Hyundai Motor Company

Annual Financial Report

HYUNDAI MOTOR COMPANY

For the year ended December 31, 2023

Responsibility Statement for Hyundai Motor Company

To the best of my knowledge,

(a) the financial statements prepared in accordance with the applicable set of

accounting standards give a true and fair view of the assets, liabilities, financial

position and profit or loss of Hyundai Motor Company and the undertakings

included in the consolidation taken as a whole and

(b) the management report includes a fair review of the development and

performance of the business and the position of Hyundai Motor Company and the

undertakings included in the consolidation taken as a whole, together with a

description of the principal risks and uncertainties that Hyundai Motor Company

faces.

Jaehoon Chang

President & CEO

March 20

, 2024

Management Report

1. Business Overview

Hyundai Motor Company (HMC, the Company) and its subsidiaries (Consolidated entities)

consist of Automotive Division, Finance Division and Others Division. Automotive Division

comprises the manufacturing and sales of vehicles, their parts and accessories. Finance

Division encompasses the automotive installment financial business and payment gateway

services, and Others Division includes the manufacturing of locomotives, and more.

Out of total revenue, the Automotive Division, the Finance Division, and the Others Division

account for 80%, 14%, and 6%, respectively. The status of major companies is as follows :

Division

Major Company

Major Product

Automotive

Hyundai Motor Company, HMA, HME,

HMCA, HMMA, HMMC, etc.

Vehicles, etc.

Finance

Hyundai Card, Hyundai Capital, HCA, etc.

Installment finance,

Lease, Credit Card

Others

Hyundai Rotem, etc.

Railway vehicles, etc.

[Automotive Division]

Approximately 4.22 million units were sold in 2023 and with this sales performance, HMC

recorded approximately KRW 130 trillion in sales revenue in Automotive Division based on

consolidated data. Sales volume increased compared to the previous year as the global supply

chain disruption started to recover in 2023, normalizing vehicle production and responding to

strong pent-up demand. In result, sales revenue grew by 14.8% and operating profit including

consolidated adjustments was up by 71.3% compared to 2022.

As a mid- to long-term strategy for sustainable growth, the Company is transitioning into a

“Smart Mobility Solution Provider” that delivers SMART values rooted in quality. This evolution

is supported by three core business frameworks and strategic directions.

The first pillar of the core business frameworks is the “Smart Mobility Device”, a directive that

aims for balanced growth in both profitability and sales, by bolstering automotive business’s

competitiveness and proactively shifting towards electrification. The second pillar, “Smart

Mobility Service”, focuses on enhancing vehicle sales and bolstering business capabilities.

Lastly, through the “H2 Solution”, HMC intends to develop the hydrogen ecosystem and

establish a stronghold in the hydrogen initiative, thereby gaining an early advantage in the

fuel-cell based hydrogen market.

[Finance Division]

Hyundai Capital and Hyundai Card are representative financial companies in the Finance

Division.

Specialized Credit Finance Business

Hyundai Capital is a financial company that operates loan specialization financial business and

is registered with the Financial Services Commission under the Specialized Credit Finance

Business Act. The main business includes installment financing, lease financing and various

types of retail and corporate financing excluding credit card service.

As Hyundai Capital raises most of funds through borrowing from financial institutions and

corporate bond issuance without receiving credit, the company’s ability to raise funds is

important.

Credit Card Business

Hyundai Card issues credit cards to members who meet certain requirements and creates

added value by charging fees in return of giving credit to merchants and members after

entering into a franchise agreement with a store of goods or services.

In addition, Hyundai Card generates revenue by providing its members with credit loan

services and other additional services such as cash advances and card loans.

[Others Division]

Hyundai Rotem, established in 1999, operates rail solution business that supplies various

types of railway vehicles and core electrical equipment of railway vehicles, defense solution

business and eco-plant business for automobile production infrastructure and technologies

for smart factory.

- 2024 Annual Guidance

The Company has announced annual guidance since 2021 in order to provide thorough

understanding and reinforce credence to its shareholders and investors. In addition, the

Company provides updated annual guidance to reflect changes in business environment.

Annual guidance for 2024 was announced during business results announcement conference

call in January 2024, including sales volume and profitability target as well as plans for

Investment, FCF (excluding the Finance Division) and shareholder return.

The Company’s sales volume target for 2024 is 4.24 million units based on wholesale, which

is a 0.6% increase compared to 4.22 million units in 2023.

For 2024 consolidated revenue, the Company is expecting a growth of 4.0% to 5.0% compared

to the previous year and aiming for a level of 8.0% to 9.0% of operating profit margin on a

consolidated basis on the back of continuous mix improvement and cost reduction despite

concerns over F/X, interest rate and global demand.

Investment plan for the Automotive Division is KRW 12.4 trillion including KRW 4.9 trillion for

R&D and KRW 5.6 trillion for CAPEX, and FCF excluding the Finance Division is expected to be

between KRW 2.5 and 4.0 trillion.

Lastly, for shareholder return, the Company announced its mid- to long-term shareholder

return policy on April 25, 2023. The announced policy includes payout ratio of 25% or above

based on consolidated net income of controlling interests, implementation of quarterly

dividend from Q2 2023 and cancellation of 1% of existing treasury shares every year for the

next three years as of April 2023.

Board of Directors

As of the end of 2023, the Company’s Board of Directors consisted of a total of 12 directors

with 5 internal directors (Euisun Chung, Jaehoon Chang, Dong Seock Lee, José Muñoz, Gang

Hyun Seo) and 7 independent directors (Chi-Won Yoon, Eugene M. Ohr, Sang-Seung Yi, Dal

Hoon Shim, Ji Yun Lee, Seung-Wha Chang, Yunhee Choi).

Euisun Chung, serving as both an internal director and the CEO, has been appointed as a Chair

of the Board of Directors to respond efficiently and swiftly to the rapidly changing dynamics

of the industry and the overall management landscape and to ensure responsible

management practices as the Executive Chair of Hyundai Motor Group.

Additionally, recognizing the need for efficient decision-making while accounting for our

diversifying business areas, HMC concluded that having the Executive Chair also serve as the

Chair of the Board of Directors would greatly benefit the efficiency of the decision-making,

thanks to his wide-ranging expertise across various business sectors.

The Board of Directors is the Company’s highest decision-making body and its goal is to

represent the interests of shareholders and stakeholders while achieving the Company’s

sustainable growth. To this end, the Board resolves matters prescribed by laws and articles of

incorporation, sets the basic policies for the Company’s operations, addresses important

work-related matters, and supervises the directors and management’s execution of their

duties.

Meetings of the Board of Directors shall be held every quarter regularly and extraordinary

meetings shall be convened as necessary by the Chair of the Board of Directors or any director

determined thereby. Upon scheduling a meeting, a notice of the time, place, and agenda of

the meeting is given to each director at least 7 days before the meeting date. A resolution of

the Board shall be adopted in the presence of a majority of directors in office by the affirmative

votes of a majority of directors present at the meeting, unless otherwise prescribed by relevant

statutes.

The Board of Directors seeks to improve the quality of decisions it makes and execute its

responsibilities more efficiently by distributing tasks and delegating specific duties to

committees within the Board, thereby strengthening its roles in business management and

supervision. The committees include Audit Committee, Recommendation Committee on

Candidates

for

Independent

Directors,

Sustainability

Management

Committee

and

Remuneration Committee.

The Company enacted the Corporate Governance Charter in 2016, laying the foundation for

enhancing the transparency of responsible management under the professional and

independent oversight of the Board of Directors, in line with its status as a global company.

Through revisions of the Corporate Governance Charter in October 2019, March 2021, and

July 2023, the Company incorporated strategic direction and the need to improve ESG

aspects throughout the Charter. Additionally, updates reflecting changes in relevant laws and

various committee regulations, as well as governance improvements, were integrated.

Furthermore, the Company conducted its own evaluation of independent directors. In late

2023, the independent directors evaluated the Board of Directors and discussed the results in

a meeting of the Board, which consequently enhanced the operational efficiency of the Board

of Directors.

In addition, the Company conducted a third-party evaluation early 2023 to obtain an objective

review of the Board’s composition and its operational efficiency. The evaluating institution

announced that there is no reason to consider the composition of the Board of Directors in

2022 as inadequate or the operation as inefficient.

The Company is committed to continually enhancing its Board’s composition and establishing

a more efficient operational process.

(a) Gender identity for Board of Directors

(As of December 31, 2023)

Number of

board

members

Percentage of

the board

Number of

senior

positions* on

the board

Number in

executive

management

Percentage of

executive

Management

Men

83.3%

100%

Women

16.7%

(b) Ethnic background for Board of Directors

(As of December 31, 2023)

Number of

board member

Percentage

of the board

Number of

Senior

positions* on

the board

Number in

executive

management

Percentage

of executive

management

White British or

Other White

(Including

minority-white

groups)

8.3%

25%

Mixed/Multiple

Ethnic Groups

Asian/Asian

British

91.7%

75%

Black/African/

Caribbean/

Black British

Other ethnic

group including

Arab

* CEO, CFO, SID and Chair

2. Major References for Business Industry

(1) Characteristics of Industry

The automotive industry requires a broad industrial base, making its forward and backward

industry linkage effects significantly stronger compared with other industries. The industry is

broadly categorized into three main areas: manufacturing, distribution, and operation.

The manufacturing sector is interconnected with other industries, including steel, chemicals,

electricity, electronics, rubber, glass, plastics, and part manufacturers that are responsible for

approximately 20 thousand parts. The distribution sector aligns with the directly managed

outlets, dealerships, alongside financing, and consignment companies.

Whereas the operation sector is closely related to industries such as maintenance,

components, refueling, and insurance.

(2) Active Growth of Industry

The automotive industry has grown thanks to the continued expansion of both Korean and

export markets, led by the government’s favorable industrial policies and the industry’s

tireless efforts in research and development. Since 1976

—

when it exported the first Korean-

made vehicle, Pony

—

to 2023, the Korean auto industry has produced a total of 120.34 million

vehicles. Of these, 50.34 million units have been sold in the domestic market, whereas 69.81

million units have been sold in overseas markets.

(3) Cyclicality of Industry

The demand for vehicles is closely linked to economic fluctuations. The relationship becomes

particularly pronounced when the penetration reaches certain threshold and the demand for

vehicles begins to contract or plateau. During periods when penetration gained traction, the

demand for vehicle skyrocketed, regardless of the economic fluctuations.

However, over time, the industry has become highly cyclical, becoming sensitive to economic

fluctuations. During times of economic downturn, contracted investment and scaled-down

hiring negatively affect the consumption of the middle class and lower-income groups. During

such times, the demand for durable goods, namely automobiles, experiences a steeper

decline compared with other consumer products.

(4) Competitiveness Factors within Industry

The automotive industry, as a large-scale manufacturing sector requiring substantial capital,

has led each country to develop its own oligopoly system, dominated by a few companies.

Achieving success in this industry is challenging, even for companies with substantial financial

resources, due to the enormous financial investment required to establish mass-production

facilities, and the fact that it takes at least 4 to 5 years from the decision to enter the market

to the actual product launch. Additionally, OEMs employ tens of thousands of workers and

maintain relationships with thousands of suppliers. Therefore, in times of extended

underperformance, any decisions regarding restructuring or downsizing operations must be

made cautiously, considering their potential impact on the national economy.

The key competitive factors of the automotive industry are product quality, marketing

prowess, and cost efficiency. These elements are crucial for boosting market dominance,

reducing expenses, and securing profitability. Of these, product quality is paramount, as it

maximizes customer satisfaction in areas such as vehicle performance, safety, design, and

new technologies. This advantage enables a company to position itself ahead of its

competitors. Effective marketing strategies further enhance competitiveness by engaging

consumers with appealing product concepts, new product launches, advertisements, sales

strategies, and after-sales service networks. Cost efficiency plays a crucial role in pricing

strategies and profit margins. It encompasses the total costs, including new product

development

cost, productivity

of mass production models,

productivity

of non-

manufacturing workforce, financial expenses, and more.

3. Market and Business Conditions by Region

(1) Korea

From 2012 to 2013, Korea witnessed a decline in consumer confidence due to the ripple

effects of the European Sovereign Debt Crisis and sluggish growth rates in emerging countries.

This downward trend continued for two consecutive years, due to the diminished new model

effect and manufacturing disruptions of some companies.

The trend, however, reversed in 2014 thanks to economic recovery and the release of new

versions of popular models. This positive momentum continued throughout 2015 and 2016,

driven by the new model effect from the launch of SUVs. Although the market saw a slight

contraction in 2017 due to lower sales in the sub-mid and mid-segment models, it rebounded

in 2018, supported by the strong sales of mid-segment SUVs and mid-segment luxury models.

The growth later waned in 2019 as the sales of models that are smaller than mid-size

decreased.

In 2020, despite the negative impact of COVID-19, the industry demand increased by 5.7%

compared with the previous year, with the sales of 1.89 million units. This increase is

attributed to policies that reduced individual consumption tax and the launch of more new

models. However, in 2021, industry demand declined by 8.4% compared with the previous

year, with 1.73 million units sold. It resulted from the semiconductor chip shortage led by

global supply chain disruptions. The disruptions remained unresolved in 2022, leading to a

further 2.3% decline in the industry demand compared with the previous year, recording 1.69

million units of sales.

The market landscape in 2023 was challenging, characterized by diminishing consumer

confidence amid high interest rates. However, starting from the first half of the year, the global

supply chain began to improve, and annual sales reached 1.75 million units, reflecting a 2.9%

growth compared with the figure of the previous year.

In the face of increasingly fierce market competition, we have endeavored to satisfy our

customers through product development, pricing policies, and services.

In 2017, we launched the compact-sized Kona, and Genesis G70. In 2018, we further

strengthened our green car lineup by introducing the hydrogen electric vehicle, Nexo. In 2019,

we unveiled the compact-sized SUV, Venue, targeting Millennials who embrace the way of

“Hon life,” lifestyle

—

characterized by enjoying one’s own company. Two new models, GV80

and the All-new G80, bolstered the Genesis lineup in 2020.

In the following year, 2021, we achieved a leadership position in the development and sales

of green models. We launched IONIQ 5 based on E-GMP, a platform dedicated to electric

vehicles. This was followed by the launch of other green models, such as the Electrified G80

and GV60, with the latter being introduced with the platform dedicated to Genesis EVs. In

2022, we unveiled the seventh-generation Grandeur, succeeded by the launch of the All-new

Santa Fe in 2023. Our outstanding product value was recognized as the Korea Automobile

Journalists Association selected Grandeur Hybrid as Car of the Year 2023.

In 2020, we sold 788 thousand units. However, we encountered the inevitable challenge of

declining sales over the next two years due to supply disruptions. In 2021, bottlenecks in the

supply of parts negatively impacted our sales figures, leading to a 7.7% decline from the

previous year, with sales of 727 thousand units. The global supply chain remained volatile in

2022, resulting in a year-over-year decrease of 5.2% in sales, with 689 thousand units sold.

In 2023, the new model effect triggered by the launch of the All-new Santa Fe and Grandeur

sparked an uptrend in our sales, recording a 10.6% increase in sales compared with that of

2022, with 762 thousand units sold.

(2) U.S.

The trend of low interest rates continued in the U.S. from 2011 to 2014, which eased credit

requirements and encouraged customers to replace their old vehicles with new ones.

This period was followed by another growth phase that began in 2014, driven by the recovery

of the real economy, reduced trade prices, and falling oil price. These circumstances

contributed to making mid-to-large size SUVs and pickup trucks more appealing to

consumers. From 2015 to 2016, the market continued to grow, fueled by the sales of light

commercial vehicles.

In 2017, the sales of light commercial vehicles continued to see growth. However, despite this

trend, the overall sales contracted due to a decline in passenger vehicle sales. In 2018, the

market expanded due to positive sales results from light commercial vehicles.

The sales of light commercial vehicles remained strong in 2019, but the sales of passenger

vehicles slowed down as the industrial demand in the market contracted.

In 2020, the overall sales declined due to the sales disruption caused by COVID-19 and

decreased consumer confidence. However, the trend towards higher-end models became

pronounced among the middle-to-upper classes, who were less impacted by COVID-19. They

purchased more high-priced SUVs and pickup trucks, leveraging low-rate policies.

In 2021, a low inventory issue came up due to a semiconductor supply shortage. This problem

persisted into 2022, resulting in the lowest sales recorded in 11 years after 2011.

In the U.S. market in 2023, 15.6 million units were sold, marking a 12.3% year-over-year

growth. Despite a sales environment characterized by high interest rates and sustained

inflation, sales increased as demand rebounded from previous declines. This growth is

attributable to improved inventory, following the normalization of production and the

continuation of favorable economic conditions.

In 2023, HMC achieved a market share of 5.6% in the U.S. market, with its sales figures

increasing by 11.5% compared with the previous year, totaling 870 thousand units. This

achievement set a new record for annual sales, bolstered by our robust SUV portfolio, which

is evidenced by Tucson’s annual sales surpassing the 200-thousand-unit mark for the first

time.

In 2022, we sold a total of 781 thousand units, marking a 0.9% decline from the year before

and capturing a 5.6% of the market share. Our SUV models, including Tucson and Santa Fe,

and Genesis models such as GV70, scored well, driving a 0.4%p expansion in our market share.

In 2021, we established a market presence by selling 23.3% more vehicles than the year before,

totaling 788 thousand units. Notably, Genesis’ annual sales increased more than threefold,

fueled by the strong performance of the its SUV models

—

GV70 and GV80.

In 2020, we outperformed the overall industry trend by marking a 9.7% decrease from the

previous year’s level, with the sales of 620 thousand units. This resulted in a year-over-year

increase in market share by 0.3%p, amounting to a total of 4.3%. This result was mainly

attributed to the sales of new popular models, including the Palisade, which, being

domestically produced, and was therefore not impacted by the lockdown.

HMC is proving its exceptional product value through various awards. The IONIQ 6 was

honored with “Car and Driver’s EV of the Year” award, and swept the “World Car Awards 2023,”

winning “World Car of the Year,” “World Electric Vehicle,” and “World Car Design of the Year.”

This achievement marks HMC’s second consecutive year of earning triple honors, following

the IONIQ 5’s triple wins in the same categories in 2022.

G90 was recognized as the “2023 Car of the Year” from MotorTrend magazine, and HMC was

named as the 2023 Best SUV brand by the U.S. News & World Report. In 2021, Genesis

achieved the top spot in the 2021 JDP Tech Experience Index (TXI), earning recognition for

our technological prowess.

Additionally, the Elantra was declared the “Car of the Year” by NACTOY in 2021, a title it also

secured in 2012. The Genesis GV70 was named as the “SUV of the Year” by MotorTrend

magazine, and both the Kona EV and Ioniq electric were listed in Autotrader’s 10 Best Electric

Cars for 2021. The improvement in quality, satisfaction, and product value has naturally led to

the growth of our brand’s value, placing us 35th in the Interbrand’s Best Global Brands 2022

ranking.

(3) Asian Market

Since 2009, China has emerged as the leading market in Asia and the world’s top automobile

market, surpassing the U.S. With demand rising due to income growth, major companies are

actively working to expand their sales by enhancing production capabilities and sales

networks. However, the market experienced only limited growth in 2011 due to austerity

policies and the removal of subsidies for compact cars.

The first half of 2012 saw strong sales, but the trend weakened after September as the sales

of Japanese firms plummeted. In 2013, the sales growth accelerated thanks to a surge in sales

of Japanese companies and the new model effect of SUVs and MPVs.

In 2014, advanced demand emerged in 2nd and 3rd tier cities

—

metropolitan areas likely to

implement car purchase restrictions. This high growth trend continued, thanks to the strong

sales of the C2 segment volume model and the new model effect of compact SUVs.

In 2015, the implementation of car ownership restrictions led to diminished new and

advanced demands, resulting in a slower sales growth of 8.3% year-over-year.

In 2016, the sales rose by 14.5% compared to the year before, fueled by tax cuts for

purchasing compact cars and the strong sales of low-cost SUVs. However, the growth became

more stagnant in 2017, with an increase of only 3.3%, as sectors other than SUVs witnessed a

sales decrease.

In 2018, the market experienced a 4.0% contraction due to the declining SUV sales. In 2019,

all segments saw reduced demand due to the economic slowdown and the extended trade

conflict. This downward trend continued into 2020, exacerbated by the negative impact of

COVID-19 on consumption. In 2021, despite the semiconductor supply issue in China, the

base effect of the lockdown policies to combat the spread of COVID-19 allowed a year-over-

year sales increase.

In 2022, the annual sales grew by 5.9% compared with that of the previous year, driven by the

implementation of automotive consumer policies such as lower purchasing taxes and the

application of license plates for new energy vehicles, alongside expanded sale promotions.

In 2023, 21.9 million units were sold in the Chinese market. Despite an economic slowdown,

industry demand slightly increased compared with the figure of the year before, thanks to the

growth of the NEV market and government support.

The Indian market experienced rapid growth as the government spearheaded the

development of the automotive industry. The share of sub-compact and compact-sized

vehicles, as well as vehicles in larger segments, has been gradually increasing due to

improving income levels.

From 2015 to 2018, sales continued to grow due to rebounding consumer sentiment, driven

by major companies’ launch of new cars and stabilized inflation. However, in 2019, a liquidity

crunch in the financial sector led to a sharp decrease in demand, resulting in a significant year-

over-year decline in sales. The demand in 2020 also plummeted due to COVID-19.

In 2021, sales rebounded, reflecting the base effect from the previous year’s COVID-19

decline and an overall improvement in conditions. Industry demand in India in 2022 reached

3.82 million units, marking a 22.9% increase over 2021. This growth was driven by the pent-

up demand caused by COVID-19/disruptions in semiconductor supply, as well as the base

effect. The base effect was caused by supply delays due to a small-scale lockdown in May of

the previous year and semiconductor supply issues. HMC’s 2022 sales in the Indian market

exceeded the 2018 record with 3.37 million units, setting a new record for the highest annual

sales. With 4.13 million units sold in 2023, we once again reached another record high

—

up by

8.2% compared to the previous year. The sustained growth was supported by various factors,

including the launch of diverse new models, supply chain improvements, and strong demand,

particularly for SUVs.

HMC gained a 1.1% market share in the Chinese market by selling 242 thousand units based

on wholesale, which marks a 3.4% year-over-year decrease. Despite the sales growth of key

models

—

CN7c and NX4c

—

the overall sales experienced a decline as the performance of other

models lagged. In 2022, the overall sales decreased by 28.5% compared with the previous

year, with 250 thousand units sold, resulting in a market share of 1.2%. We observed

diminished sales of flagship models such as Elantra/ix35, while the sales volume of

Custo/NX4c experienced an increase. In 2021, 350 thousand units were sold, achieving a 1.8%

market share, and in 2020, 440 thousand units were sold, securing a 2.3% market share.

In 2023, HMC achieved a market share of 14.6% in the Indian market, with a 9% year-over-

year sales increase to 602 thousand units. This increase is largely attributable to the launch of

the compact-sized Exter and rising sales of key SUV models. In 2022, most models including

key SUV models such as Venue/Creta experienced sales growth, securing a 14.5% market

share and recording a 9.4% increase compared with the previous year, with sales of 553

thousand units. In 2021, the sales of key models including Creta and Venue maintained robust

growth momentum, selling 505 thousand units, which represented a 19.2% growth compared

to the year before. In 2020, HMC achieved a 17.4% market share by selling 424 thousand units.

(4) European Market

After experiencing stable growth, the European market saw a sharp decline in sales following

the global financial crisis in 2008. The sales decreased for 6 consecutive years from 2008 to

2013, as austerity policies and weak employment dampened consumer sentiment.

In 2013, with the fiscal crisis beginning to ease, sales started to recover in the second half of

the year. The recovery continued into 2014, buoyed by improved employment and rising

housing prices in the UK, along with the effects of scrappage scheme incentives in Spain.

The upward trend persisted through 2015 and 2016, driven by the implementation of large-

scale quantitative easing and intensified sales promotions. This growth trend maintained from

2017 to 2019, with a general market recovery and ahead of a significant tightening of

greenhouse gas emission standards in 2020.

In 2020, the sales decreased by 24.3% year-over-year, impacted by disruptions in

production/sales, as well as deteriorating consumer sentiment, both resulting from the

COVID-19 pandemic. This downturn extended for 3 consecutive years until 2022, exacerbated

by continued production/sales disruptions and worsening consumer sentiment due to the

pandemic. 15.9 million units were sold in the European market in 2023, benefiting from the

resolution of the European supply issues and the base effect caused by the low sales of 2022,

marking a 15.3% year-over-year increase.

In 2023, we sold a total of 621 thousand units of vehicles in the European market, thanks to

the increased sales of i20 and Tucson, achieving a 5.8% year-over-year growth. In 2022, we

recorded a 4.0% increase in sales from the year before, totaling 538 thousand units.

This growth was driven by the continued strong sales of the IONIQ 5 and Tucson PHEV models,

leading to a 19.4% rise in BEV sales and a 43.4% increase in PHEV sales, respectively compared

to the previous year.

In 2021, we sold a total of 505 thousand units, marking a 36.7% increase compared with the

previous year’s performance. This achievement secured us a market share of 4.3% of the total

market. The sales of BEVs and PHEVs improved by 26.5% and 352.5%, respectively compared

to the year before, attributable to the launch of the IONIQ 5 and Tucson PHEV. In 2020, we

achieved a market share of 3.4%, recording a 24.3% decline with the sales of 406 thousand

units.

To secure profitability, the Company has been careful to avoid excessive incentive spending

and has focused on qualitative growth by strengthening internal stability. In pursuit of this

goal, we are bolstering our competitive position in the European market through outstanding

technology and design. As a testament to our competitive edge, the GV60 was awarded the

German Car of the Year in the premium segment (<€60k), and the IONIQ 5 awarded the 2022

German Car of the Year in the New Energy category and UK Car of the Year.

4. Management Discussion and Analysis by Directors

(1) Cautionary Note on Forward-looking Statements

This report’s expectations on future activities, events, and phenomena include “forward-

looking statements” that reflects HMC’s views regarding future events and financial

performance during the reporting period. These forward-looking statements are based on

various assumptions about the future business environment, and such assumptions may

prove to be inaccurate. This also involves a number of risks, uncertainties, and other factors

that could cause actual results to differ substantially from those stated, and these factors

include, but are not limited to, internal management and the external environment.

We do not undertake any obligation to publicly update any forward-looking statement to

reflect any risk or uncertainty that may emerge after the time of initial publication.

It is important to acknowledge that we cannot guarantee the realization of results, factors, or

impacts anticipated by HMC in this report. The published forward-looking statements are

based on the most current information in the reporting period. Please note that the Company

does not intend to revise the report in risk factors or forecasts associated with these “forward-

looking statements.”

(2) Overview

We faced a challenging road in 2023, marked by the quick transition from a supplier-centric

market to a consumer-centric after COVID-19, China-U.S. tensions and trade blocks, and the

full-scale global expansion of Chinese OEMs.

Nevertheless, we have achieved record-breaking business performance for two consecutive

years with sales revenue of KRW 162.7 trillion and operating profit of KRW 15.1 trillion, by

expanding volumes in advanced markets including the U.S. and Europe, and optimizing the

product mix by centering on high-value-added models like Genesis and SUVs, maximizing

sales efficiency, and improving material cost.

In addition, credit rating agencies, Moody’s and Fitch raised HMC’s ratings from “B

(Baa1/BBB+)” to “A (A3/A-)” in February 2024. This upgrade reflects our continuously

increasing profitability and financial stability, based on our enhanced product competency

and capability to generate excellent free cash flow. This recognition holds great significance

for us as it acknowledges our high corporate creditworthiness and global competencies.

However, we will not become complacent and will continue to strive to enhance our

competitive edge for sustained growth.

In August 2023, Genesis reached a milestone of 1 million units in accumulated sales, just 7

years and 10 months after the launch of the brand. Furthermore, HMC’s EVs have

demonstrated their quality in the global EV market, receiving positive responses from both

customers and media outlets. Following the launch of the IONIQ 5 in 2022, the IONIQ 6 was

honored with several prestigious prizes, winning 3 awards in the World Car Awards

—

World

Car of the Year, World Electric Vehicle of the Year, and World Car Design of the Year.

Additionally, the high-performance concept car, N Vison 74, swept the top three design

awards globally: International Design Excellence Awards, iF Design Awards, and Red Dot

Awards, significantly improving our brand value.

(3) Financial Position and Performance (Consolidated)

- Financial Position

(Unit : KRW 1 million)

Classification

2023

2022

Difference

[Current assets]

101,724,717

96,389,273

5,335,444

Cash and cash equivalents

19,166,619

20,864,879

(1,698,260)

Short-term financial instruments

7,339,968

5,774,597

1,565,371

Other financial assets

2,802,611

5,934,745

(3,132,134)

Trade notes and

accounts receivable

4,682,182

4,279,057

403,125

Inventories

17,400,346

14,291,216

3,109,130

Financial services receivables

43,120,684

38,037,368

5,083,316

Others

7,212,307

7,207,411

4,896

[Non-current assets]

180,738,638

159,353,189

21,385,449

Other financial assets

4,423,388

3,889,776

533,612

Property, plant and equipment

38,920,900

36,153,190

2,767,710

Investment property

146,148

144,450

1,698

Intangible assets

6,218,585

6,102,377

116,208

Investments in joint ventures and

associates

28,476,142

25,199,437

3,276,705

Financial services receivables

64,566,977

52,326,478

12,240,499

Investments in operating leases

29,664,618

27,681,534

1,983,084

Others

8,321,880

7,855,947

465,933

Total assets

282,463,355

255,742,462

26,720,893

[Current liabilities]

73,362,103

74,236,472

(874,369)

[Non-current liabilities]

107,291,812

90,609,445

16,682,367

Total liabilities

180,653,915

164,845,917

15,807,998

[Capital stock]

1,488,993

[Capital surplus]

4,378,489

4,241,303

137,186

[Other capital items]

(1,197,084)

(1,713,928)

516,844

[Accumulated other

comprehensive income(loss)]

(838,892)

(1,620,682)

781,790

[Retained earnings]

88,665,805

79,953,601

8,712,204

[Non-controlling interests]

9,312,129

8,547,258

764,871

Total equity

101,809,440

90,896,545

10,912,895

As of December 31, 2023, total consolidated assets increased by KRW 26.7 trillion compared

with that at the end of last year, reaching KRW 282.5 trillion. Financial services receivables

and investments in operating leases had increased by KRW 19.3 trillion in accordance with the

business expansion of the Finance Division. Investments in associates rose by KRW 3.3 trillion,

due to increased profit of equity method. Inventories increased by KRW 3.1 trillion due to high

production compared with that at the end of last year.

Total consolidated liabilities were up from the prior year-end level, increasing by KRW 15.8

trillion to KRW 180.7 trillion. This is attributable to the increased borrowings caused by the

business expansion of the Finance Division, the increased over-claimed construction of

Hyundai Rotem, and the increased deferred revenue linked with sales.

- Consolidated Statement of Comprehensive Income

(Unit : KRW 1 million)

Classification

2023

2022

Difference

Sales

162,663,579

142,151,469

20,512,110

Cost of sales

129,179,183

113,879,569

15,299,614

Gross profit

33,484,396

28,271,900

5,212,496

Operating profit

15,126,901

9,824,928

5,301,973

Profit before income tax

17,618,662

11,181,471

6,437,191

Profit for the year

12,272,301

7,983,614

4,288,687

Profit

attributable to owners

of the Company

11,961,717

7,364,364

4,597,353

Profit attributable to non-

controlling interests

310,584

619,250

(308,666)

HMC’s consolidated revenue in 2023 grew by 14.4% compared with that in the previous year

to KRW 162.7 trillion, and operating profit increased by 54% to KRW 15.1 trillion with operating

profit margin of 9.3%, which rose by 2.4%p compared with that in the previous year.

(The following details revenue by division generated from external customers. The operating

profit for the Automotive Division includes the operating profit relevant to internal transaction

adjustment.)

[Automotive Division]

The expansion of vehicle sales volume has led to a 14.8% increase in sales revenue compared

with that of the prior year, reaching a total of KRW 130.1 trillion. The operating profit recorded

a year-over-year increase of 71.3% to KRW 12.7 trillion, influenced by the improved sales of

luxury cars, such as GV80 and SUVs, along with their price increases.

[Finance Division]

The Finance Division’s sales revenue recorded KRW 22.4 trillion, marking a 11.8% rise from

the previous year. The operating profit, however, decreased by 24.9% compared to the prior-

year level, recording KRW 1.4 trillion. This decrease was due to higher funding costs and

increased bad debt expenses, both triggered by the increased interest rate.

[Others Division]

The sales revenue of Others Division saw a 15.3% growth to KRW 10.1 trillion compared with

the year before. The operating profit amounted to KRW 1.1 trillion, up 82.9% from the prior-

year figure, primarily affected by the increased sales volume of trailers and trams.

HMC’s net profit before income tax rose by 57.6% to KRW 17.6 trillion, compared with the

prior year. This increase is attributable to the increased gains from investments in joint

ventures and associates. The consolidated net income of 2023 increased to KRW 12.3 trillion,

seeing a 53.7% year-over-year increase.

- New Businesses and Discontinued Businesses

The sales of Hyundai Motor Manufacturing Rus LLC (HMMR) was approved by the Board of

Directors on December 19, 2023. The sale is expected to be completed within one year from

December 31, 2023. As of December 31, 2023, Hyundai Motor Manufacturing Rus LLC

(HMMR) is classified as disposal group and discontinued operation.

Please refer to the financial statements and note 43. Discontinued Operations.

- Foreign Exchange Risks, etc.

HMC engages in transactions denominated in foreign currencies, therefore it is exposed to

different types of foreign exchange fluctuation risks. The Consolidated entities are exposed to

major currencies including USD, EUR, JPY, and more. The closing rate of each functional

currency is as follows:

(Unit : KRW 1 million)

Currency

2023

2022

Difference

Change (%)

USD

1,289.40

1,267.30

22.10

1.7%

EUR

1,426.59

1,351.20

75.39

5.6%

JPY

912.66

953.18

(40.52)

(4.3%)

To manage foreign exchange risk, we primarily use the method of aligning foreign currency

inflows and outflows by currency and maturity to eliminate the risks, and we adjust the

payment date of foreign currency funds according to the exchange rate forecast.

We use foreign exchange derivatives, such as currency forward, currency option and

currency swap to hedge the risks. But in principle, trading-purpose transactions are ruled

out.

When the exchange rate changes by 5% either up or down, the fluctuation will influence the

net profit before income tax.

(Unit : KRW 1 million)

Currency

2023

2022

With 5% Increase

With 5% Decrease

With 5% Increase

With 5% Decrease

USD

102,337

(102,337)

111,585

(111,585)

EUR

13,707

(13,707)

20,435

(20,435)

JPY

(959)

959

(3,585)

3,585

(4) Liquidity, Financing, and Expenditure

(Unit : KRW 1 million)

Classification

2023

2022

Difference

Liquid funds :

Cash and cash equivalents

19,166,619

20,864,879

(1,698,260)

Short-term financial instruments

7,339,968

5,774,597

1,565,371

Financial assets at fair value through

profit or loss

2,374,032

5,366,752

(2,992,720)

Total

28,880,619

32,006,228

(3,125,609)

Borrowings :

Short-term borrowings

9,035,548

11,366,480

(2,330,932)

Current portion of long-term liabilities

25,109,158

25,574,131

(464,973)

Debentures

73,033,493

62,960,060

10,073,433

Long-term borrowings

17,569,760

12,285,149

5,284,611

Total

124,747,959

112,185,820

12,562,139

As of December 31, 2023, the Company had KRW 28.9 trillion of liquid funds on a consolidated

basis and the liquid funds include cash and cash equivalents, short-term financial instruments

and financial assets at fair value through profit or loss(current). The Company’s borrowings

were KRW 124.7 trillion on a consolidated basis, an increase of KRW 12.6 trillion compared to

the end of the previous year.

The Company’s major expenditures for 2023 on a consolidated basis were dividends payment

of KRW 2.5 trillion and repayment for long-term liabilities and debentures of KRW 34.9 trillion.

The Company’s liquid funds are to prepare for uncertainties caused by industrial

characteristics with high sensitivity on economic conditions and to invest in future growth.

The Company prioritizes stable liquidity and risk management related to liquidity and strives

to achieve balance between liquidity and profitability.

(5) Off-Balance Sheet Activities

Please refer to notes to consolidated financial statements.

(6) Significant Accounting Policies and Estimations

Please refer to notes to consolidated financial statements.

(7) Legal and Environmental Regulations

There are various laws and regulations related to the automotive industry, such as

manufacturing type approval, safety regulations, environmental regulations and automotive-

related taxes. Recently, related laws and regulations have been revised to strengthen

customer’s rights and responsibilities of companies.

The Company has set goals for climate change and carbon neutrality and has strengthened

environmental management in order to enhance comprehensive capabilities to respond to

global environmental issues and regulations. The Company aims to be carbon neutral by 2045

in all stages from procurement of components to production and operation of vehicles sold

with its vision of ‘progress for humanity’.

In September 2021, the Company announced ‘Integrated Solution for Climate Change’ for

carbon neutrality by 2045 at IAA Mobility in order to inherit sustainable environment to future

generations. The Company will continuously strive to establish circular economic ecosystem

aiming for carbon neutrality on overall value chains for mobility with clean mobility, next

generation platform and green energy.

(8) Derivatives and Risk Management Policy

As the Company operates its business in Korea and overseas, major currencies are USD, Euro,

KRW and others and changes in exchange rate could cause material impact on its business

operation.

In order to manage the foreign exchange risk, the Company eliminates the risk by matching

inflow and outflow of foreign currencies according to each currency and maturity, and by

adjusting settlement date based on its exchange rate outlook. Foreign exchange derivatives

such as currency forward and currency option are used as well, and regarding derivatives, it

is a principle not to bear any risk unrelated to business.

In addition, the Company determines transaction currency, amount, type and maturity

considering the foreign exchange fluctuation, correlation between currencies and expected

inflow and outflow of foreign currencies and excludes transactions for trading purpose in

principle.

The Company’s long-term currency risk management strategy focuses on diversifying

currencies by activating overseas business including emerging markets to eventually achieve

neutral status from the currency risk.

Regarding raw material price fluctuation, the Company manages the risk with the aim of

maintaining stable business activities by reducing the volatility of material cost for future

purchase. Main materials which are subject to the risk management are precious metals used

in catalyst for automotive and raw materials for EV battery and it may have a substantial

impact on its business activities.

In order to mitigate volatility risk, the Company uses derivatives such as commodity swap,

and before making transactions for financial derivatives, the Company discusses volume,

price and transaction method with financial institutions. The Company excludes transactions

for speculative purposes in relation to derivatives and does not bear any risk unrelated to

business activities.

(9) Key Strategies

We expect global economies to face increased economic turbulence in 2024 due to

political/economic uncertainties, such as limited growth and heightened geopolitical risks.

Consumer confidence is anticipated to contract, leading to a slowdown in growth. This may,

in turn, result in a weak rebound in industrial demand, with competition likely to intensify

further.

Regarding EVs, aggressive price reduction policies of other companies have fueled the

competition for EV cost competitiveness. Equally important are the growing expectations for

companies to achieve carbon neutrality, aligning with the changing climate and increasing

frequency of natural disasters. Additionally, we need to actively respond to each nation’s

policies, such as the U.S. Inflation Reduction Act or Europe’s Critical Raw Material Act.

Despite such external conditions, HMC is committed to enhancing its core competency and

strengthening its foundation for sustainable growth. We are committed to improve customer

value through the implementation of “quality control,” which has been the fundamental to

our growth. To this end, we have established the Global Safety & Quality Office (GSQO) to

focus on safety enhancement and quality improvement, furthering our mission to advance

vehicle safety and quality control principles. Guided by a customer-centric approach to safety

and quality control, we aim to prioritize the following strategies in 2024:

①

Developing Flexible/Agile Response Capability in Automotive Business

To flexibly respond to uncertainties in the management landscape, we will strengthen our

ability to sense risks and develop/manage a rapid response system. By focusing our business

operations on generating profit, we aim to preserve HMC’s financial security. In response to

fluctuations in EV demand across different regions and models, we plan to reinforce our agile

production/sales system, enabling flexible volume distribution and more. Additionally, in

response to emerging markets, we will secure our competitiveness across the overall value

chains, including development/production/sales and beyond.

②

Enhancing Fundamental EV Competitiveness

We are committed to achieving fundamental cost reductions in EVs. We will reach this goal

through parts and controller integration and internalization, and innovation in design and

assembly. Additionally, we will streamline our product lineups, and further optimize value

chains for emerging countries. Furthermore, we aim to differentiate our services from that of

others by developing HMC's unique EV selling points and expanding V2G and charging

solutions. We are also putting effort into the successful launch of a mid-large electric SUV this

year.

③

Fully Implementing SDV Transition System

We are committed to transitioning all models into SDVs. To achieve this goal, we established

the Advanced Vehicle Platform (AVP) Division this year. Our strategy includes integrating R&D

organizations to innovate software and enhance mass-production capabilities for hardware

platforms. We are adopting the Centralized Architecture to integrate vehicle control systems

into four individual domains: Comfort, Driving, Infotainment, and Advanced Driver Assistance

Systems (ADAS). Through our “Chip to Factory” strategy

—

a comprehensive process covering

from parts to production

—

we aim to accelerate the innovation in both software and hardware,

as well as the mass production of SDV products.

④

Refining Electric/Hydrogen Energy Business Models and Establishing Ecosystem

In line with the sales of EVs, we will create a platform to connect with global charging station

providers. At the same time, we will endeavor to enhance EV customers’ convenience by

operating businesses related to home chargers, waste battery recycling, and ESS. Additionally,

we plan to promote the development of a sustainable energy system through efficient

resource utilization. We will reinforce the collaborative framework among our group’s

affiliates to achieve a leadership position within the hydrogen ecosystem.

We will push for the hydrogen production in a resource-circulating way, advance technologies

for hydrogen energy storage/transportation/utilization, and promote the adoption of

hydrogen commercial vehicles. Through these efforts, we will lay the groundwork for our

hydrogen businesses.

5. Information on Shares and Dividends

(1) Total Number of Shares

The Company has common share and three types of preferred shares and the total number of

shares issued on a cumulative basis as of the base date is 231,596,479 common shares and

66,202,146 non-voting preferred shares. The total number of shares decreased by the base

date due to capital reduction and cancellation of shares is 20,064,973 common shares and

3,563,982 preferred shares and the total number of treasury shares is 7,700,625 common

shares and 3,589,137 preferred shares. As of the base date, the number of shares outstanding

is 203,830,881 common shares and 59,049,027 preferred shares.

(Base Date : December 31, 2023)

(Unit : share)

Classification

Type of shares

Note

Common

Preferred

Total

Ⅰ

. Authorized shares

450,000,000

150,000,000

600,000,000

Ⅱ

. Issued shares (cumulative)

231,596,479

66,202,146

297,798,625

Ⅲ

. Decrease in

number of shares

(cumulative)

20,064,973

3,563,982

23,628,955

1. Capital reduction

2. Cancellation

20,064,973

3,563,982

23,628,5955

Treasury Shares

3. Redemption

4. Other

Ⅳ

. Issued shares (

Ⅱ

Ⅲ

)

211,531,506

62,638,164

274,169,670

Ⅴ

. Treasury shares

7,700,625

3,589,137

11,289,762

Ⅵ

. Outstanding shares (

Ⅳ

Ⅴ

)

203,830,881

59,049,027

262,879,908

Classification

Issued shares

(cumulative)

Decrease in number of

(cumulative)

Treasury shares

Type 1 Preferred Share

25,109,982

996,863

2,186,993

Type 2 Preferred Share

38,613,865

2,493,268

1,353,570

Type 3 Preferred Share

2,478,299

73,851

48,574

(2) Treasury Shares

(Base Date : December 31, 2023)

(Unit : share)

Acquisition Method

Type of

Period-

start

Change

Period-end

Acquisition

(+)

Disposal

(-)

Cancell-

ation (-)

Intra-market

direct acquisition

(within dividend

related capital gains limit)

Common 11,408,711

1,571,405

2,136,681

7,700,625

Preferred

4,221,844

632,707

3,589,137

Acquisition from

trust agreement

(within dividend

related capital gains limit)

Common

Preferred

Total

Common

11,408,711

1,571,405

2,136,681

7,700,625

Preferred

4,221,844

632,707

3,589,137

Classification

Period-start

Change

Period-end

Type 1 Preferred Share

2,430,559

-243,566

2,186,993

Type 2 Preferred Share

1,718,424

-364,854

1,353,570

Type 3 Preferred Share

72,861

-24,287

48,574

(3) Dividends

The Company continues to expand dividends in order to enhance shareholder value and

determines the size of dividends in consideration of investment for future growth, business

performance and cashflow.

