholder & Investor


HMC is improving its efforts to enable shareholders to better understand the Companys operations and earn their trust by providing timely and accurate information. The Company is participating in investor forums as well as holding general shareholders meetings to furnish information in person and to provide an opportunity for discussion between the Company and shareholders. HMC also operates an Investor Relations (IR) website, providing the information in real time.

General Shareholders Meeting


On March 9, 2007, HMC held its 39th annual general shareholders meeting at which it shared the results of operations and other major developments. Five resolutions on the agenda were approved and passed by the shareholders.

Number of Outstanding Shares as of December 31, 2006


Classification Total number of shares issued Shares on which dividend is paid Shares with no dividend Number of shares 284,668,401 270,429,971 14,238,430

Dividend Payout as of December 31, 2006


Type of stock Common Preferred A Preferred B Preferred C Total Number of shares 208,178,785 23,159,022 36,613,865 2,478,299 Dividend per share in Korean won 1,000 1,050 1,100 1,050 Dividend paid-out 208,178,785,000 24,316,973,100 40,275,251,500 2,602,213,950 275,373,223,550

Annual General Shareholders Meeting for 2007


Classification Shareholder resolutions Resolutions To ratify the balance sheet, income statement, and statement of retained earnings for the calendar year ended December 31, 2006 Change in the bylaws Election of directors Election of outside directors who become members of audit committee Ratification of the compensation of directors Results of voting All resolutions on the agenda were approved and ratified.

Major Financial Data in 2007 Annual Report


2006 Sales revenue Net income Assets Liabilities Shareholders equity Net income per share Dividend per common share 27,335 1,526 26,430 10,379 16,051 7,021 1,000 2005 27,384 2,349 26,661 11,608 15,053 10,815 1,250 2004 27,472 1,745 24,421 11,336 13,085 7,668 1,150 unit Billion won Billion won Billion won Billion won Billion won won won

Economic growth & continuous creation of profit by extending global production and sales based on sustainable development

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25

Shareholder Main

& Investor

Shareholder Main

& Investor

Business Activities

Business Activities

Strengthened Communication
In 2006, HMC instituted a program whereby shareholders and prospective investors can meet with management in person, thereby obtaining accurate information on company operations, as part of the Companys efforts to improve IR. Under the program, the Company provided information on its overseas operations to meet the needs of its shareholders. All of these initiatives were launched to earn greater long-term trust from shareholders.

To attain these objectives, the Company is selecting prospective investors, making routine visits to investors, and regularly attending international automobile conferences. In addition to holding investor forums in Korea presenting the results of operations, HMC is sponsoring non-deal roadshows for foreign investors on a regular basis. HMCs major overseas corporations are also holding IR meetings, whereby foreign investors are provided with an opportunity to tour the factory and are informed of the Companys goals in

Domestic IR Activities
HMC is undertaking various IR activities to build long-term trust by explaining the Companys sustainability initiatives to investors. In addition, the Company is holding an investor forum each quarter at which the results of operations are presented for the preceding quarter and investors questions are answered. The Company also holds non-deal roadshows to enhance investor

satisfaction with the information furnished on the results of operations. HMC holds test-drives of new models for investors to experience enhanced competitiveness and improved qualities and also offers tours of production facilities to showcase the Companys outstanding quality and efficiency.

Overseas IR Activities
Through overseas IR activities, HMC is presenting its efforts on global management stability and capability of future growth to foreign investors and also exploring new investors for investor diversification.

global management. In 2006, the Company held an IR meeting while sponsoring the 2006 FIFA World Cup in Germany, creating an opportunity to present HMCs strategies in the European market and to inform foreign investors of its efforts to realize sustainability.

Major IR activities in Korea from January 2006 to June 2007


Date 2006 January Place Korea Stock and Futures Exchange (KRX) IR Conference Room KRX February June Seoul Seoul Headquarters at Yangjae Seoul IR Conference Room Major business affairs Business Plan for 2006 is presented Telephone conference presenting the business plan Meeting in which the results of operations for 2005 were presented Non-deal roadshow for domestic institutional investors UBS Korea Conference HD Presentation Non-deal roadshow for domestic institutional investors Telephone conference presenting the results of operations for the third quarter November Seoul Seoul Seosan Power-tech test track December 2007 January Seoul Korea Exchange Non-deal roadshow for domestic institutional investors IR Expo of listed companies hosted by the KRX Test drive of Veracruz The 2006 yearend gathering Meeting presenting the results of operations for 2006 and business plan for 2007 Seoul May Korea Exchange Seoul IR Conference Room Non-deal roadshow for domestic institutional investors Meeting presenting the results of operations for 1Q 2007 Non-deal roadshow for domestic institutional investors Telephone conference presenting the results of operations for the first quarter Seoul Woori Securities sponsored IR event

Major overseas IR activities from January 2006 to June 2007


Date 2006 January Place USA USA/ EU/ Asia March London London Hong Kong April June September China Germany Hong Kong USA/EU Major business affairs Detroit Auto Conference Non-deal roadshow to present the results of operations for FY2005 Capital Research Conference Morgan Stanley Korea Corporate Day Credit Suisses AIC Conference Tour of overseas manufacturing plant -BHMC IR activity in Europe 2006 CLSA Investors' Forum Non-deal roadshow to present the results of operations for the first half of the year New York Paris November December 2007 January Singapore Tokyo Detroit USA JP Morgan Asia Equity Conference JP Morgan Paris Auto Conference 2006 Morgan Stanley AP Summit Conference Nomura Conference 2007 Detroit Auto Show Conference Non-deal roadshow to present operational performance for FY2006 & Business plan for FY2007 February Asia/EU Non-deal roadshow to present operational performance for FY2006 & Business plan for FY2007 March New York London Hong Kong May IR Conference Room Hong Kong/ Singapore June Boston / New York / London Woori Securities New York Conference Capital Research Conference Credit Suisses AIC Conference Telephone conference giving the results of operations for the first quarter Korea Stock and Futures Exchange (KRX) Conference 2007 UBS Best of Asia Conference

July August October

Supply of Real Time Information


HMC provides various communications for shareholders and investors, including financial statements and the sustainability report. Since 2004, HMC has been operating an IR website, providing real time information on corporate matters, financial data, company share and sales. The Company is also making other information publicly available, including data filed with securities supervisory boards and conference records.
HMC IR Homepage (http://ir.hyundai-motor.com/eng)

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Shareholder Main

& Investor

Shareholder Main

& Investor

Business Activities

Business Activities

Main Business Activities


The year 2006 saw greater uncertainty in the world marketplace than perhaps any previous year, with high oil prices and a marked drop in the exchange rate. Nevertheless, all employees came together and believed in the company they were working for, and HMC was able to pull its resources together and continue its growth. 2006 was a year in which HMC continued its growth, both qualitative and quantitative, thanks to improved operating capabilities. In automobile manufacturing, of the sixty plants in North America producing cars, the Alabama plant in the U.S was rated among the top ten for initial quality within only a year of going into full production. Plants in China, India, and Turkey expanded their manufacturing capacity and construction for a new plant in the Czech Republic started. As a result of the quality improvements pursued by HMC, the Grandeur, Sonata, Tucson, and Avante models has received awards and high praise from auto research firms from around the world. HMC continued on a strong growth path with global sales (vehicle units) up 7% from 2005. In 2003. HMC exports reached 10 billion dollars. In the succeeding three years, the company has grown one and one-half times, winning the 15 billion dollar export award from the Korean government and reaching a milestone in export growth. HMC was named one of BusinessWeeks top 100 global companies in 2005. The company continues to make improvements in quality and has moved up the ranks in 2006 and 2007.

ting edge technologies and production methods at the Alabama plant. HMC plans to continue to expand the plant, eventually making it a global production base with high productivity and flexibility.

Core global base for the EU market- Assan plant in Turkey, Czech Republics Ostrava Plant _ In March
2007, HMC built a high-speed test drive track, the longest in Turkey. The Turkey plant also is adding additional facilities capable of producing up to ten thousand units.

Commencement of production of 600,000 cars- Beijing plant in China and Chennai plant in India _ The Beijing
joint venture plant producing the Verna, Avante XD, EF Sonata, Sonata, and Tucson models, is the only one in that city with the capacity to produce the volumes and diverse range offered by HMC. Beijing HMC is expecting unprecedented growth in Chinas automobile market with the upcoming 2008 Beijing Olympics and 2010 Shanghai Expo. The company has started construction on a second plant and an R&D center to localize production and attain the capacity to produce up to sixty thousand units in an effort to meet growing demand in China.

In April 2007, HMC broke ground on a plant in Czech Republic which will be capable of producing thirty thousand units per year by 2009. The Turkey and Czech Republic plants will become the core bases from which the company will capture the European automobile market, where the consumer is increasingly demanding upscale products. Additionally, there is growing demand for cars in the Eastern European market as a result of the unification of European countries.

Production goals and strategies for 2007


Optimizing capacity for second plant in India, second plant in China and the Czech Republic plant Development and application of innovative production technology Technical group operation Global production capabilities and efficient operations Industry-academia cooperation and platform fostering production technicians Expansion of production and development of environment-friendly production technology Continuous advancement of cleaner production systems Extended application of digital engineering Preparation for production through the application of a standard production system

Status of Global Production


HMC is implementing a new global policy whereby all processes are localized. This includes product development, design, sales, marketing and customer service to satisfy local customers tastes as well as that of the global market. The Company has vowed to become the world leader by infusing quality in management and pursuing production of the highest quality vehicles. With these objectives, HMC is offering great value to customers and enhancing its brand profile. In 1976, HMC first entered the global market by exporting Pony cars to Ecuador in South America. After creating the Excel sensation in the US in 1980, HMC moved from merely exporting cars produced in Korea to setting up plants overseas. With the building of the Assan plant in Turkey in 1997, HMC commenced global production of cars. In 1998, the company opened the Chennai plant in India, followed by the establishment of the Beijing plant in China in 2002, developing a full-fledged global production base.

Expanding the Global Production Base


Reaching Top 10 in North America after only a year of operation is a testament to HMCs capabilitiesAlabama Plant in the US _ J.D. Powers initial quality study
conducted at factories in North America revealed that HMC cars produced at the Alabama plant, which entered full production beginning in May 2005, were rated among the top 10 in attracting US consumers interest. The Alabama plant, known for production of Sonatas, expanded its production line, adding the Santa Fe model in 2006. Furthermore, HMC has developed local R&D, design, and testing facilities in the US; the technology R&D center, design and technical Center; and the Mojave navigation testing site. With the completion of the Alabama plant, HMC has localized all processes in the US market including product development, design, production, sales, marketing and customer service. The company is producing medium and large size cars characterized by high performance, high quality, and high profitability by applying new cut-

As in China, HMC is building a second plant in India capable of producing up to thirty thousand units. Since its entry into the Indian market, HMC has ranked number two in market share. The HMC plant in India is equipped not only with an assembly line, but also performance testing and test-drive facilities. The Indian plant is expected to grow to become a comprehensive vehicle manufacturing base capable of undertaking its own R&D, testing, manufacturing and sales in the Indian market, which has great prospects of becoming a market in which demand for small cars will rapidly increase as a result of the increase in purchasing power of the middle class.

US Alabama Plant

US Alabama Plant production facility

Construction starting ceremony of the 2nd plant and R&D center of HMC Beijing

Production line of Turkey plant

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Shareholder Main

& Investor

Shareholder Main

& Investor

Business Activities

Business Activities

Improved Product Quality in HMCs Cars


In 2006, HMC introduced the Veracruz model in the United States, the largest market in the world. It received rave reviews from the Washington Post, Motorland, and many other reviewers. In the collision test administered by US National Highway Traffic Safety Administration, Veracruz received a five-star rating, attesting to its exceptional safety. The i30 model, which was developed to enter the European market, received high ratings from Autobilt and other leading car magazines in Europe for offering functions and design surpassing other cars in the same class. Sonata was selected as the best family sedan in the 2006 Drivers Choice Awards sponsored by PBS Broadcasting in the United States. Consumer Reports also selected Sonata as the best car in its customer satisfaction survey. Grandeur (Azera in the US) won the AutoPacific Vehicle Satisfaction Award for Large Cars, while the Santa Fe took first place in the groups rating of customer satisfaction in the intermediate SUV category. Consumer Reports ranked Entourage top in its class for product reliability. HMC earned two Total Value wins from Strategic Vision with the Grandeur, Santa Fe, and Entourage. Three models, Grandeur, Santa Fe, and Entourage, were rated best in their classes in the Strategic Visions total quality study. Grandeur and Tucson were rated best in their classes in the total value index of Strategic Vision and have now held the number one position for two consecutive years.

In the collision test administered by US National Highway Traffic Safety Administration, Grandeur received a rating of Good, while Sonata received the top rating in the rear end collision test. In the safety test, Santa Fe won the Top Safety Pick. As a world leader in quality, HMC is continuously pursuing new product development innovation and quality improvement.

Status of Global Sales


HMC is leading the economic growth of Korea through increased exports to the expanding global market and employment stability. As a recognized global enterprise in the world market, the company is currently pursuing various avenues to leap into the world market as a recognized global enterprise.

Accelerating Worldwide Sales


HMC is spurring sales in major markets, including the US and Europe. In Central and South America, the Middle East, Southeast Asia, and other emerging markets, the company has successfully won orders for taxis and government vehicles, enhancing the companys image. 2006 was a monumental year for HMC marked by the sale of two million units, including the CKD* quantity. In the domestic market, Sonata has held the number one position in sales for eight consecutive years, and the number two and three positions have been acquired by Avante and Grandeur, respectively. The company has attained a market share, measured by the number of units sold, of 50% for three consecutive years.
*CKD : Complete Knock Down

Avante (expert name : Elantra) - Strengthening its presence as a steady seller

Brand Value Enhancement


Sales Targets and Strategies for 2006 and 2007
Achieved the target of selling 2.1million units in 2006
Improvement in profitability Increase prices in line with improved quality and brand power Increase the proportion of sales to EU nations Strengthen sales capability Strengthen dealer development program (Based on mid- to long-term sales targets) Strengthen capabilities to compete and increase sales by close customer management Pursuit of regional strategy Increase PR for launching new models in overseas markets Strengthen dealers sales capabilities Attain sales targets by pursuing regional strategies Strengthen capability of sales organization Strengthen competitiveness in sales base Vitalization of the organization and increase in morale Nurturing future-oriented sales personnel Make the showrooms luxurious and improve customer satisfaction Strengthen distributors capabilities to compete Using automobile maintenance service to increase repeat purchase Structuring of customer management program Sales promotion by inviting existing customers

HMC has moved up the ranks of Interbrand and BusinessWeeks


Aggressive sales through innovation in all areas in 2007
Strengthen capability to counter competition Increase promotions targeting key customers Launch of strategic products Operation of regional marketing centers Increase sales of high end cars Increase high end image High end culture/sports/alliance marketing Increase advertising of luxury cars

Growth in HMCs Global Brand Value

100 global brands for three consecutive years. The brand recognition tests by AutoPacific and Consumer Reports indicate that HMC is taking a firm hold in establishing itself as a global brand. HMC made a declaration in 2005 to attain the stature of a leading global brand and increase its capabilities to enhance brand competitiveness. This has led to the new brand identity Refined & Confident and Drive Your Way brand slogan. The brand is uniformly applied from development of product design to marketing, sales, and service. HMC is poised to lead Koreas industrial competitiveness through brand value enhancement and will be making relentless efforts to attain the stature of a premier brand in the world market, particularly in the US, Europe, and China.
Value Rank
(unit : 100 million dollars)
64 66 68 70 72 74 76 78 80 82 84 86

50 40 30 20 10 0 2005 35 84 2006 41 75 2007 45 72

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Shareholder Main

& Investor

Shareholder Main

& Investor

Business Activities

Business Activities

Brand Value in Overseas Markets


Date of Presentation June 2006 Presentation Institution Automotive News AutoPacific Market Watch July 2006 J.D. Power and Associates Business Week J.D. Power and Associates August 2006 NADA Results of the Presentation 6th in the world in vehicle production The most ideal automobile brand HMC surpassed Toyota and Honda 3 in the initial quality study (IQS) / No. 1 general brand 75th among the top 100 global brands 22nd on the Customer Satisfaction Index (CSI) 6th in dealer satisfaction in the US. The National Automotive Dealers Association US. Consumer Satisfaction Index J.D. Power and Associates October 2006 March 2007 Sobre Ruedas Consumer Reports 7th among the 20 automobile brands Ranked 6th in environmental friendliness The 2006 Maker of the Year 7th in the 2007 annual report for durability Sixth climbed up from the preceding year Consumer Reports Consumer Reports 11 defects for every 100 cars Narrower gap between evaluations of each model for durability April 2007 June 2007 AutoPacific AP News 1st in brand image improvement Korean cars outperform Japanese, European, and US cars this year Strategic Vision AutoPacific 2nd in company performance 1st in the large passenger cars category 1st in the SUV category and medium-size cross over SUVs 1st in the small cross over SUV category Barcelona Motor Show Committee Spain Sociedad de Tecnicos de Automacion USA Today July 2007 Business Week / Interbrand Ranked 5th as the car that changed the American life 72nd among the top 100 global brands 3rd place in Spains Technology Innovation Award
rd

Brand Value in Domestic Markets


Remarks Date of Presentation June 2006 Presentation Institution Ministry of Commerce, Industry and Energy / The Institute for Industrial Policy Studies July 2007 Ministry of Commerce, Industry and Energy / Korea Productivity Center/ Chosun Ilbo/ University of Michigan/ National Quality Research Center November 2007 Ministry of Commerce, Industry and Energy Won the 15 Billion dollar Export Award Awarded the Seoktap Industry Medal December 2007 Ministry of Commerce, Industry and Energy / Agency for Technology and Standards June 2007 Korea Productivity Center Selected among the top 10 new technologies in Korea in 2006 1st in the National Customer Satisfaction Index (NCSI) 1st in the passenger cars category for seven consecutive years 1st in the RV category, two consecutive years June 2007 Ministry of Commerce, Industry and Energy/ Ministry of Environment Won the Grand Prize in the Presidents Award for National Environment Management 1st in the National Customer Satisfaction Index Six consecutive years Results of the Announcement Award of Excellence in Industry Sector Remarks

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Motor Show

HMCs Leapfrog to Become a Global Brand at Motor Shows

The 2006 Detroit Motor Show (1/08 to 1/22/2006) HCD-9(Talus), a cutting edge concept car, developed by the HMC R&D Center in California was showcased, and a total of 19 models including Santa Fe, Tucson, Tiburon, Sonata, and Grandeur XG were exhibited.

The 2006 Geneva Motor Show (3/02 to 3/12/2006)


1. Concept Car HCD-10(Hellion) 2. 2006 Geneva Motor Show 3. 2006 Paris Motor Show HED-3(Arnejs) Concept Car Premiere 4. 2006 Beijing Motor Show Veracruz Chinese Premiere 5. 2007 Geneva Motor Show 6. 2007 Seoul Motor Show HND-3(Veloster) Concept Car Premiere

Santa Fe was introduced for the first time into the EU market, and a mid-size sporty wagon, a concept car, HED-2(Janus) was shown for the first time at the show. A total of 16 models including Verna, Getz, Matrix, and Atoz Prime were showcased.

The 2006 New York Motor Show (4/12 to 4/23/2006)

A total of 14 models were on display, including HD(Avante) featuring a new technology product, Accent(Verna), Tiburon(Tuscani), Santa Fe, Tucson, Entourage, Sonata, and Azera(Grandeur).

The 2006 Busan Motor Show (4/27 to 5/7/2006)

A new Avante model was showcased along with concept cars, HCD-9, HED-2, and NEOS-. A total of 21 models including a diesel Sonata, concept cars for highway, and buses were exhibited. Hybrids and hydrogen cars were also on display.

The 2006 Guangzhou Motor Show (7/24 to 7/31/2006)

The new Tuscani was introduced. A futuristic, multi-purpose concept car, HED-1 was showcased. A total of 14 models, including Avante XD, the bestseller in Korea, and Sonata, Tucson, and Equus limousine were also on display.

The 2006 Paris Motor Show (9/28 to 10/15/2006)

HMCs EU Design R&D Center developed a concept car, HED-3(Anez). Along with Grandeur VGT, and a Tuscani conversion that were shown in EU for the first time, a total of 17 models including Getz, Accent, Matrix, Sonata, and Tucson were on display.

2006 Beijing Motor Show (11/19 to 11/27/2006)


Display of Hyundai Motor Companys Veracruz, Grandeur, Sonata, i30 models at world motor shows

A five-door Avante XD(Elantra), which is the most popular model in China, was introduced along with the Veracruz model. A total of 13 models produced by Hyundai Motor Beijing were featured, which included Equus limousine, Santa Fe, and Sonata as well as the concept car, HED-3(Anez).

2007 Detroit Motor Show (1/17 to 1/21/2007)

Veracruz, the strategic model for the North American market, was on display. A total of 10 models including Santa Fe, Tucson, Sonata, Grandeur, Entourage, and a concept car, Hellion were exhibited.

The 2007 Geneva Motor Show (3/08 to 3/18/2007)

The i30 model, a compact size hatchback, strategically produced for EU and HED-4(QarmaQ)), a concept car using new materials, were exhibited. A total of 35 cars with 23 models were on display.

The 2007 Seoul Motor Show (4/05 to 4/15/2007)

Three concept cars, the HND-3(Veloster) model, developed at the Namyang Design Research Center, a crossover style compact size CUV HED-4(QarmaQ)), and the small, multi-purpose model, HCD10(Hellion), were introduced. A total of 21 finished cars with 10 special features using new technology were introduced.

34

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

THE ROAD TO SUSTAINABILITY

35

Environment Management

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Procurement Production Research Centers

Global

Efforts to Minimize Climate Change


International cooperation to minimize climate change is gaining prevalence. In their 4th Report on Climate Change, February 2007, the UN IPCC (Intergovernmental Panel on Climate Change) reported that they were certain that CO 2 released from fossil fuels, consumed by humans, is the main cause of global warming and that irreparable damage on disastrous proportions of the earth will be unavoidable unless a swift and strong decrease in greenhouse gases is achieved. In response to such findings, the greenhouse gas reduction efforts intensified in countries in which reduction measures were already in place, while other countries across the globe are also making efforts to follow in their footsteps by adopting similar measures. Developed countries are preparing for regulations to reduce greenhouse gas emissions from the automobile industry. The EU, which is leading such efforts, has given up on the voluntary agreement system and is preparing legal measures to switch to a regulatory system that will come into effect in 2012. The United States is moving with fuel efficiency regulations in an effort to join the global movement of formulating regulations to cope with climate change. China is planning to implement a reinforced set of regulations in 2008, which will regulate automobile fuel efficiency in a much stricter manner than current regulations. As a global automobiles manufacturer, HMC recognizes the importance of alleviating impacts driven by climate change and is doing its best to respond to the rapidly changing level of awareness in the global community. HMC plans to review and apply various measures to reduce the greenhouse gas emissions. These will include developing and selling diesel vehicles that emit up to 20% less CO2 than gasoline vehicles of the same class. Other measures include early mass-production of HEVs (Hybrid Electric Vehicles) and the reinforcement of plans to develop and distribute environmentally friendly alternative fuel vehicles. In addition, by developing and applying new technologies for improving the fuel efficiency of existing internal combustion engines and by developing biofuel vehicles, HMC supports the international communitys efforts to minimize greenhouse gas emissions.

Regional Responses
EU
As part of its policies to reduce CO2 emissions, the EU specifically regulates the amount of CO2 emitted from the use of fossil fuels in motorized vehicles. In the late 1990s the EU entered into voluntary agreements to reduce the level of CO2 emissions with three automobile associations - ACEA*, JAMA* and KAMA* - and made significant progress until 2004, when it achieved its midterm goals. However, since then the EU has concluded that the improvement was not enough, and in February 2007 announced new CO2 reduction regulations requiring that average CO2 emissions of new vehicles sold in the EU member states are to be reduced to 130g/km by the year 2012. states as CO2 reductions regulation became legally binding. HMC made great progress in CO2 reductions in the EU region, reducing average emissions to 166g/km in 2004, and contributed to KAMAs attainment of 168g/km, which outperformed its goal of 170g/km. The 2005 figure went 2g/km down compared to the previous year, resulting in a final outcome of 164g/km. Through exerting sincere efforts to reduce CO 2 by engaging in environmentally friendly vehicle development activities in 2006, HMC expects to take substantial steps towards CO2 reductions. The company plans to continue its CO2 reduction efforts by releasing i30 diesel model that emits 125g/km in 2007 and the new Santro model i10 in 2008. We will do our best to All EU15 Countries were required to reduce CO2 emissions under a voluntary agreement, and this expanded to the EU27 member meet the new CO 2 emission goal; annual fleet average of 130g/km for new vehicles sold from 2012.

As a global citizen, HMC truly cares for environmental preservation and sustainable development. Thus, it is actively implementing environmentally friendly practices, such as developing environmentally friendly vehicles, improving efficiency in conventional cars, and enhancing recyclability.
*ACEA : European Automobile Manufacturers Association *JAMA : Japan Automobile Manufacturers Association *KAMA : Korea Automobile Manufacturers Association

THE ROAD TO SUSTAINABILITY

37

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

EU CO2 Reduction Status


(unit : g/km)

challenge and an opportunity to reduce environmental impact of our products.

2006 Status of fuel efficiency regulation in Korea


(unit : km/l)

210 200 190 180 170 160 150 140 130 1996 KAMA (Actual) HMC (Actual) 1998 2000 2002 2004 2006 2008 2010 2012 170g/km (Interim Goal) -21g/km 165g/km(KAMA) 164g/km(HMC) -29% 130 (Target)

KOREA
As concerns about skyrocketing oil prices and devastating impacts of greenhouse gas became pervasive among people, the MOCIE (Ministry of commerce, industry and energy) of Korea established regulations on average automobile fuel efficiency in 2006, setting standards of fuel efficiency according to vehicle class (under or over 1,500cc). The average fuel efficiency of HMCs 2006 fleet in the sub 1,500cc class was 14.3km/l , exceeding the standard of 12.4km/l by 15.5%. Models in the over 1,500cc class achieved 11.2km/l , which exceeded the standard of 9.6km/l by 16.7%. Such results are above the average fuel efficiency of all passenger vehicles sold in Korea in 2006, which was 10.8km/l.

15 14 13 12 11 10 1,500cc Under Achieved number of HMC Standard figure 14.3 12.4

Average of domestic (new) passenger vehicles: 10.76km/l

1,500cc Over 11.2 9.6

HMC (Objective)

EU Sales of reduced CO2 Emission Vehicles (less 140g/km)


(based on November, 2007)

HMC was able to secure the 3rd place in 2006 by improving its fleet average fuel economy to 29.1MPG, which was a 0.4MPG

In particular, diesel models such as Sonata, Avante, and i30 will reduce the fuel cost to consumers in this era of high oil prices, and help HMC demonstrate its level of concern for environmental responsibility.

Yearly fuel efficiency achieved in Canada (small sized car)


(unit : km/l)

Model Click(export name:Getz) Accent i30 Atoz Click(export name:Getz) Click(export name:Getz) Lavita(export name:Matrix)

Engine Diesel 1.5 M/T Diesel 1.5 M/T Diesel 1.5 M/T Gasoline 1.1 M/T Gasoline 1.1 M/T Gasoline 1.4 M/T Diesel 1.5 M/T

CO2 (g/km) 116 120 125 129 130 136 139

progress vis-a-vis the previous year. Also HMC came in 6th overall in the AEI (Automotive Environmental Index) which combines the results of surveys carried out by the American consumer evaluation agency JD Power among 67,000 consumers regarding fuel efficiency, level of air pollution, CO2 emission etc., with data from the EPA (Environmental Protection Agency). Of the products manufactured by HMC, the Verna (export name: Accent) and Avante (export name: Elantra) were among the top 30 environmentally friendly vehicles selected. on December 19th, 2007, a regulation regarding the new fuel effi-

14 13 12 11
2004 Achieved number of HMC 13.7 Standard figure 11.6 2005 13.2 11.6 2006 13.0 11.6

Other Countries
Canada _ The Canadian government is moving to establish a
voluntary agreement aimed at reducing greenhouse gas emissions from vehicles, by 5.3 million tons compared to businessas-usual, by 2010. After 2010, the Canadian government plans to introduce fuel efficiency regulations similar to those in the US, in order to further facilitate greenhouse gas emissions reductions. HMC has improved the fuel efficiency of its light trucks from 10.5km/l to 11.2km/l, but the increase in sales of its mid- and large-size vehicles has caused the average fuel efficiency of its passenger cars to drop from 12.3km/l to 13.0km/l. HMC is in the process of reviewing new product development plans in order to meet the reinforced regulations and improve fuel efficiency in the field of passenger vehicles.

