SEOUL — South Korean conglomerate Hyundai Motor Group shook up its executive ranks on Tuesday and appointed its first foreign head of research and development, raising expectations of a smooth transition of power at the family-run business empire.
The reshuffle, first reported by Reuters on Tuesday and confirmed by Hyundai on Wednesday, is part of preparations for generational change in the executive ranks at South Korea’s second-largest family-owned business empire.
Group President Albert Biermann, a German former BMW executive, was named head of research and development, replacing longtime executives Yang Woong-chul and Kwon Moon-sik. The move was seen as a significant step to bring in fresh ideas at the Korean-dominated group.
In all, 17 top executives were reassigned across the group including at Hyundai Motor Co and Kia Motors Corp — which together form the fifth-biggest automaker in the world.
The move follows the promotion of Euisun Chung in September to Hyundai Motor’s executive vice chairman, moving him closer to succeeding his 80-year-old father, Mong-Koo Chung, as group chairman.
It comes as Hyundai Motor Co battles to reverse falling profits as a result of U.S. recall costs and weak sales in the U.S. and Chinese markets.
Hyundai Motor Co shares jumped as much as 9 percent to their highest level since Oct. 10, while shares in affiliates like Hyundai Mobis, Hyundai Wia and Hyundai Glovis also rallied.
While the announcement by Hyundai on Tuesday of a major investment in fuel cell production also lifted sentiment, analysts said most of the share price rise could be attributed to the leadership changes.
In particular, it signaled that the junior Chung was making progress with his plans to restructure the sprawling group after a previous plan was scrapped due to opposition from U.S. hedge fund Elliott.
“The reshuffle signals that the junior Chung is tightening his grip on the conglomerate, a move which raises investors’ hopes for change,” said Kim Joon-sung, an analyst at Meritz Securities.
In a sign that Chairman Chung’s grip may be weakening, one of his closest lieutenants, Hyundai Motor Co Vice Chairman Kim Yong-hwan, was reassigned away from the core automaker and named vice chairman of steelmaking affiliate Hyundai Steel.
A person familiar with the matter told Reuters on Tuesday that the reshuffle was “part of a generational change (the junior) Chung is pushing for.”
Hyundai Motor Co chief innovation officer Youngcho Chi was promoted to president, as the automaker tries to catch up with its rivals in future technologies such as car-sharing.
Biermann, a former BMW performance vehicle development official, is one of several foreign executives that heir apparent Chung, 48, has brought into the traditionally Korean-dominated group. — Reuters