Classification

2023

2022

2021

Par value per share (KRW)

5,000

Consolidated net profit (KRW 1 million)

11,961,717

7,364,364

4,942,356

Separate net profit (KRW 1 million)

7,343,003

3,701,958

645,526

EPS (KRW, Consolidated basis)

45,703

28,521

18,979

Total cash dividend (KRW 1 million)

2,998,657

1,830,356

1,300,658

Total stock dividend (KRW 1 million)

Consolidated dividend payout ratio (%)

25.1

24.9

26.3

Cash dividend yield (%)

Common

4.7

4.5

2.4

Preferred

7.3

8.8

4.9

Stock dividend yield (%)

Common

Preferred

Cash dividend per share

(KRW)

Common

11,400

7,000

5,000

Preferred

11,500

7,100

5,100

Stock dividend per share

(share)

Common

Preferred

* Preferred share above is based on Type 2 Preferred share.

* Consolidated net profit is consolidated net income of controlling interests.

* Please note that dividends for 2023 above are one of agendas for the Annual General Meeting of Shareholders

which is scheduled to be held on March 21, 2024 and may change according to the result of the Annual General

Meeting of Shareholders.

Classification

2023

2022

2021

Cash dividend per share for

Type 1 Preferred Share

(Cash dividend yield)

KRW 11,450

(7.4%)

KRW 7,050

(8.8%)

KRW 5,050

(5.0%)

Cash dividend per share

for Type 3 Preferred Share

(Cash dividend yield)

KRW 11,450

(7.5%)

KRW 7,050

(9.1%)

KRW 5,050

(5.2%)

6. ESG-related matters

Please refer to the attached 2023 Sustainability Report.

7. Mid- to long-term strategy of the Company

HMC has been holding CEO Investor Day regularly since 2019 in order to present and share

its mid- to long-term strategies with esteemed shareholders and investors. The 2023 CEO

Investor Day was held in June and the Company presented its business strategies including

electrification and future business addressing its competitiveness in production flexibility

which let HMC rapidly respond to business environment change.

Digital transformation and energy shift towards electric energy have been accelerated since

the outbreak of COVID-19 and the trend of automotive industry has changed rapidly.

The Company announced updated ‘Strategy 2025’ on the CEO Investor Day, which was held

in December 2020, in order to respond to changes in customers and industry and the

Company continues to reflect these changes on its business.

Based on quality, which is the basis of customer’s trust, the Company will realize its brand

purpose of ‘Quality Time’ that makes all customer’s time valuable by providing differentiated

values of ‘SMART’, which provides personalized and sustainable mobile experience based on

digital technology.

The Company has established three business structures and strategic directions with the goal

of transforming into a ‘Smart Mobility Solution Provider’ that provides quality-based ‘SMART’

value.

The first one is ‘Smart Mobility Device’ which promotes balanced growth between profitability

and sales by enhancing the competitiveness of automotive business and leading the

electrification. The second is ‘Smart Mobility Service’ that supports vehicle sales and secures

business capabilities. Lastly, the Company will preoccupy the fuel cell-based hydrogen

market by securing the hydrogen ecosystem and initiatives with ‘H2 Solution’.

The Company is striving to expand its global market share based on strategy 2025 with three

business structures. In particular, the Company will focus on strengthening internal stability

such as market share expansion and brand recognition enhancement rather than expanding

overall sales volume in all regions and the Company will establish a foundation for stable

growth in major markets for future growth.

HYUNDAI MOTOR COMPANY

AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED

DECEMBER 31, 2023

ATTACHMENT: INDEPENDENT AUDITORS’ REPORT

HYUNDAI MOTOR COMPANY

AND ITS SUBSIDIARIES

Contents

INDEPENDENT AUDITORS’

REPORT ----------------------------------------------------------------

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION -----------------------------------

CONSOLIDATED STATEMENTS OF INCOME ------------------------------------------------------

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ---------------------------

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ------------------------------------ 10

CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- 12

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------14

Independent auditor’s report

The Shareholders and the Board of Directors

Hyundai Motor Company

Opinion

We have audited the accompanying consolidated financial statements of Hyundai Motor Company and its

subsidiaries (collectively referred to as the “Group”), which comprise the consolidated statements of financial

position as of December 31, 2023, and the consolidated statements of income, the consolidated statements of

comprehensive income, consolidated statements of changes in equity and consolidated statements of cash

flows for the year ended December 31, 2023, and the notes to the financial statements, including a summary

of material accounting policy information.

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated

financial position of the Group as of December 31, 2023, and its consolidated financial performance and its

consolidated cash flows for the year ended December 31, 2023, in accordance with International Financial

Reporting Standards.

(“

IFRS

”).

Basis for Opinion

We conducted our audit in accordance with International

Standards on Auditing (“

SA”). Our responsibilities

under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated

financial statements section of our report. We are independent of the Group in accordance with the International

Ethi

cs Standards Board of Accountant’s Code of Ethics for Professional Accountants (IESBA Code) together

with the ethical requirements that are relevant to our audit of the consolidated financial statements in the

Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements

and the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit

of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed

in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters.

Valuation of sales warranty provision

As described in Note 2.(20) to the consolidated financial statements, the Group provides free warranty services

to customers during guaranteed period after the sale of the vehicle and also in the event of a recall or campaign

due to quality issues. As of December 31, 2023, the Group has recognized a total of

￦

9,121,253 million in

sales warranty provision, including provision for the obligation to provide free warranty services (Note 17).

When estimating the balance of provisions for the obligation to provide free repairs, the Group uses historical

data such as sales volume by vehicle type and past repair expenses that occurred from warranty services, and

assumptions such as expected increase rate of unit repair price and expected free repair occurrence rate. The

amount of basic data collected and aggregated in the process is vast and complex, and the applied

management assumptions are highly subjective and uncertain. Therefore, we selected the valuation of the

Ernst & Young Han Young

Tel: +82 2 3787 6600

Fax: +82 2 783 5890

ey.com/kr

2-4F, 6-8F, Taeyoung Building, 111, Yeouigongwon-ro,

Yeongdeungpo-gu, Seoul 07241 Korea

A member

ﬁ

rm of Ernst & Young Global Limited

sales warranty provision as a key audit matter as it is probable that that any error in such data or assumptions

might cause a material misstatement in the consolidated financial statements.

The primary audit procedures we performed to address this key audit matter included the following:

Evaluating whether control activities to measure and recognize the sales warranty provision are properly

designed and operated;

Using IT specialists to evaluate whether general control and automatic control of the IT system that

aggregates historical sales warranty data are properly designed and operated;

Comparing the source data of

management’s accounting estimates

with other internal and external

information;

Comparing

the sources of management’s

main assumptions used for measurement of related liabilities with

historical data;

Recalculating the balance of sales warranty provisions independently as of the end of the reporting period;

Evaluating by comparing the estimates by each vehicle type as of the end of the immediately preceding

reporting period and the actual amount as of the end of the current reporting period; and

Evaluating the appropriateness of other significant considerations that have affected the balance of

provisions.

Valuation of financial services receivables

According to the accounting policies for valuation of financial services receivables described in Note 2.(8) to

the consolidated financial statements, as of December 31, 2023, the Group recognized financial services

receivables, net, and loss allowance of

￦

110,055,651 million and

￦

1,769,240 million, respectively (Note 14).

In accordance with IFRS 9

Financial Instruments

, the Group recognizes allowance for credit loss for financial

services receivables using the expected credit loss (ECL) model.

The ECL model requires management

judgment to assess whether the receivable has undergone a significant increase in credit risk, as well as other

assumptions, such as credit rating and macroeconomic variables. In addition, the Group also considers

historical transaction data, such as delinquency days, bankruptcy, and collection, to determine assumptions

used in the ECL model. As errors in the assumptions applied to the ECL model could have a significant impact

on the consolidated financial statements, we identified the valuation of financial services receivables as a key

audit matter.

The primary audit procedures we performed to address this key audit matter included the following:

Assessing whether the Group’s accounting policies comply with the requirements in

IFRS 9

Financial

Instruments

Understanding the process over the measurement of credit loss allowance for financial services receivables

and testing relevant controls;

On a sample basis, assessing the credit rating and classification of credit quality, including the identification

of significant increase in credit risk, through inspection of related documents; and

On a sample basis, checking the source data for probability of default and loss given default and testing

appropriateness of calculation methods used for the estimation through recalculation.

Other matter

The accompanying consolidated financial statements of the Group for the year ended December 31, 2022 were

audited by other auditors who expressed an unmodified opinion on those statements on March 8, 2023.

Meanwhile, the consolidated financial statements for the year ended December 31, 2022, audited by other

auditors, do not reflect the impact of the discontinued operations described in Note 43.

A member

ﬁ

rm of Ernst & Young Global Limited

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial

Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements

in accordance with IFRS, and for such internal control as management determines is necessary to enable the

preparation of the consolidated financial statements that are free from material misstatement, whether due to

fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability

to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless management either intends to liquidate the Group or to cease operations,

or has no realistic alternative but to do so.

Thos

e charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit

conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements

can arise from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated

financial statements.

As part of an audit in accordance with ISA we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:



Identify and assess the risks of material misstatement of the consolidated financial statements, whether due

to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.



Obtain an understanding of internal control relevant to the audit in order to design audit procedures that

are appropriate in the circumstances.



Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial

statements and the reasonableness of accounting estimates and related disclosures made by

management.



Conclude on the appropriateness of management’s use of the going concern basis of accountin

g and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions

that may cast significant doubt on the

Group’s

ability to continue as a going concern. If we conclude that a

material uncertainty exists, we

are required to draw attention in our auditors’ report to the related

disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to the dat

e of our auditors’ report.

However, future events or conditions may cause the Group to cease to continue as a going concern.



Evaluate the overall presentation, structure and content of the consolidated financial statements, including

the disclosures, and whether the consolidated financial statements represent the underlying transactions

and events in a manner that achieves fair presentation.



Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within the Group to express an opinion on the consolidated financial statements. We are

responsible for the direction, supervision and performance of the group audit. We remain solely responsible

for our audit opinion.

A member

ﬁ

rm of Ernst & Young Global Limited

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control that we

identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters that

may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were

of most significance in the audit of the consolidated financial statements of the current period and are therefore

the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes

public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should

not be communicated in our report because the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such communication.

Our responsibility includes to assess whether the consolidated financial statements have been prepared, in all

material respects, in accordance with the requirements of the ESEF Regulation.

The engagement partner on the audit resulting in this independent auditors’ report is

Do hun, Han.

Report on Other Legal and Regulatory Requirements

We have reviewed the compliance of the consolidated financial statements of the Group as of December 31,

2023 with requirements set out in the ESEF Regulation that are applicable to the consolidated financial

statements.

The requirements applicable to the Group are:



consolidated financial statements to be prepared in a valid XHTML format; and



the XBRL markup to be embedded in consolidated financial statements by using the core taxonomy and

applying the common rules on markups specified in in the ESEF Regulation.

In our opinion, the consolidated financial statements of the Group as of December 31, 2023, identified as

“9884004RQX8PRBXQ8S60

-2023-12-

31.zip”, have bee

n prepared, in all material respects, in compliance with

the requirements of the ESEF Regulation.

Seoul, Korea

March 6, 2024, except for

the Report on Other Legal and Regulatory Requirements

section herein, which

is added as of March 25, 2024

This

audit report is effective as of March 6, 2024, the independent auditor’s report date. Accordingly, certain

material subsequent events or circumstances may have occurred during the period from the date of the

independent auditor’s report to the time this re

port is used. Such events and circumstances could significantly

affect the accompanying consolidated financial statements and may result in modifications to this report.

A member

ﬁ

rm of Ernst & Young Global Limited

HYUNDAI MOTOR COMPANY

AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR EACH OF THE TWO YEARS IN THE PERIOD ENDED

DECEMBER 31, 2023

The accompanying consolidated financial statements, including all footnote disclosures, were

prepared by, and are the responsibility of, the Company.

Chang, Jae Hoon

Chief Executive Officer

HYUNDAI MOTOR COMPANY

Main Office Address: (Road Name Address) 12, Heolleung-ro, Seocho-gu, Seoul

(Phone Number) 02-3464-1114

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2023 AND DECEMBER 31, 2022

ASSETS

NOTES

December 31, 2023

December 31, 2022

(In millions of Korean Won)

Current assets:

Cash and cash equivalents

￦

19,166,619

￦

20,864,879

Short-term financial instruments

7,339,968

5,774,597

Other financial assets

5,20

2,802,611

5,934,745

Trade notes and accounts receivable

3,20

4,682,182

4,279,057

Other receivables

4,20

3,431,169

4,458,689

Inventories

17,400,346

14,291,216

Current tax assets

195,696

85,867

Financial services receivables

14,20

43,120,684

38,037,368

Non-current assets classified as held for sale

8,43

434,503

22,302

Other assets

7,20

3,150,939

2,640,553

Total current assets

101,724,717

96,389,273

Non-current assets:

Long-term financial instruments

154,966

112,557

Other financial assets

5,20

4,423,388

3,889,776

Long-term trade notes and accounts receivable

3,20

210,979

179,781

Other receivables

4,20

855,015

821,050

Property, plant and equipment

9,40

38,920,900

36,153,190

Investment property

10,40

146,148

144,450

Intangible assets

11,40

6,218,585

6,102,377

Investments in joint ventures and associates

28,476,142

25,199,437

Net defined benefit assets

488,181

837,502

Deferred tax assets

3,604,977

3,237,309

Financial services receivables

14,20

64,566,977

52,326,478

Investments in operating leases

29,664,618

27,681,534

Right-of-use assets

1,037,643

1,117,293

Other assets

7,20

1,970,119

1,550,455

Total non-current assets

180,738,638

159,353,189

Total assets

￦

282,463,355

￦

255,742,462

(Continued)

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2023 AND DECEMBER 31, 2022

LIABILITIES AND EQUITY

NOTES

December 31, 2023

December 31, 2022

(In millions of Korean Won)

Current liabilities:

Trade notes and accounts payable

￦

10,952,046

￦

10,797,065

Other payables

20,39

8,642,808

8,277,891

Short-term borrowings

16,20

9,035,548

11,366,480

Current portion of long-term debt and debentures

16,20

25,109,158

25,574,131

Income tax payable

1,324,720

1,008,506

Provisions

7,316,877

8,102,596

Other financial liabilities

18,20

56,712

99,144

Lease liabilities

12,20

224,350

405,053

Non-current liabilities classified as held for sale

8,43

122,851

5,365

Other liabilities

19,20,27

10,577,033

8,600,241

Total current liabilities

73,362,103

74,236,472

Non-current liabilities:

Long-term other payables

20,39

616,011

726,115

Debentures

16,20

73,033,493

62,960,060

Long-term debt

16,20

17,569,760

12,285,149

Net defined benefit liabilities

77,268

61,861

Provisions

4,333,841

4,327,985

Other financial liabilities

18,20

176,399

262,518

Deferred tax liabilities

5,438,976

5,027,741

Lease liabilities

12,20

834,052

705,751

Other liabilities

19,20,27

5,212,012

4,252,265

Total non-current liabilities

107,291,812

90,609,445

Total liabilities

180,653,915

164,845,917

Equity:

Capital stock

1,488,993

Capital surplus

4,378,489

4,241,303

Other capital items

(1,197,084)

(1,713,928)

Accumulated other comprehensive loss

(838,892)

(1,620,682)

Retained earnings

88,665,805

79,953,601

Equity attributable to the owners of the Company

92,497,311

82,349,287

Non-controlling interests

9,312,129

8,547,258

Total equity

101,809,440

90,896,545

Total liabilities and equity

￦

282,463,355

￦

255,742,462

(Concluded)

See accompanying notes to the consolidated financial statements.

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES

2023

2022

(In millions of Korean Won, except per share amounts)

Sales

27,40

￦

162,663,579

￦

142,151,469

Cost of sales

129,179,183

113,879,569

Gross profit

33,484,396

28,271,900

Selling and administrative expenses

28,32

18,357,495

18,446,972

Operating profit

15,126,901

9,824,928

Gain on investments in joint ventures and

associates, net

2,470,933

1,557,630

Finance income

1,559,538

985,893

Finance expenses

970,700

879,638

Other income

1,782,333

1,930,914

Other expenses

31,32

2,350,343

2,238,256

Profit before income tax

17,618,662

11,181,471

Income tax expense

4,626,640

2,979,168

Profit from continuing operations

￦

12,992,022

￦

8,202,303

Discontinued operations

Loss from discontinued operations

￦

(719,721)

￦

(218,689)

Profit for the year

12,272,301

7,983,614

Profit attributable to:

Owners of the Company

11,961,717

7,364,364

Non-controlling interests

310,584

619,250

Earnings per share attributable to the owners

of the Company:

Basic earnings per share:

Common stock

￦

45,703

￦

28,521

From continuing operations

47,622

29,105

From discontinued operations

(1,919)

(584)

preferred stock

￦

45,535

￦

28,207

From continuing operations

47,445

28,783

From discontinued operations

(1,910)

(576)

Diluted earnings per share:

Common stock

￦

45,703

￦

28,521

preferred stock

￦

45,535

￦

28,207

See accompanying notes to the consolidated financial statements.

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

2023

2022

(In millions of Korean Won)

Profit for the year

￦

12,272,301

￦

7,983,614

Other comprehensive income (loss) :

Items that will not be reclassified subsequently to

profit or loss:

Profit (loss) on financial assets measured at FVOCI, net

79,056

(223,420)

Remeasurements of defined benefit plans

(312,128)

391,308

Changes in retained earnings of equity-accounted

investees, net

(219,981)

164,475

Changes in share of OCI of equity-accounted

investees, net

40,297

(175,059)

(412,756)

157,304

Items that may be reclassified subsequently to

profit or loss:

Gain (loss) on financial assets measured at FVOCI, net

13,884

(36,545)

Gain (loss) on valuation of cash flow hedge

derivatives, net

(227,671)

218,377

Changes in share of OCI of

equity-accounted

investees, net

328,032

10,008

Gain on foreign operations translation, net

455,051

701,718

569,296

893,558

Total other comprehensive income

156,540

1,050,862

Total comprehensive income

￦

12,428,841

￦

9,034,476

Comprehensive income attributable to:

Shareholders of the Company

12,204,426

8,234,396

Non-controlling interests

224,415

800,080

Total comprehensive income

￦

12,428,841

￦

9,034,476

See accompanying notes to the consolidated financial statements.

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

Capital

stock

Capital

surplus

Other

capital

items

Accumulated

other

comprehensive

income (loss)

Retained

earnings

Total equity

attributable to

the owners of

the Company

Non-

controlling

interests

Total

equity

(In millions of Korean Won)

Balance as oft

January 1, 2022

￦

1,488,993

￦

4,070,260

￦

(1,968,385)

￦

(1,772,601)

￦

73,167,855

￦

74,986,122

￦

7,629,667

￦

82,615,789

Comprehensive

income:

Profit for the period

7,364,364

619,250

7,983,614

Gain (loss) on financial

assets measured at

FVOCI, net

(430,012)

174,758

(255,254)

(4,711)

(259,965)

Gain on valuation

of cash flow hedge

derivatives, net

169,796

48,581

218,377

Changes in valuation

of equity-accounted

investees, net

(160,325)

164,475

4,150

(4,726)

(576)

Remeasurements of

defined benefit plans

378,880

12,428

391,308

Gain on foreign

operations

translation, net

572,460

129,258

701,718

Total comprehensive

income

151,919

8,082,477

8,234,396

800,080

9,034,476

Transactions with

owners, recorded

directly in equity:

Payment of cash

dividends

(1,298,212)

(56,800)

(1,355,012)

Increase in paid-in

capital of

subsidiaries by

issuing stock

560

Acquisition of

investment of

subsidiaries

273,271

Disposals of

investment of

subsidiaries

(83,094)

Purchases of

treasury stocks

(193,452)

Disposals of

treasury stocks

174,346

447,909

622,255

Others

(3,303)

1,481

(1,822)

(16,426)

(18,248)

Total transactions with

owners, recorded

directly in equity

171,043

254,457

(1,296,731)

(871,231)

117,511

(753,720)

Balance as of

December 31, 2022

￦

1,488,993

￦

4,241,303

￦

(1,713,928)

￦

(1,620,682)

￦

79,953,601

￦

82,349,287

￦

8,547,258

￦

90,896,545

(Continued)

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

Capital

stock

Capital

surplus

Other

capital

items

Accumulated

other

comprehensive

income (loss)

Retained

earnings

Total equity

attributable to

the owners of

the Company

Non-

controlling

interests

Total

equity

(In millions of Korean Won)

Balance as of

January 1, 2023

￦

1,488,993

￦

4,241,303

￦

(1,713,928)

￦

(1,620,682)

￦

79,953,601

￦

82,349,287

￦

8,547,258

￦

90,896,545

Comprehensive

income:

Profit for the period

11,961,717

310,584

12,272,301

Gain (loss) on financial

assets measured at

FVOCI, net

119,124

(26,118)

93,006

(66)

92,940

Loss on valuation

of cash flow hedge

derivatives, net

(149,287)

(78,384)

(227,671)

Changes in valuation

of equity-accounted

investees, net

348,212

(219,981)

128,231

20,117

148,348

Remeasurements of

defined benefit plans

(292,982)

(19,146)

(312,128)

Gain on foreign

operations

translation, net

463,741

(8,690)

455,051

Total comprehensive

income

781,790

11,422,636

12,204,426

224,415

12,428,841

Transactions with

owners, recorded

directly in equity:

Payment of cash

Dividends

(2,358,316)

(140,764)

(2,499,080)

Increase in paid-in

capital of

subsidiaries

by issuing stock

46,828

814,374

861,202

Acquisition of

investment in

subsidiaries

22,898

(26,341)

(3,443)

Disposals of

investment in

subsidiaries

20,546

Disposals of

Treasury stocks

67,491

201,432

268,923

Retirement of

Treasury stocks

315,412

(315,412)

Issue of

hybrid bonds

159,590

Repayments of

hybrid bonds

(300,000)

Others

(31)

(36,704)

(36,735)

13,051

(23,684)

Total transactions with

owners, recorded

directly in equity

137,186

516,844

(2,710,432)

(2,056,402)

540,456

(1,515,946)

Balance as of

December 31, 2023

￦

1,488,993

￦

4,378,489

￦

(1,197,084)

￦

(838,892)

￦

88,665,805

￦

92,497,311

￦

9,312,129

￦

101,809,440

(Concluded)

See accompanying notes to the consolidated financial statements.

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES

2023

2022

(In millions of Korean Won)

Cash flows from operating activities:

Cash generated from operations:

Profit for the year

￦

12,272,301

￦

7,983,614

Adjustments

21,192,358

20,255,938

Changes in operating assets and liabilities

(30,365,064)

(13,922,657)

3,099,595

14,316,895

Interest received

1,672,380

867,192

Interest paid

(4,237,818)

(2,695,029)

Dividend received

840,925

531,902

Income tax paid

(3,893,842)

(2,393,649)

Net cash provided by (used in) operating activities

(2,518,760)

10,627,311

Cash flows from investing activities:

Changes in short-term financial instruments, net

(1,305,170)

1,082,254

Changes in other financial assets (current), net

3,703,249

5,452,691

Decrease in other financial assets (non-current)

107,256

41,521

Collection of other receivables

61,697

60,779

Disposals of long-term financial instruments

42,793

122,124

Proceeds from disposals of property, plant and

equipment

144,338

136,870

Proceeds from disposals of intangible assets

2,333

7,357

Proceeds from disposals of investment in joint

ventures and associates

19,650

19,115

Acquisitions of subsidiaries, net of cash acquired

(89,167)

Increases in other financial assets (non-current)

(862,570)

(276,728)

Increases in other receivables

(89,586)

(80,170)

Purchases of long-term financial instruments

(73,150)

(63,612)

Acquisitions of property, plant and equipment

(7,070,758)

(4,014,969)

Acquisitions of intangible assets

(1,780,423)

(1,718,733)

Acquisitions of investments in joint ventures and

associates

(1,522,962)

(1,696,266)

Cash outflows from changes in consolidation

(12,787)

(197,188)

Others

(13,301)

10,627

Net cash used in investing activities

(8,649,391)

(1,203,495)

(Continued)

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES

2023

2022

(In millions of Korean Won)

Cash flows from financing activities:

Proceeds from short-term borrowings

￦

2,144,959

￦

3,388,510

Proceeds from long-term debt and debentures

49,089,498

30,089,495

Proceeds from capital contribution from non-

controlling interest

713,380

341,864

Acquisitions of subsidiaries

(5,501)

Repayment of short-term borrowings

(4,762,286)

(6,070,109)

Repayment of long-term debt and debentures

(34,942,180)

(27,086,324)

Repayment of lease liabilities

(248,888)

(195,245)

Purchases of treasury stocks

(193,451)

Dividends paid

(2,499,050)

(1,354,996)

Issue of hybrid bonds

159,590

Repayment of hybrid bonds

(300,000)

Others

43,849

(244,243)

Net cash provided by (used in) financing activities

9,393,371

(1,324,499)

Cash and cash equivalents included in assets held for

sale

(149,673)

Effect of exchange rate changes on cash and

cash equivalents

226,193

(29,992)

Net increase in cash and cash equivalents

(1,698,260)

8,069,325

Cash and cash equivalents, beginning of the year

20,864,879

12,795,554

Cash and cash equivalents, end of the year

￦

19,166,619

￦

20,864,879

(Concluded)

See accompanying notes to the consolidated financial statements.

HYUNDAI MOTOR COMPANY AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

GENERAL:

Hyundai Motor Company (the “Company” or “Parent Company”) was incorporated in

December 1967, under the laws of

the Republic of Korea.

The Company and its subsidiaries (the

“

Group

”

) manufacture and distribute motor vehicles and

parts, operate vehicle financing and credit card processing, and manufacture trains.

The shares of the Company have been listed on the Korea Exchange since June 1974, and the Global Depositary Receipts

issued by the Company have been listed on the London Stock Exchange and Luxembourg Stock Exchange.

As of December 31, 2023, the major shareholders of the Company are Hyundai MOBIS (45,782,023 shares, 21.64%) and

Mr. Chung, Mong Koo (11,395,859 shares, 5.39%).

(1)

The Group’s consolidated subsidiaries as of

December 31, 2023 are as follows.

	Nature of		Ownership
Name of subsidiaries	business	Location	percentage	Indirect ownership
HYUNDAI CAPITAL SERVICES, INC.	Financing	Korea	59.72%
HYUNDAI CARD CO., LTD. (*1)	˝	˝	36.96%
HYUNDAI ROTEM COMPANY (*2)	Manufacturing	˝	33.77%
HYUNDAI KEFICO CORPORATION	˝	˝	100.00%
HYUNDAI PARTECS	˝	˝	56.00%
Hyundai NGV	Engineering	˝	68.29%
MAINtrans company	Services	˝	100.00%	HYUNDAI ROTEM COMPANY
				100.00%
Rotem SRS Co., Ltd.	˝	˝	100.00%	˝
S-Trans Co., Ltd.	˝	˝	100.00%	˝
JEONBUK HYUNDAI MOTORS FC	Football club	˝	100.00%
CO., LTD
AirPlug Inc.	R&D and Sales	˝	99.41%
42dot Inc.	˝	˝	58.69%
42 Air, Inc	˝	USA	100.00%	42dot Inc. 100.00%
Movia Inc.	Transporting	Korea	100.00%	˝
Hyundai Motor America (HMA)	Sales	USA	100.00%
Hyundai Capital America (HCA)	Financing	˝	80.00%	HMA 80.00%
Hyundai Motor Manufacturing
Alabama, LLC (HMMA)	Manufacturing	˝	100.00%	HMA 100.00%
Hyundai Motor Group Metaplant America,
LLC (HMGMA)	˝	˝	60.00%	HMA 60.00%
Hyundai Translead (HT)	˝	˝	100.00%
Hyundai America Technical Center,
Inc. (HATCI)	R&D	˝	100.00%
Genesis Motor America LLC	Sales	˝	100.00%	HMA 100.00%
Hyundai Rotem USA Corporation	Manufacturing	˝	100.00%	HYUNDAI ROTEM COMPANY
				100.00%
Hyundai Motor Investment, Inc.	Investment	˝	100.00%
HYUNDAI AUTO CANADA CORP. (HACC)	Sales	Canada	100.00%	HMA 100.00%
HYUNDAI AUTO CANADA CAPTIVE
INSURANCE INC. (HACCI)	Insurance	˝	100.00%	˝
				HYUNDAI CAPITAL SERVICES,
Hyundai Capital Canada Inc. (HCCA)	Financing	˝	70.00%	INC. 20.00%
Hyundai Capital Lease Inc. (HCLI)	˝	˝	100.00%	HCCA 100.00%
HK Lease Funding LP	˝	˝	100.00%	HCLI 99.99%,
				HCCA Funding Inc. 0.01%
HCCA Funding Inc.	˝	˝	100.00%	HCLI 100.00%

Name of subsidiaries	Nature of business	Location	Ownership percentage	Indirect ownership
HCCA Funding Two Inc.	Financing	Canada	100.00%	HCCA 100.00%
HK Retail Funding LP	˝	˝	100.00%	HCCA 99.99%, HCCA Funding Two Inc 0.01%
HYUNDAI MOTOR INDIA LIMITED (HMI)	Manufacturing	India	100.00%
HYUNDAI MOTOR INDIA
ENGINEERING PRIVATE LIMITED	R&D	˝	100.00%	HMI 100.00%
(HMIE)
HYUNDAI INDIA INSURANCE
BROKING PRIVATE LIMITED	Insurance	˝	100.00%	˝
(HIIB)
HYUNDAI CAPITAL INDIA PRIVATE				HYUNDAI CAPITAL SERVICES,
LIMITED (HCI)	Financing	˝	100.00%	INC. 100.00%
Hyundai Mobility Japan Co., Ltd. (HMJ)	Sales	Japan	100.00%
Hyundai Mobility Japan R&D Center Co.,	R&D	˝	100.00%
Ltd. (HMJ R&D)
Hyundai Motor Business Service Company (HMBSC)	Services	Saudi	Arabia	100.00%
HYUNDAI MOTOR MIDDLE EAST AND AFRICA L.L.C	˝	United Arab Emirates	100.00%
Beijing Jingxian Motor Safeguard Service Co., Ltd. (BJMSS)	Sales	China	100.00%
Beijing Jingxianronghua Motor Sale Co., Ltd.	˝	˝	100.00%	BJMSS 100.00%
Genesis Motor Sales (Shanghai) Co., LTD.	˝	˝	100.00%
Hyundai Millennium (Beijing) Real Estate Development Co., Ltd.	Real estate development	˝	99.00%	CMEs 99.00%
Rotem Equipments (Beijing) Co., Ltd.	Sales	˝	100.00%	HYUNDAI ROTEM COMPANY
				100.00%
KEFICO Automotive Systems(Beijing) Co., Ltd.	Manufacturing	˝	100.00%	HYUNDAI KEFICO CORPORATION 100.00%
Hyundai Truck & Bus (China) Co., Ltd. (HTBC)	˝	˝	100.00%
HYUNDAI THANH CONG VIETNAM
AUTO MANUFACTURING	˝	Vietnam	50.00%
CORPORATION (HTMV)(*1)
HYUNDAI THANH CONG
COMMERCIAL VEHICLE JOINT	Sales	˝	50.00%
STOCK COMPANY (HTCV)(*1)
HYUNDAI THANH CONG VIET NAM
AUTO JOINT VENTURE JOINT	˝	˝	50.00%
STOCK COMPANY (HTV)(*1)
HYUNDAI KEFICO VIETNAM				HYUNDAI KEFICO
COMPANY LIMITED	Manufacturing	˝	100.00%	CORPORATION 100.00%
HYUNDAI MOTOR COMPANY	Sales	Australia	100.00%
AUSTRALIA PTY LIMITED (HMCA)
HYUNDAI MOTOR PHILIPPINES, INC. (HMPH)	˝	Philippines	100.00%
HYUNDAI MOBILITY (THAILAND) CO., LTD. (HMT)	˝	Thailand	100.00%
PT HYUNDAI MOTOR
MANUFACTURING INDONESIA	Manufacturing	Indonesia	100.00%
(HMMI)
PT HYUNDAI MOTORS INDONESIA
(HMID)	Sales	˝	100.00%	HMMI 0.01%
PT Hyundai Solusi Mobilitas (HSM)	˝		˝ 99.99%	HMID 99.99%
PT. HYUNDAI CAPITAL INDONESIA				HYUNDAI CAPITAL SERVICES,
(HCID)	Financing	˝	100.00%	INC. 100.00%
Hyundai Capital Australia Pty Limited	˝	Australia	100.00%	˝
HR MECHANICAL SERVICES				HYUNDAI ROTEM COMPANY
LIMITED	Services	New Zealand	100.00%	100.00%
Hyundai Motor Manufacturing Czech	Manufacturing	Czech	100.00%
s.r.o. (HMMC)

Name of subsidiaries	Nature of business	Location	Ownership percentage	Indirect ownership
Hyundai Motor Czech s.r.o. (HMCZ)	Sales	Czech	100.00%
Hyundai Motor Europe GmbH (HME)	Marketing and Sales	Germany	100.00%
Hyundai Motor Deutschland GmbH (HMD)	Sales	˝	100.00%
Hyundai Motor Europe Technical	R&D	˝	100.00%
Center GmbH (HMETC)
Hyundai Motorsport GmbH (HMSG)	Marketing	˝	100.00%	HME 100.00%
Hyundai Capital Europe GmbH.	Financing	˝	100.00%	HYUNDAI CAPITAL SERVICES,
				INC. 100.00%
HMCIS B.V.	Holding company	Netherlands	100.00%
Hyundai Motor Netherlands B.V.
(HMNL)	Sales	˝	100.00%
Hyundai Motor Sweden AB (HMS) ˝		Sweden	100.00%
Hyundai Motor Manufacturing Rus	Manufacturing	Russia	70.00%
LLC (HMMR)
Hyundai Motor CIS Limited Liability Company (HMCIS)	Sales	˝	100.00%	HMCIS B.V. 100.00%
Hyundai Mobility Lab Limited Liability Company. (HML)	R&D	˝	100.00%	HMCIS 99.00%, HMMR 1.00%
HYUNDAI CAPITAL SERVICES LIMITED LIABILITY COMPANY	Financing	˝	100.00%	Hyundai Capital Europe 100.00%
Limited liability company Hyundai Truck & Bus Rus (HTBR)	Sales	˝	100.00%
Hyundai Assan Otomotiv Sanayi Ve Ticaret Anonim Sirketi (HAOSVT)	Manufacturing	Turkiye	97.00%
Hyundai EURotem Demiryolu Araclari	˝	˝	50.50%	HYUNDAI ROTEM COMPANY
Sanayi ve Ticaret A.S				50.50%
Hyundai Rotem Company – Hyundai				HYUNDAI ROTEM COMPANY
EUROTEM Demiryolu Araclari SAN.	Sales	˝	100.00%	65.00%,
VE TIC. A.S ORTAK GIRISIMI				Hyundai EURotem A.S. 35.00%
Hyundai Rotem Company - Hyundai				HYUNDAI ROTEM COMPANY
EUROTEM Mahmutbey	˝	˝	100.00%	85.00%,
Projesi ORTAK GIRISIMI				Hyundai EURotem A.S. 15.00%
Rotem SRS Ukraine LLC.	Services	Ukraine	100.00%	Rotem SRS Co., Ltd. 100.00%
Rotem SRS Egypt LLC.	˝	Egypt	98.00%	Rotem SRS Co., Ltd. 98.00%
HYUNDAI MOTOR UK LIMITED (HMUK)	Sales	UK	100.00%
HYUNDAI MOTOR COMPANY ITALY S.R.L. (HMCI)	˝	Italy	100.00%
HYUNDAI MOTOR ESPANA, S.L.U. (HMES)	˝	Spain	100.00%
HYUNDAI MOTOR FRANCE (HMF) ˝		France	100.00%
Hyundai Motor Poland sp. z o.o. (HMP) ˝		Poland	100.00%
HYUNDAI ROTEM EUROPE sp. z o.o.	Services	˝	100.00%	HYUNDAI ROTEM COMPANY 100.00%
GENESIS MOTOR EUROPE GmbH (GME)	Sales	Germany	100.00%
GENESIS MOTOR UK LIMITED	˝	UK	100.00%	GME 100.00%
(GMUK)
GENESIS MOTOR SWITZERLAND AG (GMCH)	˝	Switzerland	100.00%	˝
GENESIS MOTOR DEUTSCHLAND GmbH (GMD)	˝	Germany	100.00%	˝
Hyundai Hydrogen Mobility AG (HHM) ˝		Switzerland	75.00%
Hyundai Hydrogen Mobility Germany GmbH (HHMG)	˝	Germany	100.00%	HHM 100.00%
HYUNDAI MOTOR DE MEXICO S DE
RL DE CV (HMM)	˝	Mexico	100.00%	HT 0.01%
Hyundai de Mexico, SA DE C.V., (HYMEX)	Manufacturing	˝	99.99%	HT 99.99%
HYUNDAI KEFICO MEXICO, S. DE R.L. DE C.V.	˝	˝	100.00%	HYUNDAI KEFICO CORPORATION 100.00%

Name of subsidiaries	Nature of business	Location	Ownership percentage	Indirect ownership
	Real estate
Hyundai Rio Vista, Inc.	development	USA	100.00%	HT 100.00%
HYUNDAI MOTOR BRASIL
MONTADORA DE AUTOMOVEIS	Manufacturing	Brazil	100.00%
LTDA (HMB)
Hyundai Capital Brasil Servicos De	Financing ˝		100.00%	HYUNDAI CAPITAL SERVICES,
Assistencia Financeira Ltda.				INC. 100.00%
Hyundai Rotem Brasil Industria E Comercio De Trens Ltda.	Manufacturing ˝		100.00%	HYUNDAI ROTEM COMPANY 100.00%
HMS SERVICOS DE MOBILIDADE LTDA.	Holding company	Brazil	99.99%	HMB 99.99%
China Millennium Corporations (CMEs) ˝		Cayman Islands	59.60%
China Mobility Fund, L.P.	Investment ˝		72.00%
ZER01NE Accelerator Investment Fund No.1		˝ Korea	99.00%
Autopia Sixty-fifth ~ Seventy-Seventh
Asset Securitization Specialty Company (*1)	Financing ˝		0.50%	HYUNDAI CAPITAL SERVICES, INC. 0.50%
Zavurov First Co., Ltd. (*1)			˝ ˝ 0.00%	HYUNDAI CAPITAL SERVICES, INC. 0.00%
Super Series Ninth ~ Sixteenth Securitization Specialty Co., Ltd. (*1)			˝ ˝ 0.50%	HYUNDAI CARD CO., LTD. 0.50%
Bluewalnut Co., Ltd.			˝ ˝ 100.00%	HYUNDAI CARD CO., LTD. 100.00%
Hyundai Connected Mobility GmbH	Mobility Service	Germany	100.00%
MOCEAN Co.,Ltd ˝		Korea	73.28%
UB1st Co., Ltd	Manufacturing ˝		67.99%	42dot Inc. 67.99%
Hyundai Cha Funding, LLC	Financing	USA	100.00%	HCA 100.00%
Hyundai Lease Titling Trust			˝ ˝ 100.00% ˝
Hyundai HK Funding, LLC			˝ ˝ 100.00% ˝
Hyundai HK Funding Two, LLC			˝ ˝ 100.00% ˝
Hyundai HK Funding Three, LLC			˝ ˝ 100.00% ˝
Hyundai HK Funding Four, LLC			˝ ˝ 100.00% ˝
Hyundai ABS Funding, LLC			˝ ˝ 100.00% ˝
HK Real Properties, LLC			˝ ˝ 100.00% ˝
Hyundai Auto Lease Offering, LLC			˝ ˝ 100.00% ˝
Hyundai HK Lease, LLC			˝ ˝ 100.00% ˝
Extended Term Amortizing Program, LLC			˝ ˝ 100.00% ˝
Hyundai Asset Backed Lease, LLC			˝ ˝ 100.00% ˝
HCA Exchange, LLC			˝ ˝ 100.00% ˝
Hyundai Protection Plan, Inc.	Insurance ˝		100.00% ˝
Hyundai Protection Plan Florida, Inc.			˝ ˝ 100.00% ˝
Hyundai Capital Insurance Services, LLC			˝ ˝ 100.00% ˝
Hyundai Capital Insurance Company			˝ ˝ 100.00% ˝
Power Protect Extended Services, Inc.			˝ ˝ 100.00% ˝
Power Protect Extended Services Florida, Inc.			˝ ˝ 100.00% ˝

(*1)

The Group is considered to have substantive control over the entities by virtue of an agreement or relationship with other

investors, or relationship with structured entities.

(*2)

Even though the ownership percentage is less than half, the Group has de facto control over the entity due to the relative size of

the voting rights held and the degree of share dispersion of other voting rights holders.

(2)

Summarized financial position and results of operations of major consolidated subsidiaries as of and for the year

ended December 31, 2023 are as follows.

				Profit (loss)
Name of subsidiaries	Assets	Liabilities	Sales	for the period
	(In millions of Korean Won)
HYUNDAI CAPITAL SERVICES, INC. (*)	￦ 39,602,030	￦ 33,565,942	￦ 4,873,315	￦ 459,888
HYUNDAI CARD CO., LTD. (*)	23,937,240	20,106,768	3,224,815	265,106
HYUNDAI ROTEM COMPANY (*)	5,241,485	3,954,509	3,587,382	156,779
HYUNDAI KEFICO CORPORATION (*)	2,135,064	1,130,238	2,519,796	41,047
HCA(*)	82,158,423	74,184,645	14,025,729	459,062
HMA	14,506,566	7,565,450	40,823,810	2,778,222
HCCA(*)	8,665,898	8,075,579	994,577	47,190
HMI(*)	5,000,466	1,922,363	10,634,619	921,119
HMMC	4,920,777	1,843,845	11,146,656	795,558
HMMA	4,893,938	3,606,681	13,275,365	236,265
HAOSVT	2,025,990	974,573	4,723,194	230,654
HACC(*)	1,994,722	1,126,555	4,870,333	139,070
HMMI	1,776,410	1,130,619	1,928,508	81,740
HMB	1,611,763	915,285	3,617,488	52,054
HME(*)	1,600,476	1,512,577	17,657,351	13,903

(*)

Based on the subsidiary

’

s consolidated financial statements

Summarized financial position and results of operations of major consolidated subsidiaries as of and for the year

ended December 31, 2022 are as follows.

				Profit (loss)
Name of subsidiaries	Assets	Liabilities	Sales	for the period
	(In millions of Korean Won)
HYUNDAI CAPITAL SERVICES, INC. (*)	￦ 38,647,454	￦ 33,017,783	￦ 4,436,122	￦ 437,087
HYUNDAI CARD CO., LTD. (*)	25,102,360	21,256,797	3,015,376	253,957
HYUNDAI ROTEM COMPANY (*)	4,823,870	3,332,399	3,163,344	194,534
HYUNDAI KEFICO CORPORATION (*)	2,118,244	1,151,710	2,255,354	86,781
HCA (*)	65,174,141	57,784,155	12,392,502	416,542
HMA	13,534,367	8,484,603	33,684,033	2,549,423
HCCA (*)	6,146,352	5,611,754	819,584	82,115
HMMA	4,974,559	3,863,001	11,399,961	(807,997)
HMI (*)	4,932,560	2,071,012	9,230,238	710,908
HMMC	4,554,767	1,724,596	9,291,193	680,064
HME (*)	2,604,267	2,528,135	14,302,787	12,792
HACC (*)	1,811,550	1,003,562	4,146,159	102,258
HMB	1,801,019	1,195,946	3,314,994	97,250
HAOSVT	1,733,527	867,053	3,625,354	288,338
HMMI	1,717,566	1,169,855	1,484,674	(36,494)

(*)

Based on the subsidiary

’

s consolidated financial statements

(3)

The financial statements of all subsidiaries used in the preparation of the consolidated financial statements

are prepared for the same reporting periods as the Company

’

(4)

Summarized cash flows of non-wholly owned subsidiaries that have material non-controlling interests to the

Group and subsidiaries of finance segment for the year ended December 31, 2023 are as follows.