USA
As HMC predicts a decrease in its average fleet fuel efficiency due to the expansion of the market for midsize sedans and small size SUVs in the US, it strives to develop vehicles with improved efficiencies. Despite its sales growth in midsize sedans and SUVs,

ciency standards was approved by the U.S. president. The new regulation mandates the CAFE (Corporate Average Fuel Economy) to be raised from currently 25MPG to 35MPG by 2020. This is expected to deliver approximately 40% reduction in CO2 emission from new cars by 2020. HMC faces this as both a lofty

Yearly fuel efficiency achieved in Canada (light truck)


(unit : km/l)

12 11 10

Verna(export name: Accent) and Avante(export name: Elantra) were selected as one of the top 30 environmentally friendly vehicles

China _ Currently, all HMC vehicles sold in China satisfy the


second step of fuel efficiency regulations which will be in effect starting from 2008. However, because of rapid economic growth in China, greenhouse gas emissions are increasing rapidly and additional regulations may be established to further restrict fuel consumption. HMC is working to contribute to solving the problem of increased greenhouse gas emissions from vehicles in China through fuel efficiency improvements.

9 2004 Achieved number of HMC 10.6 Standard figure 8.8 2005 10.5 8.9 2006 11.2 9.2

38

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

THE ROAD TO SUSTAINABILITY

39

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Development of Alternative Fuel Vehicles


Alternative fuel vehicles will help respond to the problems of high oil prices and global warming by using less fossil fuel and, by using it more efficiently. HMC is constantly conducting research on improvements to alternative fuel vehicles and is working to develop practical alternative fuel vehicles through joint ventures.

160 kW, 35 MPa compressed hydrogen and a cruising range of 386km per charging. The fuel cell bus has had successful demonstration runs in international events, including the 2006 World Cup in Germany.

Overseas _ HMC sponsored the 2006 World Cup Germany by


supplying fuel cell electric vehicles and conducted demonstration runs for several events. Fuel cell buses developed by HMC were provided for use as shuttle buses, operating between the Munich Press center and stations around the area, running on the actual

Participation in joint projects _ Since the late 1990s, HMC


has participated in various private sector international joint ventures and, since 2004, has been a key business partner for various government projects, leading the technological advancement of fuel cell electric vehicles. Internally, HMC has established a supply sourcing plan for all fuel cell electric vehicle parts by 2015, and is concentrating on the relevant research and development. The various government fuel cell projects which involve HMC include municipalities, public institutions, renowned universities and public transportation businesses, as well as the central government through the ME, MOCIE, and MOST. Using the various data and case studies accumulated from the government pro-

streets. The buses traveled a total of 2,400km during the World Cup period, and around 5,000 of the worlds broadcasting personnel rode the bus, experiencing the latest technologies of HMCs. HMC also then hosted the first ever public test drive, with 14 evaluators of COTY (Car Of The Year), and members of the press. The fuel cell electric vehicle - a Tucson model - was judged to be of excellent quality by them.
Test driving the Tucson, powered by hydrogen fuel cell

FCEV: Fuel Cell Electric Vehicle


PM (Particulate Matter) and CO2 emissions from motorized vehicles are inherently controlled as long as fossil fuels are used for fuel. In response to this, global automobile companies began competing to develop fuel cell electric vehicles around 1990. As a leading global corporation, HMC wants to market such environmentally friendly vehicles and is investing tens of billions of Won into the research and development of fuel cell electric vehicles.

Status of technology development _ HMC has developed independent technologies for its fuel cell systems, and related core components. HMC has finished the development of an 80kW fuel cell stack, with further R&D lined up to improve its power, durability and freeze-start capability. In addition to this, significant research is ongoing to source parts for automobiles; currently more than 90% of this work is complete. HMC has developed the Tucson and Sportage using HMC proprietary technology. They are equipped with 20 kW-LiPB auxiliary power, a 40 kW/80kW driving motor system, and 35 MPa hydrogen storage fuel tanks. The weight of the empty vehicle is 1,850 kg and it can accelerate from zero to 100km/h in 16.2 seconds, and reach a maximum speed of 150 km/h. In November 2006 HMC developed a hydrogen storage fuel tank with a capacity of 70MPa, so that more fuel could be stored, thereby extending cruising range. HMC recently succeeded in developing a fuel cell bus with a capacity output of

jects, HMC will be in a strong, comptetitive position, well-placed to move to early commercialization by around 2010 and able to fulfill its role as a leader of the fuel cell vehicle field in the global automobile market.

Fuel cell buses were test-driven at the 2006 World Cup in Germany

HMCs Status on Participation in Overseas Projects


Country USA Year of Participation 2000 ~ 2003 ~ 2004 ~ 2009 JAPAN 2002 ~ projects California Fuel Cell Partnership Supported IPHE (Internal Partnership for the Hydrogen Economy) Participated in DOE fuel cell electric vehicle Fleet demo program of USA Participated in FCCJ (Fuel Cell Commercialization Conference of Japan)

HMCs Status on Participation in Government Projects


Name of Business Year of Participation 2004. 9 ~ 2009. 8 Renewable energy development project 2005. 8 ~ 2010. 7 2006. 8 ~ 2007. 7 2006. 8 ~ 2009. 8 Next generation new technology development project 2004. 12 ~ 2010. 1 2006. 11 ~ 2011. 10 Tasks Completed Developed PEMFC development module for 80kW vehicle Developed high molecular fuel cell system for buses (200kW) Developed high pressure hydrogen storage system for fuel cell electric car and demonstration Monitoring business of fuel cell electric vehicle Developed high molecular driving equipment for 80kW vehicle Developed system technology and core parts of environmentally friendly fuel cell vehicle

40

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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41

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Domestic _ In Korea, research activities on hydrogen fuel cell


technology is being carried out by HMC to establish an infrastructure for early commercialization and, simultaneously, to secure the competitive position of its vehicles. HMC started its hydrogen fuel cell vehicle monitoring project in August 2006 with 5 fuel cell vehicles, including a bus. The project is planned to continue for three years, with 34 fuel cell vehicles, including 4 fuel cell buses. Also, to build inter-regional networks for the establishment of fuel infrastructure, HMC is constructing fuel cell charging stations in cities, such as Ulsan and Jeonju, where our operating plants are located. In addition, in order to comply with expected regulations and technological standards, HMC has started evaluating the reliability of fuel cell vehicles and hydrogen fuel technology. HMC hosted the hydrogen fuel cell vehicle monitoring project commencement ceremony in November 2006 at the Gwacheon integrated government building. The company revealed the fuel cell electric bus for the first time in Korea. Number of HMCs Hybrid Vehicle Supplied
(unit: number of vehicles)

Biofuel vehicles
Ethanol vehicles _ With the rising concerns about high oil
prices and global warming, great interest is being shown in the FFV (Flexible Fuel Vehicle), which is compatible of running on either ethanol or gasoline. In response to this HMC is developing an FFV for mass-production in the near future. HMC will commence the production of these vehicles once consumer demand and ethanol supply chains are established.

Biodiesel vehicle _ Biodiesel is more commonly used as fuel


for large commercial vehicles and trucks. It has great potential in
Hydrogen fuel cell bus showcased in the Gwacheon government complex building (Nov. 2006)

Europe, where diesel vehicles are prevalent. Currently all diesel models by HMC are certified to run on diesel containing 5% biodiesel. HMC is conducting research activities on diesel engine technology which will enable diesel vehicles by HMC to be compatible with 20-30% mix of biodiesel fuel.

Ceremony in celebration of CNG bus export to Peru

CNG bus
Though CNG (Compressed Natural Gas) is a fossil fuel, it emits less gas and offers comparatively fewer CO 2 emissions comSupplied Vehicles 50 200 220 510 (estimate) 1,530 (estimate)

HEV: Hybrid Electric Vehicle


Recent spikes in oil prices, concerns about pollution, and activist movements calling for energy efficiency have stimulated the development of efficient, environmentally friendly HEVs (Hybrid Electric Vehicles). An HEV combines the driving force of gasoline engines with electric motor and battery technologies to improve fuel-efficiency and reduce greenhouse gas emissions. HEVs offer a much higher level of fuel efficiency compared to existing gasoline vehicles, and the air pollutant emissions from them are in accordance with the specific regulations on improving urban air conditions in the Capital region. HMC began test driving 50 Click HEVs in 2004 and provided approximately 200 Verna HEVs to public organizations within and in the vicinity of Seoul in year 2005. Five major cities - Busan, Daegu, Kwangju, Ulsan and Daejeon received 220 HEVs in 2006. HMC plans to provide an additional 510 HEVs to other public organizations (i.e. kindergartens and

Year 2004 2005 2006 2007 2008

pared to other kinds of fossil fuel, giving it an advantage in regions where air quality is poor or where CO2 reduction policies are being stringently implemented. HMC has been producing and selling CNG buses in Korea since the year 2000 and has been recognized for its contribution to improving air conditions in cities. Since 2004 HMC has been supplying CNG vehicles to the hauling service providers in the major metropolitan areas in the country. The CNG buses by HMC have been appreciated for excellence in quality and recognized for technological competence. The fact that HMC remained as the number one CNG bus supplier in Korea by reaching a 68.4% (1,773 units out of a total of 2,596) market share proves this. Starting with the export of 10 CNG buses to Peru in August 2006, HMC has expanded exports to Latin American countries and South East Asian countries, a growth market for CNG buses
New Super Aerocity CNG bus

2004 Click hybrid electric vehicle

schools). HMC plans to increase the number of vehicles to 1,530 by 2008. HMC has also committed itself to narrowing price differences compared to existing vehicles while achieving a 50% improvement in fuel efficiency and a 30% reduction in tailpipe emissions.

in public transport. As a provider of CNG buses, HMC has indirectly contributed to the improvement of air quality in areas where such vehicles are in operation.

2007 Verna hybrid electric vehicle

42

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

THE ROAD TO SUSTAINABILITY

43

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Improving Vehicle Fuel Efficiency


Improving the fuel efficiency of existing vehicles is an important issue. HMC has been expanding investments into research and development activities, and this has already delivered promising results, such as new engines, new automatic transmissions, and the application of lightweight materials to vehicles.

Santa Fe Diesel 2.2 Engine _ The new Santa Fe is


equipped with a second generation 2.2 liter D engine, high performance variable geometry turbocharger technology, and the second generation common rail system with high injection pressures of 1,600 bar. High pressure fuel is injected into air, which is optimally controlled by the VGT through the common rail system, providing the best conditions for combustion. Along with this

Grand Starex VGT Engine _ The Grand Starex, released in


May 2007, is equipped with a VGT A engine and second generation common rail system with high pressure injection of 1600 bar. The Grand Starex became the first local minibus and large size minivan to comply with the Euro IV standards. Also, the 5-speed automatic transmission replaced the 4-speed version used in the previous model and the coefficient of drag was lowered compared to the previous Starex. The Grand Starex gained a 6% fuel efficiency enhancement over its predecessor while delivering greater value to the drivers (i.e. larger size, 20% increase in maximum output, 24% increase in maximum torque, 12% increase in maximum speed, and 20% increase in automatic transmission acceleration).

Improvements to the Transmission


A well-designed transmission can improve fuel efficiency by more efficiently transferring the power of the engine. Fundamental improvements in transmission performance are an important goal for automobile manufacturers, and HMC is making efforts to develop a new type of transmission.

Improvement of Engine
Avante HD Gasoline 1.6VVT _ The new Avante HD is
equipped with a range of environmentally friendly technologies and specifications, including a light gamma-1.6VVT engine featuring an aluminum cylinder block, new small-sized transmission, a motor-driven power steering system, and silica tires. In spite of its extended size and 10% increase in maximum capacity, the vehicle boasts excellent fuel efficiency: 13.8km/l - 12% higher than the 12.3km/l shown in the previous model.

improvement in engine performance, the line pressure variable control system has been applied to the automatic transmission to form the optimum line pressure for vehicle driving conditions, thus, achieving enhancements in transmission and fuel efficiencies. Despite the larger vehicle size engine displacement, the new Santa Fe increases fuel efficiency by 5% compared to its predecessor.

Transmissions _ HMC is engaging in R&D activities related to


CVT (Continuously Variable Transmission), DCT (Dual Clutch Transmission), ASG (Automated Shift Gear box), and e-CVT (Electronically Controlled Continously Variable Transmission). These are all important for fuel efficiency enhancements in HEVs. Improving the efficiency of the automatic transmission (applied in most vehicles in the US and Korea) is an important task for

Fuel Efficiency Comparison Fuel Efficiency Comparison


(Diesel model, 2 wheel drive A/T, unit: km/l ) (Disel model, Automatic Transmission, unit: km/l)

improving fuel efficiency and reducing CO2 emissions. Realizing Miniaturization and applying multi-speed technologies are of prime importance to improving the efficiency of these automatic transmissions. Through extensive research and development, HMC succeeded in independently developing the next generation downsized automatic transmission, which can be applied to small and middle class vehicles, and the 5-speed automatic transmission for use in mid- and large-size vehicles. HMC also has plans to mass-produce and apply 6-speed and 8-speed automatic transmissions, currently under development.

Grand Starex 10.5

Starex 10.0

New Santa Fe 2.2 12.5

Santa Fe 2.0 12.0

Next Generation Miniature Automatic Transmission _


In 2006, HMC developed the next-generation downsized automatic transmission for small and middle class vehicles. Geared with state-of-the-art technologies and components such as flat-type torque converters, disk-type springs, full variable controls, aluminum spool valves, and high-efficiency oil pumps, the transmissions have improved transmission efficiency and fuel efficiency. Moreover, 99.8% of parts required for product development were locally sourced; continuous improvements in qualiAvante HD (export name : Elantra) New Santa Fe Grand Starex (export name: H1 Wagon)

ty will be made through cooperation with our suppliers.

High Efficiency 5-Speed Automatic Transmission _ In


In 2006, after 6 years of intensive R&D activities, HMC developed a high efficiency mid-size 5-speed automatic transmission for middle size vehicles. The transmission is applied with a valve body for variable line pressure control, flat-type torque converter, high-strength gear materials and high-capacity bearings. With these new features, the new product boasts higher efficiency, higher capacity and lower noise, standing on a par with those of leading makers. 99% of the components of this transmission
1.6VVT Engine 2.2 VGT D Engine VGT A engine

44

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

THE ROAD TO SUSTAINABILITY

45

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

have been supplied by domestic component manufacturers, contributing to the revitalization and the competitiveness of the domestic components market. This high performance high efficiency automatic transmission is used in the Grandeur (export name: Azera) and has received the IR52 Jang, Young-sil Award in 2006.
IR Jang Young-Sil Award is industrial technology award cosponsored by KOITA (Korea Industrial Technology Association) and Maeil Business Newspaper. It is given in the name of the Minister of Science and Technology. IR stands for Industrial Research, which means research on industrial technology.

Development of Plastic Parts _ In collaboration with GE


Plastics, HMC conducted a joint research project to build the majority of a semi-mid class SUV concept cars(HED-4, QarmaQ) body with lightweight plastic. This is a neo-futuristic vehicle whose design stretches beyond todays imagination. QarmaQ is 60kg lighter and embodies the future of an eco-friendly vehicle. The QarmaQs, strong, safe, economic, and environmentally friendly features originate from a combination of design from the HMC Europe research lab and more than 30 new material technologies from GE Plastics. Furthermore, a significant proportion of QarmaQs parts can be recycled, which is a feature that will be required in the future.

Reduction of Gas Emissions


Reducing tailpipe emissions such as NOx and PM is of prime importance to an environmentally responsible company. HMC strictly manages tailpipe emissions of its vehicles around the world to conform with the relevant regional regulations and continues to develop new technologies to create vehicles with ultimately zero gas emissions.

Regional Responses
EU
The EU is further strengthening regulations regarding the emission of PM (Particulate Matter) and NOx released from diesel vehicles. Following the adoption of the Euro IV standard since 2005, the Euro V standard is expected to be enforced in EU in

The Elastic Front also reduces the chance of pedestrians being seriously injured upon collision through its triple shock absorption system. The new technologies applied to the concept car QarmaQ will be selectively applied to HMCs new models in the
Next Generation Miniature Automatic Transmission High Efficiency 5-Speed Automatic Transmission

September 2009, which will call for an 80% stricter reduction of PM emissions, and 30% reduction of NOx emissions from diesel
` vehicles vis-a-vis the Euro IV standard. The EU is discussing

enforcing Euro 6 regulations which will mandate an additional 60% reduction in NOx from diesel vehicles compared to Euro V standards. All the HMC vehicles sold in Europe were in compliance with the Euro V requirements since 2006. Moreover, in order to preserve the environment and minimize the business risks in advance, HMC takes early actions by implementing plans to equip its diesel

future.

Lightweighting
Reducing the weight of the vehicle is as important as the improving engine performance for efficiency purposes. HMC is continuing the study of space frame type vehicle bodies and research on bodies through the development of more energy efficient compressors and high-strenght-steel plates with reduced weight, HMC also has reinforced cooperation in research and development activities with overseas institutes and global companies.

models with Diesel Particulate Filters to meet such expected future requirements. These efforts will make it possible for HMC to release vehicles in compliance with Euro V in 2008, which is one year earlier than Euro V enforcement timeline.
Avante (export name: Elantra) 2.0 with beta II engine

Emission Report of Click and Sonata Against Euro Regulations


(unit : g/km)

USA
The US can be divided into states in which the federal Tier-2 regulations or Californias LEV II regulations are in effect. Californias LEV II and Zero Emission Vehicle regulations are deemed to be

PM

Euro 4

0.025

Development of steel plate _ HMC began the study of production technology for the development of new steel plates in early 2005. In the following year, HMC proceeded to carry out activities that pertain to various designing and crash teststing. HMC conducted a joint research with POSCO from the initial stage of development. As a result, HMC has developed a high strength, light weight steel plate with reduced thickness, whose intensity is twofold compared to the predecessors. The new plates also improved in terms of thickness by about 33%. Currently, HMC is working to commercialize the new plate and will enhance vehicle safety by using it in all production vehicles. The light weight plates will contribute to the reduction of fuel costs and CO2 emissions through lighter weight.
Inside of QarmaQ plastic QarmaQ

0.020 0.015 0.010 0.005 0.05 0.10

Click (export name: Getz) 1.5 diesel

the strictest gas emission regulations in the world, and thus, being able to supply vehicles that comply with these regulations

Euro 5 0.15

Sonata diesel, DPF applied

is considered as a very important challenge for automanufacturers to develop vehicles capable of satisfying these regulations.
0.25
NOx

0.20

Currently, all HMC gasoline vehicles sold in the US satisfy the regional regulations, while diesel engines and related technologies to satisfy Tier-2 and LEV II requirements are under development. HMC is selling the Avante 2.0 (export name: Elantra) equipped with beta II engine that boasts gas emission performances equal to that of SULEVs (Super Ultra Low Emission Vehicles). HMC plans to produce a variety of vehicles with SULEV class emission performance to respond to the ever strengthening tailpipe emissions regulations in the US.

Sonata 2.0 diesel sold in EU

46

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

THE ROAD TO SUSTAINABILITY

47

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

KOREA
Vehicles that run on gasoline and diesel fuel are subject to separate regulations. Gasoline vehicles are governed by regulation as strict as Low Emission Vehicle II, which is enforced in California in the US for low emission vehicles, while diesel vehicles are emission-controlled by Euro standards enforced in European countries. All HMC vehicles in the market are in compliance with Korean regulations. Some vehicles comply with the Euro IV regulations ahead of the enactment schedule. In 2006 the Ministry of Environment conducted evaluations on tailpipe emissions to classify 39 newly-released vehicles (17 domestic cars and 22 imported cars) into 5 grades. The results showed that all the HMC cars that were evaluated, including the Avante 2.0 CVVT and 1.6 CVVT in the gasoline models, had achieved the top rank of grade 1 or 2.

I-4 Middle and Small Sized Gamma Engine


In 2007, HMC succeeded in developing the I-4 gamma engine with a variety of environmentally friendly qualities. The offset crankshaft position reduces friction of the piston and the employment of aluminum cylinder block brings down the weight of the engine, thereby improving fuel efficiency. Independent variable induction valve timing equipment and center feed plastic intake manifolds were applied to achieve the highest level of performance of engines within the same class. In order to reduce tailpipe emission, the new Long Branch stainless steel injection manifold is applied to improve the performance at low and speed, and WCC+UCC(warm-up catalytic converter, under-floor catalytic converter) was used as a fixation efficiency catalyst. The exhaust manifold is placed at the back of the vehicle and the shortened catalyst activation time increases the efficiency of the overall process. Lastely, to offer a world-class quality engine and offer a 10-year,

S Engine (V6 vehicle diesel engine)


Using proprietary technology, HMC has developed a high performance V6 diesel engine for passenger cars called the S-3.0 engine. In the global market, only very few companies with world-class technological capabilities are capable of producing such engine. The S engine is a state-of-the-art masterpiece employing up-todate diesel technologies for passenger cars, such as a Piezo, common-rail direct injection system, compact graphite-iron cylinder block, and quick preheating capability. These significantly improve exhaust gas emissions as well as other weaknesses such as noise, vibration, and start delay. The S engine was chosen as the NET (New Excellent Technology) in 2006 by the Ministry of Science and Technology and KOITA (Korea Industrial Technology Association). With the development of the S engine, HMC was able to construct a full lineup of diesel passenger engines from small passenger cars to LUVs (Luxury Utility Vehicles), such as the Veracruz in which this engine was applied. from November 2006. The Veracruz, equipped with the S engine, shows a higher performance (240 horsepower) than the average performance of the same class (224~233 horsepower) and has grade 1 fuel efficiency of 11.0km/l(2WD), 10.7km/l(4WD).
Veracruz with S engine

Development of Environmentally Friendly Engine Technology


Ultra Low Exhaust Gas Diesel Engines for Passenger Cars
In 2006, HMC developed a high power, low-noise, CPF (Catalyzed Particulate Filter) embedded, Euro IV-compliant environmentally friendly diesel engine for passenger cars. The commercialization of this engine allowed HMC to secure competitive advantage in diesel passenger cars market in the EU. This engine features a high performance with an exhaust gas purifying level of over 90%. The catalyzed particulate diesel filter helps cut exhaust emissions dramatically and is strong enough to tolerate the intense heat generated in this process. Also, additional additives-supply systems were no longer required, inherently eliminating the needs for cleaning and changing the filter, resulting in reduction in maintenance cost and increase in durability and reliability. HMC was awarded a IR52 Jang, Youngsil Award in 2006 for this exceptional engine and will continue to comply with the Euro V standards.

100,000 mile warranty, HMC applied the silent timing chain, serpentine belt, and high performance electronic control systems to deal with any change of external conditions. The I-4 gamma engine, currently applied to the Avante HD, is scheduled to be equipped in an extended selection of next-generation small and semi-middle sized CUVs(Crossover Utility Vehicles) to help HMC remain competitiveness in the business arena.

Environmentally Friendly Forklift Engine


In 2006, HMC completed the developement of an environmentally friendly forklift engine called the D4DD (series 4 cylinder common rail). The D4DD engine adopts an electrically controlled common rail system, which features substantial improvements in many aspects compared to the preceding mechanically controlled forklift engines. The new engine is able to generate a maximum
V6 vehicle diesel S engine NET Certification Mark

torque of 35kg m, a 3kg m improvement over the previous model, thanks to engines electric control unit optimization that

V6 Lambda Engine
In December 2006, the Ministry of Commerce, Industry, and Energy selected the large V6 Lambda engine, developed by HMC, as one of The Top 10 New Korean Technologies of the Year. The HMC large V6 Lambda engine is a gasoline engine applied to new mid- and large-size sedans and SUVs. The new design improves maximum output by 27% and maximum torque by 16% compared to the engine in Equus(export name: Centennial), and applies an Eco type oil filter that has a high recyclability rate.

allows fuel injection at high pressures of up to 1600 bars. Forklifts equipped with the D4DD engine can maintain high torque at low RPM level, enabling the goods to be loaded and unloaded with ease. It also reduces the emission of NOx, PM, and CO, thus improvs the air quality in areas such as factory buildings where forklifts are commonly used. HMC constantly strives to bring advancements in environmentally sound forklift engine technologies and to meet the the Euro III standards ahead of schedule (due in 2008) to expand sales of forklifts in both the domestic and the foreign markets.

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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49

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Increased Recyclability
HMC is making great efforts to develop a closed-loop recycling society where discarded resources are recycled and materials are managed over the entire life cycle. In order to do so, HMC is conducting various activities from environmental evaluations conducted at the design stages to end-of-life.

Operation of RAIS-H
In order to comply with the EU regulation for Reduce, Reuse, Recycle (RRR), HMC developed RAIS-H (Recyclability Assessment Information System for Homologation). RAIS-H is an internal, web-based system used to verify the material composition and calculate recyclability rate for newly-

Examples of Material Recycling


HMC strives to continuously strengthen its competitive position with its environmental credentials. Auto parts are selected on the basis of cost and efficiency considerations. HMC is developing material recycling technologies and will apply them to every vehicles in order to meet the 85% recyclability rate by 2015 (EU ELV laws).

Improvement of Recyclability Rate


CATIA-based Integrated System for DfD (Design for Disassembly)
Improve disassembly, maintenance and recyclability of products after the design phase is more costly and time consuming because environmental aspects are determined at the design phase. Therefore, HMC has completed the development of the CATIAbased integrated system for DfD designed to help improved CAD modeling of parts in terms of environmental characteristics. This system can be used to analyze, assess, and re-model improving products environmental characteristics. Disassembly structural diagrams and disassembly methods of a product can be drawn by analyzing the 3D model. The information related to disassembly is automatically generated. This function can reduce the time and effort required for changes to the 3D model of parts.

In the future, by using this system the eco-design concepts will be proposed during the design phase, offering an alternative modeling of certain parts using a digital assessment. The HMC DfD CAD system is a worlds first, and DfE (Design for Environment) can be subsequently improved using this system.

developed vehicles in the early stage of the development process. All the recyclability information and analysis results are presented to the designers to improve environmental characteristics of the model. The system is applied to both HMC and Kia models. Benefits are gained by comparing and analyzing all vehicle models, and it can be used as a key database for ecodesign. In 2007, the newly-launched Grand Starex and i30 were evaluated using RAIS-H. The results show that the recyclability rate is

Recycling of Used Polyamide (Nylon) Parts _ The nylon


used as a material for the radiator of the engine compartment is widely used in automobiles. Expensive nylon composites are used for the end tank which acts as the transfer channel of radiator cooling water. However, these plastics parts are usually buried or burned at the end of their useful lives because of the difficulty of recycling them. HMC is collecting used radiator end tanks, radiator fans and radiator shrouds from end-of-life vehicles and has independently developed technologies for recycling these materials in order to reduce pollution and to improve environmental performance. HMC plans to process the nylon materials to make new com-

Effect of Improvements During the Early Development Stage


High

within (EU) regulation limits: over 85% recycling and 95% recoverability rates. HMC will continue complying with every markets

Application proportion

Design change cost

RRR regulations using RAIS-H, and will improve the data quality for application in eco-design process.

Shift earlier

RAIS-H

pounds for use in roof rack components of new vehicles. Through such efforts, a 20% cost reduction for materials can be

low

Conceptual design

Detail design

Preparing production

achieved and the nylon materials, previously buried and burned, can be recycled. The cost for nylon disposal (180,000~220,000 Won/Ton for burning) is expected to be saved. The roof rack developed using method, will be mass-produced and applied to

Development stage

CATIA-based Integrated System for DfD (Design for Disassembly)

Santa Fe models starting in January 2008.

CATIA based Integrated System for DfD CATIA V5 Assembly Application Design for Disassembly Toolbar

Finding the target item in disassembly

Simulation of disassembly

Recycling Process for Used Polyamide (Nylon) Parts

Verifying the design alternative


Collection of used nylon parts Crushing/Washing Standardization of material properties and recompounding for hardening Materials for roof rack

Optimal disassembly path/structural diagram DfD Modular design Examine Fasteners Tool Interference check Modify Fasteners Insert Self-location Calculate DfD score

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Recycling of Rubber Material Scrap generated from Production _ Rubber has been a challenge for recycling due
to its sulfur content. The technological challenge involved with recycling rubber was compounded by low economic benefit associated with the process. Despite, HMC is using its innovative pulverizing treatment for rubber components to create other useful materials for noise-absorption, insulation and weather stripping. A micro powdering technology is used for recycling of the vulcanized rubber scrap. Mass-production of recycled EPDM(Ethylene Propylene Diene Monomer) rubber in bumpers and recyclable fluoride rubber for gaskets will begin in 2009.

