Hyundai Motor Group’s Namyang Research and Development Center, located in Hwaseong, Gyeonggi Province, South Korea, spans a significant 3.3-square-meter area and is staffed by 14,000 researchers. The center recently experienced a significant reorganization, highlighted by the departure of Kim Yong-hwa, the Chief Technology Officer (CTO), on Dec. 28. This shift comes just six months after his appointment and is seen as unusual due to its rapid occurrence.
Kim Yong-hwa, who played a key role in helping Hyundai-Kia achieve a record operating profit of more than $19.4 billion (25 trillion won) this year, stepped down from his role as an advisor, marking a significant transition in the company’s leadership structure. The restructuring at the Namyang R&D Center is partly attributed to the need for accountability in the midst of confusion surrounding software development. As the automotive industry pivots towards software as a crucial component in future vehicles, Hyundai Motor Group has faced challenges in integrating this new focus with its traditional strengths in engine and transmission performance.
In its New Year’s speech earlier this year, Hyundai Motor Group expressed its intention to transform all of its vehicles into ‘software-centered cars’ by 2025. This strategic pivot towards Software Defined Vehicle (SDV), which would be equipped with 2,000 to 3,000 semiconductors, is seen as core to the future of automotive technology. To achieve this goal, Hyundai and Kia have been restructuring their organizations over the past four to five years. This includes merging with and acquiring autonomous driving technology companies, such as 42dot, and significantly expanding their focus on software and semiconductor expertise.
The recent appointments and structural changes at Hyundai Motor Group underscore the complexities of this transformation. This acquisition of 42dot last year, which positioned the company as the group’s ‘global software center,’ has led to some operational challenges. These challenges arise primarily from its integration with the separate software development organization at the existing Namyang R&D Center. The leader dynamics, with Song Chang-hyun at the helm of 42dot and Kim Yong-hwa leading the Namyang R&D Center, have reportedly faced obstacles in achieving smooth collaboration.
These challenges are further compounded by the differing work cultures of the mechanical and computing departments. Mechanical engineers, who focus on minimizing defects through rigorous testing and uphold a strict hierarchical structure due to the intricate nature of automobile components, contrast sharply with computing professionals. The latter group tends to be more accommodating of minor errors, prioritizing overall functionality over perfection.
Internal conflicts within Hyundai Motor Company have also surfaced. Researchers in the internal combustion engine department emphasize that the fundamental aspect of a car is safety, viewing any failure as unacceptable, focusing on rectifying errors to enhance the vehicle’s performance. Furthermore, there is a perception within the group that despite the substantial profits generated by internal combustion and hybrid cars, the organization places greater emphasis on software personnel, who command significant resources. The head of the group has expressed a desire to reorganize before these internal differences adversely impact the group’s overall competitiveness.