		HYUNDAI								HYUNDAI
		CAPITAL		HYUNDAI CARD		HCA		HCCA		ROTEM
Description		SERVICES, INC.		CO., LTD.						COMPANY
		(In millions of Korean Won)
Provided by (used in)
operating activities	￦	(1,240,514)	￦	617,367	￦	(13,789,397)	￦	(1,888,547)	￦	734,192
Provided by (used in)
investing activities		(289,957)		(309,410)		(131,584)		(4,046)		(270,412)
Provided by (used in)
financing activities		594,005		(1,528,100)		14,078,209		1,850,713		(576,282)
Effect of exchange rate
changes on cash and
cash equivalent		-		-		7,726		3,374		2,635
Net increase (decrease) in
cash and cash
equivalents		(936,466)		(1,220,143)		164,954		(38,506)		(109,867)
Beginning balance of
cash and cash
equivalents		1,747,627		2,269,390		553,623		87,794		506,008
Ending balance of cash
and cash equivalents	￦	811,161	￦	1,049,247	￦	718,577	￦	49,288	￦	396,141

Summarized cash flows of non-wholly owned subsidiaries that had material non-controlling interests to the Group

and subsidiaries of finance segment for the year ended December 31, 2022 are as follows.

		HYUNDAI								HYUNDAI
		CAPITAL		HYUNDAI CARD		HCA		HCCA		ROTEM
Description		SERVICES, INC.		CO., LTD.						COMPANY
		(In millions of Korean Won)
Provided by (used in)
operating activities	￦	(1,111,074)	￦	(618,906)	￦	(254,261)	￦	(1,257,295)	￦	716,229
Provided by (used in)
investing activities		(223,067)		(70,359)		28,172		(1,741)		(429,045)
Provided by (used in)
financing activities		2,572,598		2,379,211		389,229		1,274,970		(97,120)
Effect of exchange rate
changes on cash and
cash equivalent		-		-		22,292		(542)		(3,784)
Net increase (decrease) in
cash and cash
equivalents		1,238,457		1,689,946		185,432		15,392		186,280
Beginning balance of
cash and cash
equivalents		509,170		579,444		368,191		72,402		319,728
Ending balance of cash
and cash equivalents	￦	1,747,627	￦	2,269,390	￦	553,623	￦	87,794	￦	506,008

(5)

Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of

and for the year ended December 31, 2023 are as follows.

		HYUNDAI				HYUNDAI
		CAPITAL		HYUNDAI CARD		ROTEM
Description		SERVICES, INC.		CO., LTD.		COMPANY
		(In millions of Korean Won)
Ownership percentage of non-controlling
interests		40.28%		63.04%		66.23%
Accumulated non-controlling interests	￦	2,425,670	￦	2,490,730	￦	942,579
Profit attributable to non-controlling
interests		187,078		142,315		98,254
Dividends paid to non-controlling interests		-		38,442		-

Details of non-wholly owned subsidiaries of the Company that had material non-controlling interests as of and for

the year ended December 31, 2022 are as follows.

		HYUNDAI				HYUNDAI
		CAPITAL		HYUNDAI CARD		ROTEM
Description		SERVICES, INC.		CO., LTD.		COMPANY
		(In millions of Korean Won)
Ownership percentage of non-controlling
interests		40.32%		63.04%		66.23%
Accumulated non-controlling interests	￦	2,263,283	￦	2,511,596	￦	845,085
Profit attributable to non-controlling
interests		171,675		160,104		127,747
Dividends paid to non-controlling interests		-		56,753		-

(6)

Financial support provided to consolidated structured entities

As of December 31, 2023, HYUNDAI CARD CO., LTD. and HYUNDAI CAPITAL SERVICES, INC., subsidiaries

of the Company, have agreements that provide counterparties with rights of recourse in the event of default on the

derivatives relating to asset-backed securities issued by consolidated structured entities, Autopia Sixty-Eighth,

Sixty-Ninth and Seventy-sixth Asset Securitization Specialty Company, Super Series Ninth, Twelfth, Fourteenth

and Fifteenth Securitization Specialty Co., Ltd..

(7) Nature and risks associated with interests in unconsolidated structured entities

Nature of interests in unconsolidated structured entities of the Group as of December 31, 2023 is as follows.

			Method of
Description	Purpose	Nature of business	funding	Total assets (*)
		(In millions of Korean Won)
Asset	Fund raising	Fund	Asset Backed
securitization SPC	through asset-	collection	Securities and
	securitization		others	￦ 847,155
Investment fund	Investment trust and	Fund management	Beneficiary
	others	and operation,	(Investment)
		distribution of	certificates
		operating profit
		and others
				7,288,926
Structured Finance	Fund raising	Project financing	Project financing
	through project	for construction	and others
	financing	project and
		ship investment		34,569,749

(*) The financial information of unconsolidated structured entity includes unaudited amounts.

Nature of interests in unconsolidated structured entities of the Group as of December 31, 2022 is as follows.

			Method of
Description	Purpose	Nature of business	funding	Total assets (*)
		(In millions of Korean Won)
Asset	Fund raising	Fund	Asset Backed
securitization SPC	through asset-	collection	Securities and
	securitization		others	￦ 711,575
Investment fund	Investment trust and	Fund management	Beneficiary
	others	and operation,	(Investment)
		distribution of	certificates
		operating profit
		and others
				6,877,841
Structured Finance	Fund raising	Project financing	Project financing
	through project	for construction	and others
	financing	project and
		ship investment		24,128,653

(*) The financial information of unconsolidated structured entity includes unaudited amounts.

Risks associated with interests in unconsolidated structured entities of the Group as of December 31, 2023 are as

follows.

			Financial support provided		Maximum amount
			to the structured entity		of exposure to loss
		Book value in the			of the structured
Description		structured entity	Method	Purpose	entity
			(In millions of Korean Won)
Asset			Loan	Loan agreement
securitization SPC	￦	69,754	obligations	(Credit line)	￦	92,000
Investment fund			Beneficiary	Invest
			certificates,	agreement
		304,074	Investment trust			304,074
Structured Finance			Loan	Loan agreement
		1,695,327	obligations	(Credit line)		2,356,936

Risks associated with interests in unconsolidated structured entities of the Group as of December 31, 2022 are as

follows.

			Financial support provided		Maximum amount
			to the structured entity		of exposure to loss
		Book value in the			of the structured
Description		structured entity	Method	Purpose	entity
		(In millions of Korean Won)
Asset			Loan	Loan agreement
securitization SPC	￦	70,208	obligations	(Credit line)	￦	77,000
Investment fund			Beneficiary	Invest
			certificates,	agreement
		238,424	Investment trust			238,424
Structured Finance			Loan	Loan agreement
		1,585,070	obligations	(Credit line)		2,089,900

(8)

Significant restrictions on the subsidiaries

As of December 31, 2023, HYUNDAI CARD CO., LTD., a subsidiary of the Company, is subject to significant

restrictions that require it to obtain consent from a nominated outside director recommended by non-controlling

shareholders in the events of acquiring a company, entering into new business, providing guarantees, making

investments in stocks or contracts beyond a certain amount and others.

(9)

Changes in consolidated subsidiaries

Subsidiaries newly included in or excluded from consolidation during the year ended December 31, 2023 are as follows.

Changes	Name of subsidiaries	Description
Included	Autopia Seventy-Sixth Asset Securitization Specialty Company	Establishment
˝	Autopia Seventy-Seventh Asset Securitization Specialty Company	˝
˝	Super Series Fifteenth Securitization Specialty Co., Ltd.	˝
˝	Super Series Sixteenth Securitization Specialty Co., Ltd.	˝
˝	S-Trans Co., Ltd.	˝
˝	HYUNDAI ROTEM EUROPE sp. z o.o.	˝
˝	Hyundai Motor Business Service Company	˝
˝	Hyundai Motor Sweden AB	˝
˝	Hyundai Connected Mobility GmbH	˝
	HYUNDAI MOTOR MIDDLE EAST AND AFRICA L.L.C	˝
˝	UB1st Co., Ltd	Acquisition
Excluded	Super Series Sixth Securitization Specialty Co., Ltd.	Liquidation
˝	Super Series Seventh Securitization Specialty Co., Ltd.	˝
˝	Super Series Eighth Securitization Specialty Co., Ltd.	˝
˝	KEFICO Automotive Systems(Chongqing) Co., Ltd.	˝
˝	SMART Alabama, LLC	˝
˝	Stamped Metal American Research Technology, Inc.	˝

SUMMARY OF MATERIAL ACCOUNTING POLICIES:

(1)

Basis of consolidated financial statements preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards

(“

IFRS

”)

The material accounting policies used for the preparation of the consolidated financial statements are summarized below.

These material accounting policies are consistent with those applied to the consolidated financial statements as of and for

the year ended December 31, 2022, except for the new or amended accounting standards and interpretations described

below.

1) New and amended standards that have been applied from the year beginning on January 1, 2023 are as follows.

The Group applied IFRS 17

Insurance Contracts

Definition of Accounting Estimates

(Amendments to IAS 8

Accounting

Policies, Changes in Accounting Estimates and Errors)

, Disclosure of Accounting Policies (Amendments to IAS 1

Presentation of Financial Statements)

Deferred Tax related to Assets and Liabilities arising from a Single Transaction,

International Tax Reform-Pillar Two Model Rules

(Amendments to IAS 12

Income Taxes

Disclosure of gains (losses)

on valuation of financial liabilities in accordance with exercise price refixing

(Amendments to IAS 1

Presentation of

Financial Statements)

, for the first time on January 1, 2023. These standards and other new accounting standards effective

from January 1, 2023 do

not have a material impact on the Group's consolidated financial statements.

2) A number of new standards are effective for annual periods beginning on or after January 1, 2023 and earlier application

is permitted; however, the Group has not early adopted them in preparing these consolidated financial statements.

The Group is currently evaluating the effect of the following new or amended standards and interpretations, if any, to the

consolidated financial statements, however, those standards are not expected to have a material

impact on the Group’s

consolidated financial statements.

- Lease liabilities arising from sale and leaseback transactions (IFRS 16

Leases

)

- Classification of Liabilities as Current or Non-current (IAS 1

Presentation of Financial Statements

)

- Supplier Finance Arrangements (IAS 7

Statement of Cash Flows,

IFRS 7

Financial Instruments: Disclosures

)

- Disclosure of virtual assets (IAS 1

Presentation of Financial Statements

)

The consolidated financial statements were approved by the Board of Directors on January 25, 2024 and are

expected to be submitted for the Company's annual general meeting of shareholders.

(2)

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except as otherwise stated in the

accounting policies below. Historical cost is usually measured at the fair value of the consideration given to acquire the

assets.

(3)

Basis of consolidations

The consolidated financial statements incorporate the financial statements of the Company and entities (including

structured entities) controlled by the Company (or its subsidiaries).

Control is achieved when the Company:



has power over the investee;



is exposed, or has rights, to variable returns from its involvement with the investee; and



has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to

one or more of the three elements of control listed above.

Even if the Group has less than a majority of the voting rights of an investee, it has power over the investee when the

voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.

The

Group considers all relevant facts and circumsta

nces in assessing whether or not the Group’s voting rights in an investee

are sufficient to give it power, including:



the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote

holders;



potential voting rights held by the Group, other vote holders or other parties;



rights arising from other contractual arrangements; and



any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to

direct the relevant activities at the time that decisions need to be made, including voting patterns at previous

shareholders’ meetings.

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements

of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into

line with those used by the Group.

All intragroup transactions, balances, income and expenses are eliminated in full on

consolidation.

Non-controlling interests are presented in the consolidated statement of financial position within equity,

separately from the equity of the owners of the Group.

The carrying amount of non-controlling interests consists of the

amount of those non-controlling interests at the initial recognition and the changes in shares of the non-controlling

interests in equity since the date of the acquisition.

Total comprehensive income is attributed to the owners of the Group

and to the non-controlling interests even if the non-controlling interest has a deficit balance.

Changes in the Group's ownership interests in subsidiaries, without a loss of control, are accounted for as equity

transactions.

The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the

changes in their relative interests in the subsidiaries.

Any difference between the amount by which the non-controlling

interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed

to owners of the Group.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the

aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous

carrying amount of the assets (including goodwill), liabilities of the subsidiary and any non-controlling interests. The

amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the

Group had directly disposed of the relevant assets (i.e., reclassified to profit or loss or transferred directly to retained

earnings as specified by applicable IFRS).

The fair value of any investment retained in the former subsidiary at the date

when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9

Financial

Instruments: Recognition and Measurement

or, when applicable, the cost on initial recognition of an investment in an

associate or a joint venture.

(4)

Business combination

Acquisitions of businesses are accounted for using the acquisition method.

The consideration transferred in a business

combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets

transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests

issued by the Group in exchange for control of the acquiree.

The consideration includes any asset or liability resulting

from a contingent consideration arrangement and is measured at fair value.

Acquisition-related costs are recognized in profit or loss as incurred. When a business combination is achieved in stages,

the Group's previously held equity interest in the acquiree is remeasured at its fair value at the acquisition date (i.e., the

date when the Group obtains control) and the resulting gain or loss, if any, is recognized in profit or loss.

Prior to the

acquisition date, the amount resulting from changes in the value of its equity interest in the acquiree that have previously

been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be

appropriate if that interest were directly disposed of.

(5) Revenue recognition

In accordance with IFRS 15, all types of contracts recognize revenues by the 5-step revenue recognition model (1)

identification of contract

→

(2) identification of performance obligations

→

(3) calculation of transaction price

→

(4)

allocation of transaction price to performance obligations

→

(5) recognition of revenue when performance obligation is

satisfied.

1) Identification of performance obligations

The Group operates businesses such as the manufacture and sale of automobiles and auto parts. In the automobile sales

contracts with customers, services other than automobile sales are separately identified as performance obligations.

2) Performance obligations satisfied at a point in time

Revenue is recognized when the performance obligations under the terms of a contract with the Group’s customer are

satisfied, which generally occurs with the transfer of control of goods or services.

3) Performance obligations satisfied over time

In assessing whether the control over goods or services is transferred over time, the Group evaluates whether the customer

simultaneously obtains and consumes the benefits p

rovided by the Group’s performance, whether the assets are controlled

by the customer, and whether the assets created by the Group have no substitute purpose, and whether the Group is entitled

to reimbursement of costs incurred to date, including a reasonable margin.

4) Allocation of transaction price

The Group allocates the transaction price to each of the performance obligations identified in a single contract in

proportion to its stand-alone selling price. When the stand-alone selling price is not directly observable, the Group

estimates the stand-alone selling price using the adjusted market assessment approach, or the expected cost plus a margin

approach.

5) Variable consideration

The Group estimates the amount of consideration it will be entitled to receive using the method (either the expected value

method or the most likely amount method) that provides the most accurate prediction.

Variable consideration is included in the transaction price only to the extent that it is highly probable that a significant

reversal in the cumulative amount of revenue recognized will not occur in future periods.

6) Significant financing element

If the period between the transfer of the goods or services promised to the customer and the payment from the customer

is within one year, the Group does not adjust the promised amount of consideration for the effects of a significant financing

component, as a practical expedient.

7) Construction contracts

Where the outcome of a construction contract can be estimated reliably, the contract revenue and contract costs associated

with the construction contract are recognized as revenue and expenses, respectively, by reference to the stage of

completion of the contract activity at the end of reporting period.

The percentage of completion of a contract activity is reliably measured based on the proportion of contract costs incurred

for work performed to date relative to the estimated total contract costs, by surveys of work performed or by completion

of a physical proportion of the contract work.

Variations in contract work, claim and incentive payments are included to

the extent that the amount can be measured reliably and its receipt is considered probable.

Where the outcome of a

construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred

that it is probable will be recoverable.

Contract costs are recognized as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an

expense immediately.

(6)

Foreign currency translation

The individual financial statements of each entity in the Group are prepared and presented in the currency of the

primary economic environment in which the entity operates (its functional currency).

In preparing the financial statements of the individual entities, transactions occurring in currencies other than their

functional currency (foreign currencies) are recorded using the exchange rate on the dates of the transactions.

At the end

of each reporting period, monetary items denominated in foreign currencies are translated using the exchange rate at the

end of the reporting period.

Non-monetary items that are measured in terms of historical cost in a foreign currency are

translated using the exchange rate at the date of the transaction.

Non-monetary items that are measured at fair value in a

foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange

differences resulting from settlement of assets or liabilities and translation of monetary items denominated in foreign

currencies are recognized in profit or loss in the period in which they arise except for some exceptions.

Foreign exchange gains or losses are classified as finance income (expenses) or other income (expenses) by the nature of

the transaction or event.

For the purpose of presenting the consolidated financial statements, assets and liabilities in the Grou

p’s foreign operations

are translated into Won, using the exchange rates at the end of reporting period.

Income and expense items are translated

at the average exchange rate for the period, unless the exchange rate during the period has significantly fluctuated, in

which case the exchange rates at the dates of the transactions are used.

The exchange differences arising, if any, are

recognized in equity as other comprehensive income.

Upon the disposal of a foreign operation, the cumulative amount

of the exchange differences relating to that foreign operation is reclassified from equity to profit or loss when the gain or

loss on disposal is recognized.

Any goodwill arising on the acquisition of a foreign operation and any fair value

adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated

as assets and liabilities of the foreign operation and translated at the exchange rate at the end of reporting period.

(7)

Financial Assets

The Group classifies financial assets as financial assets measured at fair value through profit or loss, financial assets

measured at amortized cost or financial assets measured at fair value through other comprehensive income according to

the terms and purpose of acquisition. The Group determines the classification of a financial asset at initial recognition.

All recognized financial assets are measured subsequently in their entirety at either amortized cost or fair value, depending

on the classification of the financial assets.

Classification of financial assets

Debt instruments that meet the following conditions are measured subsequently at amortized cost:



The financial asset is held within a business model whose objective is to hold financial assets in order to

collect contractual cash flows; and



The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments

of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive

income (FVOCI):



The financial asset is held within a business model whose objective is achieved by both collecting contractual

cash flows and selling the financial assets; and



The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments

of principal and interest on the principal amount outstanding.

By default, all other financial assets are measured subsequently at fair value through profit or loss (FVPL).

Despite the foregoing, the Group may make the following irrevocable election / designation at initial recognition of a

financial asset:



The Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other

comprehensive income if certain criteria are met; and



The Group may irrevocably designate a debt investment that meets the amortized cost or FVOCI criteria as

measured at FVPL if doing so eliminates or significantly reduces an accounting mismatch.

1-1)

Amortization cost and effective interest rate method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest

income over the relevant period. The amortized cost of a financial asset is the amount at which the financial asset is

measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective

interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance.

The gross carrying amount of a financial asset is the amortized cost of a financial asset before adjusting for any loss

allowance. Interest income is recognized using the effective interest method for debt instruments measured subsequently

at amortized cost and at FVOCI.

1-2)

Debt instruments classified as at FVOCI

Corporate bonds are initially measured at fair value plus transaction costs. Subsequently, changes in the carrying amount

of these corporate bonds as a result of foreign exchange gains and losses, impairment gains or losses, and interest income

calculated using the effective interest method are recognized in profit or loss. The amounts that are recognized in profit

or loss are the same as the amounts that would have been recognized in profit or loss if these corporate bonds had been

measured at amortized cost. All other changes in the carrying amount of these corporate bonds are recognized in other

comprehensive income and accumulated in investments revaluation reserve. When these corporate bonds are

derecognized, the cumulative gains or losses previously recognized in other comprehensive income are reclassified to

profit or loss.

1-3)

Equity instruments designated as at FVOCI

On initial recognition, the Group may make an irrevocable election (on an instrument-by-instrument basis) to designate

investments in equity instruments as at FVOCI. Designation at FVOCI is not permitted if the equity investment is held

for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVOCI are initially measured at fair value plus transaction costs. Subsequently, they

are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive

income and accumulated in the investments revaluation reserve. The cumulative gain or loss will not be reclassified to

profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings.

1-4)

Financial assets measured at FVPL

Financial assets that do not meet the criteria for being measured at amortized cost or FVOCI are measured at FVPL. Gains

or losses arising from changes in the fair value of FVPL, dividends and interest income from the financial assets are

recognized in profit or loss.

2) Foreign exchange gain / loss

The carrying amount of a financial asset designated as a foreign currency is determined in foreign currencies and is

translated at the spot exchange rate at the end of the reporting period.

(8)

Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on investments in debt instruments that are measured

at amortized cost or at FVOCI, lease receivables, trade receivables and contract assets, as well as on financial guarantee

contracts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since

initial recognition of the respective financial instrument.

The Group always recognizes lifetime expected credit losses (ECL) for trade receivables, contract assets and lease

receivables. The ECLs on these financial assets are estimated using a provision matrix based on the Group’s historical

credit loss experience and valuation of individual assets, adjusted for factors that are specific to the debtors, general

economic conditions and an assessment of forecast on present and future conditions reflecting time value of money where

appropriate.

For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in

credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly

since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-

month ECLs.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life

of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from

default events on a financial instrument that are possible within 12 months after the reporting date.

1) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the

Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default

occurring on the financial instrument at the date of initial recognition.

In particular, the following information is taken into account when assessing whether credit risk has increased

significantly since initial recognition:



an actual or expected significant deterioration in the financial instrument’s e

xternal (if available) or internal

credit rating;



other significant increases in credit risk.

2) Definition of default

The Group believes that, based on past experience, if the debtor violates the terms of the contract, it is considered to

constitute a default event for internal credit risk management purposes.

3) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash

flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following

observable data:

(a)

significant financial difficulty of the issuer or the borrower;

(b)

a breach of contract, such as a default or past due event as defined by the Group’s internal

policy.

4) Measurements and recognition of expected credit losses

The measurement of ECLs is a function of the probability of default, loss given default (i.e. the magnitude of the loss if

there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based

on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial

assets, this is represented by the assets’ gross carrying amount at t

he reporting date.

For financial assets, the ECLs are estimated as the difference between all contractual cash flows that are due to the Group

in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective

interest rate.

If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECLs in the

previous reporting period, but determines at the current reporting date that the conditions for lifetime ECLs are no longer

met, the Group measures the loss allowance at an amount equal to 12-month ECLs at the current reporting date, except

for financial assets for which a simplified approach is used.

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding

adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are

measured at FVOCI, for which the loss allowance is recognized in other comprehensive income and accumulated in the

investment revaluation reserve, and does not reduce the carrying amount of the financial asset in the statement of financial

position.

(9)

Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when

it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the

Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the

transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have

to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group

continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset measured at amortized cost, the

difference between the asset’s carrying amount and

the sum of the consideration received and receivable is recognized in profit or loss. In addition, on derecognition of an

investment in a debt instrument classified as at FVOCI, the cumulative gain or loss previously accumulated in the

investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in equity

instrument which the Group has elected on initial recognition to measure at FVOCI, the cumulative gain or loss previously

accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained

earnings.

(10) Inventory

Inventory is measured at the lower of cost or net realizable value.

Inventory cost, including the fixed and variable

manufacturing overhead cost, is calculated, using the moving average method, except for the cost for inventory in transit,

which is determined by the specific identification method.

(11) Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence, but not a joint venture or a subsidiary.

Significant

influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or

joint control over those policies.

A joint venture is a joint arrangement, whereby the parties that have joint control of the arrangement have rights to the

net assets of the joint arrangement.

Joint control is the contractually agreed sharing of control of an arrangement, which

exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The investment in an associate or a joint venture is initially recognized at cost and accounted for using the equity method.

Under the equity method, an investment in an associate or a joint venture is initially recognized in the consolidated

statement of financial position at cost and adjusted thereafter to recognize the Group's share of the profit or loss and other

comprehensive income of the associate or the joint venture.

When the Group's share of losses of an associate or a joint venture exceeds the Group's interest in that associate or joint

venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate

or the joint venture), the Group discontinues recognizing its share of further losses.

Additional losses are recognized only

to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or

the joint venture.

Investment in associate or joint venture is accounted for using the equity method from the date that the investee becomes

the associate or joint venture. Any excess of the cost of acquisition over the Group's share of the net fair value of the

identifiable assets, liabilities and contingent liabilities of an associate or a joint venture recognized at the date of

acquisition is recognized as goodwill, which is included within the carrying amount of the investment.

Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over

the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

The requirements of IAS 28 are applied to determine whether it is necessary to recognize any impairment loss with respect

to the Group’s investment in an associate or a joint venture. When there is any indication of impairment, the entire carrying

amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by

comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount.

Any impairment loss recognized is not allocated to any asset, including goodwill that forms part of the carrying amount

of the investment. Any reversal of that impairment loss is recognized in accordance with IAS 36 to the extent that the

recoverable amount of the investment subsequently increases.

Upon disposal of an associate or a joint venture that results in the Group losing significant influence over that associate

or joint venture, any retained investment is measured at fair value at that date and the fair value is regarded as its fair

value on initial recognition as a financial asset in accordance with IFRS 9.

The difference between the previous carrying

amount of the associate or joint venture attributable to the retained interest and its fair value is included in the

determination of the gain or loss on disposal of the associate or joint venture.

In addition, the Group accounts for all

amounts previously recognized in other comprehensive income in relation to that associate or joint venture on the same

basis it would be required if that associate or joint venture had directly disposed of the related assets or liabilities.

Therefore, if a gain or loss previously recognized in other comprehensive income by that associate or joint venture would

be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss

from equity to profit or loss (as reclassification adjustment) when it loses significant influence over that associate or joint

venture. When the Group reduces its ownership interest in an associate or a joint venture, but the Group continues to use

the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been

recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be

reclassified to profit or loss on the disposal of the related assets or liabilities.

In addition, the Group applies IFRS 5 to a

portion of investment in an associate or a joint venture that meets the criteria to be classified as held for sale.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint

venture or an investment in a joint venture becomes an investment in an associate.

There is no remeasurement to fair

value upon such changes in ownership interests.

Unrealized gains from transactions between the Group and its associates or joint ventures are eliminated up to the shares

in associate (joint venture) stocks.

Unrealized losses are also eliminated, unless evidence of impairment in assets

transferred is produced.

If the accounting policy of associates or joint ventures differs from the Group, financial

statements are adjusted accordingly before applying equity method of accounting.

(12) Property, plant and equipment

Property, plant and equipment is recognized if, and only if it is probable that future economic benefits associated with the

asset will flow to the Group, and the cost of the asset can be measured reliably.

After the initial recognition, property,

plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.

The cost includes

any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating

in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and

restoring the site on which it is located.

In addition, in case the recognition criteria are met, the subsequent costs will be

added to the carrying amount of the asset or recognized as a separate asset, and the carrying amount of what was replaced

is derecognized.

Depreciation is computed using the straight-line method based on the estimated useful lives of the assets.

The

representative useful lives are as follows.

	Representative useful lives (years)
Buildings and structures	12 – 50
Machinery and equipment	6 – 15
Vehicles	6 – 15
Dies, mold and tools	4 – 6
Office equipment	3 – 15
Other	2 – 20

The Group reviews the depreciation method, the estimated useful lives and residual values of property, plant and

equipment at the end of each annual reporting period.

If expectations differ from previous estimates, the changes are

accounted for as a change in accounting estimate.

(13)

Investment properties

Investment properties are property held to earn rentals or for capital appreciation or both.

Investment properties are

measured initially at its cost and transaction costs are included in the initial measurement.

After initial recognition, the

book value of investment properties is presented at the cost less accumulated depreciation and accumulated impairment

losses.

Subsequent costs are recognized as the carrying amount of the asset when, and only when it is probable that future

economic benefits associated with the asset will flow to the Group, and the cost of the asset can be measured reliably, or

recognized as a separate asset if appropriate.

The carrying amount of what was replaced is derecognized.

Land is not depreciated, and other investment properties are depreciated using the straight-line method over the period

from 20 to 50 years.

The Group reviews the depreciation method, the estimated useful lives and residual values at the

end of each annual reporting period.

If expectations differ from previous estimates, the changes are accounted for as a

change in accounting estimate.

(14) Intangible assets

Goodwill

Goodwill arising from a business combination is recognized as an asset at the time of obtaining control (the acquisition

date).

Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount of any non-

controlling interest in the acquiree and the acquisition-

date fair value of the Group’s previously held equity interest in the

acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed

exceeds the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the

acquisition-

date fair value of the Group’s previously held equity interest in the acquiree, the excess is recognized

immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortized, but tested for impairment at least annually.

For purposes of impairment tests, goodwill is

allocated to those cash-

generating units (“CGU”) of the Group expected to have synergies from the business combination.

CGU that goodwill has been allocated is tested for impairment every year or when an event occurs that indicates

impairment.

If the recoverable amount of a CGU is less than its carrying amount, the impairment will first decrease the goodwill

allocated to that CGU and the remaining impairment will be allocated among other assets relative to its carrying value.

Impairment recognized for goodwill may not be reversed.

When disposing a subsidiary, related goodwill will be included

in gain or loss from disposal.

Development costs

The expenditure on research is recognized as an expense when it is incurred.

The expenditure on development is

recognized as an intangible asset, and amortization is computed using the straight-line method based on the estimated

useful lives of the assets since the asset is available for use or sale.

Research and development activities are conducted in phases of preceding research, development approval, product

development and mass production.

The Group generally recognizes intangible assets as development activities after the

development approval phases which product specification, release schedule, and sales plan are established.

Expenditure

incurred at the previous phase is recognized as an expense as it is considered as research activities when it is incurred.

Intangible assets acquired separately

Intangible assets are measured initially at cost, and are subsequently measured at cost less accumulated amortization and

accumulated impairment losses.

Intangible assets are amortized by the straight-line method based on estimated useful lives from the date of availability.

The Group reviews the estimated useful life and amortization method at the end of each annual reporting period.

expectations differ from previous estimates, the changes are accounted for as a change in accounting estimate.

Intangible

assets assessed as having indefinite useful life such as club membership are subjected to impairment test at least once a

year without amortization.

The representative useful lives are as follows.

	Representative useful lives (years)
Development costs	3, 7
Industrial property rights	5 – 10
Software	3 – 7
Other	5 – 40

(15)

Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset may be impaired.

any such indication exists, the Group estimates the recoverable amount of the asset to determine the extent of the

impairment loss.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the cash inflows of

an individual asset are largely independent from other assets or group of assets, the recoverable amount is measured for

that individual asset; otherwise, it is measured for the cash generating unit (CGU) to which the asset belongs.

impairment loss in respect of goodwill is not reversed. For other assets, impairment loss is reversed if the recoverable

amount increases in subse

quent years, but only to the extent that the asset’s carrying amount does not exceed the carrying

amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Intangible assets with indefinite useful lives or intangible assets not yet available for use are not amortized, but tested for

impairment annually.

(16) Non-current assets classified as held for sale

The Group classifies a non-current asset (or disposal group) as held for sale, if its carrying amount will be recovered

principally through a sale transaction rather than through continuing use.

For this to be the case, the asset (or disposal

group) must be available for immediate sale in its present condition subject only to terms that are usual and customary

for sales of such assets (or disposal groups) and its sale must be highly probable.

The management must be committed

to a plan to sell the asset (or disposal group), and the sale should be expected to qualify for recognition as a completed

sale within one year from the date of classification.

Non-current assets (or disposal group) classified as held for sale are measured at the lower of their carrying amount and

fair value, less costs to sell.

The Group classified unit of operating division for which operating activities have been completed or classified as unit

held for sale in case of major business division or sales region as discontinued income, excluding profit or loss from

discontinued operations after tax from result of continued operations and represents single amounts on income statements.

Other details for discontinued operation are represented on Note 8, and other Notes includes continued operating amounts

unless otherwise stated. If there is a discontinued operation, the profit or loss related to the discontinued operation is

classified as profit or loss from discontinued operation, and the comparative consolidated statement of income

is restated

by presenting profit or loss from the discontinued operation separately.

(17)

Lease

At contract inception, the Group assesses whether a contract is or contains a lease. A contract is, or contains, a lease if

the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

When assessing whether the contract conveys a right to control the use of an identified asset, definition of a lease under

IFRS 16 has been applied.

1) As a lessee

At inception or effective date of change, the Group allocates the consideration in the contract to each lease on the basis

of their relative stand-alone prices. However, for leases of properties in which it is a lessee, the Group has elected not to

separate non-lease components and will instead account for the lease and non-lease components as a single lease

component.

The Group recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is

initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made

at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove

the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentive received.

The right-of use asset is subsequently depreciated using the straight-line method from the commencement date to the end

of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or

the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset

will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property

and equipment. In addition, the right-of use asset is periodically reduced by impairment losses, if any, and adjusted for

certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement

date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s

incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use

asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-

term leases. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis

over the lease term.

2) As a lessor

The accounting policies applicable in the same period to the Group as a lessor are not different from those under IFRS

16. When the Group acted as a lessor, it determined at lease inception whether each lease was a finance lease or an

operating lease. To classify each lease, the Group made an overall assessment of whether the lease transferred

substantially all of the risks and rewards incidental to ownership of the underlying asset. If this was the case, then the

lease was a finance lease; if not, then it was an operating lease.

Amounts due from lessees under finance leases are recognized as receivables at the amount of the Group’s net investment

in the leases.

Finance lease interest income is allocated to accounting periods so as to reflect an effective interest rate on

the Group’s net investment outstanding in respect of the leases.

Rental income from operating leases is recognized on a

straight-line basis over the term of the relevant lease.

Initial direct costs incurred in negotiating and arranging an operating

lease are added to the carrying amount of the carrying amount of investments in operating leases and recognized as

expense on a straight-line basis over the lease term.

(18) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized to

the cost of those assets, until they are ready for their intended use or sale.

A qualifying asset is an asset that necessarily

takes a substantial period of time to get ready for its intended use or sale.

Investment income earned on the temporary

investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs

eligible for capitalization.

All other borrowing costs are recognized in profit or loss in the period in which they are

incurred.

(19) Employee benefits

1) Short-term employee benefits

Short-term employee benefits are settled within 12 months from the end of the reporting period in which the employee

provided the relevant service. They are recognized in profit or loss when the service is rendered and measured at the

undiscounted amount of benefits expected to be paid in exchange for that service.

2) Retirement benefit plans

The retirement benefit obligation recognized in the consolidated statements of financial position represents the present

value of the defined benefit obligation, less the fair value of plan assets.

Defined benefit obligations are calculated

annually by an actuary using the Projected Unit Credit Method.

The present value of the defined benefit obligations is measured by discounting estimated future cash outflows by the

interest rate of high-quality corporate bonds, with similar maturity as the expected retirement benefit payment date.

countries where there is no deep market in such bonds, the market yields at the end of the reporting period on government

bonds are used.

The remeasurements of the net defined benefit liabilities (assets) comprising actuarial gain or loss from changes in

actuarial assumptions or differences between actuarial assumptions and actual results, the effect of the changes to the

asset ceiling and return on plan assets, excluding amounts included in net interest on the net defined benefit liabilities

(assets), are recognized in other comprehensive income of the consolidated statements of comprehensive income, which

is immediately recognized as retained earnings.

Those recognized in retained earnings will not be reclassified in profit

or loss.

Past service costs are recognized in profit and loss when the plan amendment occurs, and net interest is calculated

by applying the discount rate determined at the beginning of the annual reporting period to the net defined benefit

liabilities (assets).

Defined benefit costs are composed of service cost (including current service cost, past service cost,

as well as gains and losses on settlements), net interest expense (income), and remeasurements.

The retirement benefit obligation recognized in the consolidated statements of financial position represents the actual

deficit or surplus in the Group’s defined benefit plans.

Any surplus resulting from this calculation is limited to t

he present

value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the

plans.

Contributions to defined contribution retirement benefit plans are recognized as expenses when employees provide

services eligible for payment.

3) Other long-term employee benefits

Other long-term employee benefits, which are not paid within 12 months from the end of the reporting period in which

the employee provided the relevant service, discounts future benefits earned in return for service provided in the current

and past periods to present values. Liabilities are determined after discounting estimated future cash outflows by the

interest rate of high-quality corporate bonds, with similar maturity as the expected other long-term employee benefits

date. And service cost, net interest and remeasurement component are recognized as profit or loss. Also, these liabilities

are evaluated annually by independent, qualified actuaries.

(20) Provisions

A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable

estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the

consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and

uncertainties surrounding the obligation.

A provision is measured using the present value of the cash flows estimated to

settle the present obligation.

The increase in provision due to passage of time is recognized as interest expense.

The Group recognizes provisions for costs expected to be incurred in the future for the repair of regular parts within the

warranty period based on historical experience and compensation for accidents caused by defects in the exported products

or parts of the product when such amounts are probable of payment. Also, the Group recognizes provisions for the

probable losses of unused loan commitment, construction contracts, pre-contract sale or service contract due to legal or

constructive obligations.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,

a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the

receivable can be measured reliably.

(21) Taxation

Income tax expense is composed of current and deferred tax.

Current tax

The current tax is computed based on the taxable profit for the current year.

The taxable profit differs from the profit

before income tax as reported in the consolidated statements of income because it excludes items of income or expense

that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

The Group’

current tax liability is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting

period.

The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or

received that reflects uncertainty related to income taxes, if any.

Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the

consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax

liabilities are generally recognized for all taxable temporary differences.

Deferred tax assets shall be generally recognized

for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which

those deductible temporary differences can be utilized.

Such deferred tax assets and liabilities shall not be recognized if

the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of

other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and

associates and interests in joint ventures, except when the Group is able to control the timing of the reversal of the

temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred

tax assets arising from deductible temporary differences associated with such investments and interests are only

recognized to the extent that taxable profit will be available against which the temporary difference can be utilized and

they are expected to be reversed in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that

it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied in the period in which the

liability is settled or the asset is realized, based on tax rates and tax laws that have been enacted or substantively enacted

by the end of the reporting period.

The measurement of deferred tax assets and liabilities reflects the tax consequences

that would follow from the manner in which the Group expects to recover or settle the carrying amount of its assets and

liabilities at the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against

current tax liabilities and when they relate to income tax levied by the same taxation authority.

Also, they are offset when

different taxable entities that intend either to settle current tax liabilities and assets on a net basis, or to realize the assets

and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or

assets are expected to be settled or recovered.

Recognition of current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other

comprehensive income or directly in equity, or items arising from initial accounting treatments of a business combination.

The tax effect arising from a business combination is included in the accounting for the business combination.

In addition, Pillar Two laws have been enacted or substantially enacted in some jurisdictions where the Group operates,

and Pillar Two laws are scheduled to take effect during

the Group’s

reporting period beginning on January 1, 2024.

(22) Treasury stock

When the Group repurchases its equity instruments (treasury stock), the incremental costs and net of tax effect are

deducted from equity and recognized as other capital item deducted from the total equity in the consolidated statements

of financial position.

In addition, profits or losses from purchase, sale or retirement of treasury stocks are directly

recognized in equity and not in current profit or loss.

(23)

Financial liabilities and equity instruments

Debt instruments and equity instruments issued by the Group are recognized as financial liabilities or equity depending

on the contract and the definitions of financial liability and equity instrument.

1) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its

liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognized and deducted direct

ly in equity. No gain or loss is

recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

2) Financial guarantee liability

A financial guarantee contract is a contract that the issuer must pay a certain amount of money to compensate for losses

incurred by the holder due to the failure of a specific debtor to pay the due date on the original contract or modified terms

of the debt instrument. Financial guarantee liabilities are measured initially at fair value and subsequently measured at

the greater of the following, unless they are designated as at fair value through profit or loss or arising from the transfer

of assets.



Loss provision calculated in accordance with IFRS 9



The amount recognized less the accumulated profits recognized in accordance with IFRS 15

3) Financial liabilities measured at FVPL

Financial liabilities are classified as at FVPL when the financial liability is (i) contingent consideration of an acquirer in

a business combination, (ii) held for trading or (iii) it is designated as at FVPL as of the date of initial recognition.

However, for financial liabilities that are designated as at FVPL, the amount of change in the fair value of the financial

liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income,

unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create

or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability is

recognized in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are recognized i

other comprehensive income are not subsequently reclassified to profit or loss; instead, they are transferred to retained

earnings upon derecognition of the financial liability. Gains or losses on financial guarantee contracts issued by the Group

that are designated by the Group as at FVPL are recognized in profit or loss.

4) Financial liabilities measured subsequently at amortized cost

Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading,

or (iii) designated as at FVPL as of the date of initial recognition, are measured subsequently at amortized cost using the

effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability

and of allocating interest expense over the relevant period.

5) Derecognition of financial liabilities

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or

have expired. The difference between the carrying amount of the financial liability derecognized and the consideration

paid and payable is recognized in profit or loss.

(24) Derivatives

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently

remeasured to their fair value at the end of each reporting period.

The resulting gain or loss is recognized in profit or loss

immediately, unless the derivative is designated and effective as a hedging instrument, in such case, the timing of the

recognition in profit or loss depends on the nature of the hedge relationship.

The Group designates certain derivatives as hedging instruments to hedge the risk of changes in fair value of a recognized

asset or liability or an unrecognized firm commitment (fair value hedges) and the risk of changes in cash flow of a highly

probable forecast transaction and the risk of changes in foreign currency exchange rates of firm commitment (cash flow

hedges).

Fair value hedges

The Group recognizes the changes in the fair value of derivatives that are designated and qualified as fair value hedges

are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability

that are attributable to the hedged risk. Hedge accounting is discontinued when the Group revokes the hedging relationship,

when the hedging instrument expires or is sold, terminated or exercised, or when it is no longer qualified for hedge

accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortized

to profit or loss from that date.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is

recognized in other comprehensive income.

The gain or loss relating to the ineffective portion is recognized immediately

in profit or loss.

Amounts previously recognized in other comprehensive income and accumulated in equity are

reclassified to profit or loss in the periods when the hedged item affects profit or loss.

If the forecast transaction results

in the recognition of a non-financial asset or liability, the related gain and loss recognized in other comprehensive income

and accumulated in equity are transferred from equity to the initial cost of related non-financial asset or liability.

Cash flow hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging

instrument expires or is sold, terminated or exercised, or it no longer qualifies for the criteria of hedging.

Any gain or

loss accumulated in equity at that time remains in equity, and is recognized as profit or loss when the forecast transaction

occurs.

When the forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized

immediately in profit or loss.

(25) Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date, regardless of whether that price is directly observable or estimated using

another valuation technique.

In estimating the fair value of an asset or a liability, the Group takes into account the

characteristics of the asset or liability if market participants would take those characteristics into account when pricing

the asset or liability at the measurement date.

Fair value for measurement and/or disclosure purposes in these consolidated

financial statements is determined on such a basis, except for leasing transactions that are within the scope of IFRS 16

Leases

, and measurements that have some similarities to fair value, but are not fair value, such as net realisable value in

IAS 2

Inventories

or value in use in IAS 36

Impairment of Assets

In addition, for financial reporting purposes, fair value measurements are categorized into Levels 1, 2 or 3, based on the

degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair

value measurement in its entirety, which are described in Note 20.

(26) Accounting Treatment related to the Emission Rights Cap and Trade Scheme

The Group classifies the emission rights as intangible assets.

The emission rights allowances received from the

government free of charge are measured at zero, while purchased emission rights allowances are measured at cost.

emission liability is recognized if the expected quantity of emission for the performing period does not exceed the

emission allowance in possession.

If the expected emissions exceed the emission allowances held, the emission liability

is measured and recognized based on the expected excess quantity of emissions and the market unit price of the emission

rights at the end of the reporting period.

(27) Significant accounting estimates and key sources of estimation uncertainties

In the application of the Group’s accounting policies, management is required to make judgments, estimates and

assumptions about the carrying amounts of assets and liabilities that cannot be identified from other sources.