Recycling of ASR (Automobile Shredder Residue) _


Recently, the severity of the environmental pollution from ELVs (End of life vehicles) has become an issue and the regulations on ELVs are being strengthened, both domestically and internationally. The EU and Japan have set goals to reduce landfill of ELVs to 5% or lower by 2015. In order to cope with such changes in environmental regulations, HMC has been conducting basic research in collaboration with prominent universities since 2000 to develop the recycling technologies needed to use ASR as high value materials. A new project aims to develop optimal ASR recycling technologies through 2005-2008. The project will develop the recycling technology of ASR thus improving its recycling rate. Efforts to increase the recycling rate of ELVs to 95% are being made using industrial heat source and clean gas melting technologies, and the technology for collecting and destroying toxic materials, such as automobile coolants, is being developed actively at HMC.

Recycling of waste PET bottles _ HMC strives to implement world-class environmental technologies and has developed profitable recycling technologies to give new life to waste PET bottles. The company has constructed a closed-loop recycling system for the collection, crushing, washing, and supply for waste PET bottles, and conducted research of materials recompounding technology. The recycled materials will be used in the window winding motor housing and engine cover materials for automobiles by the end of 2008.

months prior to the date imposed in the (Eu) Directive. Furthermore, none of the four heavy metals (with the exception of those in Annex II) will be used earlier than 2008 before the domestic End-of life vehicle law becomes valid. HMC plans to expand the policy of the global standardization for the four major heavy metals to all regions, regardless of regulation, step-by-step.
Substitute for the lead content in Bearing Shell: 1.7% of lead Bearing Shell lead free Bearing Shell

Minimizing use of harmful materials


HMCs ultimate goal is to develop and distribute automobiles as a means of transport, while promoting in harmony among the environment, humans and society. Todays trend of mass-production, consumption and waste are mainly due to high demand and significant industrial growth. The environmental burden from hazardous waste is also increasing accordingly. Part of HMCs drive to develop environmentally friendly automobiles is to minimize hazardous substances used, use recycled resources and dispose of vehicles more responsibly. Global Standard Guidelines of the 4 Heavy Metals
In accordance with the environmental operation policy of HMC, no lead, mercury, Cr+6 or cadmium will be used in HMC automobiles or parts sold around the world, and we will conform to this voluntarily. 1. All employees and executives will fulfill their responsibilities to make sure that none of the 4 heavy metals are used in any part of the process of our operations in development, production, sales, use and

Development of ASR Recycling Technology


ASR Recycling Shredding Functional materials Melting for gasification

Setting Global Standard for Prohibition of the Use of the Four Heavy Metals
HMC has significantly reduced the use of four heavy metals (lead, mercury, hexavalent chromium and cadmium) and developed substitutes for them. Heavy metals will have been replaced with

dismantling. 2. All domestic and foreign partners doing business with HMC will make sure that none of the 4 heavy metals are included in any of the materials or parts delivered to HMC . 3. HMC and all partners domestic and foreign will reinforce the response process to regulation regarding the 4 heavy metals and strengthen environmental education of our employees and executives. 4. HMC and all partners domestic and foreign will do their best to cooperate with one another in promoting these global standard guidelines of the 4 heavy metals. 2006. 11. 15 Vice Chairman & CEO Dong-Jin Kim, Ph.D.

ELVs

Materials separation

substitutes unless postponement or exception is granted, by June 2007.


Heat source for cement

ASR

Even substitutes for hexavalent chromium for corrosion prevention in chassis bolts, which are permitted for use until June 2008, have been developed and applied in June 2007, a year earlier than required by law. Substitute materials for the lead contained in bearing shells & bushes and the lead in the aluminum alloy for mechanical processing will be applied no later than early 2008: 6

Recycling Process of Rubber Scrap Environment Friendly Closed-loop Recycling System of Waste PET Bottles

Micro Pulverizing

Reclaimed Powder

ROLL MIXING with Reclaimed Rubber Power

Final Master Batch

Recycled Rubber Material


Waste PET Bottles Recycled PET Flakes 1st Compound material from Recycled flake Recompounded material for hardening Material for Engine cover

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Establishment of DB for Hazardous Chemical Materials


HMC implemented the IMDS (International Material Data System) in 2004 to monitor and systematically manage all hazardous materials for auto parts. Currently IMDS is only implemented at domestic factories. In near future, it will be applied in all overseas plants and function as a universal tool for chemical management. The training for IMDS and new environmental laws will be offered to users in all contracting companies by regions. This will help HMC better manage hazardous materials in cooperation with the part suppliers. HMC also has developed the MDS Data Management System to better track materials used in parts systematically and contributes to reducing hazardous material. MDS Data Management System
Training for Restriction of Hazardous Substances in Delivery Processes

Air Quality Control Criteria for New Cars (Ministry of Construction and Transportation, June 2006)
(unit : g/m3)

Regulation Materials

Formaldehyde 250

Benzene 30

Toluene 1,000

Xylene 870

Ethylbenzene 1,600

Styrene 300

Life Cycle Assessment (LCA)


HMC conducts LCA (Life Cycle Assessment) according to ISO 14040 which assesses the environmental impacts throughout the entire life cycle of production, use and disposal. Using its experience in the early stages of assessment when LCA was conducted on parts such as bumpers, instrument panels, fenders/hoods, and engines, HMC has begun performing LCAs on newly-developed vehicles since 2006, and has performed LCA on both the
Connection with IMDS Data

LCA for all new vehicles and use the results to reduce environmental impact of our future models. HMC will disclose LCA results to our stakeholders including consumers and use as an environmental communication tool for all stakeholders.

LCA Result of Grand Starex


Global warming
100

Grand Starex and i30 in 2007.

Grand Starex
4 Heavy metal Management Environmental Regulation Monitoring

Newly developed Starex has better engine efficiency and lower emissions compared to comparable models. It shows lower greenhouse gas emissions impacts (down 4.8%), lower acidification impacts (down 18.4%), lower eutrophication potential impacts (down 34.7%). It does however show an increased potential for photochemical oxidant creation (up 0.7%) due to increasing emissions of carbon monoxide, according to LCA analysis results.
Eutrophication potential impacts

80

Expanded IMDS Implementation Status Across Global Sites

MDS Management System

50

Photochemical smog

Slovakia Czech Turkey India

Korea China

USA

Recyclability Rate Calculation

Statistics on Substances Usage

i30
The semi-compact hatchback i30 has a lower environmental impact in all categories except acidification impact according to the LCA result compared to comparable models. Overall environmental performance has been improved, with lower greenhouse LCA Result of i30

Acidification impacts Baseline (Previous model) Grand Strarex

Already implemented

To be implemented

New Car Interior Air Quality Improvements


As polymers, such as rubbers, plastics, adhesives and paints have been increasingly applied in vehicles, HMC established assessment criteria for interior odor level, and decided to only

potential impacts (down 10.1%), lower photochemical oxidant creation (down 9.3%), eutrophication impacts (down 3.3%). As a side effect of using lightweight materials, acidification (up 0.8%) impact increased slightly. We are planning to conduct

Global warming
100

Annual Amount of Data Generated by MDS


(unit: number of records)

use compliant products. In addition, from the year 2008, HMC is also going to measure volatile organic compounds (VOC) emis14,000
1. Global warming: The increase in the average temperature of the Earth's near-surface air and oceans due to the greenhouse effect caused by the accumulation of CO2, methane, CFC, and so on. 2. Acidification impacts:The impacts of human emissions of oxides of sulfur, nitrogen compounds and ammonia that react in the atmosphere to produce acids. It is causing acid rain, respiratory diseases, etc. 3. Photochemical smog: A combination of fog and chemicals such as VOC and NOx that is acted upon by the action of the sun, which forms a variety of secondary products including ozone. 4. Eutrophication potential impacts: An increase in chemical nutrients, typically compounds containing nitrogen or phosphorus, by industrial effluent and sewage spewed into the sea water, which results in excessive plant growth and decay.

80

sion amount of components and use only eco-friendly materials that are meeting the strictly enforced threshold. So far HMC has

Eutrophication potential impacts

50

Photochemical smog

15,000 10,068 10,000

reduced VOC emissions by 80%. Adhesives and paints that generate most VOCs within a vehicle have been changed from organic solvents to water soluble ones. Low odor and low VOC-

5,000 153 2004 2005 2006

generating ABS and Acetal resins are being tested for future application. Furthermore, since VOCs are generated during the manufacture of parts, we have, with the suppliers cut VOC generation significantly.

Acidification impacts Baseline (Previous model) i30

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Procurement Production Research Centers

Global

Vehicle Recycling Center


HMC aims to develop and disseminate ELV (End-of-Life Vehicles) treatment technologies that support social and environmental performance, and has been operating a vehicle recycling center since October 2005. This facility can process 4,200 vehicles each year. By operating the recycling center HMC provides support for effective vehicle recycling design technologies, develops technologies for adequate handling of ELVs, support technology for reducing waste materials, supplies parts and cooperating companies with technologies. This allows the company to contribute to realization of a material recycling society. The company continues to develop dismantling systems and tools to help small and medium enterprises that are not capable of developing their own recycling technology. Using the technology gained through the operation of the recycling center, HMC plans to study recycling and environmentally friendly treatment methods from the early design stage, and will apply the results to the design stages of new vehicles. Also, HMC will form a partnership with the domestic car-scrapping industry and provide them with operational technology and know-how, and contribute to establishing a high standard for waste car management.

Green Procurement
Supporting Environmental Management Systems of Suppliers
To make each vehicle a total of 20,000 components are needed. To satisfy ever more demanding environmental regulations in the auto sector, the cooperation of suppliers are required. HMC is active in supply chain management and is leading the automobile industry by working with more than 400 1st tier suppliers and over 4,000 2nd and 3rd tier suppliers. On top of 200,000 employees working in 1st tier suppliers, there are approximately 1 million workers working in 2nd tier, 3rd tier and other general suppliers, all of them engaged in some way with HMC. HMC is supporting the environmental management system of suppliers to help improve environmental performance of their products and manufacturing processes. Every year general environmental management training is provided to all 1st tier business suppliers. In addition, HMC has increased the purchase of environmentally friendly products, and has supported suppliers environmentally responsible component developments. Also, by planning green partnership projects with small and medium sized companies, HMC encourages the transfer of 1st tier suppliers environmental management sys100 90 80 70 60 2005 2006 2007.7 End of 2007 63 84 90

ISO Certification Report of Suppliers


(unit : %)

100

Environmental management training for suppliers _


HMC provides environment management training for suppliers every year. The company regularly provides environmental management training and promote communication among experts in Korean and international environmental regulation and management systems in open forum discussions and lecture style sessions. HMCs environmental performance in its supply chain has thus been enhanced in response to global environmental regulation.

tems to 2nd and 3rd tier suppliers.

Enhancement of Suppliers Competitive Edge in Environmental Management


ISO 14001 certification with 1st tier Suppliers _ HMC
requires its 1st tier suppliers to obtain ISO 14001 EMS certification. As a result, 63% of 1st tier suppliers in 2005 and and 84% of them in 2006 obtained the certification; the figure reached 90% in July 2007. By the end of the 2007, all 1st tier suppliers are expected to obtain the certification.
Vehicle Recycling Center Training materials for environment management for partners

Explosive components processing process

Liquid recovery process

ELV treatment technology exchange

Training session for partners of Ulsan plant (May 2006)

Training session for partners of Asan plant (June 2007)

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Records of Environmental Management Training Given to Suppliers


Classification
Date and place

Materials Specifically Prohibited for Use


2007
2007. 6. 18 Public relations office of Asan factory 2007. 6. 26 Ulsan community center 2007. 6. 27 Public relations office of Guangju factory 387 750 Establish green partnership with small and medium sized companies and the driving strategy Establish green partnership for the sustainable development Trend of international and domestic environmental regulation and the countermeasure Environmental management strategy on purchasing area

2005
2005. 5. 23 Public relations office of Asan factory 2005. 5. 25 Ulsan community center

2006
2006. 5. 2 Public relations office of Asan factory 2006. 5. 9 Ulsan community center 2006. 5. 11 Public relations office of Guangju factory

Region EU

Regulation Directive 2005/69/EC(Tyre PAHs regulation) COM 2005/0244(PFOS regulation bill)

Prohibited materials Benzo(a)pyreneand other 7 types of materials Perfluorooctanoic acid sodium salt and two other types of materials Trichlorofluoromethane(CFC-11, CFCl3) and another 19 types of materials Nitrofen, its compound and 60 other types of materials

USA

The law of consumption tax (chapter 38, environmental tax)

Korea

The law of Harmful chemical material management (materials prohibited/ limited to produce, import, use)

Number of suppliers Number of training Contents

401 473 HMCs sustainability management strategy Current environmental regulation and countermeasure Regulation on heavy metals (Cr+6) and countermeasure The governments environmental policy direction and sustainable management Environmental management strategy of purchase headquarter

390 699 Establish green partnership with small and medium sized companies and the driving strategy Establish green partnership for the sustainable development Trend of international and domestic environmental regulation and the countermeasure Environmental management strategy on purchasing area

Agreement

Stockholm agreement ( regulation on POPs material )

Hexachlorobenzene, its compound and 3 other types of material

Joint bidding for a heavy metal analyzer _ In 2006 the


Purchasing division of HMC offered a joint tender for a heavy metal analyzer purchase in cooperation with the R&D and Quality Control Division. The tender was intended to prepare for EU heavy metal regulation enforcement and minimize suppliers financial burdens.

Conclusion of Environmental Friendly Parts Supply Agreement _ In February 2007, HMC has concluded the
Agreement on Supply of Environmental Friendly Parts with all 1st tier suppliers. This agreement is based on not only the will to practice environmental and ethical management for production, but also the will to become a leading corporation that assumes its due social responsibilities.

Setting an environmental standard _ All component suppliers received a guideline on The Environmental Standard of HMC which specifies environmental requirement for use in components production. The environmental standard can be found at HMCs purchase portal site, Vaatz(http://www.vaatz.com) and it is updated regularly. The guideline states both prohibited and regulated materials; the four most strongly prohibited materials are heavy metals (lead,

As of November 2007 a total of 80 suppliers completed the purchase and 100 suppliers are going to be equipped with heavy metal analyzers by 2008. HMC plans to provide an incentive to those suppliers equipped with the analyzer by accepting self-declared certificates of heavy metal compliance as a valid proof of compliance. This incentive would help suppliers reduce financial burdens while preparing for heavy metal regulation compliance.
Heavy metal contents data (IMDS)

Agreement on Supply of Environmental Friendly Parts


By concluding this agreement, both parties intend to jointly respond to consistently strengthening environmental laws in each world region and to contribute to the regional community. This agreement is effective upon signing of the both parties. 1. B, in developing and producing the parts supplied to A, refrains from using or including any substance that may impose threat to human health or environment by strictly complying with the Hyundai Motors Environmental Standards, developed to respond to the worlds environmental regulation by region. 2. B as schedule proposed by A, prohibit the use of 4 heavy metal types of lead, mercury, cadmium, and hexavalent chromium in products supplied to local and overseas factories. 3. B will make all necessary and reasonable efforts to build and apply an internal environmental management system to better design, produce, package and transport the parts supplied to A. 4. B will practice environmental, as well as ethical, management and pursue sustainable management so as to develop a symbiotic relationship with former, assuming all social responsibilities to the interested groups of employees, suppliers, and regional community.

mercury, cadmium, hexavalent chromium) Also included is guidance on use of IMDS in component production, the guideline on RAIS-H (Recyclability Assessment Information System for Homologation) and a guideline of MSDS (Material Safety Data Sheet) management.

Green procurement in overseas sites _ To implement


green procurement policies in overseas establishments, the purchasing division of HMC has appointed green purchase managers at each site and has been implementing environment procurement activities in overseas sites, such as ISO 14001 certification of suppliers, environmental training and 2nd party audits. When purchase managers of overseas factories visit Korea, the division provides training on environmental regulations and HMC environmental policies for their capacity-building.

Voluntary agreement and the model project of the government


Voluntary agreement _ In October 2006, HMC reached a
voluntary agreement with the government to establish green
The environmental standard of HMC available at Vaatz, HMC purchase portal site

partnerships with 40 1 st tier suppliers. With a strong will to expand the program to include all suppliers by 2009.
Signing ceremony for voluntary agreement on green partnership for heavy metal reduction(Oct. 2006) President Choi Jae Kook (Left), Former MOCIE minister Jung Se Gyun (Right)

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Completion of the SCEM (Supply Chain Environmental Management) project _ To respond to global environmental
regulations, HMC is making great efforts to establish joint compliance systems with its suppliers. For example, a SCEM project was started in with 15 component suppliers and hosted by the National Clean production Support Center under the Ministry of Commerce, Industry and Energy. The three years project was successfully completed in June 2006. HMCs SCEM pilot was a multi-party, environmental cooperation project involving government, expert groups, academia, suppliers. In the project, suppliers established environmental management systems, developed environmentally responsible products and prepared the way for clean technologies. They achieved environmental gains such as energy reduction, scrap material reduction as well as extensive cost reductions.

4 Driving Strategies of SCEM


Driving strategies Establish the foundation of environmental management Detailed action items EMS establishment, environmental training, environmental accounting, environmental performance valuation Establish clean production system production process improvement, energy management Establish environmental product development system Establish integrated environmental management system harmful material management, evaluation of the whole process green purchase, network system

Classification
Period Participants

SCEM
2003. 7~2006. 6 Kyungshin Industrial / Daesung Electric Co., Ltd. Denso PS Corporation / Dong Hee Industrial Co., Ltd. Doowon Climate Control Co., Ltd. Sejong Industrial Co., Ltd. / Shinchang Electrics Inzi Controls / Il Jeong Industrial / Jinhap Kasco / Omron Korea / Kapec / Han Il E Hwa Co., Ltd. Hwaseung R&A

SCEP
2006. 4~2008. 3 Doowon Climate Control Co., Ltd. / Sejong Industrial Co., Ltd. BorgWarner Transmission Systems Korea Inc. Daesung Electric Co., Ltd. / Denso PS Corporation Dong Hee Industrial Co., Ltd. / Han Il E Hwa Co., Ltd. Sam-A Aluminium Co., Ltd. / GE Sensing Korea Ltd. Youngbo Chemical Co., Ltd. / Lotte Aluminium Co., Ltd. / Precision Dongwoo Heat Treating Co., Ltd. / Hanyoung Industrial Co., Ltd. Hyunwoo Co., Ltd. / Chung Woo Co., Ltd. / I.P.L. Co., Ltd. Jungwoo Plastics Co. / Wooju Tech Co., Ltd. / Yooshin Industrial Co. Shindo Precision Corp. / Seo Jin Precision / Bum Yang Co. Sunil Industrial Co., Ltd.

Proceeding SCEP (Supply Chain Eco-Partnership) pilot project _ Based on the performance of SCEM pilot project, HMC is proceeding with a two-year SCEP pilot project to transfer environmental management to secondary and tertiary suppliers. This began in April 2006. In the first year of the project, three primary suppliers and nine secondary suppliers suppliers participated in the project. In the second year of the project (starting April 2007), the number of members expanded to seven primary suppliers and 17 secondary suppliers.

Introducing of best practice _ Doowon Climate Control wins the Prime Ministers prize in the National Environmental Management Award
SCEM / SCEP Doowon Climate Control has been providing climate control systems to HMC and participating in HMCs green partnership project since 2003. In June 2007, the company won the Prime Ministers prize in the National Environmental Management Award, for their excellent achievement in green partnership program. Based on the success of the SCEM project, Doowon Climate Control decided to participate in the SCEP Project with Sam-A Aluminum, Lotte Aluminum, GE Sensing Korea, and Youngbo Chemical and has been showing a great leadership.

SCEM

SCEP

Comprehending internal status / Research on external trends


clean production systems and environmentally responsible production systems / developing a green purchase guideline / Writing environmental reports / Establishing the foundation of environmental management

Primary suppliers

Establishing green partnerships Expanding Expanding environmental network management secondary and tertiary suppliers

Develop integrated environmental management manual

establish SCEM network system

Secondary, tertiary suppliers Doowon Climate Control winning the Prime Minister Award in Green Partnership, Korean Environment Management Award

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61

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Clean Production
Expansion of Environmentally Friendly Product Procurement
In order to pursue sustainable growth, HMC has been leading proliferation of an environmentally friendly production and customer culture.

Green Procurement Result and Expected Benefits


Since the conclusion of the voluntary contract in 2005, we have in total spent 1,184 billion Won* reorganizing the existing items subject to purchase in the year 2006 and classifying the items subject to green procurement into products certified with the Eco label, Good Recycled label, and Reduced Toxic Substance label.

Clean production refers to a production structure that concurrently satisfies both economic and environmental priorities by reducing the generation of polluting substances by best practical environmental technology, processes and systems throughout production. In order to facilitate such a system HMC is applying LCA (Life Cycle Assessment) and DfE (Design for Environment) early in the design stage of a product and is reinforcing cooperative activities with other partner companies to minimize environmental impacts in parts production and supply stages. HMC launched internal and external activities directed to reduce greenhouse gas emissions from production. The company defined targets for greenhouse gas emissions reduction and uses integrated energy management systems, environmentally friendly energy sources and facility improvements. In its external activities, it has been participating in a greenhouse gas inventory project and industrial collaborations with the Ministry of Commerce, Industry and Energy, the Ministry of Environment, KAMA (Korea Automobile Manufacturers Association) and Korea Energy Management Corporation.

Conclusion of Voluntary Agreement


The environmental responsibility of industrial sector is ever increasing as it is the core of current mass production-consumption culture. In 2005, HMC participated in the voluntary green procurement agreement promoted by the Ministry of Environment. As a corporate consumer, HMC announced plans to take part in the expansion of a sustainable consumer culture by practicing environmentally friendly product purchasing and by manufacturing and distributing environmentally friendly products.

In 2006, Eco label products, in particular, expanded by five-fold compared to green procurement items in 2005, and the purchase sum increased by 1.7 billion (15.3%). In 2007, we plan to increase the total sum of green procurement purchases by 349.8 billion (31.1%) compared to that of 2006.

*Exchange Rate :

1,004.00Won/$ (12. 30. 2005) 929.00Won/$ (12. 28. 2006) 924.00Won/$ ( 6. 29. 2007)

Yearly Status of HMC Green Procurement


Period 2003~2004 Classification Preparation Period Main activities Reviewed the introduction of green procurement 2005 Implementation Period Conclusion of voluntary agreement of industry green procurement 2006~2007 Settlement Period Expanded green procurement

Material Balance in Domestic Sites and Causes of Environmental Overload by Process

Air pollutants : 844 ton

Roles According to the Green Procurement Agreement


HMC Green procurement plan establishment, implementation, assessment and training resource and component procurement and usage Development, production, sales and distribution of product Performance assessment and result report Provide EFP information Promote green procurement agreement and its performance Award good company and promote companys performance

MOE Prepare policy to support EFP Press Strap/Noise Body


Strap/ Waste sealer

Painting
VOC/Stench, Waste water

Decorative design Packaging wastes

Energy:1,403,390 CO2ton Water resouces:13,801,278 ton Raw materials:364,590 ton Chemical substances:2,478 ton
Molding Forging Noise Molding sand waste/Dust/Stench Engine maunfacturing/Assembly Waste oil Waste water

Number of finished cars:

1,618,268

Number of

Engines: 2,2,42,340

Green Procurement, Actual vs. Plan


2005 (Actual) Number of items Eco label certified products Good Recycled label products Reduced Toxic Substance label products (Pb/Hg/Cd/Cr6+) Total 53 94 100 11,840 97 15,338 53 Cost (100 million won) 94 2006 (Actual) Number of items 58 10 32 Cost (100 million won) 111 277 11,451 2007 (Expected) Number of items Cost (100 million won) 52 12 33 35 362 14,941

Water pollutants: 129 ton

Wastes :199,469 ton (Recycled: 156,895 ton)

*The 2005 data for Good Recycled label products and Reduced Toxic substance label products is not calcuated.

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63

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Coping with Climatic Changes at the Production Sites


Internal Activity
Integrated energy management system and operation of energy TF _ For more efficient use of energy HMC has
implemented and run a Total Energy Management System (TEMS) which provides real-time verification/inquiry services of various data regarding the quantity of utility consumed and cost including electricity, pressurized air, steam, gas, and more. The users of TEMS can analyze factors behind high energy use and can understand strategies for reduction and potential demand. This can be done through daily or monthly checking against a target for energy use. The aim is to drive improvements in net profits. Furthermore, TEMS also provides various statistical data, including weekly energy consumption per machine unit, daily consumption per unit, energy consumption management, atmospheric data, and internal energy management status. Access is also available to additional resources, including energy improvement plans, cases of improvement, reporting of loss, and inspection results, as well as other up-to-date data, including the Climatic Change Convention, information regarding unit costs of oil and energy, and weather. By integrating TEMS with the i-ESH (integrated Environment Safety & Health) system, HMC plans to construct the Integrated management system of environmental performance index for a manufacturing factory by 2008. The completion of this system will allow integrated management of all environmental performance for each and every manufacturing plant, and will enable the realization of a more effective and practical reduction of greenhouse gas.

Meanwhile, HMC is trying to identify the ultimate solution to global warming through energy use reductions and organize its production facility maintenance and production technology departments, which design and install production facilities and Energy TF. Energy TF has a meeting every quarter and selects energy saving solutions. Each team offers their opinion and after discussion, the optimum energy reduction plan is decided.

Annual Greenhouse Gas Emissions


(unit: 1,000 ton CO2) (unit: ton CO2/100 million won)

3,000 2,500 2,000 1,500 1,000 500

Expansion of environmentally friendly energy usage _


The energy sources at HMC are generally low-carbon options; electricity and LNG constitute 98% of the entire energy sources. Annual energy consumption in 2006 was 35,702 GJ, which was 2.2% lower than the previous year. In 2006 was 1,758,917 tons of CO2 was emitted, 4% lower than the year before.
CO2 emissions per sales Total emissions Indirect emissions

2001 5.31 1,249 785

2002 5.43 1,395 866

2003 5.48 1,457 910

2004 5.06 1,616 1,019

2005 5.30 1,827 1,133

2006 4.76 1,759 1,152

System improvement _ HMC is promoting energy use reduction activities in an effort to improve the fundamental structure of energy use, by using high-efficiency equipment. HMC is also working towards efficient-energy enhancements by introducing an energy recovery system, which collects and recycles heat generated from coating factories, and by installing control systems to manage fluctuating uses. HMC is reducing the use of electricity by replacing substandard electromotors and by improving energy waste losses through hourly consumption monitoring and targets. For energy reduction at material (component) factories, HMC is making efforts in energy efficiency and improvement by replacing old inefficient smelting furnaces. To manufacture an automobile engine, a molding process is required which reforms melted cast iron and aluminum to a desired shape. Material plants are factories which manufacture engine parts, such as cylinder blocks, using this molding process. Such processes involve the use of smelting furnaces that consume high amounts of energy. Therefore, this is one of more urgent areas where system improvements for the reduction of energy use are necessary. HMC recently changed its parallel resonance smelting furnaces to serial resonance ones, so power input is independent of the volume of fuel inputted in the smelting furnace. Serial resonance smelting furnaces need short melting times, so the heat loss can be minimized. Also, power usage per ton has decreased by 5.7% compared to the previous year, reaching 640kWh/ton, melting capacity has been increased from 4ton/hr to 6ton/hr, so the energy reduction effect has been maximized.

Realization of Reductions in Each Functional Field


house gas emissions in line with the emissions in 2005.

Up

to 2012 HMC plans to keep levels of distribution-related green-

To achieve this, HMC is evaluating the conversion to low-energy transport, loading efficiency, shipping routes, ECO-Drive guidelines in procurement, production, sales, export, and distribution.

Improvement of Wrapping Material

HMC will also keep

the same levels of packaging material used in 2005 until 2012. To reduce packaging material use, HMC will start simplifying packaging, changing packaging materials, reviewing environmentally friendly material usage and expanding recyclable pallet use beginning in 2008. As the first step in the project, CO2 emissions will be calculated beginning in 2008 and a reduction plan will be determined. The

Establishment of environmentally friendly logistics system _ In seeking to reduce greenhouse gas emissions and
lessen our dependence on fossil fuels, governments and enterEnergy Utilization
(unit: 1,000 GJ) (unit: GJ/100 million won)

second step is to expand the subject of the plan to overseas logistics area. Hereafter, HMC will continue its environmentally friendly activities in the logistics area for the reduction of packaging material use and CO2 emissions. Meanwhile, HMC will identify other business areas in which to reduce CO2 and will establish a plan for solving such challenging environmental problems.

prises from major nations are focusing not only on developing new products but also on improving the distribution system to minimize energy consumption in transportation. In its distribution activity, HMC is preparing to construct an envi80

60,000 50,000 40,000 30,000 20,000 10,000 2001 Energy consumption per sales Energy consumption 106 24,860 2002 108 27,759 2003 109 28,999 2004 101 32,300 2005 106 36,523 2006 97 35,702

130

ronmentally friendly system to reduce packaging use and CO2 emissions through improved logistics performance.

