Hyundai Motors Exports Engne Manufacturing Skill.

For the first time in the history of Korean auto industry, Hyundai Motors will receive the royalties on engine manufacturing technique which is a major part in car production. It has passed twenty-five years since1976 when Hyundai Motors developed the new model ‘Pony’ receiving engine manufacturing technique from Mitsubishi Corporation, to reach the level of transferring its own skill to foreign companies. On June 8th, in order to jointly develop an engine for a passenger car, the Korean car manufacturing company signed a contact with ‘Global Engine Alliance’ which it established last month jointly with Daimler Chrysler and Mitsubishi Corporation on transferring ‘θ engine’ manufacturing technique which will be used for Hyundai’s NF (the next model of New EF Sonata). Under the contract, Hyundai Motors will be paid the royalties of 65.5million dollars (about 81 billion won) in total for ten years. The net income from the royalty is to be 57million dollars (about 70 billion) won because Hyundai’s subsidiaries in the U.S. obtain 33.3% shares of Global Engine Alliance and also have to pay the royalty of 8.5 million dollars.

Global Engine Alliance will embark on the joint development of 1.8ℓ, 2.0ℓ, 2.4ℓ 4-cylinder gasoline engine based on ‘θ Engine’ and consolidation of each firm’s skills. Jointly developed engine will be built in Hyundai’s car first in Mach of 2004, Daimler Chrysler’s in June of 2005 and then Mitsubishi’s in March of 2006.

Seung-Jin Kim sarafina@donga.com