The

estimation and assumptions are based on historical experience and other factors that are considered to be relevant.

Actual

results may be different from those estimations.

The estimates and underlying assumptions are continually evaluated.

Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only

that period or in the period of the revision and future periods if the revision affects both current and future periods.

Information about assumptions and estimation uncertainties at December 31, 2023 that have a significant risk of resulting

in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is as follows.

Impairment test for goodwill and non-financial assets

Determining whether goodwill and non-financial asset is impaired requires an estimation of the value in use of the CGU

to which goodwill has been allocated and value in use of non-financial assets.

The value in use calculation requires the

management to estimate the future cash flows expected to arise from the CGU and a suitable discount rate in order to

calculate present value.

Warranty provision

The Group recognizes provisions for the warranties of its products as described in Note 2.(20).

The amounts are

recognized based on the best estimate of amounts necessary to settle the present and future warranty obligation.

Defined benefit plans

The Group operates defined retirement benefit plans.

Defined benefit obligations are determined at the end of each

reporting period using an actuarial valuation method that requires management assumptions on discount rates, rates of

expected future salary increases and mortality rates.

The characteristic of post-employment benefit plan that serves for

the long term period causes significant uncertainties when the post-employment benefit obligation is estimated.

Taxation

The Group recognizes current tax and deferred tax based on the best estimates of income tax effect to be charged in the

future as the result of operating activities until the end of the reporting period.

However, actual final income tax to be

charged in the future may differ from the relevant assets and liabilities recognized at the end of the reporting period and

the difference may affect income tax charged or credited, or deferred tax assets and liabilities in the period in which the

final income tax determined.

Fair value of financial instruments

The Group uses valuation techniques that include inputs that are not based on observable market data to estimate the fair

value of certain type of financial instruments.

The Group makes judgements on the choice of various valuation methods

and assumptions based on the condition of the principal market at the end of the reporting period.

Measurement and useful lives of property, plant, equipment or intangible assets

When the Group acquires property, plant, equipment or intangible assets from a business combination, it is required to

estimate the fair value of the assets at the acquisition date and determine the useful lives of such assets for depreciation

and amortization.

Credit loss allowance

The Group sets credit loss allowance upon evaluation of impairment relating to account receivables and financial services

receivables as described in Note 2.(8).

The precision in loss allowance is based on the estimation of expected cash flow

and assumptions and variables of risk measurement model used for the estimation.

TRADE NOTES AND ACCOUNTS RECEIVABLE:

(1)

Trade notes and accounts receivable as of December 31, 2023 and December 31, 2022 are as follows.

		December 31, 2023				December 31, 2022
Description		Current		Non-current		Current		Non-current
		(In millions of Korean Won)
Trade notes and accounts receivable	￦	4,701,721	￦	241,556	￦	4,298,915	￦	200,400
Loss allowance		(19,539)		(5,005)		(19,858)		(5,028)
Present value discount accounts		-		(25,572)		-		(15,591)
	￦	4,682,182	￦	210,979	￦	4,279,057	￦	179,781

(2)

Aging analysis of trade notes and accounts receivable

As of December 31, 2023, aging analysis of total trade notes and accounts receivable that are past due, but not impaired

is as follows.

Overdue

Within

Overdue

180days

Overdue

Amount of

Within

More than

Total

impaired

Description

Not due

90days

91days

181 days

amounts

receivables

(In millions of Korean Won)

Total trade notes and

accounts receivable

￦

4,227,084

￦

396,061

￦

56,367

￦

263,765

￦

4,943,277

￦

24,544

As of December 31, 2022 aging analysis of total trade notes and accounts receivable that are past due, but not impaired

is as follows.

Overdue

Within

Overdue

180days

Overdue

Amount of

Within

More than

Total

impaired

Description

Not due

90days

91days

181 days

amounts

receivables

(In millions of Korean Won)

Total trade notes and

accounts receivable

￦

4,225,436

￦

192,913

￦

7,766

￦

73,200

￦

4,499,315

￦

24,886

(3)

Transferred trade notes and accounts receivable that are not derecognized

As of December 31, 2023 and December 31, 2022, total trade notes and accounts receivable (including inter-company

receivables within the Group) which the Group transferred to financial institutions but did not qualify for derecognition,

amount to

￦

0 and

￦

2,123,379 million, respectively.

Cash and cash equivalents received as consideration for the transfer

are recognized as short-term borrowings due to the fact that the risks and rewards were not transferred substantially.

(4)

Changes in loss allowance for the years ended December 31, 2023 and December 31, 2022 are as follows.

Description		2023		2022
		(In millions of Korean Won)
Beginning of the year	￦	24,886	￦	43,507
Impairment loss (reversal)		14,817		(940)
Write-off		(15,208)		(20,769)
Effect of foreign exchange differences and others		49		3,088
End of the year	￦	24,544	￦	24,886

OTHER RECEIVABLES:

(1)

Other receivables as of December 31, 2023 and December 31, 2022 are as follows.

		December 31, 2023				December 31, 2022
Description		Current		Non-current		Current		Non-current
		(In millions of Korean Won)
Accounts receivable – others (*)	￦	2,223,588	￦	462,064	￦	3,143,232	￦	418,541
Due from customers for contract work		1,191,078		-		1,413,886		-
Lease and rental deposits		17,104		332,215		17,471		323,362
Deposits		9,020		60,736		12,854		40,740
Others		9,237		-		5,631		38,407
Loss allowance		(18,858)		-		(134,385)		-
	￦	3,431,169	￦	855,015	￦	4,458,689	￦	821,050

(*) As of December 31, 2023 and December 31, 2022, the Group recognized the reimbursement related to the warranty provisions as

a separate asset in the amount of

￦

1,008,099 million and

￦

1,045,159 million, respectively.

(2)

Changes in other allowance for the years ended December 31, 2023 and December 31, 2022 are as follows.

Description		2023		2022
		(In millions of Korean Won)
Beginning of the year	￦	134,385	￦	20,877
Impairment loss		5,165		130,650
Write-off		(4,104)		(971)
Effect of foreign exchange differences		(116,588)		(16,171)
End of the year	￦	18,858	￦	134,385

OTHER FINANCIAL ASSETS:

(1)

Other financial assets as of December 31, 2023 are as follows.

		December 31, 2023
Description		Current		Non-current
		(In millions of Korean Won)
Financial assets measured at FVPL	￦	2,374,032	￦	493,423
Financial assets measured at FVOCI		89,252		2,900,170
Financial assets measured at amortized cost		20,604		588,502
Derivative assets that are effective hedging instruments		318,723		441,293
	￦	2,802,611	￦	4,423,388

Other financial assets as of December 31, 2022 are as follows.

		December 31, 2022
Description		Current		Non-current
		(In millions of Korean Won)
Financial assets measured at FVPL	￦	5,366,752	￦	343,594
Financial assets measured at FVOCI		66,044		2,773,537
Financial assets measured at amortized cost		25,404		12,494
Derivative assets that are effective hedging instruments		476,545		760,151
	￦	5,934,745	￦	3,889,776

(2)

Financial assets measured at FVOCI as of December 31, 2023 and December 31, 2022 are as follows.

		December 31,				December 31,
		2023				2022
		Acquisition
Description		cost		Book value		Book value
	(In millions of Korean Won)
Debt instruments	￦	627,464	￦	611,668	￦	499,193
Equity instruments (*)		2,649,742		2,377,754		2,340,388
	￦	3,277,206	￦	2,989,422	￦	2,839,581

(*)

The Group makes an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an

investment in an equity instrument that is not held for trading at the date of initial recognition.

(3)

Equity instruments classified into financial assets measured at FVOCI as of December 31, 2023 and December

31, 2022 are as follows.

			December 31,			December 31,
			2023			2022
	Ownership		Acquisition
Name of the company	percentage		cost		Book value		Book value
	(%)		(In millions of Korean Won)
KT Corporation (*1)	4.75	￦	458,793	￦	421,442	￦	414,412
Hyundai Glovis Co., Ltd.	4.88		210,688		350,625		299,359
Hyundai Steel Company (*2)	6.87		727,028		334,836		322,546
ANI Technologies Private Limited (OLA)	3.38		278,955		282,285		278,825
Hyundai Oilbank Co., Ltd.	4.35		53,734		224,367		270,911
Grab Holdings Limited	1.10		442,922		186,356		175,010
HD Hyundai (*3)	2.20		9,018		109,811		99,055
Hyundai M Partners Co., Ltd.	9.29		9,888		14,720		17,151
NICE Information Service Co., Ltd.	2.25		3,312		12,935		16,664
Hyundai Green Food Co., Ltd. (*4)	2.36		5,203		9,187		-
NICE Holdings Co., Ltd.	1.30		3,491		6,480		6,342
Hyundai G.F. Holdings Co., Ltd. (*4)	0.97		9,801		5,487		15,531
Hyundai Asan Corporation	0.88		22,500		2,117		2,117
Others			414,409		417,106		422,465
		￦	2,649,742	￦	2,377,754	￦	2,340,388

(*1)

During the year ended December 31, 2022, the Group acquired 12,011,143 shares in KT Corporation by the exchange of

treasury stocks for the purpose of strengthening its business partnership with KT Corporation, and the shares acquired by the

Group are restricted from disposal for a certain period of time.

(*2) The Group entered into a total return swap agreement to transfer 1,367,114 shares out of total 10,540,709 shares with a

third party. The Group has disposed of all of its shares during the year ended December 31, 2023.

(*3)

During the year ended December 31, 2022, the name of the company has been changed from Hyundai Heavy Industries

Holdings Co., Ltd. to HD Hyundai.

(*4)

During the year ended December 31, 2023, Hyundai Green Food Co., Ltd. was spun off into Hyundai G.F. Holdings Co., Ltd.,

the surviving entity, and Hyundai Green Food Co., Ltd., the new entity.

INVENTORIES:

Inventories as of December 31, 2023 and December 31, 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Finished goods	￦	10,509,361	￦	7,824,079
Merchandise		121,347		100,075
Semifinished goods		632,114		666,083
Work in progress		497,054		578,404
Raw materials		3,535,109		3,460,781
Supplies		360,031		351,994
Materials in transit		566,475		576,321
Others (*1)		1,178,855		733,479
Total (*2)	￦	17,400,346	￦	14,291,216

(*1) As of December 31, 2023 and December 31, 2022, others include inventories provided by operating lease with repurchase

agreement in the amount of

￦

157,442 million and

￦

163,268 million, respectively.

(*2) As of December 31, 2023 and December 31, 2022, the Group recognized a valuation allowance in the amount of

￦

238,834

million and

￦

177,907 million, respectively.

OTHER ASSETS:

Other assets as of December 31, 2023 and December 31, 2022 are as follows.

		December 31, 2023				December 31, 2022
Description		Current		Non-current		Current		Non-current
		(In millions of Korean Won)
Accrued income	￦	668,301	￦	379	￦	460,921	￦	531
Advanced payments		1,175,996		137,377		882,136		130,743
Prepaid expenses		713,067		1,795,515		782,749		1,332,807
Prepaid value-added tax and others		593,575		36,848		514,747		86,374
	￦	3,150,939	￦	1,970,119	￦	2,640,553	￦	1,550,455

NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE:

Non-current assets classified as held for sale and non-current liabilities classified as held for sale as of December 31, 2023

and December 31, 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Land	￦	-	￦	6,676
Building and others		-		15,626
Subsidiaries (*)		434,503		-
Total	￦	434,503	￦	22,302
Non-current liabilities classified as held for sale (*)	￦	122,851	￦	5,365

(*) As the Group decided to sell all of its shares of Hyundai Motor Manufacturing Rus LLC, it classified assets and liabilities related to

Hyundai Motor Manufacturing Rus LLC as disposal group held for sale, recognizing other comprehensive loss cumulatively in the amount

￦

321,879 million. The Group also recognized impairment loss in the amount of

￦

483,992 million arising from measuring disposal

group held for sale as fair value less costs to sell. Details of assets, liabilities classified as disposal group held for sale are described in Note

43.

PROPERTY, PLANT AND EQUIPMENT:

(1)

Property, plant and equipment (“PP&E”) as of December

31, 2023 and 2022 are as follows.

		December 31, 2023						December 31, 2022
		Acquisition		Accumulated				Acquisition		Accumulated
Description		cost		depreciation (*)		Book value		cost		depreciation (*)		Book value
		(In millions of Korean Won)
Land	￦	12,490,298	￦	-	￦	12,490,298	￦	12,180,112	￦	-	￦	12,180,112
Buildings		12,184,105		(4,799,368)		7,384,737		11,620,590		(4,489,885)		7,130,705
Structures		1,869,394		(924,658)		944,736		1,762,100		(911,214)		850,886
Machinery and equipment		18,183,078		(11,790,269)		6,392,809		18,215,786		(11,632,625)		6,583,161
Vehicles		704,453		(259,992)		444,461		615,152		(252,906)		362,246
Dies, molds and tools		16,567,090		(12,368,355)		4,198,735		15,387,346		(11,258,981)		4,128,365
Office equipment		2,223,452		(1,640,610)		582,842		2,090,753		(1,601,189)		489,564
Others		165,125		(60,664)		104,461		272,101		(114,293)		157,808
Construction in progress		6,377,821		-		6,377,821		4,270,343		-		4,270,343
	￦	70,764,816	￦	(31,843,916)	￦	38,920,900	￦	66,414,283	￦	(30,261,093)	￦	36,153,190

(*)

Accumulated impairment losses are included.

(2)

The changes in PP&E for the year ended December 31, 2023 are as follows.

		Beginning				Transfers								End of
Description		of the year		Acquisitions		within PP&E		Disposals		Depreciation		Others (*)		the year
		(In millions of Korean Won)
Land	￦	12,180,112	￦	196,315	￦	105,432	￦	(2,172)	￦	-	￦	10,611	￦	12,490,298
Buildings		7,130,705		51,594		690,587		(26,949)		(374,434)		(86,766)		7,384,737
Structures		850,886		28,225		160,215		(14,211)		(80,314)		(65)		944,736
Machinery and
equipment		6,583,161		26,453		1,153,470		(117,038)		(1,074,619)		(178,618)		6,392,809
Vehicles		362,246		141,460		162,268		(116,583)		(103,785)		(1,145)		444,461
Dies, molds
and tools		4,128,365		13,273		1,467,093		(77,934)		(1,443,734)		111,672		4,198,735
Office equipment		489,564		68,535		217,751		(5,018)		(185,761)		(2,229)		582,842
Others		157,808		4,867		24,041		(40)		(15,681)		(66,534)		104,461
Construction-in
-progress		4,270,343		6,535,901		(3,980,857)		(4,393)		-		(443,173)		6,377,821
	￦	36,153,190	￦	7,066,623	￦	-	￦	(364,338)	￦	(3,278,328)	￦	(656,247)	￦	38,920,900

(*)

Others include the effect of foreign exchange differences, transfers from or to other accounts, changes in the scope of consolidation,

impairment loss of

￦

140,170 million for the CGU attributable to Hyundai Motor Manufacturing Rus LLC and others.

The changes in PP&E for the year ended December 31, 2022 are as follows.

		Beginning				Transfers								End of
Description		of the year		Acquisitions		within PP&E		Disposals		Depreciation		Others (*)		the year
		(In millions of Korean Won)
Land	￦	12,130,094	￦	-	￦	56,663	￦	(9,874)	￦	-	￦	3,229	￦	12,180,112
Buildings		6,763,707		6,946		703,192		(28,181)		(357,212)		42,253		7,130,705
Structures		813,762		18,900		90,828		(5,258)		(77,357)		10,011		850,886
Machinery and
equipment		6,657,350		32,604		986,035		(91,333)		(1,064,339)		62,844		6,583,161
Vehicles		253,851		109,262		137,739		(59,329)		(81,904)		2,627		362,246
Dies, molds
and tools		4,411,102		19,799		1,284,698		(65,801)		(1,403,168)		(118,265)		4,128,365
Office equipment		424,549		55,507		187,658		(3,303)		(173,658)		(1,189)		489,564
Others		206,618		3,577		79,172		(288)		(17,647)		(113,624)		157,808
Construction-in
-progress		3,882,050		4,110,106		(3,525,985)		(1,192)		-		(194,636)		4,270,343
	￦	35,543,083	￦	4,356,701	￦	-	￦	(264,559)	￦	(3,175,285)	￦	(306,750)	￦	36,153,190

(*) Others include the effect of foreign exchange differences, transfers from or to other accounts, impairment loss of

￦

172,769

million for the CGU attributable to Hyundai Motor Manufacturing Rus LLC and others. The impairment test regarding CGU

attributable to Hyundai Motor Manufacturing Rus LLC was conducted due to continued suspension of production, and the recoverable

amount was based on its fair value less costs to sell (net fair value).

10.

INVESTMENT PROPERTY:

(1)

Investment property as of December 31, 2023 and December 31, 2022 is as follows.

		December 31, 2023						December 31, 2022
		Acquisition		Accumulated				Acquisition		Accumulated
Description		cost		depreciation		Book value		cost		depreciation		Book value
		(In millions of Korean Won)
Land	￦	54,284	￦	-	￦	54,284	￦	47,608	￦	-	￦	47,608
Buildings		310,646		(228,480)		82,166		310,589		(223,852)		86,737
Structures		18,629		(8,931)		9,698		18,630		(8,525)		10,105
	￦	383,559	￦	(237,411)	￦	146,148	￦	376,827	￦	(232,377)	￦	144,450

(2)

The changes in investment property for the year ended December 31, 2023 are as follows:

								Effect of foreign
		Beginning						exchange		End of
Description		of the year		Transfers(*)		Depreciation		differences		the year
		(In millions of Korean Won)
Land	￦	47,608	￦	6,676	￦	-	￦	-	￦	54,284
Buildings		86,737		465		(4,994)		(42)		82,166
Structures		10,105		-		(408)		1		9,698
	￦	144,450	￦	7,141	￦	(5,402)	￦	(41)	￦	146,148

(*)

Transferred amount from Construction-in-progress and other accounts

The changes in investment properties for the year ended December 31, 2022 are as follows.

								Effect of foreign
		Beginning						exchange		End of
Description		of the year		Transfers(*)		Depreciation		differences		the year
		(In millions of Korean Won)
Land	￦	54,284	￦	(6,676)	￦	-	￦	-	￦	47,608
Buildings		91,858		201		(4,994)		(328)		86,737
Structures		10,514		-		(408)		(1)		10,105
	￦	156,656	￦	(6,475)	￦	(5,402)	￦	(329)	￦	144,450

(*)

Transferred amount from Construction-in-progress and other accounts

(3)

The fair value of investment properties as of December 31, 2023 and December 31, 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Land	￦	54,284	￦	47,608
Buildings		261,906		333,488
Structures		15,496		15,496
	￦	331,686	￦	396,592

The fair value measurement of the investment properties was performed by an independent third party.

The Group deems

the change in fair value from the fair value measurement performed at the initial recognition of the investment properties

is not material.

The fair value of the investment properties is classified as Level 3, based on the inputs used in the valuation techniques.

The fair value has been determined based on the cost approach and the market approach.

The cost approach measures

fair value as current replacement cost considering building structures and design, supplementary installation, depreciation

period.

(4) Income and expenses related to investment properties for the years ended December 31, 2023 and 2022 are as

follows.

Description		2023		2022
		(In millions of Korean Won)
Rental income	￦	43,881	￦	43,967
Operating and maintenance expenses		13,271		13,201

11.

INTANGIBLE ASSETS:

(1)

Intangible assets as of December 31, 2023 and December 31, 2022 are as follows.

		December 31, 2023						December 31, 2022
		Acquisition		Accumulated				Acquisition		Accumulated
Description		cost		amortization (*)		Book value		cost		amortization (*)		Book value
		(In millions of Korean Won)
Goodwill	￦	738,791	￦	(37,972)	￦	700,819	￦	728,644	￦	(35,927)	￦	692,717
Development
costs		10,205,023		(6,849,151)		3,355,872		10,679,258		(7,124,833)		3,554,425
Industrial
property rights		582,180		(400,272)		181,908		515,017		(366,666)		148,351
Software		2,219,784		(1,454,281)		765,503		1,935,307		(1,280,424)		654,883
Others		1,059,105		(247,173)		811,932		874,134		(216,651)		657,483
Construction in
progress		434,544		(31,993)		402,551		415,983		(21,465)		394,518
	￦	15,239,427	￦	(9,020,842)	￦	6,218,585	￦	15,148,343	￦	(9,045,966)	￦	6,102,377

(*)

Accumulated impairment losses are included.

(2)

The changes in intangible assets for the year ended December 31, 2023 are as follows.

								Transfers
								within
		Beginning		Internal		External		intangible
Description		of the year		developments		acquisition		assets		Disposals
		(In millions of Korean Won)
Goodwill	￦	692,717	￦	-	￦	-	￦	-	￦	-
Development Costs		3,554,425		1,318,026		21,675		46,161		(2,310)
Industrial property rights		148,351		81		998		59,963		(94)
Software		654,883		3,567		48,455		82,747		(4,146)
Others		657,483		247		10,266		178,914		(10,088)
Construction in progress		394,518		31,126		343,218		(367,785)		-
	￦	6,102,377	￦	1,353,047	￦	424,612	￦	-	￦	(16,638)

				Impairment loss				End of
Description		Amortization		/reversal (*1)		Others (*2)		the year
	(In millions of Korean Won)
Goodwill	￦	-	￦	-	￦	8,102	￦	700,819
Development Costs		(1,408,725)		(197,229)		23,849		3,355,872
Industrial property rights		(32,167)		-		4,776		181,908
Software		(207,256)		(221)		187,474		765,503
Others		(14,617)		(19)		(10,254)		811,932
Construction in progress		-		(2,081)		3,555		402,551
	￦	(1,662,765)	￦	(199,550)	￦	217,502	￦	6,218,585

(*1) Impairment losses include impairment of development costs due to the discontinued sales and development projects

and others

for the year ended December 31, 2023.

(*2) Others include the effect of foreign exchange differences, transfers from or to other accounts, changes in the scope

of consolidation and others.

The changes in intangible assets for the year ended December 31, 2022 are as follows.

								Transfers
								within
		Beginning		Internal		External		intangible
Description		of the year		developments		acquisition		assets		Disposals
		(In millions of Korean Won)
Goodwill	￦	373,763	￦	-	￦	-	￦	-	￦	-
Development Costs		4,042,493		1,176,423		26,653		45,890		(3,755)
Industrial property rights		139,209		93		505		33,875		(85)
Software		477,856		540		62,745		60,924		(23)
Others		631,923		-		40,277		45,521		(30,387)
Construction in progress		181,742		18,941		388,696		(186,210)		-
	￦	5,846,986	￦	1,195,997	￦	518,876	￦	-	￦	(34,250)

				Impairment loss				End of
Description		Amortization		/reversal (*1)		Others (*2)		the year
	(In millions of Korean Won)
Goodwill	￦	-	￦	-	￦	318,954	￦	692,717
Development Costs		(1,596,985)		(159,009)		22,715		3,554,425
Industrial property rights		(29,057)		-		3,811		148,351
Software		(188,800)		(7,426)		249,067		654,883
Others		(52,093)		(1,841)		24,083		657,483
Construction in progress		-		(502)		(8,149)		394,518
	￦	(1,866,935)	￦	(168,778)	￦	610,481	￦	6,102,377

(*1) Impairment losses include impairment of development costs due to the discontinued sales and development projects

and others

for the year ended December 31, 2022.

(*2) Others include the effect of foreign exchange differences, transfers from or to other accounts, changes in the scope

of consolidation and others.

(3) Development costs of intangible assets as of December 31, 2023 consist of as follows.

Description		Book value		Remaining amortization period (*)
		(In millions of Korean Won)
Automobile	Developing	￦	1,209,380	-
˝	Amortizing		1,711,268	30 months
Powertrain	Developing		103,963	-
˝	Amortizing		105,478	24 months
Others	Developing		34,748	-
˝	Amortizing		191,035	42 months
		￦	3,355,872

(*)

Since the remaining amortization period differs for each project, the weighted average remaining useful lives of the development

costs at the end of reporting period are disclosed.

Development costs of intangible assets as of December 31, 2022 consist of as follows.

Description		Book value		Remaining amortization period (*)
		(In millions of Korean Won)
Automobile	Developing	￦	944,149	-
˝	Amortizing		2,163,052	30 months
Powertrain	Developing		106,894	-
˝	Amortizing		153,676	24 months
Others	Developing		-	-
˝	Amortizing		186,654	46 months
		￦	3,554,425

(*)

Since the remaining amortization period differs for each project, the weighted average remaining useful lives of the development

costs at the end of reporting period are disclosed.

(4)

Research and development expenditures for the years ended December 31, 2023 and 2022 are as follows.

Description		2023		2022
		(In millions of Korean Won)
Development costs (intangible assets)	￦	1,339,701	￦	1,203,076
Research and development costs (*1)		2,629,163		2,130,455
Total (*2)	￦	3,968,864	￦	3,333,531

(*1) Presented in manufacturing costs, administrative expenses.

(*2) Amortization of development costs is not included.

(5)

Impairment test of goodwill

The allocation of goodwill amongst the Group’s CGUs as of December 31, 2023 and December 31, 2022

is as follows.

Segment		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Vehicle	￦	261,782	￦	256,508
Finance		482		482
Others		438,555		435,727
	￦	700,819	￦	692,717

The recoverable amounts of the Group’s CGUs are measured as their value

-in-use calculated based on cash flow

projections of financial budgets for the next five years approved by management.

The pre-tax discount rate applied

to the cash flow projections for the years ended December 31, 2023 and 2022 are 14.2% and 12.7%, respectively.

Cash flow projections beyond the five-year period are extrapolated by using the estimated growth rate which does

not exceed the long-term average growth rate of the region and industry to which the CGU belongs.

No impairment

loss had been recognized for the years ended December 31, 2023 and 2022.

12.

LEASES (AS A LESSEE):

(1)

The changes in right-of-use assets for the year ended December 31, 2023 are as follows.

		Beginning
Description		of the year		Acquisitions		Disposals		Depreciation		Others(*)		End of the year
		(In millions of Korean Won)
Land	￦	251,898	￦	37,144	￦	(173,643)	￦	(14,159)	￦	1,468	￦	102,708
Buildings		819,353		383,571		(76,542)		(227,877)		(27,330)		871,175
Vehicles		26,593		12,739		(416)		(13,358)		2,378		27,936
Others		19,449		30,558		-		(13,841)		(342)		35,824
	￦	1,117,293	￦	464,012	￦	(250,601)	￦	(269,235)	￦	(23,826)	￦	1,037,643

(*)

Others include the effect of foreign exchange differences, changes in the scope of consolidation and others.

The changes in right-of-use assets for the year ended December 31, 2022 are as follows.

		Beginning
Description		of the year		Acquisitions		Disposals		Depreciation		Others(*)		End of the year
		(In millions of Korean Won)
Land	￦	83,604	￦	175,406	￦	(392)	￦	(6,097)	￦	(623)	￦	251,898
Buildings		754,149		330,661		(59,061)		(197,807)		(8,589)		819,353
Vehicles		2,370		34,238		(507)		(6,258)		(3,250)		26,593
Others		100,703		18,482		-		(6,323)		(93,413)		19,449
	￦	940,826	￦	558,787	￦	(59,960)	￦	(216,485)	￦	(105,875)	￦	1,117,293

(*)

Others include the effect of foreign exchange differences, changes in the scope of consolidation and others.

(2)

Lease liabilities as of December 31, 2023 and December 31, 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Undiscounted lease liabilities	￦	1,260,621	￦	1,303,067
Discounted lease liabilities		1,058,402		1,110,804
Current		224,350		405,053
Non-current		834,052		705,751

(3)

Expenses recognized in relation to leases for the years ended December 31, 2023 and 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Interest on lease liabilities	￦	37,635	￦	33,993
Expenses in relation to leases of short-term and low-
value assets		17,117		19,961

13.

INVESTMENTS IN JOINT VENTURES AND ASSOCIATES:

(1)

Investments in joint ventures and associates as of December 31, 2023 are as follows.

	Nature of		Ownership
Name of the company	business	Location	percentage		Book value
					(In millions of
			(%)		Korean Won)
Beijing Hyundai Qiche Financing
Company (BHAF) (*1,3)	Financing	China	53.00	￦	637,681
Hyundai WIA Automotive Engine
(Shandong) Company (WAE) (*4)	Manufacturing	China	31.40		91,058
Beijing-Hyundai Motor Company
(BHMC) (*1)	Manufacturing	China	50.00		9,413
HMG Global LLC	New business
	Investment &
	management	USA	49.50		1,275,203
Motional AD LLC (*1)	R&D	USA	26.00		700,691
Boston Dynamics AI Institute, LLC	R&D	USA	47.50		246,535
supernal, LLC (*1)	R&D	USA	44.44		163,943
Hyundai Capital Bank Europe GmbH
(HCBE)	Financing	Germany	49.00		671,589
Hyundai Capital France (HCF) (*1)	Financing	France	50.00		123,879
HYUNDAI MOTOR GROUP
INNOVATION CENTER IN
SINGAPORE PTE. LTD.(HMGICS)	Manufacturing	Singapore	40.00		117,494
Kia Corporation	Manufacturing	Korea	34.16		15,976,149
Hyundai Engineering & Construction
Co., Ltd.	Construction	Korea	20.95		3,125,635
Hyundai Transys Inc.	Manufacturing	Korea	41.13		1,181,611
Hyundai WIA Corporation	Manufacturing	Korea	25.35		783,750
Hyundai Commercial Inc.	Financing	Korea	37.50		492,127
Hyundai Autoever Corp.	IT service	Korea	31.59		486,425
Hyundai Motor Securities Co., Ltd.	Securities
	Brokerage	Korea	25.43		344,646
Eukor Car Carriers Inc. (*2)	Transportation	Korea	12.00		321,030
Tiger Alternative Investment trust	Real Estate
No.318 (*1)	Investment	Korea	50.00		250,796
Haevichi Hotels & Resorts Co., Ltd.	Hotelkeeping	Korea	41.90		84,997
Others					1,391,490
				￦	28,476,142

(*1)

Each of the joint arrangements in which the Group retains joint control is structured through a separate entity and there are no

contractual terms stating that the parties retain rights to the assets and obligations for the liabilities relating to the joint

arrangement or other relevant facts and circumstances.

As a result, the Group considers that the parties that retain joint control

in the arrangement have rights to the net assets and classifies the joint arrangements as joint ventures.

Also, there are

restrictions, which require consent from the director who is designated by the other investors, for certain transactions, such as

payment of dividend.

(*2)

As the Group is considered to be able to exercise significant influence by representation on the board of directors of the

investee and other reasons, although the total ownership percentage is less than 20%, the investment is accounted for using the

equity method.

(*3)

The entity is categorized as a joint venture although the Group’s total ownership percentage is a majority share of 53%, beca

use

the Group does not have control over the entity by virtue of an agreement with the other investors.

(*4)

The recoverable amount was less than the carrying amount and the impairment loss amounting to

₩

105,284 million was

recognized during the year ended December 31, 2023. The recoverable amount is determined based on the value of use, and the

discount rate applied to measure the value of use is 11.18% per annum.

Investments in joint ventures and associates as of December 31, 2022 are as follows.

	Nature of		Ownership
Name of the company	business	Location	percentage		Book value
					(In millions of
			(%)		Korean Won)
Beijing Hyundai Qiche Financing
Company (BHAF) (*1,3)	Financing	China	53.00	￦	759,766
Beijing-Hyundai Motor Company
(BHMC) (*1)	Manufacturing	China	50.00		525,250
Hyundai WIA Automotive Engine
(Shandong) Company (WAE)	Manufacturing	China	31.40		215,786
Motional AD LLC (*1)	R&D	USA	25.92		907,061
HMG Global LLC (*4)	New business
	Investment &
	Management	USA	49.50		608,223
Boston Dynamics AI Institute, LLC	R&D	USA	47.50		266,357
supernal, LLC (*1)	R&D	USA	44.44		178,564
Hyundai Capital Bank Europe GmbH
(HCBE)	Financing	Germany	49.00		508,110
Hyundai Capital France (HCF)(*1)	Financing	France	50.00		75,323
Hyundai Motor Group INNOVATION
CENTER IN SINGAPORE PTE.
LTD.(HMGICS)	Manufacturing	Singapore	40.00		104,556
Kia Corporation	Manufacturing	Korea	33.88		13,251,475
Hyundai Engineering & Construction
Co., Ltd.	Construction	Korea	20.95		3,033,945
Hyundai Transys Inc.	Manufacturing	Korea	41.13		1,157,462
Hyundai WIA Corporation	Manufacturing	Korea	25.35		759,270
Hyundai Autoever Corp.	IT service	Korea	31.59		449,994
Hyundai Commercial Inc.	Financing	Korea	37.50		374,970
Hyundai Motor Securities Co., Ltd.	Securities
	Brokerage	Korea	25.43		332,624
Eukor Car Carriers Inc. (*2)	Transportation	Korea	12.00		269,261
Haevichi Hotels & Resorts Co., Ltd.	Hotelkeeping	Korea	41.90		96,303
Others					1,325,137
				￦	25,199,437

(*1)

Each of the joint arrangements in which the Group retains joint control is structured through a separate entity and there are no

contractual terms stating that the parties retain rights to the assets and obligations for the liabilities relating to the joint

arrangement or other relevant facts and circumstances.

As a result, the Group considers that the parties that retain joint control

in the arrangement have rights to the net assets and classifies the joint arrangements as joint ventures.

Also, there are

restrictions, which require consent from the director who is designated by the other investors, for certain transactions, such as

payment of dividend.

(*2)

As the Group is considered to be able to exercise significant influence by representation on the board of directors of the

investee and other reasons, although the total ownership percentage is less than 20%, the investment is accounted for using the

equity method.

(*3) The entity is categor

ized as a joint venture although the Group’s total ownership percentage is a majority share of 53%, because

the Group does not have control over the entity by virtue of an agreement with the other investors.

(*4)

During the year ended December 31, 2022, the Group completed the establishment of HMG Global LLC by contributing cash

and all of the Group’s interests in Boston Dynamics, Inc. to HMG Global LLC.

(2) The changes in investments in joint ventures and associates for the year ended December 31, 2023 are as follows.

						Share of
		Beginning of		Acquisitions		profits (losses)
Name of the company		the year		(disposals)		for the period		Dividends		Others (*)		End of the year
		(In millions of Korean Won)
BHAF	￦	759,766	￦	-	￦	24,648	￦	(144,672)	￦	(2,061)	￦	637,681
WAE		215,786		-		(19,110)		-		(105,618)		91,058
BHMC		525,250		-		(524,377)		-		8,540		9,413
HMG Global LLC		608,223		754,776		(86,091)		-		(1,705)		1,275,203
Motional AD LLC		907,061		-		(201,394)		-		(4,976)		700,691
Boston Dynamics AI
Institute, LLC		266,357		-		(24,772)		-		4,950		246,535
supernal, LLC		178,564		215,887		(229,267)		-		(1,241)		163,943
HCBE		508,110		140,581		(21,188)		-		44,086		671,589
HCF		75,323		38,990		6,448		-		3,118		123,879
HMGICS		104,556		29,300		(20,315)		-		3,953		117,494
Kia Corporation		13,251,475		-		3,129,359		(480,614)		75,929		15,976,149
Hyundai Engineering &
Construction Co., Ltd.		3,033,945		-		109,811		(13,996)		(4,125)		3,125,635
Hyundai Transys Inc.		1,157,462		-		33,554		-		(9,405)		1,181,611
Hyundai WIA Corporation		759,270		-		19,516		(4,826)		9,790		783,750
Hyundai Commercial Inc.		374,970		-		83,650		-		33,507		492,127
Hyundai Autoever Corp.		449,994		-		47,993		(9,877)		(1,685)		486,425
Hyundai Motor Securities
Co., Ltd.		332,624		-		12,860		(4,436)		3,598		344,646
Eukor Car Carriers Inc.		269,261		-		89,015		(38,646)		1,400		321,030
Tiger Alternative
Investment trust No.318		-		256,200		(5,404)		-		-		250,796
Haevichi Hotels & Resorts
Co., Ltd.		96,303		-		(11,200)		-		(106)		84,997
Others		1,325,137		57,267		76,204		(79,592)		12,474		1,391,490
	￦	25,199,437	￦	1,493,001	￦	2,489,940	￦	(776,659)	￦	70,423	￦	28,476,142

(*)

Others consist of changes in accumulated other comprehensive income (loss) and others.

The changes in investments in joint ventures and associates for the year ended December 31, 2022 are as follows.

						Share of
		Beginning of		Acquisitions		profits (losses)
Name of the company		the year		(disposals)		for the period		Dividends		Others (*)		End of the year
		(In millions of Korean Won)
BHAF	￦	736,704	￦	-	￦	44,478	￦	-	￦	(21,416)	￦	759,766
BHMC		345,950		597,979		(394,495)		-		(24,184)		525,250
WAE		245,868		-		(25,336)		-		(4,746)		215,786
Motional AD LLC		1,025,263		-		(189,135)		-		70,933		907,061
HMG Global LLC		-		743,062		(5,483)		-		(129,356)		608,223
Boston Dynamics AI
Institute, LLC		-		283,366		(2,308)		-		(14,701)		266,357
supernal, LLC		-		194,596		(87,946)		-		71,914		178,564
Boston Dynamics, Inc.		414,634		-		(37,483)		-		(377,151)		-
HCBE		498,050		-		15,337		-		(5,277)		508,110
HCF		-		75,191		924		-		(792)		75,323
HMGICS		78,316		29,528		(8,067)		-		4,779		104,556
Kia Corporation		11,620,132		-		1,907,469		(411,955)		135,829		13,251,475
Hyundai Engineering &
Construction Co., Ltd.		2,935,786		-		89,636		(13,996)		22,519		3,033,945
Hyundai Transys Inc.		1,085,858		-		47,166		-		24,438		1,157,462
Hyundai WIA Corporation		729,053		-		31,789		(4,826)		3,254		759,270
Hyundai Autoever Corp.		410,935		-		39,961		(6,065)		5,163		449,994
Hyundai Commercial Inc.		339,300		-		100,212		(20,000)		(44,542)		374,970
Hyundai Motor Securities
Co., Ltd.		314,532		-		22,153		(6,453)		2,392		332,624
Eukor Car Carriers Inc.		186,489		-		82,923		(7,392)		7,241		269,261
Haevichi Hotels & Resorts
Co., Ltd.		98,894		-		(2,601)		-		10		96,303
Others		1,363,353		77,761		7,630		(16,349)		(107,258)		1,325,137
	￦	22,429,117	￦	2,001,483	￦	1,636,824	￦	(487,036)	￦	(380,951)	￦	25,199,437

(*) Others consist of changes in accumulated other comprehensive income (loss) and others.

(3)

Summarized financial information of the Group’s major joint ventures and associates as of and for the year

ended December 31, 2023 is as follows.

		Current		Non-current		Current		Non-current
Name of the company		assets		assets		liabilities		liabilities
		(In millions of Korean Won)
BHAF (*)	￦	2,787,605	￦	-	￦	1,584,432	￦	-
WAE		328,159		378,785		116,180		5,397
BHMC		2,381,289		2,453,993		4,484,377		281,563
HMG Global LLC		255,370		3,226,650		124,210		303,525
Motional AD LLC		195,840		2,954,385		132,590		290,284
Boston Dynamics AI Institute, LLC		508,378		67,955		21,790		35,796
supernal, LLC		184,936		382,837		109,761		99,471
HCBE (*)		13,466,701		-		12,101,110		-
HCF (*)		3,572,040		-		3,325,447		-
HMGICS		66,473		678,881		196,468		262,288
Kia Corporation		37,466,302		43,161,524		25,674,105		8,395,486
Hyundai Engineering &
Construction Co., Ltd.		18,613,430		5,101,065		10,356,647		2,902,333
Hyundai Transys Inc.		4,407,156		3,608,930		3,404,363		1,662,230
Hyundai WIA Corporation		3,721,639		3,092,821		1,972,463		1,075,243
Hyundai Commercial Inc. (*)		11,826,809		-		10,211,806		-
Hyundai Autoever Corp.		1,833,667		1,009,390		922,947		327,798
Hyundai Motor Securities Co., Ltd. (*)		11,585,257		-		10,307,455		-
Eukor Car Carriers Inc.		1,417,292		3,257,299		722,525		1,270,233
Tiger Alternative Investment trust
No.318		9,721		372,556		288,304		29,100
Haevichi Hotels & Resorts Co., Ltd.		42,103		404,699		248,049		60,061

				Profit (loss) for
				the period from		Other		Total
				continuing		comprehensive		comprehensive
Name of the company		Sales		operations		income (loss)		income (loss)
		(In millions of Korean Won)
BHAF (*)	￦	236,851	￦	46,507	￦	-	￦	46,507
WAE		365,973		(65,014)		-		(65,014)
BHMC		4,763,204		(994,057)		-		(994,057)
HMG Global LLC		84,398		(343,794)		5,069		(338,725)
Motional AD LLC		1,775		(803,742)		12,115		(791,627)
Boston Dynamics AI Institute, LLC		-		(51,357)		-		(51,357)
supernal, LLC		-		(526,387)		-		(526,387)
HCBE (*)		1,256,007		40,187		88,806		128,993
HCF (*)		173,068		12,777		4,581		17,358
HMGICS		79,792		(50,787)		-		(50,787)
Kia Corporation		99,808,420		8,777,817		190,203		8,968,020
Hyundai Engineering &
Construction Co., Ltd.		29,651,357		654,281		(28,254)		626,027
Hyundai Transys Inc.		11,693,980		96,745		(21,456)		75,289
Hyundai WIA Corporation		8,590,316		52,548		(792)		51,756
Hyundai Commercial Inc. (*)		728,303		133,182		8,311		141,493
Hyundai Autoever Corp.		3,065,015		140,313		(5,094)		135,219
Hyundai Motor Securities Co., Ltd. (*)		1,582,197		53,511		20,033		73,544
Eukor Car Carriers Inc.		3,090,801		731,559		45,811		777,370
Tiger Alternative Investment trust
No.318		6,232		(13,047)		-		(13,047)
Haevichi Hotels & Resorts Co., Ltd.		162,921		(29,323)		(207)		(29,530)

(*)

The companies operate financial business and their total assets (liabilities) are included in current assets (liabilities) as the companies

do not distinguish current and non-current portion in their separate financial statements.

Summarized financial information of the Group’s major joint vent

ures and associates as of and for the year

ended December 31, 2022 is as follows.

		Current		Non-current		Current		Non-current
Name of the company		assets		assets		liabilities		liabilities
		(In millions of Korean Won)
BHAF (*)	￦	4,044,066	￦	-	￦	2,610,546	￦	-
BHMC		3,042,267		3,120,431		4,715,086		399,063
WAE		537,909		457,303		338,319		5,551
Motional AD LLC		646,160		3,187,411		142,518		89,824
HMG Global LLC		799,047		1,384,220		88,391		320,996
Boston Dynamics AI Institute, LLC		556,273		53,152		9,072		39,876
supernal, LLC		338,831		216,123		42,290		108,565
HCBE (*)		9,448,406		-		8,405,237		-
HCF (*)		1,956,470		-		1,801,224		-
HMGICS		118,876		370,889		18,593		216,915
Kia Corporation		34,147,147		39,563,818		25,377,803		8,990,081
Hyundai Engineering &
Construction Co., Ltd.		15,516,745		5,394,963		8,757,397		2,230,034
Hyundai Transys Inc.		4,311,914		3,209,159		3,147,190		1,499,678
Hyundai WIA Corporation		4,267,463		3,278,988		2,410,435		1,402,365
Hyundai Autoever Corp.		1,695,856		923,580		883,698		245,358
Hyundai Commercial Inc. (*)		11,170,366		-		9,774,127		-
Hyundai Motor Securities Co., Ltd. (*)		10,233,054		-		9,008,411		-
Eukor Car Carriers Inc.		1,026,513		3,312,611		609,827		1,505,122
Haevichi Hotels & Resorts Co., Ltd.		43,919		412,477		253,312		34,862

				Profit (loss) for
				the period from		Other		Total
				continuing		comprehensive		comprehensive
Name of the company		Sales		operations		income (loss)		income (loss)
		(In millions of Korean Won)
BHAF (*)	￦	362,978	￦	83,920	￦	-	￦	83,920
BHMC		4,900,315		(821,204)		-		(821,204)
WAE		501,436		(71,164)		-		(71,164)
Motional AD LLC		1,207		(751,726)		(6,314)		(758,040)
HMG Global LLC		21,388		(63,993)		-		(63,993)
Boston Dynamics AI Institute, LLC		-		(4,858)		-		(4,858)
supernal, LLC		-		(195,567)		-		(195,567)
HCBE (*)		971,654		32,144		16,302		48,446
HCF (*)		15,602		1,848		(1,654)		194
HMGICS		12,190		(20,168)		-		(20,168)
Kia Corporation		86,559,029		5,408,976		227,095		5,636,071
Hyundai Engineering &
Construction Co., Ltd.		21,239,082		470,876		144,153		615,029
Hyundai Transys Inc.		10,256,254		123,483		64,705		188,188
Hyundai WIA Corporation		8,207,614		43,482		9,136		52,618
Hyundai Autoever Corp.		2,754,508		116,170		17,586		133,756
Hyundai Commercial Inc. (*)		588,167		266,640		(116,056)		150,584
Hyundai Motor Securities Co., Ltd. (*)		1,186,029		87,102		5,147		92,249
Eukor Car Carriers Inc.		2,865,427		668,062		43,489		711,551
Haevichi Hotels & Resorts Co., Ltd.		152,860		(5,485)		9		(5,476)

(*)

The companies operate financial business and their total assets (liabilities) are included in current assets (liabilities) as the companies

do not distinguish current and non-current portion in their separate financial statements.