20

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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65

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

ATLAS, Development of Export Distribution Information Program


HMC held an exhibition of the ATLAS Program which identifies with the distribution flow of automobiles sold overseas in July 2006. The ATLAS Program offers information including real-time locations and schedules of vessels loaded with export vehicles, allowing regional export teams at HQ and overseas to inquire about arriving vessels and loaded vehicles around the world in real-time. The program enables agencies to keep track of vessel and vehicle information; this helps reduce direct and indirect distribution costs. The ATLAS Program provides supplementary services such as maritime climate information and port condition around the world.
Making reference to the ATLAS system

Voluntary Agreement with the Ministry of Environment _


In November 2006, three sites at Ulsan, Asan, and Jeonju, participated in a voluntary agreement-signing ceremony for celebrating the integration of nationwide GHG and air contamination substances. The ceremony was arranged by the Ministry of Environment, and the participating 169 environmentally friendly companies pledged to minimize GHG and air contaminant emissions indicated as the principal factors to global warming. The representatives of the three HMC establishments vowed to isolate all causes of energy use from production, city gas and other GHGs and fulfill the mission of being environmentally friendly companies.

By sharing detail on failed cases, in particular, such as the uncertainty of improvement and trial and error projects, the industry is promoting joint benefits among its member companies.

Material Balance
HMC manufactures automobiles and engines using a variety of raw materials and energy in seven manufacturing factories around the world. As illustrated in the national material balance below, in 2006, HMC used 1.4 million tons CO2 domestically. Also a total of 13 million tons of water resources were supplied from outside, and 580,000 tons were recycled and reused in the manufacturing plants. The quantities of raw materials including vehicle steering plates

External Activity
CO 2 inventory _ HMC has organized a climate change
response team with MOCIE & KAMA and has led CO2 emission reductions in the domestic automobile business. In 2006, HMC worked with KAMA to establish a CO2 inventory in the domestic automobile industry and has developed guidelines on calculating the CO2 emissions of automobile companies. In the guideline, direct and indirect emissions figures are separated for efficient greenhouse gas emission control by HMC business sites. HMC followed national GHG inventory guidance in all operations at Ulsan, Asan, and Jeonju, as well as those within research facilities and A/S centers. The total sum of GHG inventory from national HMC establishments conforming to the guideline is 1,404,379 tons of CO2. The total quantity of energy consumption applicable to direct emissions including LNG, gasoline, light oil, LPG, and kerosene is 497,305 tons, and the electricity consumption of indirect emissions is 907,074 tons. By building CO2 inventories, the exact discharge portion of hydrofluorocarbon and CO2 emissions from welding rods can be calculated, so continuous CO2 reduction activities, like potential reduction rate analysis, will proceed. Also, based on the CO2 inventory of domestic business facilities, the range of CO2 emissions calculations will be extended to overseas production plants beginning in 2008.
In put Indirect emissions (electricity) Total 1,404,379 Direct emissions

2006 CO2 Inventory of Domestic Business Facilities


(unit : ton)

ESP: Energy Saving through Partnership _ In 2006, HMC


participated in the ESP project directed by the Korea Energy Management Corporation focused on forming partnerships within the industry. The project aims to share energy reduction best practice among the enterprises and jointly research reduction case studies, while developing and applying more advanced improvement approaches. The assembly metal industrys member companies include all domestic vehicle companies as well as Doosan Heavy Industries and Construction Co., Ltd. and Hyundai Heavy Industries and Construction Co., Ltd. The assembly metal industry was established through an inaugural general meeting in 2006 and has been sharing energy reduction improvement cases on a quarterly basis.

and aluminum and chemical substances consumed totalled 364,590 tons and 2,478 tons, respectively, and were used in the manufacture of 1,618,268 automobiles and 2,242,340 engines in HMCs plants worldwide. Meanwhile, 844 tons of air pollutants and 129 tons of water pollutants were generated. Also, among 199,469 tons of waste generated, 156,895 tons (78%) were recycled and reused in various processes.

Classfication LNG LPG Kerosene Gasoline Light oil CO2 for welding HFC SF6

Emissions 472,359 903 3,607 2,304 7,958 421 9,414 338 907,074

2006 HMC Domestic Material Balance


Items Energy Water resources Raw materials Chemical substances Air pollutants Water pollutants Out put Reuse of water resources Finished cars Engines Wastes
*2006 Material Balance only includes national establishments

Figures 1,403,390 tons CO2 13,801,278 ton 364,590 ton 2,478 ton 844 ton 129 ton 586,188 ton 1,618,268 (Number of cars) 2,242,340 (Number of engines) 199,469 ton (Recycled: 156,895 ton)

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67

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Resource Circulation
HMC decreased the use of resources in its production factories and increased the recycling rate, minimizing the volume of waste to increase process efficiency. Also, for the recycling of waste, various activities are on going, such as recycling technology for paint waste sludge, VOD fuel technology and re-use strategies for molding sand waste.

Also, initiatives for decreasing sludge, which is produced during sewage treatment, and re-use technology for molding sand continue to be areas under development. As a result of these efforts, in 2006, the waste produced was 223,242 tons and about 78% was recycled.

Conservation of Water Resources


In 2006, water usage was 16,851,846 tons; usage per sales was 45.65 tons/100 million won, which is up 5.96% compared to the past year. The increase is a result of sprinklers installed on the roof of Ulsan factory to cool down radiant heat during the summer season. Therefore the recycled water is 1,177,000 ton, down 6% from the figure in 2005.

Waste Reduction
The types of waste produced in automobile factories includes paint waste, thinner waste, packaging material, such as, vinyl, paper, and lumber and molding sand waste used to produce engines. Since 2004, HMC has been collecting metal scrap and waste, which is managed separately from waste. HMC is striving to decrease its waste generation rates and improve its recycling rate by reusing packaging material and increasing waste storage efficiency.

Status of 2006 Waste Disposal


(unit : %)

Landfill: 4.0 Incineration: 12.8

Waste into sea: 4.9

Recycled: 78.3

Annual Water Resource Utilization Yearly Quantity of Waste Generated


(unit : ton) (unit: ton/100 million won) (unit: 1,000 ton) (unit: ton/100 million won)

20,000 18,000 16,000 14,000 12,000

60

600,000

2 1

40

400,000

20

200,000

10,000

2001
Waste per sales Total wastes Designated wates

2002 1.49 384,143 20,337

2003 1.80 478,473 24,493

2004 0.82 263,364 27,892

2005 0.65 223,155 26,690

2006 0.60 223,242 24,151


Usage of water resources per sales Water resources usage

2001 47 11,058

2002 44 11,280

2003 45 11,975

2004 45 14,447

2005 43 14,798

2006 46 16,852

1.51 355,220 20,893

Yearly Quantity of Water Resources Recycled Yearly Quantity of Waste Recycled


(unit : ton) (unit: 1,000 ton)

1,500 1,178 1,007 419,647 1,000 671 204,833


175,432

1,254

600,000 734

1,177

400,000

304,634

332,523 500 166,505

200,000 2001 2002 2003 2004

2005

2006

2001

2002

2003

2004

2005

2006

68

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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69

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Waste water discharge prevention system _ The Asan


factory recycles its own sewage and waste water for industrial water after treating it in a reverse osmosis system, instead of bringing in external industrial water. HMC built a waste water and sewage disposal center in 1996 to treat waste water produced from the Asan factory and sewage produced from nearby residential areas and the plant. The waste water discharge prevention system consists of waste water disposal steps and clean water procedures. In waster water disposal, physical, chemical, biological and filtration treatment is included and in the clean water procedures, there are chelate, micro filter, reverse osmosis, vaporization, concentration and drying treatments. Water treated in the purification phase is all recycled to be reused as industrial water and sludge; the byproduct of the purification phase is sent to a landfill. For water self-sufficiency, the Asan factory uses surface water naturally collected in a pipeline inside the site.

HMC has built pump systems and pipes to use surface water as a complementary water supply to the industrial water disposal center. HMC operates 100% self sufficient water supply systems and also sewage and waste water is treated through discharging prevention systems and is used as industrial water later. The disturbed mass balance problem was also solved by using surface water, and it also reduced the cost significantly.

Reduction of Pollutant Emissions


HMC has been minimizing the generation of pollutants by establishing much more strict company management standards on air and water pollutants generated during automobile manufacturing processes. In order to abide by such standards, HMC built and manages monitoring systems for pollutant emissions. HMC is reinforcing its management of contaminant emissions, and is striving to develop related technology and equipment

Air Pollutants
Air pollutants consist mainly of volatile organic compounds (VOCs), paint particles from painting procedures and dust in material plants that produce cast iron products. HMC set internal standards 10-30% higher than legal standards and minimized the production of air pollution material. In 2006, air pollution material has decreased 26.7% compared to the previous year and recorded 844tons reduction through process efficiency and clean energy use. The Ulsan factory has changed its cast iron procedure to a light alloy procedure and as a result, the emissions of air pollution material have decreased.

Electro-coating rinse water recycling system _ In vehicle painting, several steps of coating and cleaning procedures are needed. In cleaning procedures, to reduce the water resource usage and waste water production, HMC is investing significant effort. The second painting factory of Ulsan established a rinsewater recycling facility to reduce production of electro-coating rinsing water used in cleaning procedures. These efforts led to lower concentration of waste water and more recovery of electrocoat paints. Moreover, waste water generation was 33% less, down to 100l/min. from 150l/min.

investments to reduce the quantity of pollutant emissions. To process high-concentration, refractory wastes that may be too difficult to process in the existing disposal facilities, HMC is using efficiency and toxicity assessments of microbe treatments and making efforts in pollutant reduction through waste paint and sludge reduction.

Flow Chart of Water Pollution Prevention System

Management Standard of Air Pollution Material


Classification Sulfur oxides (SOx) Unit ppm Domestic legal standards 500(Other facilities, core) Company standards 150 Induction melting furnace: 3 Actual range of emissions 50~65 2~3 12~15 12~15 0.3~0.6 9~11 40~45

Sewage storage tank 2,000m2

Sewage setting tank 640m2

Sewage dissolved air flotation tank Second setting tank 1,250m2

Particulate Matter (PM)

mg/sm3

120

Cupola: 15 Other facilities: 30

Hydrogen chloride (HCl) Aeration tank 5,200m2 Carbon monoxide (CO) Nitrogen oxide (NOx)

ppm ppm ppm

6.0 (Smelting furnaces) 600 (Incinerator) 100 (Cupola)

1.2 50 30

Waste water storage tank 4,000m2

Dissolved air flotation tank

Penton oxidation tank

Waste water setting tank 640m2

*Due to the introduction of clean production processes in early 2006, the existing process (cupola) was shut down.

Chelate resin tower

Reverse osmosis raw water 4,000m2

Sand filter

3rd treatment water tank 920m2

3rd setting tank 1,250m2

Chemical oxidation tank

2nd treatment water tank 920m2

Yearly Generation of Air Pollutants (Domestic)


(unit : ton)

1,500 1,162 Micro filter 1st Reverse 2nd Reverse osmosis membrane osmosis membrane Producing water 1,800m2/d Outsourced Treatment 2001 Industrial water feed tank 4,000m2 2002 Evaporator Vaccum dryer Mechanical vapor Recompression system & Crystallizer Centrifugal seperator 1,000 1,160

1,363

1,262 1,151 844

500

2003

2004

2005

2006

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71

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Water Pollutants
Waste water is mainly produced from vehicle cleaning and paint dust collection procedures in paint plants, engine gear parts manufacturing as well as sewage effluent from company bathrooms. The Asan and India plants have introduced zero discharge systems and are run as clean production factories with no waste water generation. HMC is currently installing and running unified sewage/waste water disposal systems in all manufacturing factories; the Ulsan factory runs seven disposal units that process waste water, two unified sewage/waste water disposal units, and one waste water disposal system. HMC has set a goal of 10-50% improvement above legal regulations as its company standard regarding water pollutants. Contaminants are divided into several classifications for management: biochemical oxygen demand, chemical oxygen demand, suspended solids and mineral oil. In 2006, Korean water pollution substance emissions totaled 129 tons, down 33% compared to 2005. By treating the sewage water generated from private residences, leased apartments, and the dormitory of the Ulsan factory at the sewage treatment plant rather than at the factory, water pollution substances based on BOD, COD, SS, and n-H were much less than in 2005. Water Pollutant Management Standard
(unit : mg/l)

Volatile Organic Compounds (VOCs)


Volatile organic compounds (VOCs) are necessary in diluting paint and cleaning coating machines for effective vehicle painting.
Legal standards 90 80 80 5 Company standards 40 30 30 2

Classification COD BOD SS n-H

VOCs are essential in vehicle production, but due to their negative environmental and health effects VOCs emissions are regulated by law. In 2006, the domestic production of VOCs was 8,077 tons and the recovery rate of organic solvent was 37%. Until 2006, about 4% of solvent in electrodeposited coatings were applied in a lump, but by the beginning of 2007, it was applied separately at 10% and 4%.

Yearly Quantity of VOC Generated (Domestic)


(unit : ton) (unit : kg/car)

25,000 20,000 15,000 10,000 5,000 2001 VOC generation peracar VOC generation 8.4 12,767 2002 7.7 13,135 2003 8.1 13,278 2004 5.9 9,956 2005 6.1 10,289 2006 5.0 8,077

10 6 2

Yearly Recovery Status of Organic Solvent (Domestic) Yearly Quantity of Water Pollutants Generated(Domestic)
(unit : ton) (unit: 1,000 ton) (unit : %)

5,000 205 187 184 154 129 Recovery rate of organic solvent 2001 2002 2003 2004 2005 2006 Amount of recovered organic solvent 193

40 30 20

210 190 170 150 130 110

3,000

1,000 2001 27 2,321 2002 34 3,336 2003 29 2,685 2004 31 3,002 2005 37 3,705 2006 37 3,439

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

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73

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Use of Water-Soluble Paints _ To lessen the use of VOCs,


HMC is replacing oil-soluble paints with water-soluble paints. Largely, paints for vehicles consist of 4 materials (resin, pigment, solvent and additives) and depending on the solvent, there are two types of paint; oil based paint and water soluble one. Water soluble paints use pure water as a solvent and are environmentally friendly paints. Since 2002, environmental regulations have been reinforced in Europe and US to regulate automobile importation, especially those that emit VOCs (Volatile Organic Compound). To manage such regulations, HMC replaced the organic paints it previously used with water-soluble paints, greatly decreasing the quantity(g) of organic solvent used per coating area(m2) of an automobile and the quantity of VOCs discharged into the atmosphere during the coating process by utilizing booths. Currently, the factories in Asan, Korea and Alabama, in the US are utilizing such water-soluble paints, and the rest of HMCs domestic factories will switch over during 2007. To eliminate VOCs emissions during the paint process, RTOs (Regenerative Thermal Oxidizer) are being installed throughout all domestic factories and will be completed by 2008. Regenerative Thermal Oxidizers use high temperatures (820) in a Particulate Matter Treatment Machine to reduce the energy usage.

Other Hazardous Materials


Hazardous material refers to chemical substances harmful to the human body and the global environment and includes toxic and other chemical substances. Throughout many advanced nations, chemical substance-related regulations are currently being reinforced and becoming a pressing issue in corporate exports and international trading. In 2003, the EU announced the draft of the REACH* regulation, and it was enacted in June 2007. Once the REACH ordinance was enforced, those enterprises exporting chemical substances and products that contain chemical substances to EU nations must fully comply with the regulation, including the pre-registration and formal registration processes. HMC has retained an internal expert to oversee hazardous material supervision, including sodium hydroxide, sulfuric acid, nitric acid, and hydrochloric acid. In 2006, the quantity of hazardous materials used domestically by HMC was 2,478 tons; the figure has increased by 12% since the year before due to the newly-implemented thermo-mechanical processing in increased engine production and the use of water-soluble paints. HMC, through toxicity inspections, has suppressed the use of hazardous chemical substances and strengthened the management of those substances with the introduction of the computer system, i-ESH. Also, HMC built a strict monitoring system to comply with the Montreal protocol, which regulates the use of ozone depletes (such as chlorofluorocarbon, halon) and that prohibits the use of those materials in all production processes of HMC and its suppliers.

Yearly Consumption of Hazardous Chemical Substances (Domestic)


(unit : ton)

12,000 10,000 8,000 6,000 4,000 2,000 2001 2002 7,426 9,350

10,062

2,828

2,191

2,478

2003

2004

2005

2006

Purchase System of New Chemical Product

HMC
Set MSDS standard & provide feedback

Safety & Health Team

Picture of RTO heat recovery

HMC is also implementing a methodical management system for hazardous materials generated inside the factories and reduction technology for a cleaner work environment.
Clean Air

Purchasing
Check compliance

Sites
Provide MSDS to users, Educate

Currently, HMC is developing assessment techniques for measuring and estimating the harmfulness of chemical substances, and is constructing pre-assessment and precautionary systems
*MSDS( Material Safety Data Sheets)

Oven Gas

for hazardous materials. HMC also is implementing various research initiatives to establish an atmosphere management process inside and outside its manufacturing processes by building reduction technology for hazardous materials generated during the manufacturing processes, developing a model of pollutants in the atmosphere, and conVOC, Stench Oxidation CO2, H2O

structing a design support system for ventilation equipment.


*REACHC(Registration, Evaluation, Authorization and Restriction of Chemicals)

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Procurement Production Research Centers

Global

Environmental Cost
HMC calculates the environmental costs of three domestic plants (Ulsan, Asan, and Jeonju) and breaks them down into five items stated below every year. Major environmental costs are broken down into the direct cost of environmental pollution reduction that is associated directly with environmental facilities and equipment, the indirect cost of environmental pollution reduction that is spent for environmental education for employees and environmental activities, the environment risk management cost for legal compliance, disposal and recycling for consigned waste treatment and waste recycling, and lastly, the social environmental activity cost for local environmental campaigns and green area management. The environmental cost in 2006 was KRW 39.6 billion, and the recycling profit derived from disposing wastes totaled KRW 2.6 billion.

Ulsan Plant
The Ulsan factory, composed of five independent factories and equipment on a campus of 5,220,000m2, with annual production capacity of 1,620,000 vehicles, is the main operation of HMC. HMC has upheld its investments and efforts in environmental management activities and is recognized by the government and regional communities as an environmentally outstanding enterprise. At the 11th Annual Environment Day Commemoration and Green Ulsan21 One-Mind-for-the-Environment Event in 2006, the Ulsan factory was awarded official commendation from the mayor of Ulsan. The factory was recognized for its participation, from 2003 to 2005, in an Environmental Mileage System and Natural Environment Preservation Project enforced by the city of Ulsan for environmental management. Also in 2005, the Ulsan plant was awarded an Ulsan Environmental Management Award, which is considered the most preeminent award jointly given by the Public Prosecutions Administration and City Hall of Ulsan. The Ulsan factory will continue to push forward to establish itself as an environmental friendly global plant.

Total Domestic Environmental Cost


Classification Environmental Cost Main Items Direct cost of environment pollution reduction Indirect cost of environment pollution reduction Management cost of environmental risk management cost Disposal and recycling cost Social environmental activity cost Total Environmental Profit Profit from recycling (Profit from waste disposal) Total Amount (unit : 1,000 won) 14,133,984 12,707,914 184,151 8,738,127 3,872,553 39,636,728 2,580,202
Satellite Photograph of Ulsan Factory

Awards and Certifications


Environmentally Friendly Company: Ministry of Environment, 1988 ISO 14001 Certification : TUV-KOREA, 1995 Ulsan Environmental Management Grand Prize : Ulsan city, Ulsan Prosecutors Office, 2005 Commendation by the Mayor of Ulsan (2006, Ulsan)

ISO 14001(International Organization for Standardization 14001)


To build environment management and clean production systems, HMC is encouraging domestic and overseas businesses to acquire ISO 14001 certification.
Received the Ulsan Environmental Management Award(2005) Commendation by the Mayor of Ulsan(2006.6)

Leading Local Environment Protection Activities


ISO 14001 certificates of Ulsan plant, H.Q, Namyang research center and A/S center and ISO 14001 certificate of Asan plant

Resource Restoration Project at Taehwa River


Since 2005, HMC making progress in the Ecological Resource Restoration Project at Taehwa River of Ulsan, in cooperation with the city of Ulsan. This project aims to bring about environmental and ecological abundance to Ulsan, a typical industrial city of

Status of ISO 14001 Certificate


Business Facility Ulsan plant (inc. H.Q, Namyang research center, A/S center) Asan plant Jeonju plant India plant Turkey plant China plant Date of Cert. 1995. 12 1998. 4 1999. 5 2003. 3 2003. 7 2006 Certification body TUV-KOREA TUV-KOREA TUV-KOREA TUV-INDIA TSE China Certification Center, Inc.

Korea, where the protection of the environment was surpassed by the priority of motivating the development of national economy during industrialization, by approaching the ecological damage with basic solutions, such as expansion of biological diversity. As the primary chapter of this initiative, HMC initiated the Sericinus montela Restoration Project in 2005. The project began its restoration activities in March 2005 and has progressed with the goal of fashioning and permanently preserving natural habitats in six locations across the Ulsan district until the end of 2007. To this effect, the Ulsan plant of HMC has been promoting numerous projects and events including cultivation of feed plants (Aristolochia contorta Bunge), Sericinus montela releasing events, holding eco-school, and more. Currently, most of the restoration procedures have been completed, enabling observation of Sericinus montelas in a number of locations, including the ecoparks at Taehwa River(2 zones), Cheokgwa Stream zone, Moonsu Sports Park, Huiya Dam zone, and Daegok region.

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On the other hand, the Ulsan Plant which successfully promoted the restoration project for Sericinus montelas, commenced its Sericinus Montela Gray Restoration Process secondary stage of project in 2007, restoration of the natural ecology of the Taehwa River. In this stage, the Korean Rose Bitterlings (Slender bitterlings) and Freshwater Chinese Mitten Crabs will be restored during the three years from 2007 to 2009,
1st year Massive plantation of feeding plants (Mar. 05~Mar. 06) 2nd year Relocation and development of feeding plants (Apr. 06 ~ Dec. 06) 3rd year Population of sericinus montela gray (Jan. 07~Dec. 07) 4th year Assessment of sustainability of the habitat (Jul. 07~Apr. 08)

and Pontia daplidices will be restored by 2010. For smooth development of the project, HMC will be in charge of the restoration techniques and all incurred costs, and the city of Ulsan has agreed to provide policy-oriented support, such as offering the land. If these organisms are restored, other creatures will be restored by symbiosis and design, significantly improving the diversity of species of the Taehwa River.

Sericinus montela Gray larva foodplant (Aristolochia Contorta Bunge)

Sericinusmontela Gray (female)

Pontia Daplidice

Freshwater Chinese Mitten Crabs

Restoring Freshwater Chinese Mitten Crabs Habitat

Korean Rose Bitterlings

Marsh Protection Activities


The Ulsan Plant is implementing periodic purifying activities and consistently monitoring and protecting the nearby Hwa-um
Taewha-dong zone A Cheokgwa stream zone

swamp to protect the natural environment. The conference of the parties to the Ramsa Convention will be held in Korea in 2008; these efforts are imported with an accordingly significant meaning.

Taewha-dong zone B

Completion of Sericinus montela gray restoration

Samho islet zone

Moonsu park

Huiya dam zone

Sericinus montela can be seen throughout the year except winter. Their movements are supple as they fly over the plains or grass land as if they are sliding. They seem to have extremely docile dispositions, similar to the national characteristics of our people, hence it had been discussed by butterfly experts to name them as our national butterfly.

Hwa-um swamp and wet land conversation activity

Protecting Historic Relics


Along with the natural environment preservation activities, four cultural assets in the Ulsan region were selected for periodic purification and preservation activities as a part of the Ulsan Plants effort to contribute to the local community.

Event held in the eco-school

Yoopo signal-fire launcher, Mt.Uga

Kangdong Hwaeum columnar joint

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Reduction Increased Green Clean

Procurement Production Research Centers

Procurement Production Research Centers

Global

Global

Global Research Centers


Europe
Technical Research Center, i30 - First semi-middle size hatchback style vehicle strategically designed for Europe
The i30 is the first vehicle strategically developed for European market. With intention to penetrate the C-segment(semi- middle size vehicle), the largest automobile market of the Europe, it was developed with the collaboration of HMETC, the Europe technical center and the Namyang research center from the product planning stage. The Europe design center had developed the Anez, the concept car of i30, and after its first introduction at the 2006 International Motor Show in Paris, HMETC closely analyzed the vehicles of European car makers and conducted various improvement activities and performance test to achieve European style driving performance, drivability, and product quality. The success in the European market, the home of automobiles, depends not only on the undying spirit of HMC but on the embracement of understanding and accepting various cultures. insisted Hans Ullrich Gobel, senior engineer of the HMETC. He also added that if we carefully approach the market with understanding and embracement of different cultures and values of customers, we can create a miracle in Europe that will surprise the world again. The i30 is also schedule to be produced in the Czech plant once the construction is competed in March, 2009. provided much freedom to the possibility of vehicle design and caused no problem in meeting the relevant safety and environment regulations. In result, QarmaQ was born with the combination of future design and new technology. said Thomas Burkle, chief designer of European research center, who participated in the QarmaQ project.
QarmaQ, the concept car adopting the state of the art material

Japan
Technical Research Center, New Electronic Technology Exhibition
In November 2006, for the first time the Japan technical center held a seminar on new technologies in electronics along with an electronics exhibition at the Namyang research center. Developing prototype products relevant to the seminar themes and having them presented by the developers in the exhibition, the researchers at the Namyang research center were given the opportunity of personally experience, raising interest and understanding of the electronics field. The new technologies in the exhibition were mostly visual and detection systems such as electronic frontal display clusters using wide and large TFT panels, and pedestrian detection systems that warn or control the driver and vehicle by detecting pedestrian/obstacles through imaging process.

environment, and proactive environmental technologies. These conferences consisted of the relevant areas such as overseas corporations and research centers, domestic planning, factories, purchasing and research centers. In the first conference held at the Europe technical center in May 2006, discussion was made on the current issues such as responding to major environmental issues, enhancing brand image, and remanufacturing projects. The issues such as methods of disclosing environmental information, the global environmental standards on hazardous materials and establishing the responding process to the standards were discussed at the 2nd conference held at the Namyang research center in November. Also, HMC hosted an environmental forum to facilitate prompt sharing of the information newly set forth at the environmental conferences and consultation with external specialists in responding the environmental issues. The environmental forum was a great success with the participation of around 250 local and international environmental specialists in discussing biofuels

Establishment of a Global Network USA


Technical Center, NF Sonata Facelift-Adopting advanced technologies and reflecting local trends
With Intensive collaboration between HATCI, American Technology Center, and Namyang R&D center since 2005, the new NF Sonata facelift was developed to reflect the tastes of North American consumers. To identify the on-site requirements of the consumers and incorporate them in the product, HATCI participated in the development of the NF Sonata facelift from the

which is drawing great interest as alternative fuels for vehicle along with skyrocketing price of oil. Approximately 130 partici-

Regular Conference on Responding to Global Environmental Issues


HMC conducted regular conferences of the environmental mangers from all around the world for exchanging information and discussing on responses to the global environmental issues such as ELV laws, recycling, climate change conventions, factory

pants including employees of over 50 partner companies agreed with the fact that environmental issues were no longer limited to certain ecosystem, but greatly affecting corporate activities and daily life of mankind. HMC is enhancing the employees understanding of the numerous environmental issues such as climate change, alternative fuels, and depletion of natural resources. To

Design Center, The state of the art concept car HED-4(QarmaQ)-Developed jointly with GE Plastics The QarmaQ, a futuristic concept car that overcomes the boundaries of common sense in terms of product design and external appearance
The QarmaQ, revealed at the 2007 Geneva motor show, is a state of the art concept car utilizing new materials developed jointly by the Europe design center and GE Plastics. The vehicle is special as it adopted more than 30 state of the art technologies on new material, which made it more economic and environmentally friendly as significant portions of the vehicle can be recycled upon dismantling. Also the use of various state of the art materials resulted in more than 60kg weight reduction, significant improvement of fuel consumption and greenhouse gas emission, which is the harmony of futuristic design and new technologies. Various feature of GEs high technology material

stage of producing the prototype vehicle and it conducted tests at different stages of development taking into consideration of US road conditions. Also, to guarantee the highest level of quality, the mass production was prepared from the test production stage under the close cooperation of the Alabama factory and Asan factory.

Design Center, HCD Series


The Hyundai California Design Center began producing HCD series concept cars since 1992. The design center has produced a total of 10 concept cars so far, including the HCD(Helion) introduced at the LA motor show in 2006. It combined the multi-purpose feature of SUVs with futuristic coupe designs. Among these, the HCD-2(Tiburon) and HCD-4(Santa Fe) turned out to be the actual mass produced models.