(4)

Summarized additional financial information of the Grou

p’s major joint ventures as of and for the year

ended December 31, 2023 is as follows.

		Cash and		Current		Non-current		Depreciation
Name of the		cash		financial		financial		and		Interest		Interest		Income tax
company		equivalents		liabilities		liabilities		amortization		income		expenses		expense
		(In millions of Korean Won)
BHAF(*)	￦	694,653	￦	1,199,356	￦	-	￦	8,884	￦	234,323	￦	60,215	￦	22,627
BHMC		1,323,025		623,684		61,785		669,321		23,712		48,157		37,878
Motional AD
LLC		77,819		30,839		19,743		132,772		4,161		2,721		7,830
supernal, LLC		182,290		-		-		18,882		800		2,997		-
HCF (*)		153,126		3,325,447		-		-		127,608		73,896		4,489
Tiger
Alternative
Investment
trust No.318		8,253		288,304		29,100		2,189		288		1,108		-

(*)

The total amount of assets (liabilities) is included in current financial liabilities as BHAF and HCF, as a financial service business, do

not distinguish current and non-current portion in their separate financial statements.

Summarized additional financial information of the Group’s major joint ventures as of and for the year ended December

31, 2022 is as follows.

		Cash and		Current		Non-current		Depreciation
Name of the		cash		financial		financial		and		Interest		Interest		Income tax
company		equivalents		liabilities		liabilities		amortization		income		expenses		expense
		(In millions of Korean Won)
BHAF(*)	￦	1,023,368	￦	2,385,681	￦	-	￦	13,926	￦	341,357	￦	128,264	￦	32,245
BHMC		1,887,932		606,105		161,500		570,749		18,263		51,436		60,112
Motional AD
LLC		71,075		16,062		62,753		87,887		5,760		-		6,027
supernal, LLC		333,184		-		-		8,305		589		5,983		-
HCF(*)		68,198		1,801,224		-		-		14,274		4,823		626

(*)

The total amount of assets (liabilities) is included in current financial liabilities as BHAF and HCF, as a financial service business, do

not distinguish current and non-current portion in their separate financial statements.

(5)

Reconciliation of the Group’s share of net assets of the Group’s major joint ventures and associates to their

carrying amounts as of December 31, 2023 is as follows.

						Unrealized
		Group’s share of				profit (loss) and		Carrying
Name of the company		net assets		Goodwill		others		amounts
		(In millions of Korean Won)
BHAF	￦	637,681	￦	-	￦	-	￦	637,681
WAE (*)		188,495		7,809		(105,246)		91,058
BHMC		34,671		-		(25,258)		9,413
HMG Global LLC		1,275,203		-		-		1,275,203
Motional AD LLC		709,112		-		(8,421)		700,691
Boston Dynamics AI Institute, LLC		246,405		-		130		246,535
supernal, LLC		163,949		-		(6)		163,943
HCBE		660,815		9,041		1,733		671,589
HCF		123,294		585		-		123,879
HMGICS		114,640		-		2,854		117,494
Kia Corporation		15,853,616		197,089		(74,556)		15,976,149
Hyundai Engineering & Construction
Co., Ltd. (*)		2,393,998		731,362		275		3,125,635
Hyundai Transys Inc.		1,167,997		-		13,614		1,181,611
Hyundai WIA Corporation		878,333		-		(94,583)		783,750
Hyundai Commercial Inc.		492,127		-		-		492,127
Hyundai Autoever Corp. (*)		427,504		58,822		99		486,425
Hyundai Motor Securities Co., Ltd.		305,343		40,052		(749)		344,646
Eukor Car Carriers Inc.		321,049		-		(19)		321,030
Tiger Alternative Investment trust No.318 (*)		194,777		56,019		-		250,796
Haevichi Hotels & Resorts Co., Ltd. (*)		81,421		3,576		-		84,997

(*)

The difference between the carrying amount and

the fair value of the investee’s identifiable assets and liabilities as of the acquisition

date is included in the amount of net assets.

Reconciliation of the Group’s share of net assets of the Group’s major joint ventures and associates to their carrying

amounts as of December 31, 2022 is as follows.

		Group’s share				Unrealized
		of				profit (loss) and		Carrying
Name of the company		net assets		Goodwill		others		amounts
		(In millions of Korean Won)
BHAF	￦	759,766	￦	-	￦	-	￦	759,766
BHMC		551,378		-		(26,128)		525,250
WAE (*)		207,938		7,809		39		215,786
Motional AD LLC		922,942		-		(15,881)		907,061
HMG Global LLC		608,223		-		-		608,223
Boston Dynamics AI Institute, LLC		266,227		-		130		266,357
supernal, LLC		178,571		-		(7)		178,564
HCBE		497,892		22,341		(12,123)		508,110
HCF		77,621		-		(2,298)		75,323
HMGICS		101,702		-		2,854		104,556
Kia Corporation		13,124,472		197,089		(70,086)		13,251,475
Hyundai Engineering & Construction
Co., Ltd. (*)		2,302,451		731,362		132		3,033,945
Hyundai Transys Inc.		1,142,960		-		14,502		1,157,462
Hyundai WIA Corporation		854,377		-		(95,107)		759,270
Hyundai Autoever Corp. (*)		391,073		58,822		99		449,994
Hyundai Commercial Inc.		374,970		-		-		374,970
Hyundai Motor Securities Co., Ltd.		291,823		40,052		749		332,624
Eukor Car Carriers Inc.		268,999		-		262		269,261
Haevichi Hotels & Resorts Co., Ltd. (*)		92,727		3,576		-		96,303

(*)

The difference between the carrying amount and the fair value of the investee’s identifiable assets and liabilities as of the

acquisition

date is included in the amount of net assets.

(6) The market price of major listed equity securities as of December 31, 2023 is as follows.

			Total number of
Name of the company		Price per share	shares		Market value
		(In millions of Korean Won, except price per share)
Kia Corporation	￦	100,000	137,318,251	￦	13,731,825
Hyundai Autoever Corp.		211,500	8,664,334		1,832,507
Hyundai Engineering & Construction Co., Ltd.		34,900	23,327,400		814,126
Hyundai WIA Corporation		65,100	6,893,596		448,773
Hyundai Motor Securities Co., Ltd.		8,590	8,065,595		69,283

14.

FINANCIAL SERVICES RECEIVABLES:

(1)

Financial services receivables as of December 31, 2023 and December 31, 2022 are as follows.

		December 31,		December 31,
Description		2023		2022
		(In millions of Korean Won)
Loans	￦	86,800,272	￦	69,298,391
Card receivables		21,196,283		21,018,287
Financial lease receivables		2,052,053		2,060,971
Others		7,043		20,761
		110,055,651		92,398,410
Loss allowance		(1,769,240)		(1,726,916)
Loan origination fee		(587,895)		(261,084)
Present value discount accounts		(10,855)		(46,564)
	￦	107,687,661	￦	90,363,846

(2) Transfer of financial services receivables

As of December 31, 2023 and 2022, the Group has issued asset-backed securities with loan receivables and credit card

receivables as underlying assets and related asset-backed securities have the right of recourse.

As of December 31, 2023

the carrying amount of financial assets that were transferred but not derecognized (including inter-company bonds)

amounted to

￦

33,972,924 million and its fair value is

￦

33,011,898 million. The carrying amount of related liabilities is

￦

23,178,071 million and its fair value is

￦

23,116,550 million.

As a result, the fair value of net position is

￦

9,895,348

million. As of December 31, 2022, the carrying amount of financial assets that were transferred but not derecognized

(including inter-company bonds) amounted to

￦

31,838,127 million and its fair value is

￦

30,847,083 million. The

carrying amount of related liabilities is

￦

22,795,844 million and its fair value is

￦

22,263,492 million.

As a result, the

fair value of net position is

￦

8,583,591 million.

(3)

The changes in loss allowance of financial services receivables for the year ended December 31, 2023 are as

follows.

		Loan Obligations
		12-Month		Lifetime expected credit losses
		expected						Total loan
Description		credit losses		Not Impaired		Impaired		obligations
		(In millions of Korean Won)
Beginning of the year	￦	345,035	￦	501,419	￦	234,157	￦	1,080,611
Transfer to 12-Month expected
credit losses		136,477		(132,123)		(4,354)		-
Transfer to lifetime expected
credit losses		(36,319)		40,241		(3,922)		-
Transfer to credit-impaired
financial assets		(3,001)		(10,807)		13,808		-
Impairment loss (reversal)		(32,630)		434,664		271,319		673,353
Collection (write-off)		(253)		(366,271)		(218,366)		(584,890)
Disposals and others		-		-		(54,462)		(54,462)
Effect of foreign exchange
differences		4,710		3,965		40		8,715
End of the year	￦	414,019	￦	471,088	￦	238,220	￦	1,123,327

		Card receivables
		12-Month		Lifetime expected credit losses
		expected						Total card
Description		credit losses		Not Impaired		Impaired		receivables
		(In millions of Korean Won)
Beginning of the year	￦	189,841	￦	219,571	￦	178,791	￦	588,203
Transfer to 12-Month expected
credit losses		84,210		(84,058)		(152)		-
Transfer to lifetime expected
credit losses		(14,774)		15,177		(403)		-
Transfer to credit-impaired
financial assets		(122,103)		(103,344)		225,447		-
Impairment loss (reversal)		92,337		125,385		205,181		422,903
Collection (write-off)		-		-		(389,551)		(389,551)
Disposals and others		(1,562)		-		(18,980)		(20,542)
Effect of foreign exchange
differences		-		-		-		-
End of the year	￦	227,949	￦	172,731	￦	200,333	￦	601,013

		Others
		12-Month		Lifetime expected credit losses
		expected								Total
Description		credit losses		Not Impaired		Impaired		Total others		Allowances
		(In millions of Korean Won)
Beginning of the year	￦	13,336	￦	8,974	￦	35,792	￦	58,102	￦	1,726,916
Transfer to 12-Month expected
credit losses		4,100		(2,689)		(1,411)		-		-
Transfer to lifetime expected
credit losses		(1,550)		1,948		(398)		-		-
Transfer to credit-impaired
financial assets		(195)		(442)		637		-		-
Impairment loss (reversal)		(1,920)		1,993		2,152		2,225		1,098,481
Collection (write-off)		-		-		(15,424)		(15,424)		(989,865)
Disposals and others		-		-		-		-		(75,004)
Effect of foreign exchange
differences		(2)		(1)		-		(3)		8,712
End of the year	￦	13,769	￦	9,783	￦	21,348	￦	44,900	￦	1,769,240

The changes in allowance for doubtful accounts of financial services receivables for the year ended December 31,

2022 are as follows.

		Loan Obligations
		12-Month		Lifetime expected credit losses
		expected						Total loan
Description		credit losses		Not Impaired		Impaired		obligations
		(In millions of Korean Won)
Beginning of the year	￦	449,207	￦	316,425	￦	204,034	￦	969,666
Transfer to 12-Month expected
credit losses		69,360		(65,956)		(3,404)		-
Transfer to lifetime expected
credit losses		(54,196)		58,198		(4,002)		-
Transfer to credit-impaired
financial assets		(2,434)		(7,225)		9,659		-
Impairment loss (reversal)		(139,481)		435,731		164,836		461,086
Collection (write-off)		(169)		(241,816)		(132,234)		(374,219)
Disposals and others		(2)		-		(4,794)		(4,796)
Effect of foreign exchange
differences		22,750		6,062		62		28,874
End of the year	￦	345,035	￦	501,419	￦	234,157	￦	1,080,611

		Card receivables
		12-Month		Lifetime expected credit losses
		expected						Total card
Description		credit losses		Not Impaired		Impaired		receivables
		(In millions of Korean Won)
Beginning of the year	￦	195,709	￦	163,391	￦	154,600	￦	513,700
Transfer to 12-Month expected
credit losses		49,247		(49,118)		(129)		-
Transfer to lifetime expected
credit losses		(26,980)		27,145		(165)		-
Transfer to credit-impaired
financial assets		(93,623)		(70,901)		164,524		-
Impairment loss (reversal)		65,488		149,053		217,342		431,883
Collection (write-off)		-		-		(342,013)		(342,013)
Disposals and others		-		1		(15,368)		(15,367)
Effect of foreign exchange
differences		-		-		-		-
End of the year	￦	189,841	￦	219,571	￦	178,791	￦	588,203

	Others
		12-Month		Lifetime expected credit losses
		expected								Total
Description		credit losses		Not Impaired		Impaired		Total others		Allowances
	(In millions of Korean Won)
Beginning of the year	￦	14,299	￦	8,119	￦	46,203	￦	68,621	￦	1,551,987
Transfer to 12-Month expected
credit losses		4,326		(1,737)		(2,590)		(1)		(1)
Transfer to lifetime expected
credit losses		(1,550)		1,974		(424)		-		-
Transfer to credit-impaired
financial assets		(100)		(237)		337		-		-
Impairment loss (reversal)		(3,639)		855		8,315		5,531		898,500
Collection (write-off)			-	-		(16,049)		(16,049)		(732,281)
Disposals and others			-	-		-		-		(20,163)
Effect of foreign exchange
differences			-	-		-		-		28,874
End of the year	￦	13,336	￦	8,974	￦	35,792	￦	58,102	￦	1,726,916

(4)

Gross investments in financial leases and their present value of minimum lease receipts as of December 31, 2023

and December 31, 2022 are as follows.

		December 31, 2023				December 31, 2022
		Gross		Present value		Gross		Present value
		investments		of minimum		investments		of minimum
		in financial		lease payment		in financial		lease payment
Description		leases		receivable		leases		receivable
		(In millions of Korean Won)
Not later than one year	￦	809,793	￦	676,940	￦	868,890	￦	758,724
Later than one year and not later
than five years		1,535,881		1,354,786		1,423,828		1,293,495
Later than five years		22,215		19,309		5,215		4,988
	￦	2,367,889	￦	2,051,035	￦	2,297,933	￦	2,057,207

(5)

Unearned interest income of financial leases as of December 31, 2023 and December 31, 2022 is as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Gross investments in financial lease	￦	2,367,889	￦	2,297,933
Net lease investments:
Present value of minimum lease payment receivable		2,051,035		2,057,207
Present value of unguaranteed residual value		1,018		3,764
		2,052,053		2,060,971
Unearned interest income	￦	315,836	￦	236,962

15.

INVESTMENTS IN OPERATING LEASES (AS A LESSOR):

(1)

Investments in operating leases as of December 31, 2023 and December 31, 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Acquisition cost	￦	37,319,651	￦	32,090,728
Accumulated depreciation		(7,520,255)		(4,262,026)
Accumulated impairment loss		(134,778)		(147,168)
	￦	29,664,618	￦	27,681,534

(2)

Future minimum lease payment receivable related to investments in operating leases as of December 31, 2023 and

December 31, 2022 is as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Not later than one year	￦	5,356,971	￦	5,001,104
Later than one year and not later
than five years		6,674,656		5,906,720
Later than five years		233		111
	￦	12,031,860	￦	10,907,935

16.

BORROWINGS AND DEBENTURES:

(1)

Short-term borrowings as of December 31, 2023 and December 31, 2022 are as follows.

		Annual		December 31,		December 31,
Description	Lender	interest rate		2023		2022
		(%)		(In millions of Korean Won)
Overdrafts	Citi Bank and others	1.75~6.03	￦	177,130	￦	62,101
General borrowings	Korea Development Bank
	and others	TIBOR+0.8~11.87		4,664,576		5,277,609
Borrowings collateralized
by trade receivables	Hana Bank and others	-		-		2,123,379
Banker’s Usance	Hana Bank and others	0.28~9.20		308,187		705,155
Commercial paper	Shinhan Bank and others	4.20~6.33		3,785,655		2,898,236
Credit facilities	Korea Development Bank	3.94		100,000		300,000
			￦	9,035,548	￦	11,366,480

(2) Long-term debt as of December 31, 2023 and December 31, 2022 is as follows.

		Annual		December 31,		December 31,
Description	Lender	interest rate		2023		2022
		(%)		(In millions of Korean Won)
General borrowings	Hana Bank and others	0.10~7.72	￦	8,081,132	￦	8,909,156
Credit facilities	Shinhan Bank and others	4.74~9.13		40,200		40,200
Commercial paper	KIWOOM Securities and others	1.41~4.74		1,790,000		2,900,000
Asset-backed securities	HSBC and others	4.40~6.12		14,865,832		6,377,616
Others(*)	NH Investment & Securities	-		-		68,903
				24,777,164		18,295,875
Less: present value discounts				(164,297)		(77,686)
Less: current maturities				(7,043,107)		(5,933,040)
			￦	17,569,760	￦	12,285,149

(*) The Group transferred a portion of its voting shares to a third party in accordance with the total revenue swap agreement as of December

31, 2022. However, the Group still recognizes it as the financial asset because the Group still owns the majority of the risks and rewards

of ownership of the transferred shares. Also, the Group recognized the amount received from disposal as borrowings.

(3) Debentures as of December 31, 2023 and December 31, 2022 are as follows.

	Latest	Annual		December 31,		December 31,
Description	maturity date	interest rate		2023		2022
		(%)		(In millions of Korean Won)
Non-guaranteed public debentures	March 29, 2032	1.00~6.63	￦	33,702,908	￦	33,979,495
Non-guaranteed private debentures	September 21, 2030	0.80~6.67		34,403,777		25,971,468
Asset-backed securities	December 17, 2029	0.38~6.12		23,189,001		22,801,451
				91,295,686		82,752,414
Less: discount on debentures				(196,142)		(151,263)
Less: current maturities				(18,066,051)		(19,641,091)
			￦	73,033,493	￦	62,960,060

17.

PROVISIONS:

(1) Provisions as of December 31, 2023 and December 31, 2022 are as follows.

		December 31,		December 31,
Description		2023		2022
		(In millions of Korean Won)
Warranty	￦	9,121,153	￦	10,399,527
Other long-term employee benefits		637,190		598,637
Others		1,892,375		1,432,417
	￦	11,650,718	￦	12,430,581

(2) The changes in provisions for the year ended December 31, 2023 are as follows.

				Other long-term
Description		Warranty (*)		employee benefits		Others
		(In millions of Korean Won)
Beginning of the year	￦	10,399,527	￦	598,637	￦	1,432,417
Charged		2,175,691		119,281		1,192,422
Utilized		(3,442,626)		(80,749)		(896,740)
Effect of foreign exchange differences
and others		(11,439)		21		164,276
End of the year	￦	9,121,153	￦	637,190	￦	1,892,375

(*)

During the year ended December 31, 2023, the Group updated the measurement of warranty provisions related to the recall of

theta 2 and other engines to reflect new information and a longer period of historical claim data.

The changes in provisions for the year ended December 31, 2022 are as follows.

				Other long-term
Description		Warranty (*)		employee benefits		Others
		(In millions of Korean Won)
Beginning of the year	￦	9,048,185	￦	676,432	￦	1,154,167
Charged		4,347,523		3,900		953,430
Utilized		(3,133,544)		(83,682)		(645,750)
Effect of foreign exchange differences
and others		137,363		1,987		(29,430)
End of the year	￦	10,399,527	￦	598,637	￦	1,432,417

(*)

During the year ended December 31, 2022, the Group updated the measurement of warranty provisions related to the recall of

theta 2 and other engines to reflect new information and a longer period of historical claim data.

18.

OTHER FINANCIAL LIABILITIES:

(1)

Other financial liabilities as of December 31, 2023 are as follows.

		December 31, 2023
Description		Current		Non-current
		(In millions of Korean Won)
Financial liabilities measured at FVPL	￦	35,241	￦	808
Derivative liabilities that are effective hedging instruments		20,909		172,047
Financial Liabilities measured at amortized cost		562		3,544
	￦	56,712	￦	176,399

(2)

Other financial liabilities as of December 31, 2022 are as follows.

		December 31, 2022
Description		Current		Non-current
		(In millions of Korean Won)
Financial liabilities measured at FVPL	￦	10,053	￦	174,386
Derivative liabilities that are effective hedging instruments		88,832		86,464
Financial Liabilities measured at amortized cost		259		1,668
	￦	99,144	￦	262,518

19.

OTHER LIABILITIES:

Other liabilities as of December 31, 2023 and December 31, 2022 are as follows.

		December 31, 2023				December 31, 2022
Description		Current		Non-current		Current		Non-current
		(In millions of Korean Won)
Advances received	￦	1,154,776	￦	105,755	￦	1,464,339	￦	67,776
Withholdings		1,232,665		271,117		1,056,483		223,568
Accrued expenses		4,481,203		-		3,351,822		-
Unearned income		1,248,837		4,026,192		1,090,242		3,150,126
Due to customers for contract work		1,636,127		-		1,217,052		-
Others		823,425		808,948		420,303		810,795
	￦	10,577,033	￦	5,212,012	￦	8,600,241	￦	4,252,265

20.

FINANCIAL INSTRUMENTS:

(1)

Financial assets by categories as of December 31, 2023 are as follows.

								Derivative
		Financial				Financial		assets that
		assets		Financial assets		assets		are effective
		measured at		measured at		measured at		hedging
Description		FVPL		amortized cost		FVOCI		instruments		Book value		Fair value
	(In millions of Korean Won)
Cash and
cash equivalents	￦	-	￦	19,166,619	￦	-	￦	-	￦	19,166,619	￦	19,166,619
Short-term and long-
term financial
instruments		-		7,494,934		-		-		7,494,934		7,494,934
Trade notes and
accounts receivable		-		4,893,161		-		-		4,893,161		4,893,161
Other receivables		-		1,605,675		-		-		1,605,675		1,605,675
Other financial assets		2,867,455		609,106		2,989,422		760,016		7,225,999		7,225,999
Other assets		1,086		668,668		-		-		669,754		669,754
Financial services
receivables		-		107,687,661		-		-		107,687,661		105,443,151
	￦	2,868,541	￦	142,125,824	￦	2,989,422	￦	760,016	￦	148,743,803	￦	146,499,293

Financial assets by categories as of December 31, 2022 are as follows

								Derivative
		Financial				Financial		assets that are
		assets		Financial assets		assets		effective
		measured at		measured at		measured at		hedging
Description		FVPL		amortized cost		FVOCI		instruments		Book value		Fair value
	(In millions of Korean Won)
Cash and
cash equivalents	￦	-	￦	20,864,879	￦	-	￦	-	￦	20,864,879	￦	20,864,879
Short-term and long-
term financial
instruments		-		5,887,154		-		-		5,887,154		5,887,154
Trade notes and
accounts receivable		-		4,458,838		-		-		4,458,838		4,458,838
Other receivables		-		2,378,968		-		-		2,378,968		2,378,968
Other financial assets		5,710,346		37,898		2,839,581		1,236,696		9,824,521		9,824,521
Other assets		27,960		434,829		-		-		462,789		462,789
Financial services
receivables		-		90,363,846		-		-		90,363,846		86,705,579
	￦	5,738,306	￦	124,426,412	￦	2,839,581	￦	1,236,696	￦	134,240,995	￦	130,582,728

(2)

Financial liabilities by categories as of December 31, 2023 are as follows.

		Financial		Financial liabilities		Derivative liabilities
		liabilities		measured at		that are effective
Description		measured at FVPL		amortized cost		hedging instruments		Book value		Fair value
		(In millions of Korean Won)
Trade notes and
accounts payable	￦	-	￦	10,952,046	￦	-	￦	10,952,046	￦	10,952,046
Other payables		-		7,560,541		-		7,560,541		7,560,541
Borrowings and
debentures		29,705		124,718,254		-		124,747,959		124,403,404
Other financial
liabilities		36,049		4,106		192,956		233,111		233,111
Lease liabilities		-		1,058,402		-		1,058,402		1,058,402
Other liabilities		-		4,267,077		-		4,267,077		4,267,077
	￦	65,754	￦	148,560,426	￦	192,956	￦	148,819,136	￦	148,474,581

Financial liabilities by categories as of December 31, 2022 are as follows.

		Financial		Financial liabilities		Derivative liabilities
		liabilities		measured at		that are effective
Description		measured at FVPL		amortized cost		hedging instruments		Book value		Fair value
		(In millions of Korean Won)
Trade notes and
accounts payable	￦	-	￦	10,797,065	￦	-	￦	10,797,065	￦	10,797,065
Other payables		-		7,292,508		-		7,292,508		7,292,508
Borrowings and
debentures		27,239		112,158,581		-		112,185,820		108,603,134
Other financial
liabilities		184,439		1,927		175,296		361,662		361,662
Lease liabilities		-		1,110,804		-		1,110,804		1,110,804
Other liabilities		-		2,960,053		-		2,960,053		2,960,053
	￦	211,678	￦	134,320,938	￦	175,296	￦	134,707,912	￦	131,125,226

(3)

Fair value estimation

The Group categorizes the assets and liabilities measured at fair value into the following three-level fair value hierarchy

in accordance with the inputs used for fair value measurement.



Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.



Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices).



Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2023 are as follows.

		December 31, 2023
Description		Level 1		Level 2		Level 3		Total
		(In millions of Korean Won)
Financial assets:
Financial assets measured
at FVPL	￦	54,853	￦	2,401,437	￦	412,251	￦	2,868,541
Derivative assets that are
effective hedging instruments		-		760,016		-		760,016
Financial assets measured
at FVOCI		1,599,823		580,478		809,121		2,989,422
	￦	1,654,676	￦	3,741,931	￦	1,221,372	￦	6,617,979

Financial liabilities:
Financial liabilities measured
at FVPL	￦	-	￦	5,318	￦	60,436	￦	65,754
Derivative liabilities that are
effective hedging instruments		-		191,803		1,153		192,956
	￦	-	￦	197,121	￦	61,589	￦	258,710

Fair value measurements of financial instruments by fair value hierarchy levels as of December 31, 2022 are as follows.

		December 31, 2022
Description		Level 1		Level 2		Level 3		Total
		(In millions of Korean Won)
Financial assets:
Financial assets measured
at FVPL	￦	57,556	￦	5,412,130	￦	268,620	￦	5,738,306
Derivative assets that are
effective hedging instruments		-		1,236,696		-		1,236,696
Financial assets measured
at FVOCI		1,493,627		451,990		893,964		2,839,581
	￦	1,551,183	￦	7,100,816	￦	1,162,584	￦	9,814,583

Financial liabilities:
Financial liabilities measured
at FVPL	￦	-	￦	11,451	￦	200,227	￦	211,678
Derivative liabilities that are
effective hedging instruments		-		173,361		1,935		175,296
	￦	-	￦	184,812	￦	202,162	￦	386,974

The changes in financial instruments classified as Level 3 for the year ended December 31, 2023 are as follows.

		Beginning										End of
Description		of the period		Purchases		Disposals		Valuation		Others		the period
	(In millions of Korean Won)
Financial assets measured
at FVPL	￦	268,620	￦	136,235	￦	(13,487)	￦	14,398	￦	6,485	￦	412,251
Financial assets measured
at FVOCI		893,964		725		(27,995)		(54,502)		(3,071)		809,121
Financial liabilities measured
at FVPL		200,227		-		-		11,833		(151,624)		60,436
Derivative liabilities that are
effective hedging instruments		1,935		-		-		(782)		-		1,153

The changes in financial instruments classified as Level 3 for the year ended December 31, 2022 are as follows.

		Beginning										End of
Description		of the period		Purchases		Disposals		Valuation		Others		the period
		(In millions of Korean Won)
Financial assets measured
at FVPL	￦	162,330	￦	92,328	￦	(6,107)	￦	8,529	￦	11,540	￦	268,620
Financial assets measured
at FVOCI		913,767		12,373		(874)		79,143		(110,445)		893,964
Financial liabilities measured
at FVPL		53,139		29,884		-		2,169		115,035		200,227
Derivative liabilities that are
effective hedging instruments		-		1,935		-		-		-		1,935

(4)

Financial assets and liabilities subject to offsetting, and financial instruments subject to an enforceable master netting

arrangement or similar agreement as of December 31, 2023 are as follows.

				Gross amounts				Related		Related
				of recognized		Net amounts of		amounts not set		amounts not
				financial assets		financial assets		off in the		set off in the
				and liabilities		and liabilities		consolidated		statement of
				set off in the		presented in the		statement of		financial
		Gross amounts		consolidated		consolidated		financial		position -
		of recognized		statement of		statement of		position -		collateral
		financial assets		financial		financial		financial		received
Description		and liabilities		position		position		instruments		(pledged)		Net amounts
	(In millions of Korean Won)
Financial assets:
Trade notes and accounts
receivable	￦	5,192,922	￦	299,761	￦	4,893,161	￦	-	￦	-	￦	4,893,161
Other receivables		2,786,530		1,180,855		1,605,675		-		-		1,605,675
Financial assets measured at
FVPL		33,107		-		33,107		14		-		33,093
Derivative assets that are
effective hedging instruments (*)		760,016		-		760,016		100,723		-		659,293
	￦	8,772,575	￦	1,480,616	￦	7,291,959	￦	100,737	￦	-	￦	7,191,222
Financial liabilities:
Trade notes and accounts
payable	￦	12,130,201	￦	1,178,155	￦	10,952,046	￦	-	￦	-	￦	10,952,046
Other payables		7,863,002		302,461		7,560,541		-		-		7,560,541
Financial liabilities measured at
FVPL		65,754		-		65,754		14		-		65,740
Derivative liabilities that are
effective hedging instruments (*)		192,956		-		192,956		100,723		-		92,233
	￦	20,251,913	￦	1,480,616	￦	18,771,297	￦	100,737	￦	-	￦	18,670,560

(*)

These are derivative assets and liabilities that the Group may have the right to offset in the event of default, insolvency or bankruptcy

of the counterparty although these do not meet the criteria of offsetting under IAS 32.

Financial assets and liabilities, subject to offsetting, and financial instruments subject to an enforceable master

netting arrangement or similar agreement as of December 31, 2022 are as follows.

				Gross amounts				Related		Related
				of recognized		Net amounts of		amounts not set		amounts not
				financial assets		financial assets		off in the		set off in the
				and liabilities		and liabilities		consolidated		statement of
				set off in the		presented in the		statement of		financial
		Gross amounts		consolidated		consolidated		financial		position -
		of recognized		statement of		statement of		position -		collateral
		financial assets		financial		financial		financial		received
Description		and liabilities		position		position		instruments		(pledged)		Net amounts
		(In millions of Korean Won)
Financial assets:
Trade notes and accounts
receivable	￦	4,731,300	￦	272,462	￦	4,458,838	￦	-	￦	-	￦	4,458,838
Other receivables		3,005,009		626,041		2,378,968		-		-		2,378,968
Financial assets measured at
FVPL		47,256		-		47,256		-		-		47,256
Derivative assets that are
effective hedging instruments (*)		1,236,696		-		1,236,696		93,233		-		1,143,463
	￦	9,020,261	￦	898,503	￦	8,121,758	￦	93,233	￦	-	￦	8,028,525
Financial liabilities:
Trade notes and accounts
payable	￦	11,418,549	￦	621,484	￦	10,797,065	￦	-	￦	-	￦	10,797,065
Other payables		7,569,527		277,019		7,292,508		-		-		7,292,508
Financial liabilities measured at
FVPL		211,678		-		211,678		-		-		211,678
Derivative liabilities that are
effective hedging instruments (*)		175,296		-		175,296		93,233		-		82,063
	￦	19,375,050	￦	898,503	￦	18,476,547	￦	93,233	￦	-	￦	18,383,314

(*)

These are derivative assets and liabilities that the Group may have the right to offset in the event of default, insolvency or bankruptcy

of the counterparty although these do not meet the criteria of offsetting under IAS 32.

(5)

Interest income, dividend income and interest expenses by categories of financial instruments for the year ended

December 31, 2023 are as follows.

		2023
		Interest		Dividend		Interest
Description		income		income		expenses
		(In millions of Korean Won)
Non-financial services:
Financial assets measured
at amortized cost	￦	937,276	￦	-	￦	-
Financial assets
measured at FVPL		60,379		-		-
Financial assets measured
at FVOCI		-		79,127		-
Financial liabilities measured
at amortized cost		-		-		542,172
	￦	997,655	￦	79,127	￦	542,172
Financial services:
Financial assets measured
at amortized cost	￦	4,676,007	￦	-	￦	-
Financial assets measured
at FVPL		100,025		707		-
Financial assets measured
at FVOCI		557		-		-
Financial liabilities measured
at amortized cost		-		-		3,971,993
	￦	4,776,589	￦	707	￦	3,971,993

Interest income, dividend income and interest expenses by categories of financial instruments for the year ended

December 31, 2022 are as follows.

	2022
	Interest		Dividend		Interest
Description	income		income		expenses
	(In millions of Korean Won)
Non-financial services:
Financial assets measured
at amortized cost	￦	443,993	￦	-	￦	-
Financial assets
measured at FVPL		150,084		-		-
Financial assets measured
at FVOCI		-		44,533		-
Financial liabilities measured
at amortized cost		-		-		426,731
	￦	594,077	￦	44,533	￦	426,731
Financial services:
Financial assets measured
at amortized cost	￦	3,466,000	￦	-	￦	-
Financial assets measured
at FVPL		5,825		1,300		-
Financial assets measured
at FVOCI		899		-		-
Financial liabilities measured
at amortized cost		-		-		2,277,906
	￦	3,472,724	￦	1,300	￦	2,277,906

(6)

The commission income (financial services revenue) arising from financial assets or liabilities other than financial

assets or liabilities measured at FVPL for the years ended December 31, 2023 and 2022 are

￦

1,263,422 million and

￦

1,011,152 million, respectively.

In addition, the fee expenses (cost of sales from financial services)

related to

financial assets or liabilities other than financial assets or liabilities measured at FVPL for the years ended December

31, 2023 and 2022 are

￦

489,309 million and

￦

427,606 million, respectively.

(7)

The Group recognizes transfers between levels of the fair value hierarchy at the date of the event or change in

circumstances that caused the transfer.

There are no significant transfers between Level 1 and Level 2 for the year

ended December 31, 2023.

(8)

Descriptions of the valuation techniques and the inputs used in the fair value measurements categorized within

Level 2 and Level 3 of the fair value hierarchy are as follows.

Currency

forwards, options and swap

Fair value of currency forwards, options and swap is measured based on forward exchange rate quoted in the current

market at the end of the reporting period, which has the same remaining period of derivatives to be measured. If the

forward exchange rate, which has the same remaining period of currency forwards, options and swap, is not quoted

in the current market, fair value is measured using estimates of similar period of forward exchange rate by applying

interpolation method with quoted forward exchange rates.

As the inputs used to measure fair value of currency forwards, options and swap are supported by observable market

data, such as forward exchange rates, the Group classifies the estimates of fair value measurements of the currency

forwards, options and swap as Level 2 of the fair value hierarchy.

- Interest rate swap

The discount rate and forward interest rate used to measure the fair value of interest rate swap are determined based

on an applicable yield curve derived from interest quoted in the current market at the end of the reporting period.

The fair value of interest rate swap was measured as a discount on the estimated future cash flows of interest rate

swap based on forward interest rates derived from the above method at an appropriate discount rate.

As the inputs used to measure fair value of interest rate swap are supported by observable market data, such as yield

curves, the Group classifies the estimates of fair value measurements of the interest rate swap as Level 2 of the fair

value hierarchy.

- Debt instruments including corporate bonds

Fair value of debt instruments including corporate bonds is measured applying discounted cash flow method.

The

rate used to discount cash flows is determined based on swap rate and credit spreads of debt instruments, which

have the similar credit rating and period quoted in the current market with those of debt instruments including

corporate bonds that should be measured. The Group classifies fair value measurements of debt instruments

including corporate bonds as Level 2 of the fair-value hierarchy since the rate, which has significant effects on fair

value of debt instruments including corporate bonds, is based on observable market data.

- Unlisted equity securities

Fair value of unlisted equity securities is measured using discounted cash flow projection and market approach, and

as for discounted cash flow projections, certain assumptions not based on observable market prices or rate, such as

sales growth rate, pre-tax operating income ratio and discount rate based on business plan and circumstance of

industry, are used to estimate the future cash flow.

The discount rate used to discount the future cash

flows,

calculated by applying the Capital Asset Pricing Model, using the data of similar listed companies.

The

Group

determines that the effect of estimation and assumptions referred above affecting fair value of unlisted equity

securities is significant and classifies fair value measurements of unlisted securities as Level 3 of the fair value

hierarchy.

- Redeemable convertible preference share

Fair value of redeemable convertible preference share is measured based on the fair value, exercise price, maturity,

and the stock price volatility up to the maturity of the underlying asset, using the binomial option pricing model. The

discount rate used in the binomial option pricing model is applied by converting the rate of return on corporate bonds

with equivalent credit rating corresponding to the remaining maturity into a continuously compounding discount

rate, and the stock price volatility up to maturity uses historical volatility of proxy companies in similar industries

in response to the remaining maturity. The fair value of the underlying asset is assumed to be maintained until the

end of the current period after estimating the underlying asset value on the contracted date by inverting the

underlying asset value inherent in the terms of the transaction on the premise that the acquisition of related shares is

an orderly transaction and traded at fair value. The Group classifies the fair value measurement of redeemable

convertible preference share as Level 3 in the fair value hierarchy based on the conclusion that the effect of the

above assumptions and estimates on the fair value of redeemable convertible preference share is significant.

(9) The quantitative information about significant unobservable inputs used in the fair value measurements

categorized within Level 3 of the fair value hierarchy and the description of relationships of significant

unobservable inputs to the fair value are as follows:

	Fair value at		Valuation	Unobservable		Description of
Description	December 31, 2023		techniques	inputs	Range	relationship
	(In millions of Korean Won)
Unlisted equity	￦	1,221,372	Discounted	Sales growth rate	-3.1% ~ 6.5%	If the sales
securities			cash flow	Pre-tax operating		growth rate
and others			and others	profit margin		and the pre-tax
				ratio	3.3% ~ 3.5%	operating
				Discount rate	8.3%	profit margin
						ratio increase,
						and the
						discount rate
						declines, the
						fair value
						increases

	Fair value at		Valuation	Unobservable		Description of
Description	December 31, 2023		techniques	inputs	Range	relationship
	(In millions of Korean Won)
Redeemable	￦	61,589	Binomial	Risk discount rate	28.3%
convertible			option
						If the discount
preference			pricing	Risk free discount
						rate declines
share and			model	rate
						and stock
others			and		3.7%
						price volatility
			others	Stock price
						increases, the
				volatility	73.9%
						fair value
						increases

The Group does not expect changes in significant unobservable inputs would have a significant impact on the fair value,

taking into account reasonable alternative assumptions.

21.

CAPITAL STOCK:

The Company’s number of shares authorized is 600,000,000 shares.

Common stock and preferred stock as of

December 31, 2023 and December 31, 2022 are as follows.

(1) Common stock

Description	December 31, 2023		December 31, 2022
	(In millions of Korean Won, except par value)
Issued		211,531,506 shares		213,668,187 shares
Par value	￦	5,000	￦	5,000
Capital stock		1,157,982		1,157,982

The Company completed stock retirement of 10,000,000, 1,320,000, 6,608,292 and 2,136,681 common shares as of

March 5, 2001, May 4, 2004, July 27, 2018 and February 3, 2023, respectively. Due to these stock retirements, the total

face value of outstanding stock differs from the capital stock amount as of December 31, 2023 and December 31, 2022.

(2) Preferred stock

Description	Par value		Issued	Korean Won		Dividend rate
				(In millions of
				Korean Won)
1 st preferred stock	￦	5,000	24,113,119 shares	￦	125,550	Dividend rate of common stock + 1%
2 nd preferred stock		˝	36,120,597 shares		193,069	The lowest stimulated dividend rate: 2%
3 rd preferred stock		˝	2,404,448 shares		12,392	The lowest stimulated dividend rate: 1%
			62,638,164 shares	￦	331,011

As of March 5, 2001, the Company retired 1,000,000 second preferred shares and as of July 27, 2018, the Company

retired 753,297 first preferred shares, 1,128,414 second preferred shares and 49,564 third preferred shares and as of

February 3, 2023, the Company retired 243,566 first preferred shares, 364,854 second preferred shares and 24,287 third

preferred shares. Due to the stock retirement, the total face value of outstanding stock differs from the capital stock

amount.

22.

CAPITAL SURPLUS:

Capital surplus as of December 31, 2023 and December 31, 2022 is as follows.

Description	December 31, 2023		December 31, 2022
	(In millions of Korean Won)
Paid-in capital in excess of par value	￦	3,321,334	￦	3,321,334
Others (*)		1,057,155		919,969
	￦	4,378,489	￦	4,241,303

(*)

During the year ended December 31, 2022, the Group disposed of 2,216,983 treasury stocks and recognized

￦

118,686 million gains

on disposition of treasury stock

23.

OTHER CAPITAL ITEMS:

Other capital items consist of treasury stocks purchased for the stabilization of stock price.

The number of treasury

stocks as of December 31, 2023 and December 31, 2022 is as follows.

	December 31,	December 31,
Description	2023	2022
	(Number of shares)
Common stock	7,700,625	11,408,711
1 st preferred stock	2,186,993	2,430,559
2 nd preferred stock	1,353,570	1,718,424
3 rd preferred stock	48,574	72,861

24.

ACCUMULATED OTHER COMPREHENSIVE LOSS:

(1)

Accumulated other comprehensive loss as of December 31, 2023 is as follows.

Description	December 31, 2023
	(In millions of Korean Won)
Gain on valuation of financial assets measured at FVOCI	￦	366,933
Loss on valuation of financial assets measured at FVOCI		(596,940)
Gain on valuation of cash flow hedge derivatives		96,683
Loss on valuation of cash flow hedge derivatives		(62,194)
Gain on share of the other comprehensive income of
equity-accounted investees		239,708
Loss on share of the other comprehensive income of
equity-accounted investees		(411,142)
Loss on foreign operations translation, net		(471,940)
	￦	(838,892)

(2)

Accumulated other comprehensive loss as of December 31, 2022 is as follows.

Description	December 31, 2022
	(In millions of Korean Won)
Gain on valuation of financial assets measured at FVOCI	￦	418,986
Loss on valuation of financial assets measured at FVOCI		(768,117)
Gain on valuation of cash flow hedge derivatives		276,938
Loss on valuation of cash flow hedge derivatives		(93,162)
Gain on share of the other comprehensive income of
equity-accounted investees		195,912
Loss on share of the other comprehensive income of
equity-accounted investees		(715,558)
Loss on foreign operations translation, net		(935,681)
	￦	(1,620,682)

25.

RETAINED EARNINGS:

(1)

Retained earnings as of December 31, 2023 and December 31, 2022 are as follows.

Description	December 31, 2023		December 31,2022
	(In millions of Korean Won)
Legal reserve (*)	￦	744,836	￦	744,836
Discretionary reserve		49,710,496		47,307,996
Unappropriated		38,210,473		31,900,769
	￦	88,665,805	￦	79,953,601

(*)

The Commercial Code of the Republic of Korea requires the Company to appropriate as a legal reserve, a minimum of 10% of

annual cash dividends declared, until such reserve equals 50% of its capital stock issued.

The reserve is not available for the

payment of cash dividends, but may be transferred to capital stock or used to reduce accumulated deficit, if any.

Appraisal gains, amounting to

￦

1,852,871 million, derived from asset revaluation pursuant to the Asset Revaluation Law

of Korea are included in retained earnings.

It may be only transferred to capital stock or used to reduce accumulated

deficit, if any.

(2)

The computation of the interim dividends for the year ended December 31, 2023 is as follows.

	Common		1 st Preferred		2 nd Preferred		3 rd Preferred
Description	stock		stock		stock		stock
	(In millions of Korean Won, except per share amounts)
Par value per share	￦	5,000	￦	5,000	￦	5,000	￦	5,000
Shares, net of treasury stocks		202,875,846		21,926,126		34,767,027		2,355,874
Dividends per share	￦	3,000	￦	3,000	￦	3,000	￦	3,000
Dividend rate		60%		60%		60%		60%
Dividends declared		608,628		65,778		104,301		7,068

The computation of the interim dividends for the year ended December 31, 2022 is as follows.

	Common		1 st Preferred		2 nd Preferred		3 rd Preferred
Description	stock		stock		stock		stock
	(In millions of Korean Won, except per share amounts)
Par value per share	￦	5,000	￦	5,000	￦	5,000	￦	5,000
Shares, net of treasury stocks		198,765,273		21,926,126		34,767,027		2,355,874
Dividends per share	￦	1,000	￦	1,000	￦	1,000	￦	1,000
Dividend rate		20%		20%		20%		20%
Dividends declared		198,764		21,926		34,767		2,356

(3)

The computation of the proposed dividends for the year ended December 31, 2023 is as follows.

	Common		1 st Preferred		2 nd Preferred		3 rd Preferred
Description	stock		stock		stock		stock
	(In millions of Korean Won, except per share amounts)
Par value per share	￦	5,000	￦	5,000	￦	5,000	￦	5,000
Shares, net of treasury stocks		203,830,881		21,926,126		34,767,027		2,355,874
Dividends per share	￦	8,400	￦	8,450	￦	8,500	￦	8,450
Dividend rate		168%		169%		170%		169%
Dividends declared		1,712,179		185,276		295,520		19,907

The computation of the dividends for the year ended December 31, 2022 is as follows.

	Common		1 st Preferred		2 nd Preferred		3 rd Preferred
Description	stock		stock		stock		stock
	(In millions of Korean Won, except per share amounts)
Par value per share	￦	5,000	￦	5,000	￦	5,000	￦	5,000
Shares, net of treasury stocks		202,259,476		21,926,126		34,767,027		2,355,874
Dividends per share	￦	6,000	￦	6,050	￦	6,100	￦	6,050
Dividend rate		120%		121%		122%		121%
Dividends declared		1,213,557		132,653		212,079		14,253

26.

HYBRID BOND:

(1)

HYUNDAI CARD CO., LTD., a subsidiary of the Company, issued hybrid bond and the Group classified it as

equity (non-controlling interests). As of December 31, 2023, hybrid bond is as follows.

			Annual
Description	Issue date	Maturity date	interest rate	December 31, 2023
			(%)	(In millions of Korean Won)
The 876th Hybrid Tier 1 (Private)	July 12, 2023	July 12, 2053	6.00	￦	160,000
Issue cost					(410)
				￦	159,590

(2)

As of December 31, 2023, the conditions of hybrid bond that HYUNDAI CARD CO., LTD., a subsidiary of the

Company issued are as follows.

	Description
Maturity	Thirty years (Maturity extension is possible according to the issuer's decision
	upon maturity)
Interest rate	Issue date ~ July 12, 2028 : An annual fixed interest rate 6%
	Increase of 2% after five years which is limited to one time only in accordance with
	Step-up clause
Interest payment
condition	Three months, optional postponement of payment
Others	Repayment before maturity by issuer is available after five years from issue date

27.

SALES:

(1)

Sales for the years ended December 31, 2023 and 2022 are as follows.

Description	2023		2022
	(In millions of Korean Won)
Sales of goods	￦	138,208,356	￦	120,760,624
Rendering of services		4,389,945		3,562,531
Royalties		226,785		260,034
Financial services revenue		15,610,287		13,764,122
Revenue related to construction contracts		3,455,105		3,099,326
Others		773,101		704,832
	￦	162,663,579	￦	142,151,469

(2)

As of December 31, 2023, the aggregate transaction price allocated to the unsatisfied (or partially unsatisfied)

performance obligation that is expected to be recognized as revenue in future periods is as follows.

Description	Within a year		After a year
	(In millions of Korean Won)
Deferred revenue and others	￦	2,356,687	￦	3,956,403

28.

SELLING AND ADMINISTRATIVE EXPENSES:

Selling and administrative expenses for the years ended December 31, 2023 and 2022 are as follows.

Description	2023		2022
	(In millions of Korean Won)
Selling expenses:
Export expenses	￦	89,186	￦	78,807
Overseas market expenses		415,139		443,923
Advertisements and sales promotion		3,419,523		3,102,640
Sales commissions		1,047,374		909,093
Expenses for warranties		2,303,658		4,345,078
Transportation expenses		110,129		101,995
		7,385,009		8,981,536
Administrative expenses:
Payroll		3,770,106		3,259,693
Post-employment benefits		144,828		173,367
Welfare expenses		622,375		544,626
Service charges		2,014,392		1,662,880
Research		2,163,445		1,759,707
Others		2,257,340		2,065,163
		10,972,486		9,465,436
	￦	18,357,495	￦	18,446,972

29.

GAIN (LOSS) ON INVESTMENTS IN JOINT VENTURES AND ASSOCIATES:

Gain (loss) on investments in joint ventures and associates for the years ended December 31, 2023 and 2022 is as

follows.

Description	2023		2022
	(In millions of Korean Won)
Gain on share of earnings of equity-accounted investees, net	￦	2,489,940	￦	1,636,824
Gain on disposals of investments in associates		90,664		63,992
Impairment loss on investments in associates		(109,671)		(143,186)
	￦	2,470,933	￦	1,557,630

30.

FINANCE INCOME AND EXPENSES:

(1)

Finance income for the years ended December 31, 2023 and 2022 is as follows.

Description	2023		2022
	(In millions of Korean Won)
Interest income	￦	997,655	￦	594,077
Gain on foreign exchange transactions		166,513		146,066
Gain on foreign currency translation		275,411		146,247
Dividend income		79,127		44,533
Gain on derivatives		33,769		18,511
Others		7,063		36,459
	￦	1,559,538	￦	985,893

(2)

Finance expenses for the years ended December 31, 2023 and 2022 are as follows.

Description	2023		2022
	(In millions of Korean Won)
Interest expenses	￦	557,532	￦	523,407
Loss on foreign exchange transactions		152,264		77,214
Loss on foreign currency translation		204,700		255,973
Loss on derivatives and others		56,204		23,044
	￦	970,700	￦	879,638

31.

OTHER INCOME AND EXPENSES:

(1)

Other income for the years ended December 31, 2023 and 2022 is as follows.

Description	2023		2022
	(In millions of Korean Won)
Gain on foreign exchange transactions	￦	686,182	￦	756,417
Gain on foreign currency translation		476,230		437,298
Gain on disposals of PP&E		42,185		49,280
Commission income		15,957		18,335
Rental income		104,676		97,905
Others		457,103		571,679
	￦	1,782,333	￦	1,930,914

(2)

Other expenses for the years ended December 31, 2023 and 2022 are as follows.

Description	2023		2022
	(In millions of Korean Won)
Loss on foreign exchange transactions	￦	614,114	￦	700,908
Loss on foreign currency translation		483,390		556,152
Loss on disposals of PP&E		262,940		176,146
Donations		178,367		89,421
Others		811,532		715,629
	￦	2,350,343	￦	2,238,256

32.

EXPENSES BY NATURE:

Expenses by nature for the years ended December 31, 2023 and 2022 are as follows.

Description	2023		2022
	(In millions of Korean Won)
Changes in inventories	￦	(2,569,963)	￦	(1,677,346)
Raw materials and merchandise used		93,205,106		80,682,374
Employee benefits		12,078,050		10,637,811
Depreciation		3,283,730		3,180,687
Amortization		1,662,765		1,866,935
Others		42,227,333		39,874,336
Total (*)	￦	149,887,021	￦	134,564,797

(*)

Sum of cost of sales, selling and administrative expenses and other expenses in the consolidated statements of income.

33.

EARNINGS PER COMMON STOCK AND PREFERRED STOCK:

Basic earnings per common stock and preferred stock are computed by dividing profit available to common stock and

preferred stock by the weighted-average number of common stock and preferred stock outstanding during the year.

The

Group does not compute diluted earnings per common stock for the years ended December 31, 2023 and 2022, since there

are no dilutive items during the years.

Basic earnings per common stock and preferred stock for the years ended December 31, 2023 and 2022 are computed as

follows.

(1)

Basic earnings per common stock and preferred stock attributable to the owners of the Company.

	For the year ended December 31, 2023					For the year ended December 31, 2022
			Weighted-					Weighted-
	Profit		average number	Basic		Profit		average number	Basic
	attributable to		of shares	earnings		attributable to		of shares	earnings
Description	share		outstanding (*1)	per share		share		outstanding (*1)	per share
	(In millions of Korean Won, except per share amounts)
Common stock	￦	9,271,196	202,857,418	￦	45,703	￦	5,696,576	199,735,258	￦	28,521
1 st Preferred stock (*2)		998,401	21,926,126		45,535		618,639	21,932,141		28,207
2 nd Preferred stock		1,584,846	34,767,027		45,585		982,679	34,775,916		28,257
3 rd Preferred stock		107,274	2,355,874		45,535		66,470	2,356,491		28,207

(*1) Weighted-average number of shares outstanding includes the effects of treasury stock transactions.

(*2) 1

preferred stock meets the definition of ‘ordinary shares’ as defined in

IAS

33 ‘Earnings per Share’.

(2)

Basic earnings per common stock and preferred stock from continuing operations attributable to the owners of the

Company.

	For the year ended December 31, 2023					For the year ended December 31, 2022
			Weighted-					Weighted-
	Profit		average number	Basic		Profit		average number	Basic
	attributable to		of shares	earnings		attributable to		of shares	earnings
Description	share		outstanding (*1)	per share		share		outstanding (*1)	per share
	(In millions of Korean Won, except per share amounts)
Common stock	￦	9,660,450	202,857,418	￦	47,622	￦	5,813,175	199,735,258	￦	29,105
1 st Preferred stock (*2)		1,040,273	21,926,126		47,445		631,279	21,932,141		28,783
2 nd Preferred stock		1,651,240	34,767,027		47,495		1,002,722	34,775,916		28,833
3 rd Preferred stock		111,773	2,355,874		47,445		67,828	2,356,491		28,783

(*1) Weighted-average number of shares outstanding includes the effects of treasury stock transactions.

(*2) 1

preferred stock meets the definition of ‘ordinary shares’ as defined in

IAS

33 ‘Earnings per Share’.

(3)

Basic earnings per common stock and preferred stock from discontinued operations attributable to the owners of the

Company.

	For the year ended December 31, 2023					For the year ended December 31, 2022
			Weighted-					Weighted-
	Profit		average number	Basic		Profit		average number	Basic
	attributable to		of shares	earnings		attributable to		of shares	earnings
Description	share		outstanding (*1)	per share		share		outstanding (*1)	per share
	(In millions of Korean Won, except per share amounts)
Common stock	￦	(389,254)	202,857,418	￦	(1,919)	￦	(116,599)	199,735,258	￦	(584)
1 st Preferred stock (*2)		(41,872)	21,926,126		(1,910)		(12,640)	21,932,141		(576)
2 nd Preferred stock		(66,394)	34,767,027		(1,910)		(20,043)	34,775,916		(576)
3 rd Preferred stock		(4,499)	2,355,874		(1,910)		(1,358)	2,356,491		(576)

(*1) Weighted-average number of shares outstanding includes the effects of treasury stock transactions.

(*2) 1

preferred stock meets the definition of ‘ordinary shares’ as defined in

IAS 33

Earnings per Share

34.

INCOME TAX EXPENSE:

(1)

The components of income tax expense for the years ended December 31, 2023 and 2022 are as follows.

Description		2023	2022
		(In millions of Korean Won)
Current tax expense	￦	3,696,557 ￦	2,705,459
Adjustments recognized in the current year in relation to
the prior years		326,989	66,052
Changes in deferred taxes relating to
Temporary differences		(541,666)	(623,348)
Tax losses and tax credits		585,233	949,285
Items that are charged or credited directly to equity		95,778	(186,176)
Effect of foreign exchange differences and others		442,093	53,057
Income tax expense	￦	4,604,984 ￦	2,964,329
Income tax expense on continuing operations		4,626,640	2,979,168
Income tax expense (benefit) on discontinued operations		(21,656)	(14,839)

(*) The Group has identified potential exposures in a limited number of countries where transitional Safe Harbor

regulations are not applied and the Pillar Two effective tax rate is expected to be less than 15% for reasons such as

currently receiving corporate tax reductions as investment incentives. The Group expects to be subject to additional

income tax after 2024 due to the impact of Pillar Two Model Rules, and its impact analysis is underway.

(2)

The reconciliation from profit before income tax to income tax expense for the years ended December 31, 2023

and 2022 are as follows.

Description		2023		2022
		(In millions of Korean Won)
Profit before income tax from continuing operations	￦	17,618,662	￦	11,181,471
Profit before income tax from discontinued operations		(741,376)		(233,528)
Profit before income tax		16,877,286		10,947,943
Income tax expense calculated at the applicable
tax rates of 28.1% in 2023 and 27.2% in 2022		4,739,431		2,973,667
Adjustments:
Non-taxable income		(1,026,127)		(91,601)
Non-deductible expenses		127,372		399,296
Tax credits		(366,809)		(528,986)
Others		1,131,117		211,953
		(134,447)		(9,338)
Income tax expense	￦	4,604,984	￦	2,964,329
Income tax expense on continuing operation		4,626,640		2,979,168
Income tax expense (benefit) on discontinued operation		(21,656)		(14,839)
Effective tax rate		27.3%		27.1%

(3) The changes in deferred tax assets (liabilities) for the year ended December 31, 2023 are as follows.

		Beginning				End
Description		of the year		Changes		of the year
			(In millions of Korean Won)
Provisions	￦	3,275,658	￦	(357,380)	￦	2,918,278
Financial assets measured at FVPL		1,539		(11,361)		(9,822)
Financial assets measured at FVOCI		(7,990)		(25,329)		(33,319)
Investment of subsidiaries, associates and joint
ventures		(1,996,502)		97,850		(1,898,652)
Derivatives		(95,052)		53,186		(41,866)
PP&E		(5,801,434)		489,881		(5,311,553)
Accrued income		(18,767)		1,728		(17,039)
Gain (loss) on foreign currency translation, net		(333)		(7,127)		(7,460)
Others		470,172		300,218		770,390
		(4,172,709)		541,666		(3,631,043)
Carryforward of tax losses and tax credits		2,382,277		(585,233)		1,797,044
	￦	(1,790,432)	￦	(43,567)	￦	(1,833,999)

The changes in deferred tax assets (liabilities) for the year ended December 31, 2022 are as follows.

		Beginning				End
Description		of the year		Changes		of the year
			(In millions of Korean Won)
Provisions	￦	2,824,209	￦	451,449	￦	3,275,658
Financial assets measured at FVPL		1,231		308		1,539
Financial assets measured at FVOCI		(121,184)		113,194		(7,990)
Investment of subsidiaries, associates and joint		(1,578,133)		(418,369)		(1,996,502)
ventures
Derivatives		(1,516)		(93,536)		(95,052)
PP&E		(5,861,743)		60,309		(5,801,434)
Accrued income		(15,840)		(2,927)		(18,767)
Gain (loss) on foreign currency translation, net		(136)		(197)		(333)
Others		(42,945)		513,117		470,172
		(4,796,057)		623,348		(4,172,709)
Carryforward of tax losses and tax credits		3,331,562		(949,285)		2,382,277
	￦	(1,464,495)	￦	(325,937)	￦	(1,790,432)

(4)

Income taxes relating to items that are charged or credited directly to equity for the years ended December 31,

2023 and 2022 are as follows.

Description		2023		2022
		(In millions of Korean Won)
Gain on disposal of treasury stocks	￦	(26,580)	￦	(66,131)
Loss (gain) on financial assets measured at FVOCI, net		(28,371)		97,671
Loss (gain) on valuation of cash flow hedge derivatives, net		76,307		(78,505)
Remeasurements of defined benefit plans		98,464		(152,166)
Changes in retained earnings of equity-accounted investees, net		(24,042)		12,955
	￦	95,778	￦	(186,176)

(5)

The amount of temporary differences associated with investments in subsidiaries, joint ventures and associates, for

which deferred tax liabilities are not recognized, are

￦

8,439,636 million and

￦

8,948,716 million as of December

31, 2023 and 2022, respectively.

35.

RETIREMENT BENEFIT PLAN:

(1)

Expenses recognized in relation to defined contribution plans for the years ended December 31, 2023 and 2022 are as

follows.

Description		2023		2022
		(In millions of Korean Won)
Paid-in cash	￦	16,783	￦	14,377
Recognized liability		4,215		4,754
	￦	20,998	￦	19,131

(2)

The significant actuarial assumptions used by the Group as of December 31, 2023 and December 31, 2022 are as

follows.

Description	December 31, 2023	December 31, 2022
Discount rate (*)	5.77%	5.29%
Rate of expected future salary increase	4.88%	4.05%

(*) The Group applied the market yields of high-quality corporate bonds (AA+) and others as of December 31, 2023 as

the discount rate to discount the defined benefit obligation to the present value, and the same discount rate was applied

as the expected return rate when calculating interest income on plan assets.

Employee turnover and mortality assumptions used for actuarial valuation are based on the economic conditions and

statistical data of each country where entities within the Group are located.

(3)

The amounts recognized in the consolidated statements of financial position related to defined benefit plans as of

December 31, 2023 and December 31, 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Present value of defined benefit obligations	￦	6,538,236	￦	6,033,698
Fair value of plan assets		(6,949,149)		(6,809,339)
	￦	(410,913)	￦	(775,641)
Net defined benefit liabilities		77,268		61,861
Net defined benefit assets		(488,181)		(837,502)

(4)

Changes in net defined benefit assets and liabilities for the year ended December 31, 2023 are as follows.

	Present value of defined			Fair value of	Net defined benefit
Description		benefit obligations		plan assets		liabilities
			(In millions of Korean Won)
Beginning of the year	￦	6,033,698	￦	(6,809,339)	￦	(775,641)
Current service cost		510,688		-		510,688
Interest expenses (income)		275,326		(332,475)		(57,149)
Past service cost		(223)		-		(223)
		6,819,489		(7,141,814)		(322,325)
Remeasurements:
Return on plan assets		-		41,324		41,324
Actuarial gains and losses arising
from changes in demographic
assumptions		2,855		-		2,855
Actuarial gains and losses arising
from changes in financial
assumptions		220,043		-		220,043
Actuarial gains and losses arising
from experience adjustments and
others		146,370		-		146,370
		369,268		41,324		410,592
Contributions		-		(351,255)		(351,255)
Benefits paid		(694,707)		586,934		(107,773)
Transfers in (out)		2,852		(2,686)		166
Effect of foreign exchange
differences and others		41,334		(81,652)		(40,318)
End of the year	￦	6,538,236	￦	(6,949,149)	￦	(410,913)

Changes in net defined benefit assets and liabilities for the year ended December 31, 2022 are as follows.

	Present value of defined			Fair value of	Net defined benefit
Description		benefit obligations		plan assets		liabilities
			(In millions of Korean Won)
Beginning of the year	￦	6,580,593	￦	(6,721,149)	￦	(140,556)
Current service cost		575,608		-		575,608
Interest expenses (income)		173,934		(185,313)		(11,379)
Past service cost		(33)		-		(33)
		7,330,102		(6,906,462)		423,640
Remeasurements:
Return on plan assets		-		168,474		168,474
Actuarial gains and losses arising
from changes in demographic
assumptions		255,197		-		255,197
Actuarial gains and losses arising
from changes in financial
assumptions		(1,002,183)		-		(1,002,183)
Actuarial gains and losses arising
from experience adjustments and
others		35,038		-		35,038
		(711,948)		168,474		(543,474)
Contributions		-		(584,701)		(584,701)
Benefits paid		(583,748)		483,747		(100,001)
Transfers in (out)		1,946		(1,454)		492
Effect of foreign exchange
differences and others		(2,654)		31,057		28,403
End of the year	￦	6,033,698	￦	(6,809,339)	￦	(775,641)

(5)

The sensitivity analysis based on reasonably possible changes of the significant assumptions as of December 31,

2023 and December 31, 2022, while all the other assumptions are retained, is as follows.

			Effect on the net defined benefit liabilities
		December 31, 2023				December 31, 2022
Description	Increase by 1%		Decrease by 1%		Increase by 1%		Decrease by 1%
		(In millions of Korean Won)				(In millions of Korean Won)
Discount rate	￦	(566,791)	￦	291,717	￦	(367,700)	￦	419,353
Rate of expected future salary increase		265,995		(554,161)		400,804		(360,074)

(6)

The fair value of the plan assets as of December 31, 2023 and December 31, 2022 is as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Insurance instruments	￦	6,946,600	￦	6,806,690
Others		2,549		2,649
	￦	6,949,149	￦	6,809,339

(7)

The Group expects to pay contribution of approximately

￦

600,102 million to the plan in 2024 and the weighted

average duration of the defined benefit obligation as of December 31, 2023 is 7.9 years.

36.

CASH GENERATED FROM OPERATIONS:

(1)

Cash generated from operations for the years ended December 31, 2023 and 2022 is as follows.

Description		2023		2022
		(In millions of Korean Won)
Profit for the year	￦	12,272,301	￦	7,983,614
Adjustments:
Retirement benefit costs		457,531		568,950
Depreciation		3,283,730		3,180,687
Amortization of intangible assets		1,662,765		1,866,935
Provision for warranties		1,926,790		4,005,842
Income tax expense		4,626,640		2,979,168
Gain(loss) on foreign currency translation, net		(63,551)		228,580
Loss on disposals of PP&E, net		220,755		126,866
Interest income, net		(440,123)		(70,670)
Gain on share of earnings of equity-accounted investees, net		(2,489,940)		(1,636,824)
Cost of sales from financial services, net		9,399,599		7,439,938
Others		2,608,162		1,566,466
		21,192,358		20,255,938
Changes in operating assets and liabilities:
Increase in trade notes and accounts receivable		(99,422)		(1,325,728)
Decrease in other receivables		488,118		622,992
Decrease (increase) in other financial assets		(546,587)		1,423,023
Increase in inventories		(3,249,884)		(2,721,100)
Increase in other assets		(1,152,521)		(83,879)
Increase(decrease) in trade notes and accounts payable		(8,816)		1,146,082
Increase in other payables		992,329		2,186,971
Increase in other liabilities		2,577,771		2,086,192
Decrease in other financial liabilities		(12,623)		(1,597)
Decrease in net defined benefit assets(liabilities)		(340,839)		(573,780)
Payment of severance benefits		(107,773)		(100,001)
Decrease in provisions		(4,388,292)		(3,796,018)
Changes in financial services receivables		(17,743,124)		(8,457,539)
Investment in operating leases		(6,571,935)		(4,689,798)
Others		(201,466)		361,523
		(30,365,064)		(13,922,657)
Cash generated from operations	￦	3,099,595	￦	14,316,895

(2)

Major non-cash transactions not stated on the consolidated statements of cash flows from investing and financing

activities for the years ended December 31, 2023 and 2022 are as follows.

Description		2023		2022
		(In millions of Korean Won)
Reclassification of the current portion of long-term debt
and debentures	￦	27,152,167	￦	24,891,478
Reclassification of construction-in-progress to PP&E		3,980,857		3,525,985
Reclassification of construction-in-progress to intangible assets		367,785		186,210

(3)

Changes in liabilities arising from financial activities for the year ended December 31, 2023 are as follows.

Changes from non-cash transactions

Cash flows from

Effect of

Beginning

financing

Reclassified to

exchange rate

Present value

End of

Description

of the year

activities

current portion

changes

discounts

Others(*)

the year

(In millions of Korean Won)

Short-term

borrowings

(including

current

portion)

￦

36,940,611

￦

(29,949,836)

￦

27,152,167

￦

473,380

￦

(24,521)

￦

(447,095)

￦

34,144,706

Long-term

debts

12,285,149

12,901,677

(7,954,787)

202,221

118,791

16,709

17,569,760

Debentures

62,960,060

28,578,150

(19,197,380)

613,213

44,328

35,122

73,033,493

(*)

Others include transfers from or to other accounts and others.

Changes in liabilities arising from financial activities for the year ended December 31, 2022 are as follows.

Changes from non-cash transactions

Cash flows from

Effect of

Present

Beginning

financing

Reclassified to

exchange rate

value

End of

Description

of the year

activities

current portion

changes

discounts

Others(*)

the year

(In millions of Korean Won)

Short-term

borrowings

(including

current

portion)

￦

33,666,738

￦

(22,985,947)

￦

24,891,478

￦

684,515

￦

56,738

￦

627,089

￦

36,940,611

Long-term

debts

10,667,731

6,925,739

(5,432,473)

115,999

7,656

497

12,285,149

Debentures

63,458,809

16,381,780

(19,459,005)

2,524,323

18,593

35,560

62,960,060

(*)

Others include transfers from or to other accounts and others.

37.

RISK MANAGEMENT:

(1)

Capital risk management

The Group manages its capital to maintain an optimal capital structure for maximizing profit of its shareholder and

reducing the cost of capital. Debt to equity ratio calculated as total liabilities divided by total equity is used as an index

to manage the

Group’s capital. The overall capital risk management policy is consistent with that of the prior period.

Debt to equity ratios as of December 31, 2023 and December 31, 2022 are as follows.

Description	December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Total liabilities	￦	180,653,915	￦	164,845,917
Total equity		101,809,440		90,896,545
Debt-to-equity ratio		177.4%		181.4%

(2)

Financial risk management

The Group is exposed to various financial risks such as market risk (foreign exchange risk, interest rate risk and price

risk), credit risk and liquidity risk related to its financial instruments. The purpose of risk management of the Group is to

identify potential risks related to financial performance and reduce, eliminate and avoid those risks to an acceptable level

of risks to the Group. Overall, the Group’s financial risk management policy is consistent with the prior period policy.

1) Market risk

The Group is mainly exposed to financial risks arising from changes in foreign exchange rates and interest rates.

Accordingly, the Group uses financial derivative contracts to hedge and manage its interest rate risk and foreign currency

risk.

Foreign exchange risk management

The Group is exposed to various foreign exchange risks by making transactions in foreign currencies. The Group is

mainly exposed to foreign exchange risk in USD, EUR, JPY and others.

The Group manages foreign exchange risk by matching the inflow and the outflow of foreign currencies according to

each currency and maturity, and by adjusting the foreign currency settlement date based on its exchange rate forecast.

The Group uses foreign exchange derivatives, such as currency forward, currency swap, and currency option, as hedging

instruments. However, speculative foreign exchange trade on derivative financial instruments is prohibited.

Sensitivity analysis for a 5% change in exchange rate of the functional currency against each foreign currency on profit

before income tax as of December 31, 2023 is as follows.

	Foreign Exchange Rate Sensitivity
Foreign Currency	Increase by 5%		Decrease by 5%
	(In millions of Korean Won)
USD	￦	102,337	￦	(102,337)
EUR		13,707		(13,707)

JPY

(959)

959

Interest rate risk management

The Group has borrowings with fixed or variable interest rates. Also, the Group is exposed to interest rate risk arising

from financial instruments with variable interest rates. To manage the interest rate risk, the Group maintains an appropriate

balance between borrowings with fixed and variable interest rates for short-term borrowings and has a policy to borrow

funds with fixed interest rates to avoid the future cash flow fluctuation risk for long-term debt if possible. The Group

manages its interest rate risk through regular assessments of the change in market conditions and the adjustments in nature

of its interest rates.

Sensitivity analysis for a 1% change in interest rates on profit before income tax as of December 31, 2023 is as follows.

	Interest Rate Sensitivity
Accounts	Increase by 1%		Decrease by 1%
	(In millions of Korean Won)
Cash and cash equivalents	￦	33,650	￦	(33,650)
Short-term and long-term financial
instruments		22,948		(22,948)
Borrowings and debentures		(134,529)		134,529

The Company’s subsidiaries, HYUNDAI CARD CO., LTD. and HYUNDAI CAPITAL SERVICES, INC. that are

operating financial business, are managing interest rate risk by utilizing value at risk (VaR). VaR is defined as a threshold

value which is a statistical estimate of the maximum potential loss based on normal distribution. As of December 31,

2023 and December 31, 2022, the amounts of interest rate risk measured at VaR are

￦

146,303 million and

￦

135,241

million, respectively.

c) Price risk

The Group is exposed to market price fluctuation risk arising from equity instruments. As of December 31, 2023, the

amounts of financial assets measured at FVPL and financial assets measured at FVOCI are

￦

54,853 million

and

￦

2,377,754 million, respectively.

Credit risk

The Group is exposed to credit risk when a counterparty defaults on its contractual obligation resulting in a financial loss

for the Group. The Group operates a policy to transact with counterparties who only meet a certain level of credit rating

which was evaluated based on the counterparty’s financial conditions, default history, and other factor

The credit risk

in the liquid funds and derivative financial instruments is limited as the Group transacts only with financial institutions

with high credit-ratings assigned by international credit-rating agencies. Except for the guarantee of indebtedness

discussed in Note 39, the book value of financial assets in the consolidated financial statements represents the maximum

amounts of exposure to credit risk.

In addition, the Company’s subsidiaries,

HYUNDAI CARD CO., LTD.

and

HYUNDAI CAPITAL SERVICES, INC.

, that

operate financial business, assess their credit stability according to their internal credit ratings and manage credit risk

concentrations by debtor. These subsidiaries provide loan agreements with a limit to a large number of customers, and as

of December 31, 2023, the unused limit is

￦

746,970 million for

HYUNDAI CAPITAL SERVICES, INC.

and

￦

86,275,519

million for

HYUNDAI CARD CO., LTD

. and as of December 31, 2023, credit risk concentration relates to 86% for

households and 14% for companies.

Liquidity risk

The Group manages liquidity risk based on maturity profile of its funding. The Group analyses and reviews actual cash

outflow and its budget to match the maturity of its financial liabilities to that of its financial assets.

The Group retains an appropriate level of deposit to cope with uncertainty caused by the inherent nature of the industry

which is sensitive to economic fluctuation and to invest in R&D constantly. In addition, the Group has agreements with

financial institutions related to trade financing and overdraft to mitigate any significant unexpected market deterioration.

Also, the Group continues to strengthen its credit rates to secure a stable financing capability.

The Group’s maturity analysis of its non

-derivative liabilities according to their remaining contract period before maturity

as of December 31, 2023 is as follows.

	Remaining contract period
	Not later than		Later than one year and		Later than
Description	one year		not later than five years		five years		Total
	(In millions of Korean Won)
Non-interest-
bearing liabilities	￦	22,674,125	￦	664,726	￦	-	￦	23,338,851
Interest-bearing
liabilities		38,896,754		90,865,948		6,960,759		136,723,461
Lease liabilities		262,251		647,038		351,332		1,260,621
Financial
guarantee		314,471		63,421		79,205		457,097

The maturity analysis is based on the non-discounted cash flows and the earliest maturity date at which payments, i.e.

both principal and interest, should be made.

(3)

Derivative instruments

The Group enters into derivative instrument contracts such as currency forwards, currency options, currency swaps and

interest swaps to hedge its exposure to changes in foreign exchange rate or interest rate.

As of December 31, 2023 and December 31, 2022, the Group recognized an accumulative net profit of

￦

34,489 million

and

￦

183,776 million, respectively, in accumulated other comprehensive income or loss, for effective cash flow hedging

instruments.

The longest period in which the forecasted transactions are expected to occur is within 99 months as of December 31,

2023.

For the years ended December 31, 2023 and 2022, the Group recognized a net profit of

￦

133,719 million and

￦

391,801

million in profit or loss (before tax), respectively, which resulted from the ineffective portion of its cash flow hedging

instruments and changes in the valuation of its other non-hedging derivative instruments and others.

In addition, the Company’s subsidiaries,

HYUNDAI CARD CO., LTD.

and

HYUNDAI CAPITAL SERVICES, INC.

, that are

engaged in financial services business, use interest rate swaps and currency swaps to hedge the risks of future cash flows,

which related to borrowings, debentures and others, due to market interest rate fluctuations and exchange rate fluctuations.

As of December 31, 2023, the average hedge ratio is 100%.

38.

RELATED-PARTY AND OTHER TRANSACTIONS:

The transactions and balances of receivables and payables within the Group are wholly eliminated in the preparation of

consolidated financial statements of the Group.

(1)

For the year ended December 31, 2023, significant transactions arising from operations between the Group and

related parties or affiliates as designated by the Monopoly Regulation and Fair Trade Act of the Republic of Korea

(“the Act”) are as follows.

		Sales/proceeds				Purchases/expenses
	Description	Sales		Others		Purchases		Others
		(In millions of Korean Won)
Entity with	Hyundai MOBIS Co., Ltd.	￦	590,173	￦	16,134	￦	14,813,812	￦	118,239
significant	Mobis Alabama, LLC		253,907		-		2,387,097		30,426
influence over	Mobis Automotive Czech s.r.o.		12		2,008		2,962,398		18,684
the Company	Mobis India, Ltd.		18,278		2,854		1,433,394		27,999
and its	Mobis Parts America, LLC		191,160		4,299		1,604,058		1,278
subsidiaries	Mobis Module CIS, LLC.		67		273		2,015		-
	Mobis Parts Europe N.V.		19,131		2,426		646,881		2,420
	Others		85,447		1,784		1,548,323		12,200
Joint ventures	Kia Corporation		1,685,353		968,903		648,536		719,547
and associates	Kia Russia & CIS, LLC		220		32		-		-
	Kia Slovakia s.r.o..		92,908		16		759,649		-
	Kia Georgia, Inc.		842,050		3,550		154		-
	BHMC		193,257		-		33,075		-
	HMGC		33,571		818		93,268		63,293
	Hyundai WIA Corporation		286,611		1,349		919,024		9,264
	Others		958,681		77,363		5,892,019		3,541,756
Other related parties			56,893		4,028		1,976		9
Affiliates by the Act			981,812		104,267		11,608,499		1,460,116

For the year ended December 31, 2022, significant transactions arising from operations between the Group and related

parties or affiliates by the Act are as follows.

		Sales/proceeds				Purchases/expenses
	Description	Sales		Others		Purchases		Others
		(In millions of Korean Won)
Entity with	Hyundai MOBIS Co., Ltd.	￦	617,886	￦	15,569	￦	12,246,389	￦	74,457
significant	Mobis Alabama, LLC		175,677		152		1,952,641		6,392
influence over	Mobis Automotive Czech s.r.o.		88		745		2,441,059		24,371
the Company	Mobis India, Ltd.		15,783		3,237		1,310,317		3,340
and its	Mobis Parts America, LLC		173,649		4,140		1,528,014		825
subsidiaries	Mobis Module CIS, LLC.		67		376		88,339		2,791
	Mobis Parts Europe N.V.		18,037		1,993		622,583		1,064
	Others		68,863		1,480		1,499,679		9,582
Joint ventures	Kia Corporation		1,344,334		781,710		576,677		749,322
and associates	Kia Russia & CIS, LLC		236,563		7		29		-
	Kia Slovakia s.r.o..		106,675		338		706,944		1,751
	Kia Georgia, Inc.		850,880		1,017		42		-
	BHMC		243,336		-		28,184		-
	HMGC		27,747		1,773		44,864		52,023
	Hyundai WIA Corporation		119,339		913		1,039,973		10,837
	Others		838,127		65,143		5,922,155		2,079,207
Other related parties			21,567		3,755		2,531		7
Affiliates by the Act			838,319		121,880		10,962,515		1,152,633

(2)

As of December 31, 2023, significant balances related to the transactions between the Group and related parties or

affiliates by the Act are as follows.

		Receivables (*1,2)				Payables
		Trade notes		Other		Trade notes		Other
		and accounts		receivables		and accounts		payables
	Description	receivable		and others		payable		and others
					(In millions of Korean Won)
Entity with	Hyundai MOBIS Co., Ltd.	￦	142,677	￦	150,906	￦	2,248,687	￦	459,196
significant	Mobis Alabama, LLC		31,106		-		157,597		-
influence over	Mobis Automotive Czech s.r.o.		1,253		830		210,894		511
the Company	Mobis India, Ltd.		-		-		160,011		-
and its	Mobis Parts America, LLC		29,790		26,986		123,415		-
subsidiaries	Mobis Module CIS, LLC		5		85		7		-
	Mobis Parts Europe N.V.		819		149		52,525		44
	Others		90,363		2,250		72,019		18,361
Joint ventures	Kia Corporation		541,374		422,304		78,946		145,081
and associates	Kia Russia & CIS, LLC		-		50		-		141
	Kia Slovakia s.r.o.		7,481		138		55,158		246
	Kia Georgia, Inc.		65,196		51,650		-		34,214
	Kia America, Inc.		-		240,582		-		16,877
	BHMC		302,632		14,681		24		27
	HMGC		16,089		23,602		373		27,900
	Hyundai WIA Corporation		118,669		13,229		144,310		25,746
	Others		259,635		181,298		718,951		994,901
Other related parties			137		-		20		326
			201,220		65,233		1,173,602		484,603
Affiliates by the Act

(*1) The Group has recognized the loss allowance for the related parties' receivables in the amount of

￦

608 million as of December 31,

2023 and the reversal of

impairment loss is recognized in the amount of

￦

349 million for the year ended December 31, 2023.

(*2) As of December 31, 2023, outstanding payment of

￦

18,080 million pursuant to corporate purchase card agreement provided by

HYUNDAI CARD CO., LTD. is included. For the year ended December 31, 2023, the amounts spent and repaid are

￦

420,695 million

and

￦

426,207 million, respectively.

As of December 31, 2022, significant balances related to the transactions between the Group and related parties or

affiliates by the Act are as follows.

		Receivables (*1,2)				Payables
		Trade notes		Other			Trade notes		Other
		and accounts		receivables			and accounts		payables
	Description	receivable		and others			payable		and others
		(In millions of Korean Won)
Entity with	Hyundai MOBIS Co., Ltd.	￦	112,072	￦	186,427	￦	2,631,460	￦	453,605
significant	Mobis Alabama, LLC		22,829		-		148,988		411
influence over	Mobis Automotive Czech s.r.o.			-	9,924		240,666		-
the Company	Mobis India, Ltd.			-	1,462		176,609		22
and its	Mobis Parts America, LLC		19,635		95		113,577		-
subsidiaries	Mobis Module CIS, LLC			-	71		804		-
	Mobis Parts Europe N.V.		359		1,328		49,254		-
	Others		21,772		949		115,791		6,847
Joint ventures	Kia Corporation		483,663		383,401		103,109		111,663
and associates	Kia Russia & CIS, LLC			4	24		-		-
	Kia Slovakia s.r.o.		6,018		163		55,100		319
	Kia Georgia, Inc.		59,925		33,682		-		30,404
	Kia America, Inc.			-	10,568		-		19,943
	BHMC		272,134		14,411		-		57
	HMGC		7,738		23,734		5,133		23,306
	Hyundai WIA Corporation		33,157		7,449		171,098		28,850
	Others		169,169		125,220		699,974		1,058,827
Other related parties			1,742		44		13		344
Affiliates by the Act			181,415		68,799		1,242,171		423,944

(*1) The Group has recognized the loss allowance for the related parties' receivables in the amount of

￦

958 million as of December

31, 2022 and the

impairment loss is recognized in the amount of

￦

749 million for the year ended December 31, 2022.

(*2) As of December 31, 2022, outstanding payment of

￦

23,592 million pursuant to corporate purchase card agreement provided by

Hyundai Card Co., Ltd. is included. For the year ended December 31, 2022, the amounts spent and repaid are

￦

426,510 million and

￦

425,013 million, respectively.

(3)

Significant fund transactions and equity contribution transactions for the year ended December 31, 2023 between

the Group and related parties are as follows.

	Loans			Borrowings		Equity
Description	Lending		Collection	Borrowing	Repayment	contribution
	(In thousands of USD Dollar and EUR Euro, In millions of Korean won)
Joint ventures and associates	€	68,600	-	$ 562,000	$ 565,000	￦	1,490,366
				￦ -	￦ 3,425

Significant fund transactions and equity contribution transactions for the year ended December 31, 2022 between

the Group and related parties are as follows.

	Loans			Borrowings		Equity
Description	Lending		Collection	Borrowing	Repayment	contribution
	(In thousands of USD Dollar and Chinese Yuan, In millions of Korean won)
Joint ventures and associates	￥	15,000	-	$ 612,000	$ 600,000	￦	2,002,648
				￦ 520	￦ 4,252

For the years ended December 31, 2023 and 2022, the Group received dividends of

￦

796,678 million and

￦

503,634

million from related parties and affiliates by the Act, respectively and paid dividends of

￦

590,131 million and

￦

349,958 million to related parties, respectively. During 2023, the Group traded in other financial assets and others of

￦

2,580,000 million with HYUNDAI MOTOR SECURITIES Co., Ltd., an associate of the Group.

The Group has

other financial assets of

￦

310,000 million in the consolidated statement of financial position as of December 31, 2023.

For the year ended December 31, 2023, HYUNDAI MOTOR SECURITIES CO., Ltd., an associate of the Group,

acquired bonds issued by the consolidated entities,

HYUNDAI KEFICO CORPORATION

and

HYUNDAI ROTEM

COMPANY

in amount of

￦

15,000 million and

￦

5,000 million, respectively, and there are no acquired bonds for the

year ended December 31, 2022.

(4)

Compensation of registered and unregistered directors, who are considered to be the key management personnel

for the years ended December 31, 2023 and 2022 is as follows.

Description	2023		2022
		(In millions of Korean Won)
Short-term employee salaries	￦	374,972	￦	347,185
Retirement benefit costs		50,004		53,146
Other long-term benefits		1,518		1,289
Share-based payment		155		-
	￦	426,649	￦	401,620

(5)

For the year ended December 31, 2023, the Group offers payment guarantee to related parties and affiliates by the

Act.

39.

COMMITMENTS AND CONTINGENCIES:

(1)

As of December 31, 2023, the payment guarantees provided to related parties by the Group, excluding the ones

provided to the Company’s subsidiaries, are as follows.

Description	Domestic		Overseas (*)
		(In millions of Korean Won)
To associates	￦	28,910	￦	216,119
To others		734		229,651
	￦	29,644	￦	445,770

(*)

The guarantee amounts in foreign currencies are translated into Korean Won using the Base Rate announced by Seoul Money

Brokerage Services, Ltd. as of December 31, 2023.

(2)

As of December 31, 2023, the Group is involved in domestic and foreign lawsuits as a defendant. In addition, the

Group is involved in lawsuits for product liabilities and others. The Group obtains insurance for potential losses

which may result from product liabilities and other lawsuits. In addition, as of December 31, 2023, the Group is

under investigation by related authorities in relation to the Theta 2 engine recall, and its results and impacts are

unpredictable. The Group is unable to estimate the outcome of the lawsuits and the amount and timing of outflows

of resources are uncertain. The Group expects that the impact on the consolidated financial statements will not be

material.

(3)

As of December 31, 2023, a substantial portion of the Group’s PP&E is pledged as collateral for various loans and

leasehold deposits up to

￦

797,185 million. In addition, the Group pledged certain

bank

deposits,

checks

and

promissory notes, including 213,466 shares of Kia Corporation, as collateral to financial institutions and others.