New Electronics Technology Exhibition of the Japan Technical Center

2nd Environment Conference (Namyang Research Center)

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Efforts

to Minimize Climate Change of Gas Emissions Recyclability

Reduction Increased Green Clean

Procurement Production Research Centers

Global

facilitate systematic responses to ever strengthening global environmental regulations, it is establishing global environmental standards on the current environmental regulations covering different regions and countries. In the future, to establish the integrated framework for the response of the global network including Korea, HMC also plans to expand the conferences and the workshops where global representatives can share their best practice freely. The Eco Technology Research Team aims to enhance the environmentally friendly qualities of automobiles to help eliminate environmental impacts and conducts various research and development projects for environmental technologies to help create a sustainable mobility. They depart from the passive way of thinking - of simply decreasing the amount pollutants created and conduct research with an active state of mind and a will to prevent pollution proactively throughout the entire life cycle of the automobile, from cradle to grave (planning, design, production, transportation, use, disposal).

Eco Technology Research Institute, Eco Technology Research Team

Technological Exchange of Overseas Research Centers


With rapid globalization of the business, HMC has been holding technological exchange sessions for local researchers of overseas research centers since 2006. The sessions are providing local researchers with opportunities to share opinions about the recent trends on research, which emphasize the importance of locally specialized technology development and technologies related to international environmental and certification regulations. In 2006, specialists of each field from the technical centers in the US, Europe, and Japan participated and presented a total of 70 research papers. The research paper Development of U 1.6 l Engine for Euro 5 by Jurgen Grimm, Senior Engineer of HMETC, led an active discussion by participants and was specially awarded in the Research Paper Contest. Also, the sessions provided an opportunity for the participants to visit the Seoul headquarter, the Asan plant production site, and Namyang research center, which are equipped with the latest facilities. They were also provided with an opportunity to experience Korean culture.

The main tasks of the team consist of minimizing pollution in all stages of automobile production and use in response to global environmental regulations, and leading the field of automobile-related environmental technologies. The team conducts, for example, LCA (Life Cycle Assessment) to help development of environmentally friendly vehicles, cleaner production technologies, technologies related to climate change, and recycling technologies for parts and materials.

Technical Exchange of Overseas Research Centers

Eco-Technology Research Institute Overview

Air, Water Treatment Experiment Lab

INTERVIEW
We got off to a shaky start but by the end the whole group was playing the Janggu Korean Drum in decent harmony, and the fact that we were all from different cultures seemed unimportant. Ironically, the activity made everyone feel more like a family! -Mark Ohashi Engineer Manager, Vehicle Evaluation, Body Trim (HATCI)Evaluating the Environmental Assessments of Vehicles At the Vehicle Dismantling Lab

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People & Society

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Companion

Customer-First Social

Contribution, Center of the Sustainable World

The Road to Growth, with All Stakeholders


HMC does not concentrate only in its fundamental task of profit-making. We also fulfill our Corporate Citizenship role and responsibility to realize a sustainable society. As a leading company of the automobile industry, which has a large ripple effect on the whole economy, HMC considers every interested group worldwide that is related to the complete value chain as an interested party. As it is represented by the Hyundai Motor Groups slogan on social contribution, the world moved together, the goal of HMC is to advance the betterment of the world with all interested parties.

Communication with HMCs Stakeholders

Customers

profit, reputation brand loyalty

pro v b isio infr usin n of ast ess ruc tur e

Regional community

Employees
product service
, tion ca du y, e re lar welfa sa

n ma hu urces o res

ing ply com ons , t en ulati ym pa reg tax with

eco nom job y vita cre liza atio tion , n

pro fit

nd pa s g u olicie n i p w dra suing r pu

co m p on en ts

Government

Shareholders and Investors

HMC is striving to promote the values of sustainability through organic harmony and cooperation with all stakeholders.

capital, asset

profit and growth

Suppliers

THE ROAD TO SUSTAINABILITY

85

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Core Growth Engine of Corporate Vision - Employees


HMC considers its employees as the core growth engine that creates the future value of the company and does not spare effort in investment, from employee selection to development. HMC has developed an impartial HR policy of trust-based, and transparent management, while also offering training programs and varied development systems designed to optimize the capability of individual employees. To this end, the employees of HMC are striving to carry out their tasks, offering innovative ideas for company development, and earnestly committing themselves to the creation of an ideal corporate culture, where people and company become one through two-way communication.

Respecting Employee Diversity


Global mindset promoted by organizational diversity _
As the movement into overseas markets expands with the acceleration of global management, HMC is stepping up to hire an increased number of local employees at international business sites. As of December 2006, the total number of Korean employees is 19,781, representing 26.5% of HMCs entire workforce. HMC provides equal opportunity to employees everywhere in the world without discriminating due to nationality, ethnicity, culture or religion, and is contributing to regional economies by expand-

Human Rights Protection


HMC officially announced its commitment to respect the individual human rights of employees through establishment and declaration of the Charter of Ethics, enacted in 2001, and operates a variety of human rights protection programs for employees. Moreover, the company operates the Complaint Settlement Committee and the Complaint Settlement Consulting Center to ensure that employees complaints are handled immediately and fairly.

Employee Status
Number of Employees
As of December 2006, there were 74,760 employees working at key business sites of HMC, Korean and overseas combined. HMC is striving to create employment every year and contribute to stabilizing employment, in Korea and internationally.

ing local employment.

Viable Workplace Devoid of Discrimination and Open to Many Opportunities


HMC works under the philosophy of rejecting all discriminatory practices when it comes to human resource management including hiring, staffing, evaluation, education, and promotion, so that employees will not be discriminated against based on their ethnicity, age, religion, gender, or region. Hiring of new employees is based on the open hiring policy, and all hiring processes are conducted fairly based on HMCs hiring manual and judgment criteria. New employees are placed in different departments through sufficient consultation carried out during training, while evalua-

Expanding and encouraging womens social participation _ The ratio of female employees to the total workforce
at HMC in Korea is at 4%, with 2,236 female employees as of 2007. HMC is stepping up its effort to hire more women, and to establish structured initiatives that will improve their working conditions. Likewise, the company offers women daily leave every month, 90-day pre-/post-natal leave, and a childcare center (HMC Childrens Center at the Ulsan Plant).

Forum of harmony and bonding _ To promote Korean


Number of Employees (Domestic)
(unit: number of Persons)

tion, compensation and promotion based on their individual performance is carried out transparently and fairly according to the internal evaluation criteria and regulations. All types of discriminatory practices in human resources management are prohibited.

corporate culture and strengthen our network, HMC hosted the Hyundai Convention from September to October 2006, inviting international dealers to network with each other. The participants
54,440 54,973

60,000 48,831 50,000 49,993

51,597

53,218

spent five days in Seoul, sharing their companies mid- and longterm business strategies with one another. They also provided with the opportunity to experience and understand Korean culture, through a trip to Jeju Island and a number of other destina-

Operation of Special Human Rights Protection Agencies


HMC protects employee human rights by operating special agencies. With the Cyber Monitoring Center and Workplace Violation Reporting Center, the company ensures that the

40,000 2001 2002 2003 2004 2005 2006

tions. HMC is planning to continue implementation of related programs in the future.

Number of Local Employees, by Job Category


(unit: number of employees)

Number of Overseas Employees, by Region


(unit: number of employees)

Number of Female Employees (Domestic)


Others : 285 Sales : 6,407 2,500 R&D: 5,725 Production/ Maintenance : 31,553 Asia : 8,597 America : 8,724 2,000 2,178 2,178 General administration : 11,003
(unit: number of female employees)

EMEA* : 2,466 2,229 2,193 2,230 2,235

1,500 Total : 54,973 Total : 19,781


*EMEA : Europe, Middle East and Africa

2001

2002

2003

2004

2005

2006

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

employees can receive advice on ethical judgments they may be required to make during work. In addition, the HMC operates a Sexual Harassment Consulting Center to comply with the regulations that prohibit sexual harassment in the workplace, provided by Equal Employment Law, and to create a healthy and viable working environment. At the same time, the company provides training in the prevention of sexual harassment to all employees.

Eliminating Child and Forced Labor


HMC complies with the applicable labor laws of the respective nations it operates in. The company prohibits child labor, and does not hire under the minimum age defined by each nation. Moreover, all HMC workers are employed at their own will, while employment and compensation for all employees service rendered at business sites are conducted fairly based on employment guidelines set for each business site and the relevant laws

Systematic Management
Realizing disaster-free plant operation through preventive education and pre-evaluation _ HMC conducts a
variety of training programs to share information pertaining to the environment, safety and health with employees and to increase awareness. The Ulsan Plant operates a hotline and the 24-hour monitoring center to respond to accidents, such as in-house fires and other disasters, as immediately as possible, thereby minimizing loss and damage. In March 2006, HMC conducted a safety campaign at the front gates of its five plants to promote safety

safety day campaign, actively engaging in efforts to conduct various training programs that help employees effectively prevent and respond to all types of accidents, and fires. Through such endeavors, HMC is actively seeking ways to minimize losses in human resources and productivity.

Operation of industrial safety and health center _ The


Ulsan Plant provides physical check-up services, including diagnosis, treatment and prevention of illnesses that frequently afflict employees and workers of HMC and its suppliers, to contribute to the soundness and improvement of employee health through early detection and treatment of illnesses. The Industrial Safety and Health Center provides free check-up and one-stop medical service. Workers also benefit from systematic health management based on information technology and receive high-quality medical services from state-of-the-art medical facilities and medical experts equipped to effectively handle emergencies or new disease types. In 2006, 105,462 employees of HMC and its partners received medical treatment from the Industrial Safety and Health Center.

Guarantee to Employees on Forming a Representative Body


HMC guarantees rights to the formation of labor unions and other necessary bodies that represent employees, in accordance with pertinent domestic and international labor laws. In Korea, the HMC Labor Union is formed based on the Labor Standard Law, the Labor Union Law, and the collective agreement with the labor union. In international sites, HMI Labor Council and BHMC Assembly are operating as the representative bodies for employees.

of respective nations.

Industrial Safety and Health


HMC operates an Industrial Safety and Health committee, which consists of 7 people each from the management and the union. One periodic meeting is scheduled every quarter, but meetings are held as needed to discuss and deal with any case of emergency or urgency pertaining to industrial safety and health issues.

awareness among employees. HMCs Asan plant reduces risk through its working environment assessments conducted twice per year, establishes and implements safety inspections by setting up monthly safety themes aimed at ensuring a disaster-free plant, and focuses on securing the safety of workers and eliminating hazard factors at the worksite. The Asan Plant also implements autonomous safety management activities and special

Empowering and Respecting Employees at Overseas Sites


HMC respects the opinion of the local workforce at overseas business sites and reflect these opinions in managements decision-making process. The decision-making committee for the BHMC has appointed a local director. For overseas technology R&D centers, where most of the personnel consist of the local workforce under the local recruiting principle, their participation in management is indeed very active.

i-ESH, an Integrated System for Environmental Safety and Health


The i-ESH system, which is accessed via the HMC Intranet, contains vast information on environmental safety and sanitation pertaining to the Ulsan, Asan and Jeonju plants. The recorded information is organized into statistical data of diverse formats and used by the employees working in related areas. The system also allows employees to easily access information related to environment safety and sanitation, by providing them with information related to all types of regulations and technology standards and with educational materials.

training on industrial safety in order to provide opportunities for employees to obtain relevant information and develop their expertise on a given task. In 2006, Jeonju Plant held a monthly

Rate of Yearly Industrial Disasters


(unit: %)

3.0

2.0

1.0

i-ESH system
National average, Manufacturing sector HMC standard information waste management environment objectives toxic material management training on the environment air management emergency procedures soil management environment examination partners water purity inspection general environment standard information hazardous work safety objectives partners facilities emergency procedures process safety information accident/ industrial disaster

2002 1.22

2003 1.42

2004 1.28

2005 1.28

2006 1.14

1.06

2.20

2.86

1.64

1.74

Environ me nt

t emen nag Ma

Safe ty M a
t men ge na

Diagnosis Status by Year


(unit: number of people)

Classification HMC employees Insurance Non-insurance Subtotal common management environmental management safety management health (sanitation) management Partners Insurance Non-insurance Subtotal Total

2004 68,898 32,507 101,405 4,044 626 4,670 106,075

2005 72,679 32,978 105,657 8,372 579 8,951 114,608

2006 69,766 27,047 96,813 8,236 413 8,649 105,462

2007.10 56,628 20,692 77,320 5,801 379 6,180 83,500

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

tion ma or nf

Heal th M a

standard information training on health (sanitation) emissions facilities equipment management work environment measurement protection zone information musculoskeletal system information on health (sanitation) hazard chemical substance

t men ge na

i-ESH SYSTEM

Statis tic sI

THE ROAD TO SUSTAINABILITY

89

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Post- Treatment Management Status by Year


(unit: number of people)

Support on Diversified Education Aimed to Foster Capacity


2004 2005 1,685 4,600 3,133 1,660 11,078 2006 2,545 5,480 3,900 1,938 13,863 2007.10 1,909 5,032 4,079 1,571 12,591 Total 7,071 16,924 12,458 6,099 42,552

management system, HMC is spurring the development of professional human resources, dedicating its efforts to establishing a global standard of talents and disseminating such standards. In order to develop comprehensive management capability and strengthen the expertise of its human resources, HMC is operating a specialized global expert course, targeting specific areas of production, including the HR organization, R&D and so forth. In 2006, such areas of production management, marketing and financial accounting were added to the global expert course, further specifying the target areas and significantly increasing the number of students. To aid establishment of the global management system, training systems in overseas branches and HR development strategies have also been improved.

Classification Post-treatment management status by disease type Hyperlipemia High blood pressure Diabetes Liver related disease Statistics No. of cases Accumulated number of people New Consultations

HMC is poised to grow into a world-class automaker, driven by the outstanding performance of its highly qualified employees from diverse backgrounds. This is made possible by the varied and appropriate training opportunities offered by the corporation that foster individual capacities and is driven by the continuous efforts made by each employee. To identify and foster competent human resources who will develop into future growth engines,

1,693 3,888 3,040 1,576 10,197

1,517 392

1,609 530

2,296 378

1,945 260

7,080 1,489

HMC is carrying out a number of activities pertinent to the principles formulated for human resource development, which are: dissemination of organizational culture, vitalization of global education, reinforcement of education for management leaders and area experts, and the establishment of a capacity-oriented edu-

Human Resource Development

cational course.

Training management leaders _ Through a group-level


training course for directors in 2007, HMC conducted education on the role of management and strengthening of individual capacities. Also, with the addition of a financial accounting course, 122 directors including the Vice President have shared information and knowledge on securing sustainability through the maximization of profitability. Meanwhile, six managerial capacity development courses for directors have also contributed to the improvement of the directors managerial skills.

Hosting of the human resource development seminar _


Education Vision
Dissemination of corporate culture We strive to develop and foster competent employee human resources who can optimize the motor groups management performance.

As its global management accelerates, HMC is providing education at headquarters and local sites to the employees hired in international branches, helping them understand HMCs corporate culture and spirit. Also, in Korea, the HRD (Human Resource Development) seminar was held to facilitate information exchange through the formation of human networks and to reinforce expertise and competence in area group education (HRD). During the year, four HRD seminars were held to share the best practice cases of the motor group and to expand on-site application of these cases.

Mission Training objectives for 2006


1. Sharing and disseminating the motor groups unique corporate culture and management principles 2. Fostering core talents with superlative competence in their respective areas of expertise 3. Developing and operating a human resource development system that supports a management strategy flexible to environmental changes

Vitalization of global training

Establishment of a capacity-oriented education course

Establishing capacity-oriented educational courses _


A previously developed capacity model is used as the basis for HMCs HR practices, including hiring and evaluation, while a capacity-oriented educational system and courses completed in

Vitalization of global education _ To establish a global

2006 are also delivered to employees. HMC considers the indis-

Training for management leaders

Ideal employee of HMC


Challenging spirit Creativity Passion Cooperation Global mindset

Core Capacity Training A common module that synthesizes five core capacities + In-depth / specialized modules for each rank

Common Modules
Spirit ing ng

In-depth Modules

Ch all e

Cre ati v
ity

General Manager Assistant General Manager

Global Mind Cooperation Passion Creativity Challenge

indset al M ob Gl

Qualified employees of HMC

Like automobiles, in which more than 20,000 parts must play their roles without even the slightest

Core Competency

Manager
passi on

error, HMC can accomplish its mission only when talented individuals in their various departments such as engineering, production, marketing, and design carry out their role precisely. HMC employees achieve their goal by not giving up when faced with adversities, but by overcoming them through cooperation with partners.

Assistant Manager Rank-and-File

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HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

Cooperation
THE ROAD TO SUSTAINABILITY

91

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

pensable employee capacities as core capacity, leadership capacity, and job capacity; differentiated training programs are developed for each rank and level. Meanwhile, department heads evaluate the capacity level of individuals, separate from the performance evaluation conducted every year. The results of the evaluation are shared with each employee during consultation, so that he or she can develop their own self-development plan (IDP). HMC provides a variety of in-house and outsourced education programs to employees to help them improve any lack of capacity identified.

During the job fairs, senior staff members who graduated from international universities provided the students with in-depth counseling and advice related to their employment.

a mentor system in 2006, so that senior employees can help new employees adapt more quickly and easily to the organization. Education on social contribution is designed to let new employees take the initiative in developing and implementing action

of employees subject to application of the collective agreement concluded in 2007 is 93.3% (43,987 union members out of 55,976 total employees). HMC will strictly observe the agreement. Should critical changes be made by management that may affect the status of employment, such as expansion of business, merger and acquisition, or plant transfer, HMC will notify the labor union

Employee Training Status


Employee training status _ In 2006, HMC invested a total
of 14 billion Won in employee training, realizing an average of 65 hours of training per employee. Training at international production plants, in line with the expanding global management, is conducted in conformity with the legal educational requirements of the country and local conditions.

plans, thereby encouraging spontaneous involvement.

Building Trust
Establishing a Culture of Trust and Mutual Profit between Management and the Union
HMC wants to relieve the anxiety between labor and management, which may derive from the unique characteristics of the

90 days prior to such changes. HMC will continuously make efforts to create a culture between labor and management that is reliable and mutually beneficial.

Securing Competent Human Resources Internationally


To actively respond to global market changes, HMC has hired employees from institutions of higher education in the US, EU and other renowned international universities since 2002. From FEB 27th to MAR 10th 2006, HMC held job fairs at nine major universities in the US, while also visiting European universities.

Fostering Ideas to Build on Corporate Competence


CAP (Communication Action Performance) meeting of the R&D Headquarters _ HMCs R&D Headquarters has
been executing CAP meetings since 2005, in order to establish a culture of spontaneous involvement, cooperative organization, and creative development. The meeting is a stage of active conversation in which various ideas of both management and the employees are discussed and practiced in an effort to change and improve the R&D area. During 2006, 73 suggestions in 52 agenda areas were adopted for improvement activities. In December 2006, the director of R&D Headquarters hosted a meeting to share the successful implementation of CAP meet-

Training for new employees _ HMC conducted orientation


and training for the new employees, hired in the first and second half of 2006, and the 165 employees hired in 2007. The 6-week education comprises theoretical and empirical education, which help new employees understand the groups management principles and adapt to the organization. In particular, HMC adopted

auto industry, and to motivate employees to produce the worlds best quality automobiles. In this effort, HMC is striving to realize a site-oriented management approach based on trust and understanding with employees. During 2006-2007, HMC has been making efforts to achieve a productive labor-management relationship and to stabilize site management by actualizing vigorous worksite culture and family-oriented personnel management. These efforts have finally come to fruition, and in 2007, labor and

Employee Training Status in 2006


Classification Number of trainees (number of people) 246 10,444 5,616 29,065 6,414 2,404 54,189 Total education time by education type Basic capacity 16,618 751,594 145,318 398,769 72,176 50,613 484,575 1,919,663 Job capacity 7,568 411,561 395,376 182,984 34,852 109,347 346,977 1,488,665 Core capacity 2,276 69,314 19,088 2,176 92,854 108 118 100 20 17 67 65 Average time of education per person

management reached an agreement without suffering a casually repeated dispute by each yielding a step and committing themselves to improving product quality and promoting sales. The ratio

executives general administration R&D production sales maintenanc others Total

Ideas Invited in 2006, by Business Sites


Classification Public subscription Corporation-wide special subscription for outstanding improvement suggestions R&D HQs Ulsan Plant special subscription for outstanding improvement suggestions operation of immediate improvement system Asan Plant public subscription for idea on making outstanding workplace (93 cases) operation of immediate improvement system Jeonju Plant Subscription for outstanding ideas operation of immediate improvement system Production and Purchasing HQs

Exhibitions

Focal Points of New Employee Education


Classification Increasing basic capacity Main Program Workplace manners Planning / Presentation Change and Innovation Social Contribution Inspiring the pride of a HMC member Field trip : understanding the position of Hyundai Motors Group in Korean and international auto market GWP Activities : admission / graduation ceremonies for new employees spectate at professional baseball game / cultural lectures Reinforcing mental power and teamwork Extreme physical training Marine Corps training
*GWP : Great Work Place

CAP meeting (1,000 participants to date) R&D on competitors vehicles new technology exhibitions exhibitions on outstanding inventions award for employees holding patents (55 people) CAD competition competition on the presentation of research papers

Purchasing HQs - exhibitions on outstanding suggestion cases

Presentations

presentation by quality subcommittee evaluation of field management

Presentation on field management cases

Competition at the Asan Plants sub committee presentation

hosting of competition for presentation on suggestions

Production and Development HQs - competition for new Rank-and-File employees presentation on their reports (120 people) Commercial Project Division - Presentation on 6 Sigma Process

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

ings, encouraging those who were involved in the efforts to vitalize corporate culture and improve work efficiency. During the meeting 100 employees, including those with outstanding performance or facilitators, were awarded and further committed themselves to continual participation and inter-departmental cooperation. In 2007, the CAP meeting was tentatively extended to induce the participation of Product Strategy Headquarters in an attempt to increase work efficiency through cooperation among different headquarters. Through the CAP meetings, the R&D Headquarters will continue to strive to improve productivity and its creative performance.

individual suggestions, 18 billion won through task team activities, and in total, 91 billion won during the year 2006. Individual suggestions amounted to approximately 472,264 cases and among them, 461,472 cases were adopted, showing a high adoption rate (97.7%). Also, the number of suggestion has increased by 6.8% from the year 2005. Cost reductions increased by 22% and the number of suggestions made per person increased by 7.3%, from 8.2 cases to 8.8 cases. For task team activity, the number of improved themes was 2,156 cases, up by 6.4% from 2005, while the cost reduction improved by 0.8%.

Employee Welfare
Remuneration _ HMC operates both the legal employee benefits program provided under Korean law and an additional corporate remuneration package. The legal benefits include health insurance, industrial disaster insurance, and unemployment insurance, whereas HMCs extra-provisional remuneration package offers support grants for employee societies, weekend farms, and operation of a four-season recreational facility for HMC employees. HMC is also implementing various remuneration packages in international business sites, corresponding to the pertaining laws, customs, and regional characteristics.

Employee spouses _ Culture Classes for Spouses


Cultural classes for spouses, offered every year at each business site, are meaningful for their contribution in facilitating the understanding between the employees and the family members and in helping improve their relationship. The cultural classes for spouses, through lectures by renowned social figures and by sharing the corporate management environment, serve as a stage where employees, families, and the corporation unite as one.

Making a Happy Home

Ulsan Plant operates the training

Increased company-wide awareness on security _ To Inviting ideas and acting to improve the working environment _ To increase individual and corporate pride,
share knowledge and strategy, realize mutual respect among employees, and create a joyful work atmosphere, HMC invites various ideas and rewards the outstanding ones. As a part of ongoing product quality improvement activity, HMC pursues a corporate level suggestion-and-improvement movement. As a result, performance is improving, while the cost is falling. In production plants, the worksite-oriented ideas and suggestions are recorded in the immediate improvement notes dispersed throughout the site. This site-management innovation activity immediately acts on the problem and provides feedback as an immediate improvement system. In this way, HMC is dedicating efforts to build trust with the site workers by activating on-site improvements and establishing a problem-solving structure of discussion and organization. become a world-leading corporation, HMC classifies and manages all of its information assets based on their level of importance. To protect core competence, the confidential sales data is analyzed for threats and vulnerabilities in each part (management, physical, and technical areas) for an effective countermeasure. These efforts are aimed at preventing an accident, rather than to follow up on accidents. Also, in order to maintain employee awareness on security, team security manager education and department security manager workshops are held twice per year. Furthermore, through security campaigns such as, security awareness films and security slogan invitations, we are doing our best to create a security mind in every employee.

program, Making a Happy Home as a means to establish the

Fostering and supporting employee societies _ In


HMC, a number of societies are spontaneously formed by the employees. Social groups engaged in a diverse set of activities such as hobbies, social services, sports, and religious activities pursue better interpersonal relations among the employees and create an enjoyable workplace.

identity of the home makers and to ensure self-development of the employee spouses. The training is conducted for three days, four hours per day, and comprises of three Making a Happy Home stages. The third stage, Training on emotions of the husband and wife, is attended by both the husband and wife. The training serves for the participants to recall the importance of the family. Beginning in 2006, programs were extended to employ-

A United Family
Formulation of Educational Programs for Families
Aware of the importance of employees families and homes, HMC has prepared a family program that involves the participation of all family members and facilitates the communication of their love to one another. To create another competitive edge and to form a unified relationship between the families and the company, HMC is implementing varied educational programs for spouses and children.

ees fathers. Starting in June, true father school was held for 8 weeks on every Thursday.

Cost reduction through suggestion _ According to the


2006 suggestion/task team performance compiled by Quality Management Headquarter, HMC saved 73 billion won through
Team security manager training The Father School, for re-establishment of the right paternal role

Suggestion Activities by Year


(unit: 1,000 won)

Year Number of cases adopted Cost reduced

2004 378,601 59,527,497

2005 434,792 59,847,979

2006 472,264 72,998,980

Target for 2007 558,576 76,338,720

Number of Societies in 2007, by Business Sites


(unit: number of people)

Classification

HQ

Ulsan Plant

Asan Plant

Jeonju Plant

Production and Purchasing HQs 1,038 734 35 65 1,872

Sports

329 483 36 848

4,636 2,303 5,032 551 12,522

829 454 254 253 27 1,817

1,322 688 226 292 2,528

Number of Team Security Managers Educated


(unit: number of people)

Hobbies Social services

Classification The second half of 2006 The first half of 2007

The number of managers educated 1,054 1,062

Participants 1,026 1,008

Completion rate of the course(%) 97.3% 94.9%

Religious activities Study activities Total

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Employees children _ English Camp


Junior high school age students of HMC employees can participate in an English camp, established to provide quality English language training and to reduce household expenditure on private education. The class was provided free-of-charge and even during school recess periods of 2006. Classes are formed based tests levels, with each class consisting of only 13 students to optimize learning effectiveness. Students learn to read, write and listen under the guidance of international lecturers. The extra-curricular activities include singing American pop music, editing English newspapers, writing English letters, and other unique programs that can stimulate the childrens interest in English.
Making friends with dad through art program, at Yangjae Atrium

Involvement of Employee Families


Mothers Choir of Ulsan Plant _ The Mothers Choir of
HMCs Ulsan Plant, consisting of Ulsan Plants employee spouses, held their 10th annual performance at the Grand Auditorium of the Cultural Center in 2006. In parallel with the concert, the choir members visited social welfare institutions to provide meals to marginalized senior citizens and support economically challenged students.

Launching of family social service group _ Family social


service group, established in April 2007, is engaged in a number of volunteer services linked with regional volunteer centers across Korea during the entire month of May. The families develop their own schedule, while selecting programs as desired. The activity has been very helpful in terms of achieving harmony between family members and as an educational activity for children. In particular, the volunteers participated actively in the spring field trip at the Kosian House located in Ansan, the care

Housewife social service corps of Asan Plant _ In May


2007, the Asan Plant established the first social service corps of homemakers among HMC business sites. The founding members of the group are 40 employee spouses who joined voluntarily. By declaring their three resolutions helping marginalized peo-

center for the children of international laborers, and in the 5th Rainbow Festival for Immigrant Children, hosted on Childrens Day, to encourage and educate for a world free from prejudice and stereotypes. The service group is also selectively participating in various programs of culture, education and environmental awareness.

Cultural Center

HMC Cultural Center conducts lectures on

Plant Field Trips


Ulsan Plant invites employees children who are about to matriculate into university to visit the facility to provide them with the opportunity to see where their parents work. Through the experience, in which they can see and feel for themselves the roles of their parents, the children are encouraged to develop a sense of

ple who need social aid, helping neighbors in need and promoting their will to help themselves, and practicing not a temporary, but a continuous social service the corps committed to acting out of true love for their neighbors.

fairy tales, violin, ballet and musicals for children of employees. Casual exhibitions and presentations are also held, so that the whole family can share and enjoy the skills developed and refined at the Center.

Family invitation event _ HMC hosts sports events such as


annual tournaments and health marathons to promote the health of the employee families and to provide a stage for harmony. In May, the familys month, each business site organizes field trips

Art Events

Educational programs, including Dad is Dr. Art

pride for HMC and are aided in designing their college education and future life.

and Making friends with dad through art which were offered to the employees of the Gyeong-in region in 2006, offer many resourceful programs, such as reviewing artwork as valuable assets, education on the art theory, appreciating modern art, and case studies on synergism for corporate management by leveraging on the creativity aspect of art. While appreciating the artwork, employees can extend their conversation with their family members, and emotionally inspire their children. In this way, such events are playing vital roles in creating and maintaining harmony among family members.

Cyber education _ Cyber University for housewives


Cyber University for Housewives, operating since January 2004, is expanding the scope of learning for 5,000 spouses every year, through knowledge content in the areas of computer, financial technology, and hobbies. Operation of community also offers useful information.

and events inviting employee families. In addition, recreational facilities are operated during the summer season to offer enjoyable vacations for family members.

Employee childrens school

7,000 people annually

access the employee childrens school via the internet. From elementary, middle, and high school curriculum to economics classes and childrens English, the school operates a diverse range of educational programs for the children of HMC employees.

Cyber Education Status for Employees and Family Members


Classification Cyber University for Housewives Employee Childrens School Education candidates Employee spouse Employee children Number of people educated/year Approximately 5,000 people Approximately 7,000 people Education details Computer, financial technology, hobbies, etc. Elementary, middle, and high school curriculums, economy classes, childrens English, etc.
*Hyundai education center website: www.hkhrd.com Art event during the Grand Childrens Day Festival at Asan Plant Environmental Purification Activities of Employee Families Social Service Groups

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Companion for Sustainable Growth - Suppliers


HMC actively implements cooperative management in order to grow together with its suppliers, building partnerships based on mutual trust. As HMC grows under the goal of world leader, it does not spare necessary systematic support to its suppliers.

Suppliers that have Joined the 5 Star Quality Club


Classification Company Remarks

Previous members BorgWarner Transmission Systems Korea Inc., HEESUNG CATALYSTS, NANYANG INDUSTRY SEJONG INDUSTRIAL Co.,Ltd., HAN IL E HWA CO.,LTD. KYUNGSHIN INDUSTRIAL, Sewon ECS

Mutual Cooperation Program Operating Supplier Support Programs for the Highest Product Quality
As part of its cooperative plans with small and medium-sized companies, HMC announced an innovative mutual cooperation plan in April 2006, at a total cost of 15,000 billion won until 2010, focused on R&D and quality improvement among partners. Various plans are included in this program for continuous implementation, including cash payments to small and medium sized suppliers, quality technical support to primary, secondary and tertiary suppliers, seminars, organization of partnership cooperation teams, operation of quality technology service corps, operation of a performance sharing system, joint entrance into overseas market, and support on winning overseas contracts, as well as hosting seminars for the improvement of partners competitive power, and educational support. HMC will continually and actively build a strong partnership with its business suppliers while continuously endeavoring to improve product quality and reduce cost through such means of joint technology development, thereby contributing to its image as a global enterprise and to profitability.

Strengthening Partners Core Capacities


5 Star system _ Since 2002, HMC has been operating the 5
Star quality system, an effort to enhance the competence and quality of the parts supplied by partners. Recently, HMC has been conducting the 5 Star evaluations of suppliers satisfying three requirements: no recalls or outside campaigns, more than 4.5 payments, and a quality management system scoring more than 750. From this evaluation, more than 85 scored suppliers were granted the best quality - 5 Star. Suppliers that acquire 5 Stars become members of the 5 Star Quality Club, and these companies are qualified to receive such incentives as enhancements in credit levels by credit evaluation agencies, participation in new bids for automobiles under development, and the use of the 5 Star Quality certification emblem.
New member

YURA, SEJUNG, SEOJIN INDUSTRIAL SUNGWOO HITECH, KEFICO Joined in the second half of 2006 5 Star Quality Club Emblem

Operation of the Korea Automotive Parts Industry Promotion Team _ In November, 2006, in collaboration with
the Foundation of Korea Automobile Parts Industry Promotion (KAPKOREA), HMC established the Korea Automotive Parts Industry Promotion Team as part of the expanded program for mutual growth and cooperation with large-, medium-, and smallsized enterprises. The group is dedicated to providing partners with strategic support in enhancing basic management capacities and securing global competencies. The Korea Automotive Parts Industry Promotion Team aims to strengthen the practical performance capabilities of the suppliers in promoting their competence, rather than simply enhancing product quality. To do so, HMC is organizing a support team of approximately 20 former executives, with an abundance of management expertise, for a service term of two years, and deploying them as advisers to companies in need of such support. The advisers work with partners for at least three months, assuming responsibility for the provision of advisory support on all aspects of management,

Hosting R&D Suppliers Tech Day _ In November 2006,


HMC hosted the 1st R&D Suppliers Tech Day event with the participation of 26 suppliers (Powertrain (9), Chassis (9), Electrocircuit system (2), Decorative design (3), Body (3)) at the Namyang Research Lab. Korean suppliers who need to promote new R&D technologies but have difficulties in hosting exhibitions on their own, were well served by this event. HMC also hosted the Joint Technology Exhibition of Suppliers to provide booths where new technologies could be promoted, helping the exchange of core technologies between companies. In addition, the R&D mutual growth and cooperation seminar allowed participants to listen to the problems faced by partners and offer them consultation and possible solutions. By hosting the R&D Suppliers Tech Day event every year, HMC plans not only to provide its suppliers with the opportunity for technological reporting and exchange, so that they may practically enhance their competitive powers, but also to cultivate this event into an important tool to achieve mutual growth and cooperation, such as by using the event as a forum for communication.

HMCs Companionship

including technological support, quality instructions, export support and managerial support. All costs incurred within the duration of the advisory services are borne by the foundation, so that

Strengthening suppliers core capacities


Operation of Korean Automotive Parts Industry Promotion Team Implementation of 5 Star system Exhibitions & seminars on new technology Execution of guest engineering system

Reinforcing the foundation for stable management


Cash payments for supplied goods Performance sharing system Support capital Joint purchasing

the suppliers can concentrate their resources on enhancing management capabilities of the company, free from burdens. HMC is planning to actively support mutual growth of the partners by contributing another 5.5 billion Won, in addition to the previous contribution of 3.5 billion Won made to KAPKOREA. All costs incurred within duration of the advisory services are currently

Direction of Companionship Reinforced global market response system


Joint entrance into overseas market Execution of program to foster global talents Building environmental networks

Expanding support for secondary suppliers


SQ mark certification system Hosting management innovation seminars Operation of quality and technology service corps Joint purchasing, expansion of job training consortium

being evaluated to ensure they prescribe the correct path for mutual growth with large, medium, and small enterprises and provide a strategic growth and cooperation plan for the long term survival of suppliers, rather than solving simple pending issues such as quality. The activities also utilize the know-how of former executives, who are valuable social assets.
The Joint Technology Exhibition of Suppliers held on the 1st R&D Suppliers Tech Day

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Support for Management Stabilization of Suppliers


Cash payment for supplied goods _ As a means to help
small and medium-sized companies facing financial difficulties caused by high oil price and other market challenges, HMC is disbursing cash to such companies for goods supplied and has shortened the period for promissory note payment from 120 to 60 days. In addition to continuing this policy next year, HMC plans to introduce further improvements to payment conditions for the secondary and tertiary suppliers as well.

their employees, who have relatively fewer training opportunities. HMC provided suppliers with support for in-house training with lecture rooms, lecturers, and contents in 2006, but training also has been extended to secondary suppliers for improvement in quality and productivity. As its entrance into the global market is gaining momentum, HMC is also promoting the training of overseas suppliers and language training of their employees.

Transparent Purchasing Establishing Impartial and Transparent Purchasing


HMC applies Open & Fair policies to all transactions with suppliers. To facilitate this, the Charter of Purchasing Ethics was formulated and enacted, along with the implementation of the Vaatz system.

Operation of a Partner Distress Settlement Program


In attempt to build on the mutually cooperative relationships with its suppliers, HMC is operating a supplier distress settlement program. (Suggestion Box of Purchasing Headquarters). By collecting information on concerns experienced by suppliers in working with HMC, including opinions, improvement sugges-

Reinforcing Support of Secondary Suppliers


Currently, HMC is consistently practicing its mutual cooperation with secondary business suppliers. In an attempt to enhance the

Observance of the Purchasing Headquarters Charter of Ethics


The Purchasing Headquarters Charter of Ethics was formulated and declared as the moral basis for action and value judgments of the purchasing officers, who substantially influence the improvement of suppliers competence. The Purchasing Division Charter of Ethics
1. Our ideal is developing and offering safe and environment-friendly products to our customers, thereby increasing their quality of life and filling them with abundance. 2. Our responsibility is to create optimal value through fair and transparent purchasing activities and advanced technology, to seek mutual development of local and overseas partners, and to contribute to corporate development. 3. In particular, we respect the ethical behavior that sustains transparent management and dutifully carry out the roles that are delegated to us. Our ideal is to become the purchasers who uphold public benefit and order. 4. We strive to establish a Purchasing Headquarters that is widely respected, by creating a righteous and progressive purchasing culture and valuing the title of purchaser

tions, and reports on corruption of HMC employees, the company is pursuing mutual growth with its suppliers.

Support capital _ HMC supports its suppliers with funding to


purchase raw materials, to conduct research and development, and to invest in development to aid their financial stability. A total of 2.3 trillion Won was offered for such support in 2006; HMC plans to continuously increase this figure.

quality of supplied parts, HMC is operating quality and technology service corps, whereby, in an effort to increase the competitive power of secondary suppliers, a member of the technical committee is dispatched to the partner company. Every month, seminars of major business sectors and intensive education on quality system are provided to suppliers, inducing a favorable response.

Vaatz System, the Stage of Mutual Cooperation for Purchasing


At present, Vaatzs scope of purchasing includes even the overseas sites. To secure global competence in transparent purchasing of parts with superior quality, the entire process of purchasing, selection of suppliers, and their registration follow a fair evaluation and review through the e-bidding procedure.

Performance sharing system _ HMC has been implementing a performance sharing system since the 1990s. Cost reduction is promoted through VE (Value Engineering) proposals or localization of parts import, without a reduction in product or service values. By sharing such practices with its suppliers in a preagreed manner, HMC seeks to find a mutual Win-Win strategy.

Meanwhile, from August to October in 2006, HMC held the management innovation seminar for secondary supplier CEOs to increase the competitive power of secondary suppliers, which have less capital power and technological advantages. This seminar, intended to substantially enhance the quality and management mentality of secondary suppliers, attracted the participation of 2,500 representative directors from supplier companies, with an

Joint purchasing _ HMC is expanding its joint purchasing


system to decrease the purchasing expenses of its suppliers, based on its purchasing power. In 2006, 296 companies participated in the joint purchasing system which accounted for transactions equaling 61.8 billion Won; HMC plans to increase this figure to 421 companies and 120 billion Won in 2007. In its initial stage, the majority of jointly purchased products were general materials. Now, the scope of joint purchasing is extending to raw materials, including stainless steel and aluminum ingots.

average of 250 per cycle during the 2 months. In June 2006, the discussion on mutual cooperation with secondary suppliers was held to collect the concerns and opinions of secondary suppliers, while strengthening already substantial support and continuously expanding cooperation. In the future, HMC plans to seek further opportunities to substantially with the sometimes less-preferred secondary suppliers, and thereby secure their competitive edge.

*Vaatz main screen(www.vaatz.com)

HMCs Purchasing Policy

Improved parts quality

Secure competitive production cost


Vitalization of supplier suggestions Responding to inflation of raw material prices

Reinforced Global Market Response System


Joint entrance into overseas market _ HMC has established its overseas production system to promote competitiveness in the global market. The production system, which includes not only HMC production plants, but also those of outstanding parts suppliers already established in the USA, China, India, Turkey and the Czech Republic, is expected to play the role of the core base of overseas growth in the mid to long-term.

Secure quality in parts of new vehicles Improved quality of suppliers Secure parts quality globally

Global Optimized Purchasing

Establishment a global network


Dispersing Vaatz to overseas plants Integrated purchasing support in five global regions
Management innovation seminar for secondary supplier CEOs

Transparent purchasing
Increased transparency in transactions Establishing Ethical management

Cultivation of programs to foster global talents _ HMC


helps the CEOs of supplier companies with their management programs, providing seminars and various training programs to

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Customer-First Management
In the opening ceremony of the year 2007, HMC upgraded the companys mid- to long-term development strategy from the previous innovation for customers, to Customer-First Management. Customerfirst management' embraces HMCs firm conviction that all of its management activities will be in line with the customer-oriented value innovations and pursuant to continuous growth in the auto industrys era of unlimited competition. HMC, while developing a powerful service system, is realizing customer happiness and moving beyond customer satisfaction, through reinforced customer-oriented marketing and in-house-centered Customer Satisfaction training.

Providing a ONE-STOP Service _ From the sales of new


cars to maintenance, car accessories, financial and insurance service, and used car sales, HMC introduced a new-concept complex where customers can receive a variety of auto-related products and services in one place. In 2006, HMC opened the first one-stop service center at Cheon-an, South Chungcheong Province, which is a four-story high structure of 428-pyeong total area. This center is expected to not only reinforce local sales competence by upgrading customer service, but also strengthen

Customer Satisfaction
Overseas sales account for more than 70% of HMCs total sales. To measure the satisfaction level of customers distributed globally, HMC has developed the Hyundai Global Satisfaction Index program to frequently check the concerns and requests of customers in some 40 countries. Since 2003, HMC has been operating the Hyundai Academy Program, conducting education on the customer response process. Also, through the global dealer development program, HMC is fostering competent dealers who will elevate customer satisfaction through sales and maintenance services.

Improving System for Implementation of Customer-First Management


Auto Prosumer system Good Information Service ONE-STOP Service BLU Service Before Service Customer oriented marketing

brand image by providing standardized high-end service.

Implementation of BLU Service _ In April 2007, HMC


launched its BLU Service, a total premium membership service to reinforce 'Customer-First Management,' and introduced the BLU members program, which provides one-stop automobile Customer management, a customer rewards points service, and integrated membership benefits to new and existing customers.

International Market
HMCs efforts dedicated to customer satisfaction are producing a fruitful outcome throughout the world. In 2006, a HMC study on customer satisfaction in Europe (including the UK) revealed that HMC ranks among the top car makers in customer satisfaction. At the same time, in India and China, HMC achieved higher customer satisfaction levels than other international competitors.

HMC

CS Conductor CS Training

Impress customers Customers happiness Brand image enhancement Greater Customer satisfaction

Introduction of the Before Service _ In October 2006,


HMC introduced the Before Service under a new concept of direct customer visits. This system actively unfolds a series of activities for pre-management, including preventive check-ups

The overseas marketing team, in order to practice CustomerFirst Marketing, has established and been operating CRM programs in the Indian and Chinese markets, offering customers convenience by periodically notifying individuals of routine checkup periods and subject parts. Also, by offering various cultural events and discount benefits, HMC is increasing the satisfaction of global customers in a more direct manner. In the future, HMC is planning to expand these CRM programs to the European market.

Practicing Customer-First Management


Customer-oriented Corporate Goals
Management objective of 2007 - Customer-First Management _ To improve its product and corporate values,
HMC places the utmost priority on its customers within the entire process from R&D and production to sales and maintenance. From the product planning stage, customer requests are reflected through the autoprosumer system, as well as in other areas of members club(marketing), good information service(sales), Before Service, and complimentary check up service (A/S), thereby attaining a two way communication and realizing excellence in customer service. In addition, to enhance on-site CS services, HMC has introduced the CS conductor system and reinforced its CS training to consistently pursue Customer-First Management.

opinions of AutoProsumers were extensively considered during the naming processes for Veracruz and i30, launched in 2006 and 2007, respectively. HMC is continuously reaching out to collect customers opinions and to apply them to products and services. For example, customers preferences were analyzed and reflected in the development of i30.

and performance tests.

Korean Market
'Good Information Service' becomes available _ In
2006, HMC started customized information services to potential customers planning to purchase automobiles through its corporate website. Customers who apply for good information receive a product catalogue and automobile purchase guidebook during the first month. From the second month and on, Useful Tips on Automobile Purchasing, which contains sales terms and conditions, events, and test drive critiques, is provided.
BLU Membership

In the 2006 Customer Satisfaction Index conducted by KMAC, HMC held the top ranking in small-sized vehicles and RVs. The research period was from May to August of 2006 and customers who had owned and used their automobiles for less than 3 years participated in this research. In the research, HMC assumed the top ranking in small-sized vehicles for 13 consecutive years and RVs for 3 consecutive years, reconfirming its success in Customer-First Management. Meanwhile, HMC ranked first in small-sized vehicles and RVs in the 2006 National Customer

Cases of Systematic Improvements


Introduction and intensive operation of the AutoProsumer system _ In 2006, HMC introduced a first
in the local auto industry - the AutoProsumer system, a means to consistently reflect customer opinions in marketing decisionmaking. The term AutoProsumer refers to a consumer who directly participates in the production of autos. The system maximizes customers satisfaction by actively accommodating their opinions from the stages of product or service planning. The
Main page of 'Good information service' website Before Service delivered in Gangneung, Korea

Satisfaction Index, displaying its strong will to satisfy customers. NCSI is the representative customer satisfaction index of Korea undertaken on 200 companies in 37 industries. Customers directly evaluate the quality each companys products and services. In the future, HMC will continue to re-organize its system toward the customers perspective and place utmost priority on
*KCSI : Korean Customer Satisfaction Index *NCSI : National Customer Satisfaction Index

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Yearly Customer Complaints Raised


Classification General consultation Number of complaints Sales Quality Maintenance Parts Total 2002 448,801 14,548 8,109 2,828 974 463,349 2003 453,357 12,998 9,021 1,317 275 466,355 2004 406,720 15,516 11,480 1,201 186 422,236 2005 423,775 20,050 15,578 368 48 443,825 2006 381,848 18,544 14,642 383 33 400,392

Occupant analysis _ When a collision occurs, the movement


of passengers is affected by many different factors such as the transformation of the vehicle body, the characteristics of the safety equipment, the layout and inner structure of the car, and the passengers physical conditions (height, weight, the characteristics of the damaged body parts, and the characteristics of the joints). In order to analyze the percussion effect to the passengers, HMC uses The Occupant Analysis. The percussion power to the occupants is measured based on the acceleration of the head and chest, the pressure to the thighbones, and the angle of the neck.

Proving Exceptional Safety in the Global Market


HMC was acknowledged for its excellence in the global market by passing the safety assessment test implemented by governments and evaluation agencies to protect their customers and provide them correct information. Every year, the National Highway Traffic Safety Administration(NHTSA) conducts safety assessments of vehicles on sale in the US market and releases the result to customers. In the 2006 New Car Assessment Program of NHTSA, HMCs Sonata and Tucson obtained five stars, both in drivers seat and passengers seat tests in the accident simulation of a head-on crash. These two models were proved to be the safest among medium-sized vehicles. Other HMC vehicles also won more than 4 stars in the crash tests conducted on their fronts and sides. In June 2007, the Insurance

customers in order to build the foundation of a CS-culture corporation. Meanwhile, by strengthening its customer-oriented activities, HMC will increase its value to customers, secure a leading position in the competitive market, and create a favorable cycle that will connect to corporate growth. HMC plans multilateral efforts and attempts to increase the level of customer satisfaction.

that enables the car to actively detect dangerous situations and prevent accidents prior to occurrence. In the past, HMC had only concentrated on airbag, seat belt and safe chassis systems, which are defensive and passive. That kind of system is just used to minimizing the damage, rather than prevent accidents. To provide a better driving environment, HMC is applying extensive ASV technologies (Smart Cruise Control, Lane Departure Warning and

The result of this analysis is used to predict how the damage level changes depending on the characteristics of the collision or the safety equipment and improve the safety of the passengers.

Protecting Women and Children _ While we maintain the


passenger safety function in its optimum level through a womenand-children safety analysis, we also focus on developing airbags and other safety devices that ensure the protection of children and adults with smaller builds. Car accidents do not take place with nobody in the car. Thats why we test collision effects using dummies which are very similar

Institute for Highway Safety selected Santa Fe as the 2007 Top Safety Pick among SUVs and officially announced the result to customers. Meanwhile, in Korea, Santa Fe also received the highest score among all SUV vehicles in a safety test led by the Ministry of Construction and Transportation. In April 2006, Grandeur (export name : Azera) also received a GOOD mark, the highest grade achievable, in the head-on crash simulation test conducted by the Insurance Institute for Highway Safety.

Customer Safety
HMC develops automobiles considering the safety of not only the drivers and passengers but also of pedestrians. To improve reliability, HMC designs a safe vehicle from the first step by using super computer simulation, which considers various collision situations. And through Car-to-Car collision testing, which closely mimics real situations, we are able to sell the safest cars, which pass safety inspections with ease. In addition, HMC is striving to develop ASV (Advanced Safety Vehicle) or ISV (Intelligent Safety Vehicle). ASV vehicles self-detect dangerous situations and prevent drivers, passengers and pedestrians from being involved in accidents.

Collision Damage Mitigation, etc.) to its new cars. And HMC makes full use of internal electronic control skills and IT technologies which are the best available in the world.

Collision safety _ To obtain the best collision safety performance, omni-directional safety chassis systems disperse collision energy. This system is the result of several rounds of simulation. And HMC applies up-to-date collision safety systems, such as Side Curtain Airbags, which reduce head injuries when a car impacts from the side and prevent passengers from moving and other materials from coming into the vehicle. Other collision stability systems include Dual Pretensioner, which strengthens the binding power of passengers, and an Active Head Rest system that

to human bodies. By operating the computer simulation program, the safety level of the passengers can be evaluated after analyzing the deformation of auto body and the sensor figures of the dummies. Therefore, HMC is conducting an integrated collision test which analyzes the car, dummies, and the protection equipment all together in order to predict the collision effects more accurately.

ASV (Advanced Safety Vehicle)


Today, HMC is focusing heavily on this active safety technology

decreases head and neck injury through the automatic upward movement of the headrest when the back of the car is hit.

Active and Passive Safety Steps

Collision Preventive Safety Collision Avoidance Pre-Crash Safety Collision Safety Rescue

Driving Environment Recognition Vehicle Control Driving Convenience Improvement

Driving Environment Recognition Warning/Vehicle Control Safety Improvement

Accident Factor Recognition Warning/Vehicle Control Collision Damage Mitigation

Accident/Collision Perception Vehicle Control Collision Safety Improvement Rescue

Accident/Collision Perception Car Communication Post Collision Safety Improvement

Collision safety and airbag systems

Grandeur (export name: Azera) achieved the top rating of Good in headon crash tests conducted by IIHS

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Companion

Customer-First Social

Contribution, Center of the Sustainable World

Social Contribution, Center of the Sustainable World


Reinforcing the slogan of Moving the World Together, HMC hosts the Easy Move Campaign - to improve mobility of physically disabled people - and the Safe Move Campaign which promotes safer traffic culture by leveraging the scale of our corporation in order to contribute to society. In addition, we support institutional social welfare projects, based on our grass-roots experience, to contribute to the society. HMC employees all work together, sometimes even including family members, in voluntary activities. Moreover, the company is safeguarding the quality of life in society by hosting diverse global social programs, living up to the reputation of a global corporation.

Symbol and Slogan

Philosophy of Social Contribution


Like any other member of society a company has a set of responsibilities and roles, including encouraging social development. HMC nurtures businesses that contribute to society by capitalizing on the characteristics of an automaker subscribing to the The world moved together, slogan, with an awareness of social cohesion. Corporate community involvement at HMC is increasing. HMC will actively conduct social contribution activities associated with its sites, consistent with its growing global management, while striving to become a socially responsible corporation.

Visions on Social Contribution


Contribute to environmentally friendly economic activities and environmental preservation Contribute to corporate citizenship and assumption of social responsibilities Contribute to the realization of a sustainable society, working with citizens Contribute to realization of social values that achieve human dignity and happiness Contribute to immediate response to global social demands

Meaning of the Symbol

The symbol expresses our desire to race ahead towards a wider world and a better future, together with the community and society. The circle that the two people draw together by joining their arms symbolizes HMC as a moving wheel, and the world itself. Moreover, it represents the will to compensate the trust of the society with greater respect, just like the continuous rotation of a circle. The two people walking together stand for co-existence with nature and neighbors, for sustainable growth. Moving ahead by taking steps forward in unison represents the will of HMC to strive towards a sustainable future, to help neighbors in need, whatever our commercial commitments. Blue signifies the world with social harmony, resulting from our social contribution activities, in a transparent world where hope thrives and strengthens the blueprint of the future we dream of.

Social Contribution Systems Principles of Social Contribution


HMC is a global company that values quality of life in the community and wider society. Firmly rooted on the management principle pursuit of the mankinds happiness with vehicles, the company firmly believes in realizing its social contribution towards happiness for human beings and a sustainable society. HMC aims to conduct its economic activities in an environmentally responsible way. Meanwhile, it is engaged in activities that contribute to society in diverse areas in order to practice a sense of companionship with others. Starting with social welfare, the company is widely involved in public activities, promoting such areas as education and academia, culture and sports, international exchanges, and environmental preservation. With the volMoving the World Together

Meaning of the Slogan

Moving the World Together is the slogan that expresses HMCs philosophy which aims to contribute to society. It has the following meaning:

Management Principle _ Contributing to quality of life


through mobility

untary participation of its employees, HMC continues to engage in activities that help marginalized members of society and relief activities that aid recovery from natural disasters.

Reflecting the characteristics of an automaker, while expressing the will to continuously change Propagating HMCs social contribution philosophy and aiming for internationalization of social activity efforts Emphasizing the partnership that balances with society, under the acting philosophy of a world citizen

Mission on the Contribution to Society _ The company


aims to lead the way to a culture that actively engages in environmentally responsible economic activities and a socially responsibility contribution to personal welfare and a sustainable society.

The Direction of HMCs Pursuit on Society Contribution

Introduction (2001 ~ 2004)

Growth (2005 ~ 2008)


Substantiating social contribution programs

Maturation (2009 ~ )

Overview of Social Contribution Projects

Focused projects

Volunteerism

Local development

projects

Overseas development

projects

Easy Move In-depth progress of global social contribution projects Development of the image of a respected company Safe Move Social welfare subscription project

Common program Service group programs

Social welfare Education and academics Culture and sports International exchanges

Social contribution projects by branches

Execution of activities for giving back to the society by each business site Pursuit of environment business by each business site

in respective business sites Organizing and activating volunteer service groups Selecting focal areas of social contribution Building global social contribution system and initiating projects

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Three Promises for a Sharing World


Safe Move - the Safe World for Our Children
HMC conducts its Save Move campaign to minimize car accidents for children and to ensure that a sophisticated traffic culture is firmly rooted in Korea. With the concept of safe road created together, the company operates this system by separately operating different support programs such as car accident prevention training for children, prevention of on-site accidents, and support to car accident victims. HMCs Safe Move is expanding the safe traffic culture by implementing diverse methodologies that guarantee our childrens safety.

Easy Move a Fair World for People with Low Mobility


There are 5 million people with limited mobility due either to physical disabilities or old age; this is one tenth of the Korean population. Through its Easy Move campaign HMC raises awareness of the low mobility of senior citizens, physically disabled people, pregnant women and others with limited mobility. In August 2006 in Seoul, HMC donated Starex, an Easy Move vehicle developed through a two-year process, to organizations that help people with mobility difficulties. HMC also hosted the world moving together-Easy Move campaign, with the human rights forum for disabled people, to announce its plan to continue expanding its initiatives to promote improved mobility. The com-

A World Where Hope Grows Social Welfare Subscription Projects


HMC has conducted yearly subscriptions targeting social welfare groups nationwide since 2005. Projects that receive support are selected using expert assistance. Community welfare projects provide customized support where needed, and HMC cooperates with social welfare groups in project development. Projects with outstanding performance are supported again. Selected projects maintain communication with HMC on their performance and output, and HMC leverages these relationships to continue exploration of other similar community projects.

Volunteers - Promoting the Value of Sharing


Organization and Status of Volunteer Social Service
A total of 115 employee volunteer groups at the HMC HQs, Ulsan Plant, Namyang R&D Center and other sites have formed alliances with social welfare institutions located in their respective regions, practicing sharing through consistent volunteer service. HMC supports the volunteer services by matching employees spontaneous fundraising with a corporate grant.

Implementation Status, Safe Move project


Project Title Traffic Safety campaign for children Details NO NO Story, musical on traffic safety Contents on safe traffic National Education Tour on Childrens Traffic Safety Broadcasting campaign Mini exhibition for traffic safety Employee-involved Traffic safety class Three-leaf clover search Wish granting for children of traffic accident victims

pany plans to invest in research and development while cooperating with government and civil groups to carry out diverse initiatives according to local conditions.