Certain receivables held by the Company’s foreign subsidiaries, such as financial services receivables, are pledged

as collateral for their borrowings.

(4)

As of December 31, 2023, the Group has overdrafts, general loans, and trade-financing agreements with numerous

financial institutions including Kookmin Bank, with a combined limit of up to USD 33,700 million, and

￦

5,756,500

million.

(5)

As of December 31, 2023, HYUNDAI CAPITAL SERVICES, INC. and HYUNDAI CARD CO., LTD., subsidiaries

of the Company, have entered into agreements for certain borrowings including trigger clauses for the purpose of

credit enhancement. If the credit rating of HYUNDAI CAPITAL SERVICES, INC. and HYUNDAI CARD CO.,

LTD. falls below a certain level, this may result in early repayment of the borrowings or termination of the

agreements.

(6)

As of December 31, 2023, the Company has a shareholder agreement with the third party investors regarding shares

of Hyundai Card Co., Ltd. and Hyundai Commercial Inc. This includes the call options that allow the Company to

buy shares from the investors and the put options that allow the investors to dispose of the shares to the Company.

(7)

As of December 31, 2023, the Company has an agreement to dispose of its shares of Hyundai Motor Manufacturing

Rus LLC, which includes the call options clause that allow the Company to repurchase its shares. The call option

can be terminated under an uncontrollable situation, but can be maintained through efforts by both parties to address

such situation.

(8)

In December 2019, the Company entered into an agreement to invest

￦

1,408,220 million in the construction of new

Global Business Centre (GBC). As of December 31, 2023, the Company has recognized relevant liability in the

amount of

￦

872,867 million in accordance with the agreement with the Seoul government to implement public

contributions relating to the new construction project.

(9)

Financial instruments with restricted use for the years ended December 31, 2023 and 2022 are as follows.

Description	December 31, 2023		December 31, 2022
	(In millions of Korean Won)
Short-term and long-term financial
instruments	￦	1,674,550	￦	1,464,888
Cash and cash equivalents		537,734		631,954
Other financial assets		2		2
	￦	2,212,286	￦	2,096,844

40.

SEGMENT INFORMATION:

(1) The Group

’s

operating segments include vehicle segment, finance segment and others segment. The vehicle segment

is engaged in the manufacturing and sale of motor vehicles. The finance segment operates vehicle financing, credit

card processing and other financing activities. Others segment includes the R&D, train manufacturing and other

activities.

(2)

Sales and operating profit by operating segment for the year ended December 31, 2023 are as follows

	For the year ended December 31, 2023
							Consolidation
Description	Vehicle		Finance		Others		adjustments		Total
	(In millions of Korean Won)
Net sales (*1)	￦	130,149,921	￦	22,401,156	￦	10,112,502	￦	-	￦	162,663,579
Total sales (*2)		212,367,654		22,688,779		11,985,990		(84,378,844)		162,663,579
Operating profit		12,969,227		1,385,538		1,064,063		(291,927)		15,126,901

(*1) Net sales represent sales from external customers.

(*2) Total sales include inter-company sales within the Group.

Assets and liabilities by operating segment as of December 31, 2023 are as follows.

	December 31, 2023
							Consolidation
Description	Vehicle		Finance		Others		adjustments		Total
	(In millions of Korean Won)
Total assets	￦	136,896,274	￦	154,437,674	￦	11,166,625	￦	(20,037,218)	￦	282,463,355
Total liabilities		52,192,746		135,929,495		5,797,213		(13,265,539)		180,653,915

Sales and operating profit by operating segment for the year ended December 31, 2022 are as follows.

	For the year ended December 31, 2022
							Consolidation
Description	Vehicle		Finance		Others		adjustments		Total
	(In millions of Korean Won)
Net sales (*1)	￦	113,341,992	￦	20,037,912	￦	8,771,565	￦	-	￦	142,151,469
Total sales (*2)		180,440,977		20,306,157		10,438,311		(69,033,976)		142,151,469
Operating profit		7,910,469		1,844,571		581,718		(511,830)		9,824,928

(*1) Net sales represent sales from external customers.

(*2) Total sales include inter-company sales within the Group.

Assets and liabilities by operating segment as of December 31, 2022 are as follows.

	December 31, 2022
							Consolidation
Description	Vehicle		Finance		Others		adjustments		Total
	(In millions of Korean Won)
Total assets	￦	133,885,205	￦	135,124,336	￦	9,793,550	￦	(23,060,629)	￦	255,742,462
Total liabilities		58,838,578		117,649,362		5,910,506		(17,552,529)		164,845,917

(3)

Sales and operating profit by operating segment for the years ended December 31, 2023 and 2022 are as follows.

	For the year ended December 31,
Description	2023		2022
	(In millions of Korean Won)
Vehicle (*)
Sales	￦	212,367,654	￦	180,440,977
Cost of sales		183,498,370		156,494,938
Gross profit		28,869,284		23,946,039
Selling and administrative expenses		15,900,057		16,035,570
Operating profit		12,969,227		7,910,469
Loss on investments in joint ventures and
associates, net		(155,986)		(193,709)
Finance income and expenses		4,649,392		1,931,640
Other income and expenses		(694,538)		(361,770)
Profit before income tax		16,768,095		9,286,630
Income tax expense		4,112,864		1,788,790
Profit for the period		12,655,231		7,497,840
Finance (*)
Sales		22,688,779		20,306,157
Cost of sales		18,936,621		16,158,877
Gross profit		3,752,158		4,147,280
Selling and administrative expenses		2,366,620		2,302,709
Operating profit		1,385,538		1,844,571
Gain on investments in joint ventures and
associates, net		49,618		88,737
Finance income and expenses		1,474		8
Other income and expenses		11,907		47,026
Profit before income tax		1,448,537		1,980,342
Income tax expense		215,121		801,286
Profit for the period		1,233,416		1,179,056
Others (*)
Sales		11,985,990		10,438,311
Cost of sales		10,248,626		9,362,208
Gross profit		1,737,364		1,076,103

Selling and administrative expenses		673,301		494,385
Operating profit		1,064,063		581,718
Gain (loss) on investments in joint ventures and
associates, net		601		(147)
Finance income and expenses		(3,418)		(36,465)
Other income and expenses		(57,041)		(3,627)
Profit before income tax		1,004,205		541,479
Income tax expense		252,008		(4,988)
Profit for the period		752,197		546,467
Consolidation adjustments		(1,648,822)		(1,021,060)
Profit for the period from continuing operations		12,992,022		8,202,303
Profit attributable to:
Owners of the Company		12,463,736		7,515,003
Non-controlling interests		528,286		687,300
Loss for the period from discontinued operations	￦	(719,721)	￦	(218,689)
Loss attributable to:
Owners of the Company		(502,020)		(150,639)
Non-controlling interests		(217,701)		(68,050)

(*)

The amounts are aggregates of entities belonging to each segment, unadjusted for elimination of intercompany transactions.

(4)

Assets by operating segment as of December 31, 2023 and December 31, 2022 are as follows.

Description	December 31, 2023		December 31, 2022
	(In millions of Korean Won)
Vehicle (*)
Current assets:
Cash and cash equivalents	￦	15,633,984	￦	15,122,640
Financial instruments		10,016,084		14,778,819
Inventories		18,149,965		14,066,352
Trade notes and accounts receivable		9,568,659		12,839,194
Other assets		3,876,820		3,929,828
Total current assets		57,245,512		60,736,833
Non-current assets:
Financial assets		3,496,251		3,256,063
Property, plant and equipment		35,662,209		32,941,558
Intangible assets		4,717,443		4,579,341
Investments in joint ventures and associates		29,724,875		26,611,995
Other assets		6,049,984		5,759,415
Total non-current assets		79,650,762		73,148,372
Total assets		136,896,274		133,885,205
Finance (*)
Current assets:
Cash and cash equivalents		2,632,288		4,659,822
Financial instruments		3,874,879		3,046,070
Inventories		316,540		190,877
Financial services receivables		43,425,548		38,400,027
Other assets		2,907,748		2,163,985
Total current assets		53,157,003		48,460,781
Non-current assets:
Financial assets		1,382,273		1,431,179
Property, plant and equipment		850,165		613,529
Intangible assets		336,904		331,798
Investments in joint ventures and associates		1,677,486		1,557,709
Financial services receivables		64,809,911		52,576,986
Investments in operating leases		30,266,083		28,355,783
Other assets		1,957,849		1,796,571
Total non-current assets		101,280,671		86,663,555
Total assets		154,437,674		135,124,336
Others (*)
Current assets:
Cash and cash equivalents		1,040,150		954,871
Financial instruments		1,467,699		866,684
Inventories		1,607,765		1,465,788
Trade notes and accounts receivable		1,428,134		1,283,400
Other assets		2,272,612		2,027,818
Total current assets		7,816,360		6,598,561
Non-current assets:
Financial assets		61,200		48,104
Property, plant and equipment		2,528,297		2,462,917
Intangible assets		237,022		195,282
Investments in joint ventures and associates		469		9,854
Other assets		523,277		478,832
Total non-current assets		3,350,265		3,194,989
Total assets		11,166,625		9,793,550
Consolidation adjustments		(20,037,218)		(23,060,629)
Total assets	￦	282,463,355	￦	255,742,462

Liabilities by operating segment as of December 31, 2023 and December 31, 2022 are as follows.

Description	December 31, 2023		December 31, 2022
	(In millions of Korean Won)
Vehicle (*)
Current liabilities:
Trade notes and accounts payable	￦	15,991,327	￦	19,560,146
Other payables		6,613,077		6,284,763
Borrowings and debentures		3,225,872		6,169,978
Provisions		7,306,099		8,102,910
Other liabilities		8,418,082		6,929,017
Total current liabilities		41,554,457		47,046,814
Non-current liabilities:
Borrowings and debentures		2,057,140		3,813,212
Net defined benefit liabilities		44,953		41,513
Provisions		4,605,057		4,533,879
Other liabilities		3,931,139		3,403,160
Total non-current liabilities		10,638,289		11,791,764
Total liabilities		52,192,746		58,838,578
Finance (*)
Current liabilities:
Other payables		3,310,026		2,623,663
Borrowings and debentures		35,489,760		36,297,818
Provisions		271,574		218,721
Other liabilities		1,998,487		1,907,826
Total current liabilities		41,069,847		41,048,028
Non-current liabilities:
Borrowings and debentures		88,296,175		71,030,315
Provisions		28,309		28,849
Other liabilities		6,535,164		5,542,170
Total non-current liabilities		94,859,648		76,601,334
Total liabilities		135,929,495		117,649,362
Others (*)
Current liabilities:
Trade notes and accounts payable		1,065,212		960,691
Other payables		222,056		167,427
Borrowings and debentures		805,496		1,283,660
Provisions		147,511		99,811
Other liabilities		2,605,152		1,676,220
Total current liabilities		4,845,427		4,187,809
Non-current liabilities:
Borrowings and debentures		610,861		941,734
Net defined benefit liabilities		32,315		20,348
Provisions		158,811		168,107
Other liabilities		149,799		592,508
Total non-current liabilities		951,786		1,722,697
Total liabilities		5,797,213		5,910,506
Consolidation adjustments		(13,265,539)		(17,552,529)
Total liabilities	￦	180,653,915	￦	164,845,917

Equity by operating segment as of December 31, 2023 and December 31, 2022 is as follows.

Description	December 31, 2023		December 31, 2022
	(In millions of Korean Won)
Vehicle (*)
Capital stock	￦	13,814,222	￦	11,476,313
Capital surplus		4,457,140		4,380,670
Other capital items		(1,197,161)		(1,714,005)
Accumulated other comprehensive income (loss)		(1,351,352)		(1,680,138)
Retained earnings		68,980,668		62,583,774
Equity attributable to the owners of the Company		84,703,517		75,046,614
Non-controlling interests		11		13
Total equity		84,703,528		75,046,627
Finance (*)
Capital stock		3,483,947		3,479,326
Capital surplus		446,317		446,317
Other capital items		158,830		299,240
Accumulated other comprehensive income (loss)		979,767		947,192
Retained earnings		13,439,318		12,302,899
Equity attributable to the owners of the Company		18,508,179		17,474,974
Non-controlling interests		-		-
Total equity		18,508,179		17,474,974
Others (*)
Capital stock		1,021,187		1,023,526
Capital surplus		1,411,438		576,152
Other capital items		(5,713)		-
Accumulated other comprehensive income (loss)		253,353		207,417
Retained earnings		2,720,065		2,103,887
Equity attributable to the owners of the Company		5,400,330		3,910,982
Non-controlling interests		(30,918)		(27,938)
Total equity		5,369,412		3,883,044
Consolidation adjustments		(6,771,679)		(5,508,100)
Total equity	￦	101,809,440	￦	90,896,545

(*)

The amounts are aggregates of entities belonging to each segment, unadjusted for elimination of intercompany transactions.

(5)

Cash flows by operating segment for the years ended December 31, 2023 and 2022 are as follows.

	For the year ended December 31,
Description	2023		2022
	(In millions of Korean Won)
Vehicle (*)
Cash flows from operating activities:
Profit for the period	￦	12,413,564	￦	7,267,737
Adjustments		9,281,038		11,189,692
Changes in operating assets and liabilities		(7,571,558)		(4,982,787)
Interest received (paid)		1,002,974		425,270
Dividend received		3,652,323		1,678,864
Income tax paid		(3,408,455)		(2,047,422)
Net cash provided by operating activities		15,369,886		13,531,354
Cash flows from investing activities:
Changes in financial instruments		(989,805)		1,604,166
Changes in investment in joint ventures and associates		(1,322,033)		(1,165,862)
Changes in property, plant and equipment intangible
assets		(7,991,770)		(5,184,167)
Others		3,154,743		335,666
Net cash used in investing activities		(7,148,865)		(4,410,197)
Cash flows from financing activities:
Changes in short-term borrowings		(2,347,941)		(1,842,721)
Changes in long-term debt and debentures		(2,478,999)		(1,343,537)
Proceeds from capital contribution from
non-controlling interest		2,321,964		1,568,678
Purchases of treasury stocks		-		(193,451)
Dividends paid		(5,241,389)		(2,441,105)
Others		(143,711)		(112,334)
Net cash used in financing activities		(7,890,076)		(4,364,470)
Effect of exchange rate changes on cash and
cash equivalents		180,399		(46,913)
Net increase in cash and cash equivalents		511,344		4,709,774
Finance (*)
Cash flows from operating activities:
Profit for the period		1,233,415		1,179,056
Adjustments		7,342,101		8,662,786
Changes in operating assets and liabilities		(21,288,494)		(10,198,949)
Interest received (paid)		(3,567,110)		(2,214,260)
Dividend received		175,598		1,303
Income tax paid		(196,822)		(248,038)
Net cash used in operating activities		(16,301,312)		(2,818,102)
Cash flows from investing activities:
Changes in financial instruments		-		-
Changes in investment in joint ventures and associates		(179,571)		(75,991)
Changes in property, plant and equipment intangible
assets		(399,324)		(119,633)
Others		(157,850)		(73,749)
Net cash used in investing activities		(736,745)		(269,373)
Cash flows from financing activities:
Changes in short-term borrowings		(1,752,921)		1,972,663
Changes in long-term debt and debentures		16,965,023		4,880,932
Proceeds from capital contribution from
non-controlling interest		4,626		2,153
Purchases of treasury stocks		(3,685)		-
Dividends paid		(60,977)		(91,752)
Others		(152,612)		(580,042)
Net cash provided by financing activities		14,999,454		6,183,954

	For the year ended December 31,
Description	2023		2022
Effect of exchange rate changes on cash and
cash equivalents		11,069		22,023
Net increase (decrease) in cash and cash equivalents		(2,027,534)		3,118,502
Others (*)
Cash flows from operating activities:
Profit for the period		752,197		546,411
Adjustments		757,274		439,872
Changes in operating assets and liabilities		294,593		439,871
Interest received (paid)		2,381		(39,984)
Dividend received		484		108
Income tax paid		(288,565)		(98,142)
Net cash provided by operating activities		1,518,364		1,288,136
Cash flows from investing activities:
Changes in financial instruments		(346,989)		(463,400)
Changes in investment in joint ventures and associates		(440)		(110)
Changes in property, plant and equipment intangible
assets		(429,153)		(279,034)
Others		(240,543)		263,808
Net cash used in investing activities		(1,017,125)		(478,736)
Cash flows from financing activities:
Changes in short-term borrowings		(136,018)		(158,936)
Changes in long-term debt and debentures		(571,389)		(237,446)
Proceeds from capital contribution from
non-controlling interest		466,535		-
Purchases of treasury stocks		-		-
Dividends paid		(130,644)		(103)
Others		(52,331)		(46,613)
Net cash used in financing activities		(423,847)		(443,098)
Effect of exchange rate changes on cash and
cash equivalents		7,887		(6,384)
Net increase in cash and cash equivalents		85,279		359,918
Consolidation adjustments		(267,349)		(118,869)
Net increase (decrease) in cash and cash equivalents		(1,698,260)		8,069,325
Cash and cash equivalents, beginning of the period		20,864,879		12,795,554
Cash and cash equivalents, end of the period	￦	19,166,619	￦	20,864,879

(*)

The amounts are aggregates of entities belonging to each segment, unadjusted for elimination of intercompany transactions.

100

(6)

Sales by region based on where the Group’s entities are located for the years ended December 31, 2023 and 2022

are as follows.

For the year ended December 31, 2023

North

Description

Korea

America

Asia

Europe

Others

Total

(In millions of Korean Won)

Net sales

￦

50,145,518

￦

66,423,274

￦

17,498,807

￦

23,809,444

￦

4,786,536

￦

162,663,579

For the year ended December 31, 2022

North

Description

Korea

America

Asia

Europe

Others

Total

(In millions of Korean Won)

Net sales

￦

44,725,966

￦

55,941,024

￦

15,594,336

￦

21,741,766

￦

4,148,377

￦

142,151,469

(7) Non-

current assets by region where the Group’s entities are located as of December 31, 2023 and 2022 are as follows.

	December 31,		December 31
Description	2023		2022
	(In millions of Korean Won)
Korea	￦	35,311,711	￦	33,935,698
North America		4,751,419		3,211,607
Asia		3,021,481		2,835,528
Europe		1,806,587		2,012,856
Others		656,502		623,992
		45,547,700		42,619,681
Consolidation adjustments		(262,067)		(219,664)
Total (*)	￦	45,285,633	￦	42,400,017

(*)

Total amount is the same as summation of PP&E, intangible assets and investment properties.

(8)

There is no single external customer who represents 10% or more of the Group’s sales for years ended December 31,

2023 and 2022.

41.

CONSTRUCTION CONTRACTS:

(1)

Cost, income and loss and claimed construction from construction in progress as of December 31, 2023 and

December 31, 2022 are as follows.

	December 31,		December 31,
Description	2023		2022
		(In millions of Korean Won)
Accumulated cost	￦	14,689,631	￦	14,866,771
Accumulated income		937,245		336,083
Accumulated construction in process		15,626,876		15,202,854
Progress billing		16,071,925		15,006,020
Due from customers		1,191,078		1,413,886
Due to customers		1,636,127		1,217,052
Reserve (*)		62,197		77,915

(*)

Reserve is recognized as long-term trade notes and accounts receivable in the consolidated financial statements.

101

(2) Effects on profit or loss of current and future periods, due from customers related to changes in accounting estimates

of total contract revenue and total contract costs of ongoing contracts of Hyundai Rotem, a subsidiary of the Company,

as of December 31, 2023 are as follows.

Description	December 31, 2023
	(In millions of Korean Won)
Changes in accounting estimates of total contract revenue	￦	535,107
Changes in accounting estimates of total contract costs		229,894
Effects on profit or loss of current period		(25,738)
Effects on profit or loss of future periods		330,951
Changes in due from customers		(62,835)
Provision for construction loss		39,470

Effects on profit or loss of current and future periods were calculated with estimated total contract costs and estimated

total contract revenue based on factors that are considered to be relevant from commencement of the contract to December

31, 2023. Total contract revenue and costs may change in future periods.

(3)

There is no contract as of December 31, 2023, in which contract revenue is recognized using the percentage of

completion method based on the input method, that accounted for more than 5% of the Group's revenue in the prior

period.

42.

BUSINESS COMBINATIONS:

The Group acquired 54.35% of shares in UB1st Co., Ltd. during the year ended December 31, 2023.

The accounting for the business combination at the acquisition date is as follows.

Description	Amount
	(In millions of Korean Won)
Total considerations transferred	￦	3,000
Non-controlling interests		363
Assets and liabilities acquired:
Current assets		4,103
Non-current assets		2,871
Current liabilities		4,599
Non-current liabilities		1,579
Fair value of identifiable net assets		796
Goodwill		2,567

The amounts of sales and net loss of the acquiree since the acquisition date included in the consolidated statement of

income for the year ended December 31, 2023 are

￦

6,089 million and

￦

777 million, respectively.

102

43.

DISCONTINUED OPERATIONS:

The sale of Hyundai Motor Manufacturing Rus LLC (HMMR) was approved by the Board of Directors on December 19,

2023. The sale is expected to be completed within one year from December 31, 2023. As of December 31, 2023, Hyundai

Motor Manufacturing Rus LLC (HMMR) is classified as disposal group and discontinued operation.

Operating results of Hyundai Motor Manufacturing Rus LLC (HMMR) for the years ended December 31, 2023 and 2022

are as follows.

	For the year ended December 31,
Description		2023		2022
	(In millions of Korean Won)
Sales	￦	41,244	￦	376,066
Cost of sales		106,235		329,914
Gross profit		(64,991)		46,152
Selling and administrative expenses		(8,401)		51,311
Operating profit		(56,590)		(5,159)
Gain on investments in joint ventures and
associates, net		1,297		(1,047)
Finance income		32,638		232,920
Finance expenses		128,420		174,590
Other income		105,750		326,199
Other expenses		65,920		432,741
Impairment loss remeasured at fair value		630,131		179,110
Profit before income tax		(741,376)		(233,528)
Income tax expense		(21,655)		(14,839)
Loss for the period from discontinued operations	￦	(719,721)	￦	(218,689)

Assets and liabilities classified as held for sale due to discontinued operations as of December 31, 2023 and December

31, 2022 are as follows.

Description	December 31, 2023		December 31, 2022
	(In millions of Korean Won)
Assets:
Current assets:
Cash and cash equivalents	￦	70,804	￦	-
Other receivables		4,445		-
Inventories		268,071		-
Other assets		11,773		-
Others		2,730		-
Total current assets		357,823		-
Non-current assets:
Other assets		8,927		-
Property, plant and equipment		54,761		-
Deferred tax assets		12,295		-
Others		697		-
Total non-current assets		76,680		-
Liabilities:
Current liabilities:
Trade notes and accounts payable		3,061		-
Current portion of long-term debts		88,462		-
Provisions		8,682		-
Other liabilities		13,631		-
Total current liabilities:		113,836		-
Non-current liabilities:
Provisions		9,015		-
Total non-current liabilities:		9,015		-

103

Net cash flows generated from Hyundai Motor Manufacturing Rus LLC (HMMR) for the years ended December 31,

2023 and 2022 are as follows.

Description		December 31, 2023		December 31, 2022
		(In millions of Korean Won)
Cash flows from operating activities	￦	(276,116)	￦	(62,608)
Cash flows from investing activities		(65,282)		(91,056)
Cash flows from financing activities		(228,892)		585

44.

SUBSEQUENT EVENTS:

The Group declared acquisition of hydrogen fuel cell business based on the resolution of the Board of Directors on

February 16, 2024. The details are as follow:

Description	Contents
Seller	Hyundai MOBIS Co., Ltd.
Date of acquisition	May 31, 2024
Object of acquisition	Domestic hydrogen fuel cell business
Price for acquisition	￦ 217,800 million

2023 Sustainability Report

Road to

Sustainability

Environmental

2.1

Environmental Management

2.1.1

Environmental Management System

2.2

Response to Climate Change

2.2.1

Climate Change Risk Management

2.2.2

Carbon Neutrality

2.2.3

Reducing Product Carbon Footprint

2.2.4

Carbon Reduction at Business Sites

2.2.5

Life Cycle Carbon Reduction

2.3

Establishment of a Circular Economy

2.3.1

Extended Producer Responsibility

2.3.2

Establishment of a Virtuous Circulation

System for Batteries

2.4

Reduction of Environmental Impact

2.4.1

Sustainable Use of Resources

2.4.2

Management of Harmful Substances

2.5

Protection of Biodiversity

2.5.1

Preservation, Restoration, Expansion of

Biodiversity

Governance

4.1

Board-centered Management System

4.1.1

Composition of the BOD

4.1.2

Operation of the BOD

4.1.3

Functions of the BOD

4.1.4

BOD Remuneration

4.1.5

BOD Subcommittees

4.2

Shareholder-friendly Management

4.2.1

General Shareholder’s Meeting

4.2.2

Communication with Shareholders

4.2.3

Shareholder Interest Protection Systems

4.2.4

Shareholder Return

4.3

Ethics and Compliance Management

4.3.1

Spreading Ethical Management

4.3.2

Compliance Management &

Compliance Support System

4.3.3

Compliance Program

4.4

Risk Management

4.4.1

Global Risk Management System

4.4.2

Management of Major Non-financial and

Financial Risks

4.4.3

Personal Information Protection

4.4.4

Cybersecurity

Social

3.1

Creative Organizational Culture

3.1.1

Strategic HR Management

3.1.2

Great Workplace Culture

3.1.3

Human Rights Management

3.2

Health, Safety and Welfare of Employees

3.2.1

Strengthening Health and Safety Leadership

3.2.2

Customized Welfare Benefits

3.3

Sustainable Supply Chain

3.3.1

Establishing a Win-win Growth Ecosystem

3.3.2

Supply Chain ESG Management

3.4

Customer Experience Innovation

3.4.1

Product Responsibility

3.4.2

Maximizing Customer Satisfaction

3.4.3

Sustainable Brand

3.5

Creating Shared Value

3.5.1

CSV Initiative

3.5.2

CSV Activities

Introduction

1.1

CEO Message

1.2

Company Overview

1.3

Global Network

1.4

Business Performance

1.5

ESG Direction of Hyundai Motor Group

1.6

ESG Governance

1.7

Key ESG Activities and Achievements

1.8

Stakeholder Engagement

1.9

Materiality Analysis

Contents

ESG Factbook

5.1

Facts & Figures

5.2

ESG Certifications

103

5.3

GRI Index

104

5.4

ESRS Index

107

5.5

TCFD Index

110

5.6

SASB Index

111

5.7

WEF IBC Stakeholder Capitalism Metrics

112

5.8

Independent Assurance Statement

114

5.9

GHG Assurance Statement

116

5.10

About This Report

120

This report has been published as an interactive PDF, allowing readers to move quickly and easily to

pages in the report, and including shortcuts to the related web pages.

What moves us:

The 2023 Hyundai Motor Company ESG Magazine illustrates Hyundai’s “Progress for Humanity”. For

the irreplaceable Earth and for a sustainable future for which generations to come will be grateful, the

progress continues. And what enables our innovation is “humanity.

Interactive PDF

ESG Magazine

CEO Message

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

In 2022, our company achieved a record 143 trillion won in sales and

9.8 trillion won in operating profits — a historic milestone for Hyundai

Motor Company. This proud achievement is a testament to our hard-

won efforts to expand sales, particularly of our high-value-added

models, notwithstanding a supply shortage of major components

such as semiconductors and heighted market competition stemming

from an economic slowdown.

Our sales in Europe saw a notable 6.5 percent year-on-year increase,

reflecting our growing market share in the European Union’s electric

vehicle (EV) segment. In the United States, we significantly increased

our market shares across major regions, with our flagship luxury

brand Genesis setting historic sales records for two years running.

Furthermore, Hyundai’s EV brand IONIQ won the prestigious World

Car of the Year award for the IONIQ 5 (in 2022) and the IONIQ 6 (in

2023) due to their world-class quality and safety standards.

In terms of sustainable management, Hyundai Motor Company has

made comprehensive efforts to strengthen its Environmental, Social

and Governance (ESG) initiatives. On the environmental side, we have

worked to steadily expand our sales of EVs, achieving an 8 percent

year-on-year increase in EV sales and selling 200,000 units. This

has brought our company one step closer to achieving our carbon

neutrality target for 2045. On the social front, we have thoroughly

evaluated diverse ESG-related risks in our supply partners’ operations

and supported them to upgrade their ESG management capabilities,

with a view to creating a more responsible and sustainable value-

chain ecosystem. As for governance, we have made serious efforts

to implement frameworks for enhancing our governance structure,

including instituting outside evaluations of our board of directors’

operations as well as compliance systems.

On the back of these efforts, Hyundai Motor Company came out on

top in the ESG evaluation (the Dow Jones Sustainability Indices) of the

automotive industry by S&P Global last year. In addition, we have made it

onto the Dow Jones Sustainability World Index for two consecutive years.

In an era of growing demands for and regulation of ESG activity around

the globe, establishing an ESG-centered approach to management

On behalf of Hyundai Motor Company, I would like to express my heartfelt gratitude to all

our customers, employees and business partners who have contributed so invaluably to the growth and

progress of our enterprise.

has become a vital requirement in the corporate world. Going forward,

this trend is only likely to intensify as sustainable economic growth

gains importance. Not only are major corporations disclosing their

ESG information publicly, but the oversight and management of

ESG initiatives throughout their supply chains are also becoming

regularized. As such, ESG management is the new norm — it has a

direct bearing on legal compliance risks as well as reputation and

financial risks and thus lays the groundwork for sustainable growth.

As a leader in ESG efforts, Hyundai Motor Company has set out to

fundamentally transform its system of operations, implementing a

long-term strategy of sustainable growth, continuous innovation and

proactive engagement with various stakeholders. In order to live up

to the rigorous standards expected of us, we will significantly bolster

our company-wide ESG-related capabilities throughout the entire

company as well as our supply chains and make substantive progress

within our organization.

Dear friends, partners and supporters,

Hyundai Motor Company will usher in the future by ceaselessly taking on

challenges and innovating in response to rising economic uncertainties

and risks. We will fulfill our corporate social responsibilities with a spirit

of fairness, integrity and collaboration. And we will build bridges of

solidarity, mutual trust and unconstrained communication with all our

stakeholders.

Just as small droplets come to form a vast ocean, Hyundai Motor

Company will make good on its promises and fulfill its potential for

the benefit of humanity and Earth itself. I would like to cordially ask

for your continued support and encouragement in this meaningful

endeavor.

Thank you.

Jaehoon Chang

President and CEO, Hyundai Motor Company

In its pursuit of progress for

humanity, Hyundai Motor Company

will continue embracing

boundless challenges and

spearheading innovation.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Company Overview

* As of the end of 2022; Based on K-IFRS consolidated financial statements

* As of the end of 2022

Hyundai Motor Company has been providing customers with the best products and services possible ever since its establishment in 1967. We will continue to strengthen our business capabilities with the goal of growing into a “smart

mobility solution provider” based on sustainability management. Moreover, we build customer trust through “quality” and based on that, we will provide “SMART”, sustainable mobility experiences as our differentiators, and thus realize our

brand vision of connecting people with quality time.

Key Financial Figures

Credit Ratings

Overview of Hyundai Motor Company

Company Name

Hyundai Motor Company

DOMESTIC

OVERSEAS

CEOs

Euisun Chung, Jaehoon Chang, Dong Seock Lee

Korea Ratings

AA+

Moody’s

Baa1

NICE Investors Service

AA+

Korea Investors Service

AA+

S&P

BBB+

Date of Establishment

Dec. 29, 1967

Key Business Area

Automobile manufacturing

Date of IPO

Jun. 28, 1974

Headquarters

12, Heolleung-ro,

Seocho-gu, Seoul, 06797, Korea

Stock Exchange

Korea Exchange (KRX) stock market

* As of the end of 2022

(Unit: Vehicles)

Global Best-selling Models

Tucson

570,058

Elantra (AVANTE)

367,209

Santa Fe

218,688

Sonata

134,752

Accent

133,847

(Unit: KRW billion)

SALES REVENUE

OPERATING PROFIT

NET PROFIT

TOTAL ASSETS

TOTAL EQUITY

2020

2021

2022

2020

2021

2022

2020

2021

2022

2020

2021

2022

2020

2021

2022

KRW

142,527.5

billion

KRW

9,819.8

billion

KRW

7,983.6

billion

KRW

255,742.5

billion

KRW

90,896.5

billion

103,997.6

2,394.7

1,924.6

209,344.2

76,341.0

117,610.6

142,527.5

6,678.9

9,819.8

5,693.1

7,983.6

233,946.4

255,742.5

82,615.8

90,896.5

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Global Network

Hyundai operates production plants, technology research institutes, and design centers in major overseas markets. We

sell vehicles across the globe, with around 6,200 sales networks in approximately 184 countries.

Hyundai Motor Europe Headquarters

Hyundai Motor Manufacturing Czech

Hyundai Motor Czech

Hyundai Motorsport Gmbh

Hyundai Motor Company Italy

Hyundai Motor Deutschland Gmbh

Hyundai Motor United Kingdom

Hyundai Motor France

Hyundai Motor Europe Technical Center

Hyundai Motor Poland

Hyundai Motor Espana

Hyundai Motor Netherlands B.V.

Hyundai Motor Russia & CIS Headquarters

Hyundai Motor Commonwealth Of

Independent States

Hyundai Motor Manufacturing Russia

Hyundai Truck & Bus Russia

Hyundai Assan Otomotiv Sanayi Ve Ticaret A.S.

Genesis Motor Europe

Hyundai Hydrogen Mobility

Europe Quality Center

Hyundai Motor Company Brussels Ofﬁce

Europe

Hyundai Motor Group (China) Ltd.

Beijing Hyundai Motor Company

Hyundai Motor Technology And

Engineering Center (China), Ltd.

Hyundai Truck & Bus (China)

Beijing Zingxian motor Safeguard Service Co

Hyundai Top Selection Used Car Co., Ltd.

Hyundai Motor Global Tooling

in China CO., Ltd.

Genesis Motor China

Hyundai Motor Japan R&D Center

Hyundai Motor Japan

Hyundai Motor India Headquarters

Hyundai Motor India Engineering Center

Hyundai Thanh Cong Commercial Vehicle

Joint Stock Company

Hyundai Motor ASEAN Headquarters

Hyundai Motor Manufacturing Indonesia

HLI Greenpower

Hyundai Thanh Cong Manufacturing

Vietnam

Hyundai Motor Oceania Headquarters

Hyundai Motor Group Innovation Center

in Singapore

HTWO Guangzhou

Hyundai Thanh Cong Vietnam Joint Stock

Company

Advanced & Digital R&D Center China

China Commercial Vehicle R&D Center

Hyundai Motor Thailand, Inc.

Hyundai Motor Philippines, Inc.

Asia & Pacific

Hyundai Motor M.East &

Africa Headquarters

Africa & Middle East Quality Center

Genesis Middle East & Africa

Middle East & Africa

Hyundai Motor North America Headquarters

Hyundai Motor Group Metaplant America

yundai Auto Canada Corp.

Hyundai·Kia America Technical Center, Inc.

Hyundai Motor Manufacturing

Alabama

Hyundai Motor Central &

South America Headquarters

Hyundai Motor de Mexico

Hyundai de Mexico

Hyundai Translead

Hyundai Motor America

Hyundai Motor Company

Washington Ofﬁce

Motional

Supernal

North America Quality Center

Boston Dynamics

North America, Central & South America

* As of April 2023

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Business Performance

Hyundai sells vehicles through directly-operated branches across Korea as well as dealerships. To increase sales, we implement customer top priority management, marketing aimed at enhancing brand value, and on-site-tailored

sales promotions. We implement innovative activities to respond to consumer needs in the contactless era by making continuous effort to discover new mobility-oriented businesses in line with changes in domestic consumer trends.

In overseas markets, we are implementing distinctive sales strategies that reflect the market environment by base through overseas subsidiaries. Despite the COVID-19 pandemic and semiconductor supply setbacks, we are focusing

on enhancing brand power by digitalizing the sales process based on future retail strategies, strengthening brand image through brand campaigns, expanding the sales network centered on high-quality dealers, and strengthening

online marketing and CSV activities.

Sales of Eco-friendly Cars

Sales by Major Market

Production and Sales

Domestic

1,732,639

Overseas

2,267,655

Domestic

688,884

Overseas

3,254,038

PRODUCTION

SALES

TOTAL

4,000,294

TOTAL

3,942,922

(Unit: Vehicles)

(Unit: 1,000 vehicles)

Wholesale

Retail

Korea

North America

Central &

South America

310

949

940

Others

(vehicles manufactured in China,

GMC, Truck & Bus (China), HMJ,

HHM, etc.)

555

562

250

256

689

570

587

(Unit: Vehicles)

TOTAL SALES VOLUME

(Unit: Vehicles)

SALES BY MODEL

GLOBAL SALES

(Unit: Vehicles)

506,793

EV, HEV, PHEV, FCEV

139,432

Domestic

210,352

11,217

FCEV

285,224

HEV, PHEV

367,361

Overseas

* Based on wholesale

* As of 2022

* As of 2022; and wholesale basis

Russia

China (BHMC)

BHMC

Europe

India

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Business Performance

Business Review in Major Markets

Market Condition

In 2020, the Korean market recorded new vehicle sales of 1.89 million units,

a 5.7% increase over 2019, on the back of an individual consumption tax

reduction policy and increased launch of new vehicles despite COVID-19

impact. In 2021, however, new vehicle sales decreased 8.4% from 2020 to

record 1.73 million, mainly attributable to supply issues of semiconductors

for vehicles as a result of global supply chain setbacks. Supply chain

instability continued in 2022, resulting in new vehicle sales of 1.69 million, a

year-on-year decrease of 2.3%.

Business Review

In 2022, Hyundai sold 690,000 units, a year-on-year decrease of 5.2%, as a

result of production setbacks caused by global supply chain instability. Our

market share decreased 1.3% year-on-year to record 40.7% but we strived to

improve sales profitability by increasing the proportion of high value-added

model sales, including the Genesis and SUVs, and by increasing sales of the

new Grandeur that was launched at the end of the year. In addition, to respond

to customer needs, we became the first in Korea to adopt a Direct to Consumer

(D2C) online sales method, while strengthening the Genesis brand lineup to

lead the luxury car market in Korea. In 2023, we will successfully launch the

planned new model lineup and focus on increasing our market share.

Market Condition

Overall sales decreased in the US market in 2020 as a result of production

and sales setbacks due to COVID-19 and worsened consumer sentiments.

However, the upper middle class used low interest rates to purchase

high-priced SUVs and pickup trucks, leading to upward alternative

consumption. Sales grew in the first half of 2021 as the market became free

of the COVID-19 pandemic shock, but sales remained low in the second

half of the year due to semiconductor supply shortage. In 2022, inventory

shortage issues continued as a result of global semiconductor shortage

led to a 7.8% decrease from 2021 to record sales of 13.899 million units.

Business Review

In 2022, Hyundai sold 781,000 units in the US market, recording a year-

on-year decrease of 0.9%, with a market share of 5.6%. Market share rose

0.4%p year-on-year on the back of strong sales of SUV models, including

Tucson and Santa Fe, as well as Genesis models such as the GV70. In 2022,

the G90 was named as Car of the Year by MotorTrend, and Hyundai was

named Best SUV Brand by U.S. News & World Report. Hyundai is thus

proving product excellence by winning various awards.

Market Condition

In China, a total of 21.056 million units of cars were sold in 2022. In major

manufacturing regions, including Changchun and Shanghai, manufacturing

was suspended after March to prevent the spread of COVID-19, leading to

a significant decrease (-17.5%) in sales from March to May. However, on the

back of consumption policies, including a purchase tax reduction in June and

expansion of new energy vehicle license plates, 2022 annual sales recorded

a year-on-year increase of 5.9%. In India, sales rose 22.9% over 2021 to record

3.82 million units owing to base effects from standby demand caused by

COVID-19 and semiconductor supply setbacks. This is a record-high annual

sales performance that exceeds 3.37 million units recorded in 2018.

Business Review

In China, Hyundai sold 250,000 units in 2022, a 28.5% decrease from

2021, and recorded a market share of 1.2%. In 2021 and 2020, Hyundai sold

350,000 and 440,000 units, respectively, and recorded a market share of

1.8% and 2.3%. In India, sales of most vehicles, including major SUV models

such as Venue and Creta, rose in 2022, on the back of which Hyundai sold

553,000 units, a year-on-year rise of 9.4%, with a market share of 14.5%. We

are making active efforts to continue balanced growth of sales, services,

and brands from a long-term perspective in India.

Market Condition

Total sales in Europe were 11.961 million units in 2020, mainly attributable to

production and sales setbacks as well as worsened consumer sentiments

due to COVID-19. In 2021, a total of 11.775 million units were sold, a year-on-

year decrease of 1.5%. In 2022, supply setbacks triggered by semiconductor

supply shortages and the spread of COVID-19 variants impacted sales,

leading to a year-on-year reduction of 4.1% in sales to record 11.287 million

units. Overall demand declined as a result of semiconductor supply

shortages, but BEV sales rose 28.0% and accounted for 12.1% of overall

vehicle demand.

Business Review

Hyundai’s sales volume in Europe was 505,000 units in 2021, recording a

market share of 4.3%. In 2022, we sold 538,000 units (based on Western

Europe), a year-on-year increase of 4.0%, on the back of continued strong

sales of the IONIQ 5 and Tucson PHEV. We are reinforcing our position

in the European market based on technological prowess and design

excellence. As a leading example, the Genesis GV60 was named German

Premium Car Of The Year 2023. In addition, the IONIQ 5 was named 2022

German Car Of The Year in the “new energy category” and UK Car of the

Year, thus proving Hyundai’s quality competitiveness.

Korean Market

US Market

Asian Market

European Market

Sales of eco-friendly cars

139,432

units

Total sales

688,884

units

Market share

40.7

* Retail basis

* Wholesale

basis

Sales of eco-friendly cars

98,443

units

Total sales

780,675

units

Market share

5.6

Total sales

INDIA

552,512

units

Market share

INDIA

14.5

CHINA

1.2

CHINA

250,423

units

Sales of eco-friendly cars

214,719

units

Total sales

586,680

units

Market share

4.2

ESG Direction of Hyundai Motor Group

Guided by Hyundai Motor Group’s social responsibility message “The Right Move for the Right Future” which includes the Group’s ESG management commitment and mid- to long-term direction, we share a story of a sustainable future for

humanity, the environment, and society. A sustainable future is an obligation we should pursue for the next generation, a basic right that everyone on Earth should be able to enjoy, and a desirable future that everyone dreams of. The Group’s

social responsibility message incorporates the Group’s commitment to lead the right “move” through the “right” action to this end. For this commitment to lead to actual change, there is a need to clearly set internal and external ESG

requirements and key management indexes per major agenda item. To this end, Hyundai Motor Group clearly presents a direction for change through three major mid- to long-term directions – “Move for Our Planet, People, Community”

– and 15 key management areas. Starting in 2023, we have developed and applied the HMG ESG Index, the Group’s common management index, based on 15 key management areas. Going forward, we will continue to build a culture of

sustainability in our organization and improve ESG performance.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Sustainability in Hyundai Motor Group

The Right Move

for the Right Future

Social Impact

Customer Experience Innovation

Product Quality & Safety

Sustainable Supply Chain

Job Creation for the Future

Move for

Our Community

Carbon Neutrality & Energy Transition

Circularity

Clean Tech Products & Services

Operational Eco-efficiency

Natural Capital Conservation

Global Environment

The Right Move for Our Planet

Move for

Our Planet

Diversity & Inclusion

Human Right

Corporate Culture Innovation

Talent Growth Experiences

Occupational Health & Safety

Move for

Our People

Move

Hyundai Motor Group has been helping people to “move” and creating the world’s “movement” since its

founding. “Move” is therefore a heritage of the Group and it also services as a pivot that connects the past,

present, and future into one.

Right

Hyundai Motor Group thinks and acts in a “right” way in the pursuit of progress for sustainable environment

and humanity. “Right” therefore symbolizes the Group’s sustainable philosophy.