Number of Social Welfare Projects, by Category


Classification 2005 2006 Total Disabled 6 7 13 Senior Citizen 6 6 12 Children and Youth 6 6 12 Other 4 4 Total 22 Projects 19 Projects 41 Projects Support funding 300 Million Won 300 Million Won 600 Million Won

Starex, an Easy Move vehicle

Details of the Easy Move Project


Project Title Community Chest of Korea/ Federation of Korean Industries Research Institute of the Differently Abled Persons Right in Korea Federation of Citizens for the Physically Challenged Peoples Convenient Facilities Korean federation of the disabled groups Community Chest of Korea
Traffic Safety campaign for children

Project Details Electronic wheel chair for physically challenged people Artificial limbs and special shoes for physically challenged people Support for the livelihood of physically challenged people Convenient mobility facilities for institutions for physically challenged people Braille information device for visually challenged people Plant field trip

Organizational Chart of HMCs Volunteer Service Groups

HMC Volunteer Service Groups

Supervision : HQs General Administration Team

HQs 16 groups

Ulsan Plant 22 groups

Asan Plant 3 groups

Jeonju Plant 4 groups

Namyang R&D Center 14 groups

Domestic sales 25 groups

Commercial Sales 6 groups

A/S 25 groups

Association of Physically Challenged People with Severed Limbs

Progress on Easy Move Vehicle Development


Apr. 2005 Aug.2005 Initially Presented at the Seoul Motor Show Test ride for Easy Move at the National Assembly held with the National Assemblys Special Committee for the disabled Jul. 2006 Quality enhancement and testing of Easy Move through evaluation and comments of the disabled
Traffic Safety Training Bus for children

Continuous volunteer service rendered every month based on the one-on-one alliance with social welfare institutions in their respective regions

Sep. 2006

Launching of Easy Move and execution of campaign

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Major Milestones of Volunteer Service Groups in 2006


Classification January Key description Establishment of 6 new groups 112 in total Rice cake sharing on Lunar New Years Day participation of 406 people in 69 groups September Rice cake sharing on Korean Thanksgiving participation of 805 people in 108 groups Establishment of 3 new groups 115 in total December Year-end social service week volunteering participation of 1,443 employees in 115 groups Sharing rice of love donation of 5,200 bags Yearly performance 115 groups, 1,372 services, 15,136 people participated

Field of Business Sharing Big for Marginalized People


Social Welfare
The one company per village movement - support for rural areas _ HMC is forms alliances with farming communities
as a way of enhancing rural development opportunities. HMC has formed one-company-per-village alliances with 69 farming communities nationwide by allowing employees to help during harvest time, to promote consumption of farm products using direct sales and Internet sales channels, to support information-based services to improve welfare conditions of farming communities, and to provide everyday support to residents, such as legal advisory ser-

Education/Academics
Young Hyundai _ Young Hyundai, which combines the terms
young (university students) and Hyundai (of HMC) is the community site for the university students, operated by HMC. It aims to help raise awareness of the importance of the automobile industry and the diverse aspects of HMC to the university students: the future leaders and potential customers of HMC. In 2006, 50 students were selected in the 5th annual event of Be Global Friends with Hyundai- China, shown on the homepage of Young Hyundai, and participated in a trip to the Chinese cultural-historical region. They experienced a cultural exchange with students of Beijing university and visited a Beijing-Hyundai train. They saw good examples of both HMC and Chinese culture.

Performance of the Volunteered Service Groups


Classification No. of volunteer sessions 1,017 sessions 1,372 sessions No. of volunteers 12,755 15,136 Hours of service rendered 51,020 hours 60,544 hours No. of volunteered service groups 106 115 No. of donating employees 69,336 106,257 Amount of fund raised through donation 2.3 Billion Won 3.5 Billion Won

vices.

Hope Engine School _ Educational Support


HMC operates the Hope Engine School to provide branch school children access to educational services on a par with city schools using on-line academic programs in education, culture and growth. The educational materials required for learning are tailored to the need of the students. The objective of this program is to promote access to high-quality opportunities to study.

2005 2006

Culture
Organizational Chart of Volunteer Service Groups: The One Company per Village movement, loving and caring for the rural areas

Along with education, cultural programs are also sup-

ported for extra-curricular activities in schools in order to develop the students emotionally and strengthen their bonding. Funding is granted for activities such as folk music, photography, calligraphy, and reading. As a part of the cultural excursion, a visit to
HMC employees at the one company per village movement

HMC

Seoul offers the chance to experience various cultural opportunities. Through the 3-day visit the children have the opportunity to visit the aquarium, theme park, broadcasting station and the HMC headquarters. The HMC visit is operated in parallel allowing

HQs

Ulsan Plant

Asan Plant

Jeonju Plant

Namyang R&D Center

Domestic Sales

the children to get to know HMC.

A/S

Wish Granting

Each branch school has a wish box, used

for the wish granting event. By granting the wishes that will bring happiness to all students, we are giving them hope. At the same
Helping farmers during harvest Increase income by pioneering into new sales channels Increase the quality of life at farming communities Provide opportunity to experience culture Equal Development in Urban and Rural Area

Provide opportunity to experience life in the farming communities Provide opportunity to refresh Satisfy the need for diverse volunteer works Improve health with environmentally friendly farm products

time, a toll-free 24/7 counseling hotline is operated to provide counsel for the problems and worries these students may face.
University students at the 5th annual Be Global Friends with Hyundai- China event

Establishing a relationship with farm village

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Automobile marketing forum for university students _


This is the largest social event in Korea, and gathers together marketing ideas targeting university students and graduate students in Korea and overseas. Starting with the 1st tournament in 1998 and through the 8th event, which was held in 2006, many students interested in marketing are granted the opportunity to learn from the field and to develop themselves. Moreover, the program produces many tangible and intangible benefits such as an increase in company reputation, diverse marketing ideas, and the discovery of qualified employee candidates. This program is considered a successful example of industry-academic cooperation. In December 2006, the 8th university students marketing forum awarded 54.5 million Won to the winners, including 10 million Won to the first prize winner. Winners of excellence or higher awards were given a chance to visit the HMC plant in Montgomery, Alabama.
The presentation competition for the 8th university students marketing forum award

Industry-academic cooperation for securing qualified employees _ In June of 2007, HMC established the HyundaiKia Collaborative Research Center in the next generation automobile research center of Seoul National University, and made an agreement with Seoul National University to invest 1.7 billion Won for joint research over 5 years. HKCRC would in particular focus on the research and development of core power train technology to cope with enhanced regulation on fuel efficiency and ventilation. Also, exchange of HR and physical resources with Namyang research institute and Seoul National University will be actively promoted. Since 2003, in an effort to obtain qualified candidates in the R&D area HMC has managed research scholarships and made cooperative agreements with several universities for HR and physical resources. HMC has donated vehicles to universities for use in their research and supported the growth of professional automobile experts.
Agreement ceremony for industry-academic collaborative joint research

Status on the participation at the marketing forum


Year
Application

2003(5th)
1,218 people 643 teams

2004(6th)
2,500 people 890 teams 1,700 people 569 teams

2005(7 th)
2,920 people 732 teams 2,344 people 586 teams

2006(8th)
3,028 people 758 teams 2,076 people 519 teams

Culture/Sports
H.art _ HMC launched a new creative brand called H.art in April
2007 to engage in cultural and artistic activities in a more effective and continuous manner. H.art is the only brand in Korea specialized from corporate culture marketing. All types of cultural and art activities (Hyundai Motor Art) will be implemented under the H.art brand in the future.
H-art Exhibition of 'Combine HMC and Modern Art'

People accepted

1,112 people 531 teams

Development of future vehicle technology _ Since 1995,


HMC has hosted automobile technology contests and provided opportunities for graduate and undergraduate students to realize their dream of becoming automobile engineers. In May 2007, the 8 automobile technology contest was held and with Idea part as
th

Yangjae Atrium _ HMC opened Yangjae Atrium in March of


2007 in the lobby of its Yangjae office, which serves as a regular arts exhibition space, and hosts exhibitions of diverse themes. To commemorate the opening of the Yangjae Atrium, three prominent modern artists in Korea Kim Chang-yeol, Park Sung-tae and Lee Yong-deok were invited, to showcase work themed Energy-Energy Exhibition, expressing the energy of HMC, which is moving out into the world with a creative challenging spirit. HMC plans special exhibitions every two to three months.
Yangjae Atrium, a regular arts exhibition space of the Yangjae Headquarters

a new theme, participants could suggest their ideas by film, animation, simulation, etc. The title of the contest was also changed from university student design contest to futuristic automobile technology contest, in order to induce participation of students from various majors. Through the contest, HMC has supported the production of 20 works, presented the finished works on the 11th of October, and awarded scholarships totaling 100 million Won to the winners.
University and graduate students participate in the futuristic automobile technology contest

Grand party for drawing at the Blue Country _ HMC


hosts a Hyundai SsingSsingi drawing contest every year to get children to recognize the importance of the environment and to develop a mindset of environmental preservation. In 2006, the 19th contest was held and the subject was making a clean and blue ocean with SsingSsingi. There was also a mask-making event that encouraged children to pay attention to ocean environments.

'The wall of wish', an event of the Hyundai SsingSsingi drawing contest

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

HMC support sports _ Support for the World Cup


HMC signed a contract with FIFA in 1999 to officially sponsor not only the 2002 Korea-Japan World Cup, but also the 10 international soccer tournaments overseen by FIFA. Besides sponsoring the 2006 Germany World Cup, HMC was the official sponsor in nine international soccer tournaments overseen by FIFA. Moreover, HMC signed an eightyear contract with FIFA from 2007 to 2014 to provide official vehicles for all tournaments to publicize the excellence of HMCs automobiles. Through such efforts, HMC gained the opportunity to expose the company brand and logo worldwide.

national team. Since 1999, the company has generously support soccer in Korea.

Motor sports_ World Relay Champion


Over the last deacde or so HMC

Childcare Support for foreign workers _ About 30% of


foreign laborers children are either in care and/or unschooled because their parents dont have legal status in Korea. Thus, the children are at risk since they are left unattended at their parents workplace. HMC has been offering support for them since 2004.

has recorded notable performances in FORMULA 2 racing with

Jeonbuk Hyundai Motors Soccer Team

Jeonbuk

the Tiburon Relay vehicle. From 2000 to 2003, the company participated in the World Relay Championship, the top event for production cars, using a reconditioned Verna. HMC promotes its technological know-how and reliability to the world by participating in such world-class events.

Hyundai Motors Soccer Team, runner-up in the 2002 Asian Winners Cup (champion of the Western league), continues to promote the image of its parent company, an official sponsor for the 2002 Korea-Japan World Cup, EURO 2002, and 2006 Germany World Cup. It also has served to promote Korean soccer worldwide. Meanwhile, HMC is leading an effort to cultivate promising play and to expand the presence of soccer in Korea by operating soccer clubs for young children to ensure advance-

Support for heating costs at care centers during winter and donation of books _ Since 2005, HMC has provided subsidies to pay for the heating cost of 15 care centers managed by the Council for immigrant foreign workers. As a humanitarian gesture to migrant workers who await deportation, HMC has supplied books in languages familiar them at nine care centers. In May 2006, the Hwasung immigration office held a fund-raising event for social welfare and provided 10,000 books to the main foreign workers shelters in Hwasung and Cheungju.

Speed Festival

The Speed Festival Click event is spon-

sored by leading companies such as HMC, Hyundai Mobis, Shell Korea and Kumho Tire, supporters of motor sports. At the event in 2006, 80 players participated for 25,000 spectators. The event has made a major contribution to the popularization of motor

e-FIFA

HMC has engaged in active marketing activities online

ment of soccer in Korea.

and offline and, in and out of the soccer stadium, as an official sponsor for the 2006 Germany World Cup. The company opened the Hyundai Fan Corner at www.FIFAworldcup.com, the official World Cup website, to introduce a variety of events. Moreover, the company enjoyed PR via Internet by organizing official FIFA online soccer game for online marketing.

Korea Archery Association

Understanding the potential

sport. For the first time in the history of the racing in Korea, the Festival players made an exchange visit with Spains Cats CRDi Cup participants, contributing to the expansion of the domestic motor sports industry. Meanwhile, HMC invited 45 children from the Yangyang orphanage to the event and provided them with hospitality, souvenirs and the chance to get in a racing car.

of Korean archery, HMC has supported the advancement of the archery in Korea for more than 25 years since the establishment of the Korea Archery Association. The company is interested in the science and technology of archery. As a result, sport science organizations have introduced archery training and training analy-

Czech National Team and Australias A League


HMC signed a contract with Czech National Team on March 2005 to support the team, and thus the company expects active, positive marketing opportunities in the Eastern EU market. The company also sponsors Australias A League and expects to increase its brand recognition through seven Australian teams and one New Zealand team, from August 2006 to February 2007.

sis, as well as sport science equipment developed with R&D. In 1985 the company established the Seoul International Archery Competition, a first class international tournament. The company continues to improve the quality of Korean archery.

International Exchanges
Medical fee support for foreign workers _ As a means of
contributing to global society, HMC provides free medical checkups for foreign laborers through the Migrant Workers Health

Amateur Skiing / Snowboard Tournament

An amateur

Association in Korea and medical recoupment association, which helps laborers who do not get proper medical care.

skiing / snowboard tournament hosted by HMC has become the largest in Korea with the participation of 1,480 people in January of 2006. The tournament has been credited with opening up a

Korea Football Association

HMC contributes significantly

new horizon for the cultivation and popularization of winter sports.

to the advancement of the Korean soccer community by serving as the official sponsor for the Korea Football Association and the

Goodwill Ball Finale Event at German World Cup

Amateur Skiing/ Snowboard Tournament

Speed Festival

Children's day Rainbow Festival hosting the children of foreign workers

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

Racing Towards the Happiness of the Mankind - Contributions to Global Society


Overseas Corporation
HMC USA production corporation (HMMA) _ Read Across America
HMMA is a part of this national voluntary program which aims to promote reading at junior schools. The program aims to increase the childrens level of academic achievement by making sure that they develop the habit of reading books early on. The children are encouraged to dress up like the characters in the books to encourage their interest.

engage in industry-academic cooperative programs that support academic curriculum closely linked to the industry and practical training.

League Soccer) and fellows at WUSA(Womens United Soccer Association). There were a lot of interesting things to see and hard training was offered to participants.

Employees provide food, toys, daily consumables and gift certificates to the family members adopted through this program.

Turkey production corporation (HAOS) _ Public Tours


Since October 2005, HMMA has opened its

Day of the Daffodil

'Day of the Daffodil' is the annual fund

Hyundai Torches

With the conviction that education

cutting edge production facilities at its plants to the general public, so that they can tour the plants. Now the HMC plant is the flagship place to visit in Alabama. 'Public tours' are conducted three times per week, and interested parties as well as the general public are invited to the plant.

raising event organized by the American Cancer Society. HMA employees participate in this event in person by purchasing daffodils and Pooh teddy bears. Proceeds from the sales are used for charity. In addition, employees folded paper daffodils baked bread and cookies to sell to raise funds.

enables a bright future, HAOS started the 'Hyundai Torches', a large scale scholarship fund begun in 2004. Students with outstanding academic performance, yet who cannot continue their education due to family financial difficulty, are selected to receive scholarships. Today, many students are opening up a brighter future by entering the university through this program.

USA sales corporation (HMA) _ Habitat for Humanity


HMMA participates in Habitat for

Clothes Collection

Working Wardrobes is a non profit

Hope on Wheels

HMA and HMC dealers are increasing

organization which provides clothes to job seekers and helps them to develop their abilities. HMA holds clothes collection events 2-3 times a year and deliver a clothes and accessories donated. Also there is a special program called Cinderella for Life, that provides dresses, shoes and bags to teenagers, who are in an economically difficult environment or have a family to support, to make their graduation party a special event.

Business for Vehicle Support

HAOS produces special

Humanity through which HMC employees build houses for people in need. From the construction of the foundation to a complete house, HMMA employees, family members and friends are showing their love by participating in this worthy voluntary activity.

support for research to discover the basic root causes of the cancers that affect children. As part of this effort, HMA has established the Hope On Wheels program and has been donating to the Boston Farber Cancer Institute since 1998 through the Jimmy Fund. Presently, HMA donates over 8 Million USD to hos-

vehicles that offer special features for physically challenged people, and operates diverse assistance programs to help the physically challenged in Turkey. In addition, vehicles with special devices are donated to social welfare groups to facilitate mobility of the physically challenged, and research on diverse convenience devices is conducted to serve as the feet of physically disabled people in Turkey.

Imagine a Greater Montgomery

As a partner of

pitals in all parts of the US, helping children who are fighting cancer.

Montgomery, HMMA is working hard with the local Chamber of Commerce and industry of Montgomery, in conjunction with many business and public leaders in the area, to promote growth of the local economy through public education, the enhancement of competitive power and a spirit of embracing diversity. HMC is contributing to the development of Montgomery through regular donations and the direct participation of employees in activities.

Campaign for Blood Donation Soccer for Hope


Soccer for Hope (SFH) is the non-profit organization founded by Oliver Wyss, a former professional soccer player who overcame aplastic anaemia. Through the soccer community, 'SFH' is engaged in activities that aim to increase societys interest in children who are suffering from illness, complying with the wish of Oliver who wants to pay back the people

USA Red Cross

Association periodically visits the HMA to conduct 'campaign for blood donation'. Many HMA employees participate in the blood drives and the collected blood is then used for emergency situations or for other treatment purposes. In the future, continual campaigns for blood donation will be conducted to contribute to society by helping those in need.

Education Support Business

HAOS is interested in pro-

viding computer education that most schools in its region cannot offer. Thus, the company has donated 52 computers to three schools in Tuzla and support for the IT devices that the schools need. In addition, the company also provides desks, chairs and other accessories needed for the effective use of computers. Going forward, HAOS will continue to invest in education in

Education Support Business

HMMA helps the advance-

who helped him to beat his own illness. 'SFH' has developed into a charity program in which thousands participate nationwide. It collects funds through participation fees for the Camp of Hope, clinic and walking event as well as company sponsorships. In 2006, SFH hosted a joint event with the Hyundai Cup, in which 1,000 children participated with famous players in MLS (Major

ment of the automobile industry in Alabama and cultivates outstanding industrial workers by donating Sonatas for use in training in the vehicle technology education programs at junior highs, high schools and colleges in Alabama. The donated vehicles are used for practical training, while the company continues to

Adopt-A-Family

HMA sponsors 'Share Our Selves', which

Turkey.

is a regional charity organization that helps marginalized people in the region who spend the year-end on their own due to economically challenging family life. 'Share Our Selves' sponsors families of limited economic means through the adoption of the families by HMC employees and their family members.

Employees of HMMA participating in the Read Across America program

Hope on Wheels program of HMA that helps children affected by cancer

Day of the Daffodil HMA employees' fund raising event

Hyundai Torches, a scholarship program of HAOS

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The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

The

Road to Growth, with All Stakeholders Growth Engine of Corporate Vision - Employees for Sustainable Growth - Suppliers Management

Core

Core

Companion

Companion

Customer-First Social

Customer-First Social

Contribution, Center of the Sustainable World

Contribution, Center of the Sustainable World

EU sales corporation (HME) _ Business to Support the Middle Schools of South Africa
The HME Agency in Germany allocates EUR 2 for every car sold to sponsor Harry Gwala Junior High located in South Africa. In addition, the company has increased safety in the classrooms of schools located in dangerous areas by signing contracts with security companies. Moreover, the company has invited the choirs from the schools to the EU for performances, contributing to the artistic and cultural experiences of the students as well.

India production corporation (HMI) _ HMIF (Hyundai Motor India Foundation)


HMI established HMIF on April 10, 2006, and it is now engaged in sustainable contributions to the societys activities based on the structured organization. Whenever a car is sold in India, 100 Ruppee is donated to the HMIF, allocating money to the fund. Currently, medical education, training for employment, environmental protection, traffic and road safety, exchange of artistic and cultural activities, and crisis relief are supported. Moreover, four representative programs, including regional community activities, cultural and artistic activities, scholarships, and relief activities, have

Business Scholarships

HMI provides support so that

Educational Support

BHMC operates an 'education sup-

many more Indian students can benefit from education, and it is conducting industry-academic cooperative activities in a structured manner. In particular, the company has established a technology training program in the Assam region, located at the Northeastern part of India, to provide materials needed for conducting research on vehicles, as well as education and job placement opportunities for students in underdeveloped regions. Moreover, the company has formed alliances with specific universities, as a part of the industry-academic cooperation system, to operate internships and cultivate outstanding human resources through scholarship. In addition, the company has established vehicle training centers in key cities to cultivate A/S

port business' so that students who dream of becoming engineers can gain the necessary technical knowledge by using the latest practical training tools.

Vehicle and Medical Support

BHMC donated 10 Sonata

vehicles to the city of Beijing to help eliminate SARS, and, early on, provided medical and technology personnel to fight the disease. Going forth, BHMC will continue to expand activities that contribute to society, so that it can play the role of a good corporate citizen.

2006 World Cup Event

As an official sponsor of FIFA,

been formed for active operation.

HME was highly commended by soccer fans during the 2006 Germany World Cup for hosting popular events. About 18 million people gathered together at the plazas in 12 cities where the World Cup was being held, and HMC showcased impressive soccer shows and high end entertainment programs.

Hyundai Motor Group China (HMGC) _ Cultivation Human Resource Development


HMGC continues to support educational tools that contribute to the

Regional Community Activities

HMIs 'regional commu-

personnel.

nity activities' is a program formed to increase the sense of community among regional residents, and its main focus is on modernizing regions that are marginalized and updating outdated facilities based on regional community development plans and

Rescue Activities

HMI does not hesitate to reach out to

society. In 2006, HMGC donated various tools to the Joyanggu Donation Management Center, including six used PCs, one TV, one fax and one banknote counter. In 2005, the company donated 100,000 USD to the Korean school in Beijing to assist with its construction efforts.

help in the case of earthquakes, surges, floods and other natural calamities that take place in India. HMI has formed groups of medical volunteers to treat injured people and to control communicable disease and vaccinate for prevention. Moreover, the company has dispatched teams of technicians to fix and check vehicles damaged from the surge, free of charge. The company also has supplied money, clothes and blankets.

Frankfurt Book Fair

HME supports the '2005 Frankfurt

resources. Regions located in the vicinity of the company are targeted to provide medical support, support for education facilities, transportation safety campaigns, environment enhancement activities and so forth in a structured manner.

Book Fair,' which is one of the largest such events in the world. During the five-day event, some 300,000 visitors and reporters from 81 nations visited. HMC donated 30 Grandeur, Sonata, and Trajet cars as official duty vehicles for the use of the steering committee. Through this international event, 'Frankfurt Book Fair', HMC has publicized the Korean culture to the people of the world and Korea itself, as the events official sponsor.

Environmental Protection Activities

In 2006, HMGC

planted 400 Oriental Arbor Vitae trees at the mountain located near Beijing, and HMGC plans to continue to planting trees to

Cultural and Artistic Activities

HMIs 'cultural and artis-

tic activities serve as a program to vitalize cultural interchanges between Korea and India through the promotion of mutual understanding. While publicizing the Korean culture in India, HMI also supports Indias cultural and arts performances. Diverse programs are offered to Indians, such as Korean language class, showcasing Korean movies, Korean cooking class, Taekwondo class, and performances by traditional Korean artists to help form a cultural consensus with the Indians.

Beijing-Hyundai Motor Company (BHMC) _ A Night at Modern Beijing


BHMC contributes to the increased cultural level of the regional residents through diverse cultural events. Night in the modern Beijing is one of the representative events where Beijing residents can enjoy cultural parties, and it is now considered a festival where the residents become one with the BHMC.

ensure environmental protection.

Inko Centre, a center for cultural interchange between Korea and India

BHMC donated 108 engines to major 37 universities in China for research purposes

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Global Research Centers

Domestic Facilities
Headquarters Address : 231, Yangjae-dong, Seocho-gu, Seoul, 137-938, Korea Phone : +82-2-3464-1114 Kye-Dong Office (Domestic Business Division) Address : 140-2, Kye-dong, Chongro-gu, Seoul, 110-793, Korea Phone : +82-2-746-1114 Ulsan Plant Address : 700 Yangjong-dong, Buk-gu, Ulsan, 683-791, Korea Phone : +82-52-280-2114 Asan Plant Address : 123 Kumsong-ri, Inju-myun, Asan-si, Chungchungnam-do, 336-830, Korea Phone : +82-41-530-5114

Overseas Facilities
Asia Beijing Representative Office, KRCN Co.,Ltd Address : 507, GAOLAN BLDG, 32 LIANGMA BRIDGE ROAD, CHAOYANG, BEIJING, CHINA Phone : +86-10-6464-3514 Beijing Hyundai Motor Company (JV) Address : ROOM 601,MILLENNIUM TOWER NO.38 XIAOYUN ROAD,CHAOYANG DISTRICT, Beijing China(POST BOX NO.100027) Phone : +86-10-8453-9888 Hyundai Motor Beijing Office Address : ROOM 701,MILLENNIUM TOWER NO.38 XIAOYUN ROAD,CHAOYANG DISTRICT, Beijing China(POST BOX NO.100027) Phone : +86-10-8453-9666 Beijing Hyundai Motor Company (JV) Hyundai Indonesia Motor Address : JL. SULTAN ISKANDAR MUDA NO 81, ARTERI PONDOK INDAH LT. 2 JAKARTA SELATAN 12240, INDONESIA Phone : +62-21-729-3338 Hyundai Motor Vietnam (HMV) Address : 467 Nguyen Van Linh Str., long Bien Dist., Ha Noi, Viet Nam Phone : +84-4-875-7227 or +84-4-827-2540 Hyundai Motor Company & Kia Motor Corporation Shanghai Office Address : SHANGHAI OFFICE A-F1, 13, FAR EAST INTERNATIONAL PLAZA, NO. 319, XIANXIA RD, SHANGHAI 200051,CHINA Phone : +86-21-6235-0033 Hyundai Asia Resources Inc. Hyundai Motor Japan (HMJ) Address : 18F. Shin-Kasumigaseki Bldg. 3-3-2 Kasumigaseki Chiyoda-Ku, Tokyo Phone : +81-3-3504-8921 Mongolia Hyundai-Kia Auto Co., Ltd. Hyundai Motor Japan R&D Center Address : -2-2 NISHINOHARA INZAI-CITY,CHIBA, JAPAN #270-1334 Phone : +81-476-47-6332 Hyundai Motor India Address : A-30, Mohan Co-Operative Industrial Area, Phase-1 Mathura Road, NEW DELHI 110-044, India Phone : +91-11-695-9110 Hyundai Motor India (HMI) Address : IRRUNKATTUKOTTAI, NH-4 SRIPERUMBUDUR CHENGAI-MGR DT., TAMIL NADU 602-105, INDIA Phone : +91-11-5159-9920 Address : Bayangol Duureg 5 Horoo Peace, Auenue Street 13, UB, MONGOLIA Phone : +976-1-631971 Address : 2272 PASONG TAMO EXTENSION, MAKATI CITY,1200 PHILIPPINES Phone : +632-819-1120 Hyundai Hong Kong Company Ltd Address : Shop B, G/Fl., H&S Building, 36 Leighton Road, Causeway Bay, Hong kong Phone : +852-3428-8257 Address : Northside of Shuanghi Dajie, Westside of Shuntong Road, Shunyi District, Linhe Industrial Development Zone,Beijing, Peoples Republic of China Phone : +86-10-8949-8117 Hyundai Motor SDN. BHD. Address : NO.40, JALAN PEMBERITA U1/49 TEMASYA INDUSTRIAL PARK SEKSYEN U1, 40150 SHAN ALAM SELANGOR DARUL EHSAN Phone : +603-5569-4770 Oriental-Hyundai SDN. BHD. Address : WISMA KAH MOTOR, NO 566, BATU 3 1/2 JALAN IPOH, 51200 KUALA LUMPUR Phone : +603-6259-1888/2888 +603-6252-9621 Hyundai Motor Asia Representative Office Address : Level 5, Wisma Hong Leong, 18 Jalan Perak, 50450, Kuala Lumpur, Malaysia Phone : +60-3-2713-8383

Overseas Facilities
America Hyundai Motor America (HMA) Address : 10550 Talbert Avenue, P.O.Box 20850, fountain Valley,CA 92728 0850, USA Phone : +1-888-965-8282 Hyundai Motor Manufacturing Alabama Address : 7515 HALCYON SUMMIT DR. MONTGOMERY ALABAMA 36117, U.S.A Phone : +1-334-387-8100 Europe / Africa Hyundai America Technical Center. Inc Address : 5075 VENTURE DR. ANN ARBOR ,MI 48108, U.S.A.(MICHIGAN) Phone : +1-734-213-3302 Hyundai & Kia Motors Design & Technical Center(Irvine) Address : 81 BUNSEN IRVINE. CA 92608,U.S.A(California) Phone : +1-949-585-7015 Hyundai Washington Office Address : 1660 L Street, NW, Suite 201 Washington, DC 20036 U.S.A. Phone : +1-202-296-5550 Hyundai Motor Company Poland Hyundai Detroit Office Address : 26200 TOWN CENTER DRIVE SUITE 345 NOVI,MI 48375, U.S.A. Phone : +1-248-468-2414(ext-101) Hyundai Motor Hungary HMC Chicago Br. Address : 411 KINGSTON COURT MT. PROSPECT CHICAGO, IL60056 U.S.A. Phone : +1-847-655-0146 Hyundai Motor Company Latin America & Caribbean Operations Address : 9250 NW 25th Street Miami, FL 33172 U. S. A. Phone : +1-305-470-8001 Hyundai Auto Canada(HAC) Address : 75 Frontenac Drive, Markham, Ontario L3R 6H2, Canada Phone : +1-905-948-6712 MMC Automotriz S.A. Address : Zona Industrial los Montones,Barcelona, Eslado Anzoategui,Apartado Postal 151, Venezuela Phone : +58-281-276-2222 Hyundai Assan Otomotive Sanayive Ticaret A.S. Address : E-5 KARAYOLU 32KM 81700 TUZLA ISTANBUL, TURKEY Phone : +90-216-581-0012 Hyundai Comtrans Address : 107113, Russia, Moscow, Sokolnichesky val, bld. 1A Phone : +7 495 730-55-88 Hyundai Motor CIS Address : 127410, Moscow, Altufievskoe shosse, 31/1 Phone : (495) - 788-62-67 Address : H-1114 Budapest, Bartok Bela ut 47. Phone : +36 1 887 5700 Address : Natpoll Bldg. No. 30, 4, Migdalowa Street,02-796 Warsaw,Poland Phone : +48-22-645-1625 Hyundai Motor Europe Technical Center GmbH Address : Marie-Curie-Strasse 2, 65428 Russelsheim, Germany Phone : +49-6142-7899-622 Hyundai Auto Norge AS Address : Ensjoveien 12D, 0605 OSLO, NORWAY Phone : +47-22-70-6154 Hyundai Motor Company Australia Address : 8 Baywater Dr. Homebush Bay, NSW 2127 Phone : +61-2-9763-3571 Hyundai Automotive Distributors Australia PTY Ltd. Address : Harbourside Business Park Unit 1, 8 Baywater Drive HOMEBUSH BAY NSW 2127 Phone : +612 9763-3333 Oceania Hyundai Motor Europe GmbH Address : Marie-Curie-Strasse 2, 65428 Russelsheim, Germany Phone : 49-6142-7899-360 Hyundai Automotive South Africa (Pty) Ltd. Address : 138 Van Riebeeck Avenue, Edenvale 1600. Suite 274, Private Bag X10016, Edenvale 1610 Johannesburg, South Africa Phone : +27 11 372 0800 Hyundai Motor Argentina S.A. Address : Av. Panamericana 3611 (Puente San Lorenzo)1686-Olivos. Prov. Buenos Aires Argentina Phone : +5411-4799-3882 Hyundai Motor Company (Africa & Middle East Regional Headquarters) Address : #2903, API WORLD TOWER SHEIKH ZAYED ROAD, P.O BOX 34406 DUBAI, U.A.E. Phone : +971-4-332-6667 Hyundai CAOA do Brasil Address : Av. Ibirapuera, 2822 - Moema, CEP 04028 - 002, Sao Paulo, Brazil Phone : +55-11-5538-1138 Hyundai CAR (UK) Ltd. Address : ST. JOHN'S COURT,EASTON STREET, HIGH WYCOMBE,BUCKS, HP11 1JX,THE UNITED KINGDOM Phone : +44 1 494 42 8600

Jeonju Plant Address : 800 Yongam-ri, Bongdong-eup, Wanjugun, Jeollabuk-do, 565-902, Korea Phone : +82-63-260-5114 Hyundai & Kia Corporate R&D Division Address : 772-1, Changduk-dong, Hwaseong-si, Gyeonggi-do, 445-706, Korea Phone : +82-31-368-5114 Hyundai & Kia Eco Technology Research Institute Address : 104, Mabuk-dong, Giheun-gu, Yongin-si, Gyeonggi-do, 446-912, Korea Phone : +82-31-899-3057

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GRI Index

GRI Index
( Reported, Partly reported, - Not reported)
Governance 4.9 Procedures of the highest governance body for overseeing the organizations identification and management of economic, environmental, and social performance 4.10 4, 5, 13 8 8, 9 10~11, 120~121 Commitments 4.11 to external initiatives 8, 120 10~11 4.13 4.12 Processes for evaluating the highest governance bodys own performance, particularly with respect to economic, environmental, and social performance Explanation of whether and how the precautionary approach or principle is addressed by the organization Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses Memberships in associations (such as industry associations) and/ or national/international advocacy organizations in which the organization 23 9, 30 Stakeholder Engagement 4.14 4.15 4.16 8 28, 29 4.17 List of stakeholder groups engaged by the organization Basis for identification and selection of stakeholders with whom to engage Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group 85 85 86~88, 98, 99, 37 00 16, 17, 89
See 'Board of Directors and Organization' in Business Report

GRI Indicator Strategy and Analysis 1.2 Organizational Profile 2.1 2.2 2.3 1.1 Statement from the most senior decisionmaker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy Description of key impacts, risks, and opportunities Name of the organization Primary brands, products, and/or services Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures 2.4 2.5 Location of organizations headquarters Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report 2.6 2.7 Nature of ownership and legal form Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries) 2.8 2.9 Scale of the reporting organization Significant changes during the reporting period regarding size, structure, or ownership 2.10 Report Parameters Report Profile 3.1 3.2 3.3 3.4 Report Scope and 3.5 3.6 3.7 Awards received in the reporting period Reporting period for information provided Date of most recent previous report Reporting cycle Contact point for questions regarding the report or its contents Process for defining report content Boundary of the report State any specific limitations on the scope or boundary of the report

Page 3

Remark

Comment

See 'Board of Directors and Organization' in Business Report

102~104, 109, 110, 128~131 86~109, 128~131

Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics

7, 32, 33 00 00 00 133 00 00 00


Some data on environmental and social performance is related to domestic sites only and the limitations are specified in the relevant charts and graphs

and concerns, including through its reporting Economic Management 5.1 Approach Economic Performance EC1 Core Direct economic value generated and distributed, including revenues, operating 8, 25, 109, 110 costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments EC2 Core Financial implications and other risks and opportunities for the organizations activities due to climate change EC3 EC4 Core Core Coverage of the organizations defined benefit plan obligations Significant financial assistance received from government
See the appendix 2-10,reserve for retirement allowances in the Audit Report See the appendix 15, income taxes and deferred tax assets (liabilities) in the audit Report for the amount of tax credit for corporate income

Management Approach and Performance Indicators

16, 17

See the appendix 24, calculation of added value in the Audit Report

37~49

Boundary

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.

No major change took place

Market 00
By utilizing external experts, the credibility of measuring the data on environmental performance is improved

EC5

Add

Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation

See the appendix VII-2, status of employment in the Audit Report

3.9

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report.

Presence EC6 Core

Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation

29, 100

3.10

Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement

No restated information

EC7

Core

Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation

86~88

3.11

Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

67

Reporting boundaries of some environmental performance data has changed. The changes are specifed in appendices.

Indirect Economic Impacts

EC8

Core

Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, inkind, or pro bono engagement

106~119

GRI Content Index Assurance

3.12

Table identifying the location of the Standard Disclosures in the report.

122~125

EC9 126, 127 Environmental 22, 23 22 Management 5.2 Approach Materials EN1 EN2 22 Energy EN3 EN4 EN5 17 EN6

Add

Understanding and describing significant indirect economic impacts, including the extent of impacts Management Approach and Performance Indicators

86, 100, 108~110

3.13

Policy and current practice with regard to seeking external assurance for the report.

18, 19

Governance, Commitments,

Governance

4.1 4.2

Governance structure of the organization Indicate whether the Chair of the highest governance body is also an executive officer

Core Core Core Core Add Add

Materials used by weight or volume Percentage of materials used that are recycled input materials Direct energy consumption by primary energy source Indirect energy consumption by primary source Energy saved due to conservation and efficiency improvements Initiatives to provide energy-efficient or renewable energy based products

63 51~53 63~65 64~65 64~65 37~46

and Engagement 4.3

For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members

4.4

Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body

and services, and reductions in energy requirements as a result of these initiatives


See'Board of Directors and Organization' in Business Report

4.5

Linkage between compensation for members of the highest governance body, senior managers, and executives

EN7 Water EN8 EN9

Add Core Add

Initiatives to reduce indirect energy consumption and reductions achieved Total water withdrawal by source Water sources significantly affected by withdrawal of water Percentage and total volume of water recycled and reused Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

57~61, 64~66 69 77~79 69 77~79

4.6

Processes in place for the highest governance body to ensure conflicts of interest are avoided

See'Board of Directors and Organization' in Business Report

EN10 Add
See'Board of Directors and Organization' in Business Report

4.7

Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organizations strategy on economic, environmental, and social topics

Biodiversity

EN11 Core

EN12 Core 16, 17 EN13 Add

Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas Habitats protected or restored

77~79

4.8

Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation

77~79

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GRI Index

GRI Indicator Biodiversity EN14 Add Strategies, current actions, and future plans for managing impacts on biodiversity EN15 Add Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk Emissions, Effluents, and Waste EN16 Core EN17 Core EN18 Add EN19 Core EN20 Core EN21 Core EN22 Core EN23 Core EN24 Add Total direct and indirect greenhouse gas emissions by weight Other relevant indirect greenhouse gas emissions by weight Initiatives to reduce greenhouse gas emissions and reductions achieved Emissions of ozone-depleting substances by weight NOx, SOx, and other significant air emissions by type and weight Total water discharge by quality and destination Total weight of waste by type and disposal method Total number and volume of significant spills Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally EN25 Add Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organizations discharges of water and runoff Products and Services EN27 Core EN26 Core Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation Percentage of products sold and their packaging materials that are reclaimed by categor Compliance EN28 Core Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations Transport EN29 Add Significant environmental impacts of transporting products and other goods and materials used for the organizations operations, and transporting members of the workforce Overall Society EN30 Add Total environmental protection expenditures and investments by type Management Approach and Performance Indicators

Page 77~79

Remark

Comment Investment HR3 Add Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained HR4 Core Total number of incidents of discrimination and actions taken 87
No incident of discrimination

87

and Procurement 77~79 Practices Non65~66 65~66 37~46 74 71, 73 72 68 N/A N/A

Discrimination Freedom of association and collective bargaining Child Labor HR6 Core Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor Forced and Compulsory Labor Security HR8 Add HR7 Core Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor Percentage of security personnel trained in the organizations policies or 94 88 88 HR5 Core Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights 88

77~79

Practices Indigenous Rights HR9 Add

procedures concerning aspects of human rights that are relevant to operations Total number of incidents of violations involving rights of indigenous people and actions taken SO1 Core Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, 106~119 Data not collected

37~62, 80~83

Society

Community

50~53, 56, 68

Corruption No sanction imposed (incl. monetary penalties)

including entering, operating, and exiting SO2 Core Percentage and total number of business units analyzed for risks related to corruption SO3 Core Percentage of employees trained in organizations anti-corruption policies and procedures SO4 Core Public Policy SO5 Core Actions taken in response to incidents of corruption Public policy positions and participation in public policy development and lobbying SO6 Add Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country No political contribution is made

20, 21

21

65, 66

21 59~62

76 16, 17, 20, 21, 106, 107

Management 5.3 Approach

Labor Practices Employment and Decent Work

LA1 LA2 LA3

Core Core Add

Total workforce by employment type, employment contract, and region

86, 87

Business confidential Not reported

Anti-Competitive SO7 Add Behavior Compliance SO8 Core

Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations

See the appendix 18, Contingency and Commitment in the Audit Report

Total number and rate of employee turnover by age group, gender, and region Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations

See the appendix 18, Contingency and Commitment in the Audit Report

Labor/

LA4

Core Core

Percentage of employees covered by collective bargaining agreements Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements.

93 93

Product Responsibility

Customer Health and Safety

PR1

Core

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

102~105

Management LA5 Relations Occupational LA6 Health and Safety LA7

Add

Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs.

88

PR2

Add

Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes

21, 104

Core

Rates of injury, occupational diseases, lost days, and absenteeism, and number of workrelated fatalities by region.

89

Product and Service Labeling

PR3

Core

Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements

102~105

LA8

Core

Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

89, 90

PR4 Add

Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling,

21, 104

LA9 Training and Education

Add

Health and safety topics covered in formal agreements with trade unions Average hours of training per year per employee by employee category Programs for skills management and lifelong learning that support the

89, 90 92 90~92

Marketing Communications PR6 Core PR5 Add

by type of outcomes Practices related to customer satisfaction, including results of surveys measuring customer satisfaction Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship 30, 32, 33, 102, 103 21

LA10 Core LA11 Add

continued employability of employees and assist them in managing career endings. LA12 Add Percentage of employees receiving regular performance and career development reviews. Diversity and Equal Opportunity LA14 Core Human Rights Investment and Procurement Practices HR2 Core HR1 Core LA13 Core Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity. Ratio of basic salary of men to women by employee category Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken 58 ` See the appendix VII-2, status of employment in the Business Report Human rights protection screening is a basic requirement for overseas investments According to the Environmental Friendly Parts Supply Agreement, screening on human rights is conducted

92

22, 23, 86, 87

PR7

Add

Total number of incidents of non-compliance with regulations and

21, 104

voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes Customer Privacy Compliance PR9 Core PR8 Add Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services
See the appendix 18, Contingency and Commitment in the Audit Report

20, 21

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Assurance Report

Assurance Report
To the readers of the Hyundai Motor Company 2007 Sustainability Report

WORK UNDERTAKEN AND CONCLUSIONS Financial Data


We have reconciled the data on financial performance for the year 2006 listed below, with the audited 2006 Non-Consolidated Financial Statements of HMC.

INTRODUCTION
We have been engaged by HMC to review specified information in the Hyundai Motor Company 2007 Sustainability Report (further referred to as The Report). The Report, including the identification of material issues, is the responsibility of the company's management. Our responsibility is to issue an Assurance Report in relation to the scope described below.

Sales and Net income on page 8, 25 Assets, Liabilities, and Shareholders eguity on page 8, 25 Dividend per common share, Dividend paid-out, Net income per share on page 25

Based on the above, the data on financial performance, as specified above are properly derived from the 2006 Non-Consolidated Financial Statements of HMC, for which the independent auditors issued an unqualified audit opinion dated January 26, 2007.

CONTEXT AND SCOPE


In The Report HMC describes its efforts and progress in relation to sustainability and reporting. Our engagement was designed to provide the readers of The Report with: reasonable assurance on whether the data on financial performance, as specified in the section Work undertaken and conclusions are properly derived from the 2006 Non-Consolidated Financial Statements of HMC. limited assurance on whether : the information in the following sections of The Report is fairly stated: -Green Procurement (pages 57 to 62) -Clean Production (pages 63 to 79) -Core Growth Engine of Corporate Vision - Employees pages 86 to 97) -Companion for Sustainable Growth - Suppliers (pages 98 to 101) -Social Contribution, Center of the Sustainable World(pages 106 to 119) Following our review we discussed changes to the specific sections with HMC, and reviewed the final version of The Report to ensure that it reflected our findings. Based on the above, the information in the sections, Green Procurement (pages 57 to 62), Clean Production (pages 63 to 79), Core Fairly stated means that the report properly reflects the information contained in the underlying sources such that it is consistent with the source information. Reasonable assurance is a higher level of assurance than limited assurance, which is reflected in the nature and depth of the work performed. To obtain a thorough understanding of the financial results and financial position of HMC, the reader should consult the HMC audited Non-Consolidated Financial Statements for the year ended 31 December 2006. Growth Engine of Corporate Vision - Employees (pages 86 to 97), Companion for Sustainable Growth - Suppliers (pages 98 to 101), Social Contribution, Center of the Sustainable World(pages 106 to 119) does not appear to be unfairly stated.

Specific Sections
For the information in the sections of The Report, as specified above under Context and scope we conducted: a media and internet search in relation to HMC to obtain insight into the relevant sustainability aspects in the reporting period; a review of the systems and processes used to generate this information; a review of internal documentation and intranet sources; interviews with staff in order to assess the information included in the specific sections.

COMMENTARY
Without affecting the conclusions presented above, we would like to draw readers attention to the following:

STANDARDS AND CRITERIA


We conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE 3000):Assurance Engagements other than Audits or Reviews of Historical Financial Information , issued by the International Auditing and Assurance Standards Board. Amongst others this standard requires that:

We come to conclusion that a thorough attention is required for standardization of data generation, aggregation and reporting scheme due to variety of the site as well as each business unit of HMC. On top of that, we recommend that the function of Environmental Management Strategy Planning Team should be empowered to efficiently drive corporate sustainability management. Furthermore, we think that HMC should strengthen engagement systems with various stakeholders.

the assurance team members possess the specific knowledge, skills and professional competencies needed to understand and review the information in The Report, and that they comply with the requirements of the IFAC Code of Ethics for Professional Accountants to ensure their independence; when providing limited assurance, which is a lower level than reasonable assurance, a negative form of conclusion is used.

We have discussed our observations as well as reporting process beyond the scope of our contract with HMC management and found them receptive to our comments. November 2007

There are no generally accepted standards for reporting sustainability performance. HMC applies its own internal sustainability performance reporting criteria, in addition to using the G3 Sustainability Reporting Guidelines of the Global Reporting Initiative.

Samjong KPMG Advisory Service Inc.

CONSIDERATIONS AND LIMITATIONS


Environmental, health, safety and social performance data are subject to inherent limitations given their nature and the methods used for determining, calculating and estimating such data.

Managing Partner & President Suh Boo-Tek

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2007 HMC Sustainability Report Review Opinion

Corporate Governance and Management System

HMC 2007 Sustainability Report Review Opinion

Corporate governance should be built around the principles of rationality, efficiency, and transparency. Strong leadership, though necessary for long-term growth, can be a risk if there is no mechanism of check and balance. According to the report, HMC corporate governance seems to lack the mechanism of check and balance. Efforts to improve and report this issue should be made. For instance, the company needs to set up a system to ensure independent selection and nomination of outside directors to its BOD.

HMC Sustainability Report Review Committee


Recognizing the importance and contribution of stakeholder engagement to higher corporate competitiveness, Hyundai Motor Company (HMC) has established a Sustainability Report Review Committee (the committee) comprised of Korean and International experts, for the first time in Korea, as part of its efforts to ensure open and transparent communication procedures. This, we recognize, is a laudable effort. Another point raised by the committee members was that strategies and efforts for integrating various sustainability programs should be further elaborated in the report, instead of simply listing the programs. The report, for instance, lists activities such as declaration of the code of conduct, elimination of bribery, and setting up ethics division for ethical and transparent management. However, what must come first is integration of such programs with the management system-i.e. building good corporate governance and balanced decision-making process, and improving evaluation of individuals/departments that may trigger unethical behavior. The committees aim is to review the contents of the sustainability report, provide ideas for further improvement and make recommendations regarding the challenges and opportunities of sustainable development that face HMC. The committees role is not to offer any kind of assurance as the report will undergo separate verification. The scope of the review is limited to the printed report.

Environment
HMC is indeed making a lot of investments in climate change and air pollution reduction, while actively introducing environmental management, i.e. green procurement and clean production. However, the report could have been more complete if it included comprehensive analysis on how the current programs contributed to CO2 reduction and air pollution. As a global leader, we expect HMC to be engaged in more proactive environment programs, going beyond merely reacting to laws and regulations, by setting up CO2 reduction targets and implementing a mid-to-long-term plan against air pollution. In addition, information on environmental management can be summarized for balance with other areas. Details can be made available via HMC website for interested readers, as many other global companies do.

The committee reviewed the draft and the final report between September and November 2007. A total of four committee meetings were held, one of which was attended by the international members. This provided HMC an opportunity to respond to the committee members comments by making changes to the report where possible. The committee members convey opinions in individual capacities and do not represent the perspectives of their organizations.

HMC Sustainability Report


HMC has been publishing sustainability reports every year since 2003. It also launched the committee this year as part of its efforts to fulfill its commitment to set up and operate a stakeholder consultation body, specified in the 2006 report. The committee operation is the first step toward fulfilling the commitment. This is a positive signal that the company will better integrate with the society in the future.

Society
We appreciate HMC efforts to set a long-term vision and systematically implement social contribution. However, the company will benefit further by exploring social programs that fit better with the nature of the industry from a strategic perspective.

Notably, the 2007 report features candid interviews with the CEO and allocates a separate section on its climate change efforts. This shows that HMC is evolving toward building a corporate-wide sustainable management strategy. The HMC report team has also made endeavors to reflect as diverse opinions as possible from the committee. Some inputs, where immediate actions could not be taken by HMC, were approached from a long-term perspective.

Meanwhile, the report only briefly and superficially mentions labor issues. The HMC labor disputes for the past few years have been hurting corporate reliability and brand value. Building constructive and co-prosperous labor relations are one of the key concerns of the many stakeholders including investors and therefore, the company is advised to include its basic direction and full commitment to implement trust building plans, to the extent that the plans dont breach the HMC position of No Labor No Pay. This is part of the fiduciary obligations for the stakeholders.

However, to fully honor its commitment to sustainable management, HMC is well advised to pay more attention to specific and detailed actions, to focus on its key sustainability issues, and to better link the key issues with the management. In particular, not only HMC strengths and performances but also its shortcomings and improvement plans should be described to obtain higher level of trust from the stakeholders.

Threats and Opportunities for HMC


HMC already boasts global competitiveness in many areas including product design, engine technology, efficient supplier infrastructure, and advanced environmental management system. In particular, its investments in high fuel efficiency, emission control, and green

The report introduces general management philosophy of the company as a starting point of sustainable management. However, the management philosophy items, i.e. convenient car life, environmental management, socially responsible management, ethical management, and transparent management, are not all clearly aligned to sustainability. We, thus, recommend HMC, in the long-term, to reestablish its management philosophy that embraces and harmonizes these concepts.

technologies will be key leverage points under the threats of high oil prices and climate change.

However, despite such strengths, the lack of corporate governance transparency and the repetition of unconstructive labor strikes every year are amplifying uncertainties for the company. Moreover, the report fails to include clear strategies and positions about these potential threats. The statement, HMC has aligned its internal decision- making and relevant standards to prevent recurrence of law-

HMC endeavored, in its report, to include the GRI G3 indicators as well as information on key performance indicators, thereby providing a wide range of data on key issues. However, the report is not clear in terms of prioritization of the issues according to the principle of materiality contained in the G3 guidelines. It thus leaves room for improvement for the company to build a systematic process of selecting material issues based on company and stakeholder priorities and to link it with the reporting scope. This would help readers identify which are the key issues for HMC to address.

suits involving its executives and will make sure to pursue substantial social contribution. We will make best efforts to turn this into a positive opportunity for sustainability is too broad and abstract. HMC, in this regard, is advised to express basic direction, principles, and long-term roadmap for these issues, if unable to offer short-term solutions.

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In addition, HMC is yet to establish and implement clear vision and strategies for commercialization of alternative fuel vehicles, such as hybrid engines and hydrogen cars, and energy efficient vehicles. Meanwhile, by improving the transparency of corporate governance and building productive labor relations, HMC will be able to realize full potential in the market.

Byoung-Doo Lee, Vice Chairman/Ph.D, Horwath Choongjung Consulting Corp. HMC has been publishing sustainability report for over four years now. The report embraces many of the G3 indicators and the concept of materiality. However, it only includes, as the companys major economic activities, overseas operations, brand empowerment, and new car quality improvement. Renewed understanding and changes are required here. In addition, the report needs to explain, through concrete indicators, how environmental and social performances contributed to economic performance.

Stakeholder Engagement
The fact that the report systematically defines stakeholders and describes their relationships with the company is good evidence that the HMC understands the report as an important tool for stakeholder communication. However, the report can be improved by showing specific examples of stakeholder engagement activities, the resulting outcomes as well as the companys actions in response to stakeholder expectations, taking a systematic and robust approach. Jason Perks, Sd3 Ltd., Founding Director I commend HMC on its progress in managing and reporting on its economic, environmental and social performance over the past four years. HMC has become a truly international company, and its future growth is focused on global markets. The company is already showing world-class performance in many areas, including fuel efficiency, quality and customer feedback. There are some impressive commitments from the CEO and I look forward to seeing this develop into a world-class sustainability strategy addressing

Conclusion
The committee highly appreciates HMC for preparing sustainability reports and for voluntarily operating an external review committee, for the first time in Korea. Such attempt is expected to enhance the status of HMC as a global leader and to have significant implications to other companies, publishing or planning to publish sustainability reports in the future. The review opinion was prepared for further development of HMC and the committee is delighted at this opportunity to help HMC improve its sustainability performance. Lastly, the committee looks forward to a positive reflection of its opinions in the short and long term sustainability strategies of the company and future reports.

not just the immediate tough issues such as fuel economy, governance and labor issues, but wider challenges such as sustainable mobility.

Alan Knight, AccountAbility, Head of Standards In the future, stakeholders will be looking to Hyundai to refine and expand their commitment to the environment and society in ways that will not materially impact their current record of success. What this means in practice is a focus on and investment in the next generation of transportation. This will be the generation that takes the economically viable step away from fossil fuel powered vehicles. This is not a leap of faith, but the leap of leadership.

Quotation from
Byong-Hun AHN, Professor of KAIST Graduate School of Management, Director of KAIST CSR Research Center HMC is experiencing growing pains, but it is already leading the industry in the areas of fuel efficiency, environment technology, and green partnership with its vendors. Further progress in corporate governance transparency and labor relations will certainly make it a truly global leading auto company and this, in itself, will be the biggest contribution to society.

2007.11 HMC Sustainability Report Review Committee

Young-Woo Park, President, Business Institute of Sustainable Development, KCCI This report helped me understand, in general, HMC activities and programs. I was especially impressed by the companys efforts and contribution to sustainability via environment-friendly management and production. However, HMC, a local and global leader, can improve further in terms of better matching its activities with the corporate vision and management philosophy and of leading the sustainability issues rather than merely complying with the regulations.

Professor of KAIST Graduate School of Management

Byong-Hun AHN Young-Woo Park Il-Chung Kim Byoung-Doo Lee Jason Perks Alan Knight

Il-Chung Kim, Professor of Department of International Trade, Dean of Office of International Programs and Education, Dongguk Univ. HMC continues to invest more in environment preservation, but such is not fully reflected in its management philosophy or annual management objectives. HMC brand value will be further enhanced if and when the CEO recognizes child asthma patients, victims of air pollution, as his stakeholders and commits himself to environment protection throughout all management activities.

President, Business Institute of Sustainable Development, KCCI Professor of Department of International Trade, Dongguk Univ. Vice Chairman/Ph.D, Horwath Choongjung Consulting Corp. Sd3 Ltd., Founding Director AccountAbility, Head of Standards

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Reference Material

Reference Material
Published Report
2002 Environment Report 2002/2003 Sustainability report 2003/2004 Sustainability report 2005 Sustainability report 2006 Sustainability report
2002 2002/2003 2003/2004 2005 2006

Others
Business report PR report Society contribution white paper Others

Domestic and Foreign Public Website


Financial information Financial Supervisory Service. Data Analysis, Retrieval and Transfer System Society contribution Ethical management csr.hyundai-motor.com audit.hyundai-motor.com club.hyundai-motor.com/tog club.hyundai-motor.com/gog club.hyundai-motor.com/vinside club.hyundai-motor.com/amg Motor show 2006motorshow.hyundai-motor.com 2007motorshow.hyundai-motor.com Representative vehicle equus.hyundai-motor.com veracruz.hyundai-motor.com grandeur.hyundai-motor.com sonata.hyundai-motor.com santafe.hyundai-motor.com i30.hyundai-motor.com avante.hyundai-motor.com verna.hyundai-motor.com grandstarex.hyundai-motor.com tuscani.hyundai-motor.com Equus Veracruz Grandeur Sonata Santa fe i30 Santa fe Verna Grand starex Tuscani worldcup.hyundai-motor.com www.hyundai-motorsfc.com www.asanmuseum.com Young Hyundai Woman Hyundai Others club.hyundai-motor.com/alc club.hyundai-motor.com/khan www.young-hyundai.com www.woman-hyundai.com www.hkventure.co.kr www.marketing-forum.co.kr Venture plaza Marketing forum World cup Soccer team Honorary President Jung Ju Yung ir.hyundai-motor.com dart.fss.or.kr Club club.hyundai-motor.com club.hyundai-motor.com/j2 club.hyundai-motor.com/soc Main Avante Tuscani& Tiburon Santa Fe Grandeur Grandeur Atos & Visto Accent Terracan

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www.bluemembers.co.kr www.globalserviceway.com

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