Internal Stakeholders

The Right Way

for Our Growth

External Stakeholders

The Right Change for Our Society

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

ESG Governance

Sustainability-Centered Decision-Making and

Communication

Establishment of ESG Governance

n line with the ESG paradigm, where ESG management has become a

prerequisite for sustainable growth, Hyundai established ESG governance

for strengthened ESG-centered decision-making and cooperative relations,

and operates the Sustainability Management Committee and the ESG

Committee, a small meeting group within the Hyundai Business Strategy

Meeting that is participated in by top management. We also operate the

ESG Council, in which business divisions related to major pending ESG

issues participate to discuss improvement measures and share information

on improvement performance to manage ESG risks and performance.

Sustainability Management Committee

The Sustainability Management Committee consists of a total of eight

directors – seven independent directors, one internal director. It discusses

diverse policies concerning practicing sustainability management and

maintaining insider trading transparency; implementing business ethics

and making ESG performance improvements; and protecting shareholder

rights and interests. It also deliberates and decides on strategy, activity,

performance, and target plans from a professional perspective. In

addition, the Committee discusses major plans concerning safety and

health, which are steadily gaining importance, and examination of plan

execution. An independent director (Chi-Won Yoon) who is in charge

of protecting shareholder rights and interests in the Sustainability

Management Committee attends investor meetings in Korea and non-

deal roadshows (NDRs) for overseas investors to promote communication

between the BOD and shareholders. Investor demands and suggestions

concerning ESG are reflected in the company-wide ESG policy and

strategy-establishing process.

ESG Committee

Hyundai has established the ESG Committee within the Hyundai Business

Strategy Meeting that is participated by the CEO and top management.

Top management in each area discuss implementation directions and

action plans on ESG tasks and issues, and review the implementation

status and major performance. The ESG Committee manages risks by such

ESG area as carbon neutrality, resource circulation, protection of human

rights, spread of ESG across the supply chain, and social contribution,

while also managing and supervising performance improvement activities.

Hyundai is strengthening management activities to preemptively identify and remove risk factors related to ESG, and explores new business opportunities and strives to secure a new competitive edge by strategically using various ESG

factors. Based on ESG governance, we discuss pending issues at the Sustainability Management Committee under the BOD, the highest decision-making body, and the ESG Committee. In addition, we encourage each organization to

autonomously strive for ESG improvement by establishing a performance goal for each working-level division and reflecting the performance in KPIs, thereby building a culture of ESG.

In regards to matters identified as matters that require deliberation/

approval from the top decision-making body after the review or

management/supervision by the ESG Committee, we set them as agenda

of the Sustainability Management Committee. Those matters include

major pressing risk factors and matters that require improvements

because they are aligned with mid- to long-term business strategies.

ESG Council

Hyundai has formed the ESG Council, consisting of working-level employees

per division concerning environmental (E), social (S), and governance (G),

including climate change, quality and safety, talent development, social

contribution, and ethical management. The ESG Council discusses the ESG

implementation direction and plan per division, carries out risk reduction

and performance improvement activities, and shares information on

pending matters and performance. In principle, the ESG Council is held

regularly for the purpose of sharing information on the implementation

status and performance of each division. It is also run frequently for ESG

information disclosure, response to external evaluations, and response to

pending issues concerning business.

Sustainability Management Team

The Sustainability Management Team, under the Planning & Finance

Division, handles company-wide planning, management, and cooperation of

ESG management. Its tasks include establishment of an ESG management

system, organizational internalization, establishment of a cooperation

system, and external disclosure and communication. To advance the ESG

management system, the Team is establishing ESG management indexes

and a data platform, and helps each division design ESG KPIs. In addition,

it identiﬁes matters that require performance improvements and handles

collaboration/mediation so that working-level employees can make

improvements. It is also in charge of stakeholder communication, including

sustainability report publication ad external ESG assessment.

ESG Performance Management

Hyundai is adopting an ESG performance management system aimed

building a culture of ESG to generate business effectiveness and positive

social influence through ESG management. We set KPI per strategic ESG

task and regularly (on a quarterly, semiannually, annually basis) examine

performance. The execution status of strategic ESG tasks and achieved

performance are handled as important factors in the process of evaluating

the performance of top management and employees.

We plan to identify and adopt KPIs that identify ESG risks that may arise

from entering new markets, developing new business, and conducting

projects and that preemptively prevent/manage ESG risks that have a high

possibility of occurrence or high business impact.

BOD Composition

Planning & Finance Division

(Sustainability Management Team)

Hyundai Motor Group

ESG Council

Environmental (E)

• Climate change

• Operations environment

• Product environment

• Low-carbon products

• BOD operation

• Ethical management

Governance (G)

• Human rights, HR development,

HR management

• Supply chain ESG

• Quality management, Customers

• Information protection

• Innovation

• Social contributions

• Health & Safety

Social (S)

ESG Council

ESG Committee

(Hyundai Business Strategy Meeting)

BOD

(Sustainability Management Committee)

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Key ESG Activities and Achievements

Hyundai identifies and improves ESG issues that are important for Hyundai’s sustainable growth and fulfillment of social responsibilities. We also focus on managing ESG issues that have a high impact on our business operations and

stakeholder lives. In 2022, we sold 506,793 eco-friendly vehicles and conducted a life cycle assessment (LCA) on 16 models in line with zero-carbon product goal, and as part of our RE100 implementation, Hyundai Motor Manufacturing Czech

(HMMC) achieved 100% transition to renewable energy. We declared our Diversity & Inclusion Policy and confirmed an increase in the percentage of female executives, managers, and technical staff as a result. To manage supply chain ESG

risks, we conducted a document-based assessment on 1,704 suppliers and an onsite due diligence on 38 suppliers. To establish sound, transparent governance, we carried out a third-party evaluation on BOD composition and operation,

appointed additional female and foreign nationality directors, and established an Audit Committee approval process for non-audit service contracts with external auditors.

Journey Towards Sustainability

Overall ESG

Environmental

Social

Governance

•

Announced Hyundai Motor Group’s social responsibility message

- Set 3 major mid- to long-term directions – Move for Our Planet, Move

for our People, Move for our Community – and 15 key management

areas

•

Developed HMG ESG Index and Conducted a pilot assessment

- Established a key performance index to improve the ESG level of the

Group afﬁliates and for systematic internalization

•

Established an ESG platform

(in-house ESG information management system)

- Established the “integrated ESG platform” by putting together global

disclosure standards and ESG evaluation indexes for systematic

company-wide ESG data management

•

Conducted an ESG NDR

- Held an ESG-specialized NDR for global investors concerning our ESG

management performance and future plans

(for 28 institutional investors for 10 days)

•

Recorded 506,793 units of eco-friendly vehicle sales in 2022

- Recorded global annual sales of 210,352 EVs and 11,217 FCEVs in 2022

•

Increased the number of models subject to LCA

- Conducted the 2022 LCA on a total of 16 models, including all Genesis

models, IONIQ 6, and NEXO

•

HMMC achieved RE100

- HMMC completed the transition from electric energy used in the

manufacturing process to 100% renewable energy

•

Water reuse indicated a year-on-year increase of 5%

- 2,284,154 tons of water were reused in 2022 with a reuse ratio of 21%

(2,179,600 tons in 2021)

•

Disclosed the Hyundai Diversity & Inclusion Policy and the Non-

Discrimination & Anti-Harassment Policy

- Established principles aimed at realizing the values of employee

diversity & inclusion and preventing issues/incidents related to

workplace human rights

•

Genesis ranked No. 1 in US Initial Quality Study (IQS)·US Vehicle

Dependability Study (VDS)

- Ranked No. 1 in 2022 in IQS and VDS premium brand, thus proving

top-level quality and safety technologies

•

Recorded continuous increase in female executives, managers,

engineers

- The ratio of female executives, managers, and engineers continued

to increase as a result of efforts to expand employee diversity and to

build an inclusive organizational culture

•

Strengthened supply chain ESG management

- Conducted a document-based assessment on a total 1,704 tier-1

suppliers and core tier-2 suppliers and an on-site due diligence of

38 high-risk suppliers

•

Third-party assessment of the BOD

- Conducted a third-party assessment for an objective assessment of

adequacy of BOD composition and operational effectiveness

•

Assessed the effectiveness of compliance control standards

- Conducted an annual effectiveness assessment through an external

expert to examine whether the compliance control system is operated

effectively

•

Enhanced BOD diversity

- Appointed an additional female independent director with expertise

(labor-management, law) and an additional director with a foreign

nationality (global business)

•

Established a process for non-audit services by external auditors

- Established a process to receive the Audit Committee’s approval

beforehand to sign a non-audit service contract with an external

auditor to strengthen independence of

external auditors

* Total female executive ratio

(5.38% in 2020 → 5.62% in 2021 → 6.37% in 2022)

* 2 female directors, 2 directors with a foreign nationality

Key ESG Activities and Achievements

Hyundai actively responds to ESG ratings of domestic and overseas capital markets, including the S&P(DJSI), MSCI, Sustainalytics ESG Risk Ratings, Korea Institute of Corporate Governance and Sustainability (KCGS), CDP Climate Change

& Water Security. We also increasingly disclose information about our ESG performance based on the SASB Standards, TCFD Recommendation, and WEF Stakeholder Capitalism Metrics for external communication of our ESG management

level. In addition, through on/offline communication with regulatory agencies, institutional investors, and non-profit organizations in Korea and abroad, we confirm major stakeholders’ ESG management demands or expectations towards

Hyundai. We use the results of collecting stakeholder opinions to better implement ESG management.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

ESG Assessment and Initiatives

DJSI World Index

Hyundai received recognition for its outstanding ESG management in

Corporate Sustainability Assessment (CSA) by S&P Global and was included

for two consecutive years in the DJSI World Index as of 2022. In particular,

we generated outcomes in such indices as environmental efficiency

improvements, including water consumption, strategic HR management,

and sustainable brand, and received the No. 1 ranking in the industry. Our

inclusion in the DJSI World Index is the result of active ESG performance

generation activities in accordance with our mid- to long-term sustainability

management direction. We will continue to establish measures to improve

our ESG management level and communicate with various stakeholders.

CDP Climate Change & Water Security

Hyundai has been implementing 2045 carbon neutrality strategy,

continually expanding the electriﬁed vehicle lineup, switching to renewable

energy at our operations, operating low-carbon/eco-friendly manufacturing

processes, and advancing water treatment facilities at our domestic and

overseas operations. In recognition for such environmental management

practiced from a mid- to long-term perspective, we earned the Leadership

A, the highest rating, in Water Security from Carbon Disclosure Project

(CDP) in 2022. We also received the Leadership A- score in Climate

Change. Accordingly, we received the Grand Prize in the water resources

management and Sector Honors in the carbon management at the 2022

CDP Korea Awards. We will continue to make active efforts to reduce GHG

emissions and protect water resources throughout the entire process that

ranges from acquisition of raw materials to end-of-life treatment.

Hydrogen Council

The Hydrogen Council is the ﬁrst global CEO council which was formed to

emphasize the role of hydrogen technology in the energy transition across

the globe. Launched during the World Economic Forum (Davos Forum),

it consists of around 150 global companies, including Hyundai Motor

Company, Toyota, BMW, and Air Liquide, and discusses activities aimed

at successfully implementing the goals of the Paris Agreement that was

adopted at the UN Climate Change Conference in 2015 (COP21). In particular,

Euisun Chung Executive Chairman of Hyundai Motor Group served as the

co-chair in 2019 and 2020, taking active part in supporting national and

private-level cooperation around the world to realize a hydrogen economy.

We are now still playing an active role as a member company.

ESG Communication

CEO Investor Day

In June 2023, we held the CEO Investor Day and presented our new

strategy, the “Hyundai Motor Way.” The Hyundai Motor Way includes our

ﬁnancial, electriﬁcation, and future business strategies to take leadership

in the EV market by achieving innovation based on Hyundai’s unique

heritage. We have set a goal to achieve 2 million units of EV sales and

10%+a of EV profitability, as well as mid- to long-term investment plan

totaling KRW 109.4 trillion for ten years (2023-2032), including KRW 35.8

trillion in electriﬁcation. We seek to gain top-tier EV leadership by adopting

a modular architecture, implementing an electric vehicle manufacturing

method that uses existing plants and builds new EV-dedicated plants, and

establishing a value chain and strengthening design capabilities in all areas

of battery. We will build a hydrogen ecosystem through a Hyundai afﬁliate-

level hydrogen toolbox and carry out continued research and investments

in future businesses, including autonomous driving, SDV, robotics, and

AAM, to solidify our status as a “smart mobility solution provider.” We

will achieve our brand vision, “Progress for Humanity,” through people-

centered innovation by developing our technological prowess that has

continued from the past.

ESG Non-Deal Roadshow

In August 2022, we held an ESG roadshow for global investors to explain

about the ESG implementation status and future plans and to listen to

opinions, including requirements for Hyundai. In addition to sharing

information on the execution status of our 2045 carbon neutrality strategy,

including RE100, and electriﬁcation strategy, including expansion of electric

vehicle sales, we explained about our activities to reuse water in regions with

high water resource risks. In addition, we transparently shared information

on prior inspections and training to strengthen product quality and safety,

measures to manage human rights risks of operations, and supplier ESG risk

diagnosis and due diligence plans. In consideration of the capital market’s

interest in ESG and inﬂuence, we will continue to regularly hold events where

our ESG status and performance are shared, including NDRs.

Hyundai x FIFA World Cup 2022

Hyundai’s sustainability vision is to create a sustainable world more

efficiently through solidarity. During FIFA World Cup 2022™, we ran

the Goal of the Century campaign in which soccer fans participate and

practice sustainable actions under the slogan of a “United World for

Sustainability”. In particular, through the Hyundai Goal of the Century

Program, participants made a pledge to practice an eco-friendly activity

if a country in the World Cup Finals that he/she roots for makes a score.

Many soccer fans across the globe took part in the program as a way to

create a sustainable future. In addition, we provided official vehicles to

each country’s national team players, VIPs, and ofﬁcials, and more than

half of the provided vehicles (some 230 units) were eco-friendly vehicles,

including the IONIQ 5, Tucson HEV, Kona HEV, and ELEC CITY, helping

develop FIFA World Cup 2022™ into a sustainable festival.

Hyundai x FIFA World Cup 2022

ESG Non-Deal Roadshow

ESG RATINGS

KCGS

B+

Overall

(Environmental A,

Social B+, Governance B+)

Sustainalytics

30.9

Risk Ratings

(High Risk)

MSCI

Rating

Korea H

Business Summit – Corporate Council on Hydrogen

Hyundai is participating in the Korea H

Business Summit, the largest private-

sector hydrogen council in Korea, as a key member. The vision of the Korea

Business Summit is to hasten Korea’s transition to a hydrogen society,

with Korea’s leading companies performing central roles, and to lead the

global hydrogen economy. In particular, it is providing support to facilitate

balanced development of the overall hydrogen economy ecosystem by

removing investment uncertainties, ranging from hydrogen production to

use, through close cooperation among companies. In addition, it is striving

to advance the Korean economy’s transition to a hydrogen economy by

enabling timely execution of business and investment opportunities that

require considerable capital.

Stakeholder Engagement

Hyundai categorizes its stakeholder groups into seven – customers/dealers, employees, suppliers, local communities, government, shareholders/investors – in consideration of automotive industry characteristics and pending issues, and

operates various communication channels by comprehensively considering each stakeholder group’s major matters of interest and anticipations towards Hyundai. We encourage active stakeholder participation and communication, and

reflect major stakeholder opinions in our management decision-making process, including business plans, thereby strengthening management transparency and credibility. We will continue to build mutually sound relations, such as by

facilitating stakeholder exchange and transparently providing important information.

Stakeholder Participation and Communication Channel Optimization

Stakeholder Participation Process

Hyundai has set in place various channels to facilitate stakeholders’ participation and collect their opinions. Among opinions received through different channels, pending matters concerning our mid- to long-term business strategies and business activities, and issues with high social/environmental

impact are reported to the ESG Committee (Hyundai Business Strategy Meeting) and Sustainability Management Committee (under the BOD). Matters that are determined as being important as a result of an internal review and deliberation are applied to the business operation process or are addressed through improvement activities.

We conduct monitoring on a regular basis to figure out whether the matters are applied to the business operation process and improvement activities are implemented. If deemed necessary to inform stakeholders of the implementation status and progress, we faithfully deliver the information.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Customers

Dealers

Employees

Suppliers

Local Communities

Government

Shareholders/Investors

Group

Definition

•

They purchase and enjoy Hyundai’s products

and services. We optimize customers’

purchase/experience channels and provide

top-level products and services.

•

They are contact points that directly face

customers and deliver Hyundai’s products/

services and brand value/experiences. They

have partnership relations with Hyundai.

•

Employees at Hyundai get involved in

product development, production, sales,

and support activities. Their competencies

mean the company’s competencies. They

are internal stakeholders who also fulfill

Hyundai’s social responsibilities toward

external stakeholders.

•

They supply parts or materials to Hyundai,

enabling the company to produce quality

products. Their quality competitiveness

impacts Hyundai’s quality.

•

Local communities refer to residents and

civic groups and local governments in areas

located close to our operations and global

citizens who are influenced by our activities.

Hyundai strives for their sustainable

development.

•

The government enacts laws and regulations

that are related to the automobile industry or

decides on regulation levels on corporations’

business operation, so that it can influence

our business activities.

•

They provide finance and capital to the

company, so that Hyundai can maintain

sustainable growth engines while

implementing diverse future business

strategies or running our business.

Main

Channels

•

Offline base (sales/service)

•

Car club, influencer

•

Customer promotions

(Motor show, exhibition, test driving)

•

Online (social media)

•

Customer satisfaction survey

•

Official website, app

•

Sports sponsorship

•

H-ear

(Open customer communication channel)

•

Online dealer portal

•

Dealer meetings and invitation events

•

Regular dealer council

•

Regular dealer visits by Hyundai employee

in charge of regional management

•

Labor-Management Council

•

Organizational culture diagnosis and

employee satisfaction survey

•

On/offline grievance receipt channels

•

Occupational Safety and Health Committee

•

Meetings, events, etc.

•

Musculoskeletal Disorder Prevention

Management Committee

•

Education and training related to work and

safety

•

Win-win growth portal site

•

Transparent Purchase Practice Center

website

•

Win-Win Cooperation Practice Center

website

•

Global Win-Win Cooperation Center

(GPC Portal)

•

HMG Partner System

•

Seminars and training

•

Social contribution programs

(volunteering participated in by residents, etc.)

•

Family inviting events

(factory visits by employee families, etc.)

•

Communication with local communities

nearby the company’s operations

(council consisting of local residents)

•

Recruitment program

(publicize recruitment to local talent)

•

Events held for unity, including local cultural,

sports, and art events

•

Public hearings

•

Policy-making discussions and briefings

•

Company briefing and securities firm

conference

•

Annual Shareholders Meeting

•

Non-Deal Roadshow

•

IR meetings

•

Sustainability Management Committee

•

IR website

Major

Issues

•

Technology investment and development to

improve product and price competitiveness

•

Strengthen product safety/quality

management

•

Lead the future mobility, autonomous

driving, and electrification market

•

Customer satisfaction

•

Brand image

•

Expand the vehicle lineup

•

Dealer margin and compensation system

•

Technology investment and development to

improve product and price competitiveness

•

Brand image

•

Employee competency building

•

Employee human rights and diversity

•

Organizational culture and evaluation/

compensation

•

Labor-management relations

•

Health and safety in the workplace

•

Supply chain ESG management

(assessment and improvement)

•

Support for supplier safety and security

management

•

Support for supplier implementation of

carbon neutrality and win-win growth

•

Job creation and retention

•

Local community-tailored social

contributions

•

Enhance operations environmental efficiency

•

Assess and protect biodiversity related to

business activities

•

Support the local community infrastructure,

including tourism promotion and facility

installation

•

Disseminate eco-friendly vehicles and

strengthen vehicle safety

•

Support electrification of small- to mid-sized

suppliers

•

Provide support for global supply chain and

trade issues

•

Support commercialization of new

businesses, including robot and AAM

•

Strengthen roles of ESG governance

•

Mid- to long-term future business strategies

•

Protect shareholder rights and interests

•

Enhance global corporate value and improve

fundamentals

•

BOD expertise and efficient operation

•

Manage climate change-related financial

impact

•

Supply chain ESG management

•

Enhance employee diversity

•

Health and safety in the workplace

Win-win growth portal site: Portal site that provides information on our win-win growth activities and support programs (notices for tier-1 suppliers, win-win growth news, notices on training and supplier recruitment information, etc.)

Transparent Purchase Practice Center website: To practice transparent management and promote mutual development when trading with suppliers, we run a center for making institutional improvement suggestions and reporting matters related to transparent and ethical conduct

Win-Win Cooperation Practice Center website: This website is dedicated to communication with our tier-2·tier-3 suppliers (Information on major management support and win-win cooperation programs that we provide. We also listen to suggestions and provide feedback.)

Global Win-Win Cooperation Center (GPC Portal): Facilities to support suppliers’ strengthening of future competitiveness (providing training support to Hyundai Motor Group and tier-1·tier-2 suppliers, providing venues for seminars and new technology exhibitions, providing training facilities and lecturers for suppliers’ in-house training, etc.)

HMG Partner System: Supply chain management system aimed at building a collaborative system between Hyundai Motor Group and suppliers (information-sharing, support for collaboration in the areas of production, quality, R&D, purchasing, etc.)

Establishment of plan

Optimize channels and methods

by stakeholder

Collection of opinions

Explain activities and agenda,

collect stakeholder opinions

Internal report

Report issues with high business impact

to ESG governance

Improvement activities

Apply to the business operation process,

derive improvement tasks

Monitoring

Check implementation and execution of

improvement tasks

BUSINESS CASE

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Shareholder/Investor Dialogue and Engagement

Encouraging shareholder/investor engagement and

exchanging feedbacks

Investors provide financial capital for the company to pursue diverse future

business strategies or to maintain sustainable growth drivers in doing

business. We therefore communicate with both domestic and overseas

institutional investors to exchange feedbacks from the market perspective.

and based on the trust with investors, we are building a foundation for

sustainable future businesses. As a global automobile manufacturer and

ultimately a smart mobility solution provider, we need to meet investors’

investment standard in diverse categories, including carbon neutrality,

supply chain management, human rights, and governance, and this makes

active communication important.

Role of the BOD and top management

In Hyundai Motor Company’s journey toa smart mobility solution provider

and a global leading electric vehicle brand, active discussions with investors

are important index and source that provide us colors of the capital market.

The board and top management at Hyundai Motor Company, therefore,

communicate with institutional investors on a regular basis to discuss our

performance concerning business and overall ESG management.

Through Sustainability Management Committee under the BOD, directors

regularly discuss ESG-related risks, status, and improvements. An

independent director in charge of protecting shareholder rights participates

in ESG and governance NDRs to directly talk to investors then delivers the

voice of the capital market to the board. Top management is in charge of

conversing the company

’s future business strategy and ESG management

targets with investors.

Facilitating shareholder/investor communication

The Hyundai Investor Relations (IR) Team communicates Hyundai’s ESG

management performance and progress through NDRs, corporate briefing

sessions, securities firm conferences, and investor meetings. It also listens

to opinions on the ESG implementation direction that the capital market

demands from Hyundai in line with the global ESG trend.

Enhancing shareholder/investor communication

Hyundai Motor Company Investor Relations (IR) Team communicates

Hyundai’s ESG management performance and progress to investor

community through NDRs, conferences, and investor meetings.

Furthermore, IR Team gets feedbacks from investors on global ESG trend

that the market expects us to adhere to.

Monitoring

Credit Rating

Agencies

Hyundai Motor Company receives credit rating

results from global and Korean credit rating

agencies., These ratings may affect business

investment decisions, including investment decisions

and bond issuance. our credit rating serves as an

important index in business activities. Therefore, it is

important to consistently monitor and follow up with

any risks regarding the ratings.

Credit rating agencies focused mainly on financial

performance in the past but are introducing unique

evaluation indexes in line with the recent global ESG

trend. This movement signifies that a company’s

ESG credit rating, in addition to its financial credit

rating, is becoming a significant investment index to

investors and other stakeholders.

Meeting expectations of shareholders/investors

ESG management at Hyundai Motor Company stands for a sustainable

future. Investors, one of the key stakeholders, have a high level of interest

on ESG enhancement, short/mid/long-term plans, and how these plans

turn into actual progress. Thus, it is our utmost responsibility to present

best performance aligned with the market expectation and standards.

“2045 Net Zero” announced in 2021 and “RE100” are the milestones that

Hyundai Motor Company must follow. Based on our progress on these

targets, investors can make investment decisions through which the

investors can maintain a trust with their stakeholders. ESG investments,

including those into carbon neutrality, renewable energy, adoption of

eco-friendly technologies, are inevitable for a sustainable future. Through

continued engagement relating to the above, we aim to sustain a

trustworthy relationship.

Furthermore, Hyundai Motor Company updates ESG enhancement on a

regular basis by engaging with global ESG rating agencies. Through this

effort, we believe we can further enhance reputational values in addition to

directly engaging with the investors and shareholders.

Global ESG NDR

In 2022, Hyundai Motor Company held

global ESG NDR first among Korean listed

companies. ESG NDR targets to discuss any

ESG- related topics, which is different from

quarterly NDRs in which the company covers

financial performance and business results.

Through this global ESG NDR, we discussed

with investors our ESG improvements and

mid- to long-term goals.

ESG Meetings

There is rising interest and demand for our

ESG management and future strategies along

with the market adding more values to ESG.

In addition to engagement with domestic and

overseas institutional investors, we are actively

expanding scope of IR meetings with various

stakeholders, including ESG rating agencies

and credit rating agencies.

IR Website

Hyundai Motor Company discloses

information that investors need, such as

quarterly earnings materials and sales

performance on the IR website.

Strengthening shareholder/investor trust (Risk Management)

As a global company, Hyundai Motor Company has business sites and

sales networks in various countries. We must meet environmental

regulations of different countries and also effectively manage the global

supply chain. This regional diversity is an opportunity but also signifies that

we could be exposed to risk factors. To minimize risks, we have established

a corporate management system for various issues that may arise in the

supply chain and are continuing to advance the system. To satisfy the

environmental regulations of each country, we are actively monitoring the

progress of fulfilling regulations.

We can sustain a solid relationship with investors, shareholders, and other

stakeholders through an appropriate risk management. It is therefore

very important to take appropriate and effective measures when a risk

arises and to also establish measures to prevent recurrence. When a risk

becomes an issue, we are not hesitant to share the mitigation progress and

results on our IR website or through a shareholder letter in order to assure

confidence and trust to investors. Hyundai Motor Company will continue

to be transparent, and preemptive regarding disclosure so that the trust

with investors is maintained.

Going Forward

Based on the vision, “Progress for Humanity,” Hyundai Motor Company

is leading the progress into a sustainable future through means such

as innovative mobility experience. Through stakeholder engagement

including investors, we aim to share ESG enhancement progress and

future strategies both regularly and consistently. Ultimately, we will actively

communicate with investors to highlight our genuine endeavor and

investment into a sustainable future.

Stakeholder Engagement

Materiality Analysis

Hyundai conducted the 2023 materiality analysis to identify material issues – leading the transition to eco-friendly/electric vehicles, efforts to reduce GHG emissions, enhancement of global corporate value, diffusion of human rights

management, and strategic management of supply chain ESG. They have continuity with the material issues in the last report. “Leading the transition to eco-friendly/electric vehicles” was chosen as the most important issue this year,

reflecting anticipations toward the eco-friendly and electrification transition strategies of Hyundai as the leader of the future mobility industry amid a global trend of switching to EVs. In addition, “diffusion of human rights management”

and “strategic management of supply chain ESG” were chosen as top issues against the backdrop of an increasing need to manage global supply chain human rights risks and expanding normative demand concerning human rights

assessments.

Approach to Apply Double Materiality

External ESG evaluation index

• Conduct research on domestic and

overseas ESG risk and performance

evaluation agency’s requirements

and evaluation criteria

- DJSI, MSCI, Sustainalytics, etc.

Financial materiality

•

Issues that must be managed by

Hyundai with importance to generate

financial performance

− Hyundai’s material issues in the last five years

− Benchmarking of information disclosure in the

same industry

− ESG agenda reported to C-level

− Employee survey

Impact on Hyundai

• Consider the possibility of

impact on Hyundai’s financial

and business performance

• Identify business areas that cause

social and environmental impact

ESG disclosure index

• Conduct research on principles,

standards, and guidelines aimed

at facilitating ESG information

disclosure in domestic and

overseas

- GRI, SASB, TCFD, etc.

Impact materiality

•

Issues that must be managed by

Hyundai with importance to manage

external impact

− Domestic/overseas evaluation and

disclosure index

− Status of media exposure, including the press

− Internal/external expert interviews

− External stakeholder survey

Impact on stakeholders

• Measure the likelihood of impact that material issues

have on external stakeholders (likelihood)

• Measure the size of impact that material issues have

on external stakeholders (scale)

• Identify key external stakeholders who will highly

likely be impacted by material issues

Top 5 material issues

ESG Issue Research

Financial & Impact Materiality

Impact Measure

Double Materiality Analysis Results

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Selecting Material Issues Based on Double Materiality

STEP 02.

STEP 03.

STEP 01.

2023 materiality analysis results will be reported to

responsible governance (C-level executives). Regarding

the management plan, key performance, and mid- to

long-term plan for sustainability (ESG) issues, we will go

through a process of making a report to the Sustainability

Management Committee and receiving approval.

STEP 05.

Review by the top decision-making body

To identify material issues that are material in business/

financial aspects and also have a high level of influence on

stakeholders, we analyzed global economic, social, and

environmental topics as well as international standards. As

a result, we derived a sustainability issue pool of 45 issues.

Forming a pool of ESG issues

Financial Materiality

Benchmarking

Analyze material issues of

sustainability reports by companies

in the same industry

Agenda reported

to C-level

Analyze agenda items reported to

Hyundai’s top management

Five-year material

issues

Analyze material issues of

sustainability reports disclosed in

the last five years

Employee

survey

Analyze issues with financial

materiality to Hyundai

We used various assessment methodologies to determine

priority from the double materiality perspective for the pool

of 45 issues, and quantified each result of analysis.

Assessing the materiality of ESG issues

Impact Materiality

International

standard index

Analyze domestic and overseas

standards, including GRI and SASB

Internal/External

expert survey

Analyze issue influence from

a third-party perspective

Media research

Analyze 35,776 major media articles

that were published in 2022

External

stakeholder survey

Analyze issues with impact

materiality

To identify issues with financial materiality and issues that

have potential/actual/negative/positive impact on external

stakeholders, we conducted a stakeholder survey that

reflected the double materiality concept. In particular, to

determine impact materiality, we expanded the external

stakeholder survey target and advanced survey questions

from the previous year. We quantified the likelihood, scale,

and scope indexes of issues based on global guidelines,

including GRI 2021 and draft ESRS, and reflected them in

issues’ impact scores.

Measuring the impact of ESG issues

Overview of stakeholder survey

Period

March 29 – April 14, 2023

(around 2 weeks)

Method

Online survey

Target

External stakeholders and

Hyundai employees

Details

Assess ESG issues that have a high

level of importance and influence on

Hyundai and stakeholders

Composition of stakeholder survey respondents

Internal employees

75 persons

Outside stakeholders

107 persons

Internal/external experts

22 persons

Total

204 persons

Collected opinions from domestic and overseas investment

institutions, local communities/NGOs, government-related

agencies and evaluation organizations, suppliers and Hyundai

affiliates, customers, and general consumers

STEP 04.

We determined each issue’s priority through a materiality

analysis. For material issues derived through the process,

we disclosed each issue’s management direction, key

performance, and mid- to long-term plan through our

sustainability report.

Selecting material issues

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Materiality Analysis Results

Aligning material issues with management compensation

Target

KPIs

Relevant Goals

C-Level executives responsible

for related divisions, including CEO

and CFO

• Expand eco-friendly product sales

• Promote eco-friendly product-related activities

• Eco-friendly product sales ratio of 17%

or more by 2023

Based on managerial accounting

• Increase the number of models subject to LCA

• Increase EV sales volume and sales ratio

• Sell 2 million units of electric vehicles by 2030

• Establish a system for carbon neutrality implementation and increase renewable energy use

• Realize carbon neutrality in the overall value chain by 2045

• Achieve 100% renewable energy transition for electricity consumed at all global business sites by 2045

• Financial profit and loss, profit margin, market share, and brand power achievement level

• Strengthen profitability and enhance brand value

• Strengthen the hydrogen energy business’ value chain growth foundation

• Reorganize global factories to optimize EV production

• Achieve 34% of global EV production in 2030 through global factory reorganization

• Establish Hyundai Motor Group’s mid- to long-term hydrogen business strategies and phased roadmap

Efforts to reduce

GHG emissions

Leading the transition to

eco-friendly/electric vehicles

Enhancement of

global corporate value

Results of selecting 2023 material issues

No.

Issues

Leading the transition to eco-friendly/electric

vehicles

Efforts to reduce GHG emissions

Enhancement of global corporate value

Diffusion of human rights management

Strategic management of supply chain ESG

Sound labor-management relations

Risk management system

Establishing an environmental management

system

Strengthening production and product quality

Strengthening ESG governance

Establishing a climate change response system

Industrial health and safety

Fair BOD composition

Organizational culture and compensation

Strengthening ethics and compliance

management

No.

Issues

Strengthening shared growth and win-win

cooperation

Strategic workforce plan

Collecting and recycling end-of-life vehicles/

second life EV batteries

Customer experience innovation

After-sales service management

Strategic social contributions

Employee competency building

Enhancement of employee diversity

Brand ESG strategies

IT/cyber security systems

Product Life Cycle Assessment (LCA)

Improving resource efﬁciency at business

operations

Responsible minerals (conﬂict minerals)

monitoring

Open innovation

Efforts for eco-friendly purchase

No.

Issues

Climate change risk management

(physical/transition)

Protection of shareholder rights

Efﬁcient BOD operation

Biodiversity assessment and protection

Personal information protection system

Participating in global ESG initiatives

Expanding eco-friendly material input

Water management

Response to global fuel economy regulations

Air/water pollutant management

Financial impact of climate change

Environmental management system certiﬁcation

Reduction of hazardous chemicals

BOD and management compensation

Establishing committees within the BOD

Results of selecting 2022

material issues

No.

Issues

Carbon neutrality & Expansion of

renewable energy

Supply chain ESG risk management

Technological innovation

No.

Issues

Strengthening product safety and quality

management

Expanding the EV lineup

Materiality Analysis

Strategic management

of supply chain ESG

Diffusion of human rights

management

Enhancement of global corporate value

Efforts to reduce

GHG emissions

Leading the transition

to eco-friendly/electric

vehicles

Impact materiality

Financial materiality

Management of Material Issues

Material

issues

Background of issue selection

Major activity and impact metric

Cause of the impact

External stakeholders /

Impact areas evaluated

Issue management and performance

Mid- to long-term goal and plan

Page

Business

site

Supply

chain

Product &

service

Environ-

ment

Local

commu-

nity

Consumer

Supplier

Leading the

transition to

eco-friendly/

electric

vehicles

• Accelerating transition to eco-friendly,

electrified vehicles, attributable to major

country’s strengthening of fleet’s average

emission standards for automotive

companies or fuel economy regulations as

well as policies that prohibit ICEV sales

• Increased consumer expectation towards

reduction of CO

emissions during the

vehicle operation

• Electrified vehicles’ CO

and air pollutant

reduction effects compared to ICEVs: 58.1%

reduction (KRW 19.8 billion reduction effect)

* Based on internal research conducted in 2018

●

•

Hyundai established a mid- to long-term roadmap to transition from the

previous internal combustion engine-centered portfolio to an electrification

portfolio, and is expediting development of technologies and launch of

vehicles. In case of commercial vehicles, such as buses and large trucks with

high carbon emissions, we will build an electrification lineup for all models

by 2028. Beginning with the transition to 100% EVs in Europe by 2035, we will

expand the region, while also strengthening FCEV lineup after 2023.

− Sold 506,793 electrified vehicles in 2022

− Sold 210,352 EVs (98,583 units of IONIQ 5) in 2022

− Sold 11,217 FCEVs in 2022

•

100% Electrification in main markets

by 2040

•

100% Electrification in European market

by 2035

•

100% Electrification of Genesis by 2030

•

Sell 2 million EVs in 2030

P. 28-31

Efforts to

reduce GHG

emissions

• Increased importance of reducing GHG

emissions in line with the global carbon

neutrality trend

• Adoption of strong trade regulations,

including Europe’s Carbon Border

Adjustment Mechanism (CBAM)

• Increased demand for companies to fulfill

social responsibilities concerning reducing

GHG emissions to minimize natural disasters

caused by climate change

• Costs of responding to the emissions

trading scheme regulations: approximately

KRW 1.15 billion

* Financial loss due to exceeding the GHG emissions

allowance (around 1.46 million tons) in 2022

●

•

In September 2021, we announced our plan to achieve carbon neutrality by

2045, primarily through electrification and establishment of the hydrogen

society, smart cities and circular economy ecosystems. Hyundai’s carbon

neutrality plan includes not only the reduction of GHG emissions across our

entire value chain, including the purchase and procurement of raw materials

and subsidiary materials, design, production, and sales of vehicles, but also

activity plans to reduce or offset GHG emissions from the incidental activities

necessary for business operations outside its value chain.

− Joined the RE100 initiative and set the roadmap

− Established Hyundai’s carbon neutrality roadmap and supplier carbon

neutrality guidelines

− Achieved transition to 100% renewable energy at HMMC in 2022 and HMMI

in 2023

•

Achieve carbon neutrality across the

entire value chain by 2045

− Focusing on electrification, RE100 at

business sites, and encouraging supply

chain achieve carbon neutrality

•

Transition of all electricity consumed at

all business sites around the world to

renewable energy by 2045

−

Aiming to achieve RE90 at all business

sites by 2040

P. 25-27

Enhancement

of global

corporate value

• Needs for corporate value enhancement by

gaining global brand competitiveness and

increasing global sales

• Needs for R&D investment aimed at

expanding business areas to future mobility

• Support for R&D efforts for technological

improvement to enhance corporate value

• R&D investment in mobility software

• Investments to improve product quality for

consumer safety

●

•

In 2022, Hyundai ranked third in global sales by strengthening its brand and

improving quality. Among the global top 6 companies, we were the only

company to record growth in sales volume. In addition, we increased the

ratio of sales of high value-added models, including the Genesis and SUVs,

improving profitability. The G90 was chosen as MotorTrend’s 2022 Car of the

Year, receiving global market recognition for competitiveness.

− IONIQ 5 ranked first in a comparative evaluation of electric vehicles by the

German automobile magazine Auto Motor und Sport (AMS)

− 3 models were chosen for the 2023 IIHS safety evaluation TSP and TSP+

− R&D investment in 2022: approximately KRW 3,340.5 billion

− Investment in startups through open innovation from 2017 to the first quarter

of 2023: approximately KRW 1,328.5 billion

− ICT investment in 2022: approximately KRW 240 billion

•

Plan to invest KRW 12 trillion by 2030 in

software, including connected car and

autonomous driving (KRW 4.3 trillion

for new business-related technology

development, KRW 2.9 trillion for

establishment of a big data center,

KRW 4.8 trillion for open innovation, etc.)

P. 6-7

According to the external stakeholder survey, 70% and more of the respondents said that the issues have “positive” or “very positive” impacts.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Reducing social costs

with eco-friendly vehicles

Materiality Analysis

Material

issues

Background of issue selection

Major activity and impact metric

Cause of the impact

External stakeholders /

Impact areas evaluated

Issue management and performance

Mid- to long-term goal and plan

Page

Business

site

Supply

chain

Product &

service

Environ-

ment

Local

commu-

nity

Consumer

Supplier

Diffusion of

human rights

management

• Increased importance of preventing human

rights violations and mitigating human rights

risks at business sites and supply chain

• Increased stakeholder demand for

companies to fulfill social responsibilities by

practicing human rights management

• Establishment of a human rights risk

management system to measure human

rights risks that can arise during business

operations

• Establishment of human rights risk

evaluation index based on Human

Rights Policy to conduct written/on-site

assessment

●

•

Hyundai established the Human Rights Policy to prevent human rights violations

and mitigate human rights risks, and demand employees, domestic and overseas

manufacturing plants and sales companies, subsidiaries and sub-subsidiaries, and joint

ventures to comply with the Human Rights Policy.

−

Ran 23 human rights training programs for employees in 2022

−

Ratio of evaluation of a human rights risk among business sites was 90.4% in 2022

* Number of employees at business sites where human rights risk assessment was

conducted / Total number of employees

•

Advance diagnosis and due diligence

index to respond to human rights risks

•

Hold a prior briefing session on the human

rights risk diagnosis and due diligence

process and index

•

Provide training on diagnosis and due

diligence and response capacity building

P. 50-52

Strategic

management

of supply

chain ESG

• Strengthened need to manage ESG risks

that may occur in the value chain through

preemptive supply chain ESG management

• Increased duties to manage supply

chain ESG due to international laws and

regulations, including the EU Sustainability

Due-Diligence

• Establishment of a supply chain ESG

diagnosis and due diligence system to

measure ESG risks that may occur at

suppliers, including environmental pollution

and serious accidents

• Document-based/on-site diagnosis using

supply chain ESG evaluation indexes that are

based on the Supplier Code of Conduct and

other initiatives

●

•

Hyundai stipulates a code of conduct in the areas of ethics, environment, labor and human

rights, health & safety, and management systems that must be observed by all suppliers

that signed a contract with Hyundai. In addition, we provided training programs aimed at

improving ESG awareness and relevant competencies to suppliers to prevent ESG risks

in the overall supply chain and enhance the ESG management level of suppliers. We also

established and operate a supply chain ESG diagnosis and due diligence system, thereby

strategically managing supply chain ESG risks.

−

Conducted a document-based diagnosis on ESG risks for 1,680 tier-1 suppliers

−

Provided ESG consulting to 30 suppliers for which risks were identified in 2022

−

Provided on/offline training to around 360 tier-1 suppliers in Korea to enhance their

carbon neutrality response capabilities

•

Complete a document-based diagnosis

for all tier-1 suppliers in 2024 and expand

on-site due diligence

•

Support the establishment of safety

devices in 2024 to prevent supplier safety

accidents

P. 60-62

Material Topic Management

Main Opinions of External Stakeholders

Suppliers/Group Affiliates

We hope to see the consulting aimed at helping suppliers improve their ESG

management continue. In addition, we would like for Hyundai to disclose, in

detail, its vision, goals, and strategies to achieve sustainable growth together

with suppliers as well as supplier support measures.

We believe supply chain management is extremely important for Hyundai

to achieve net zero by 2045. It is important to achieve the goal as soon as

possible, but we hope to see Hyundai allocate sufficient time in accordance

with the level that suppliers are currently at to establish an environment that

enables smooth participation by all parties.

Customers

We hope that Hyundai will further strengthen its chemicals management

system for parts and safety evaluation for customer safety. We also would

like the manufacturing of many eco-friendly vehicles that can adequately

respond to global environmental and carbon neutrality issues.

Government Agencies

We hope to see Hyundai present customers and suppliers with balanced

social rules by taking the lead in responding to environmental issues, such

as global warming, and establishing sound labor-management relations. We

also ask Hyundai to become a corporate role model that pursues futuristic

technologies and values.

Overseas Institutional Investors

We are impressed by Hyundai’s efforts to reflect the opinions of external

stakeholders in the process of creating the sustainability report. We

anticipate confirming the results of global supply chain management that

includes all major ESG issues, such as the environment, human rights, and

labor, in the form of quantitative data.

External Experts

There is a need to continually discover and review new risks, other than

issues that have already become legal risks, such as human rights and

supply chain ESG.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Materiality Analysis

The Earth is not only the home of mankind but

also our responsibility to future generations.

Hyundai has a clear understanding of its role

and responsibility in reducing GHG emissions,

thereby taking active parts in contributing to

the global trend of achieving carbon neutrality.

In particular, we are doing our best to protect

the blue light of Earth with distinctive

approach to climate change based on our own

eco-friendly technology.

Environmental

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

2.1

Environmental Management

2.2

Response to Climate Change

2.3

Establishment of a Circular Economy

2.4

Reduction of Environmental Impact

2.5

Protection of Biodiversity

2.1

Environmental Management

2.2

Response to Climate Change

2.3

Establishment of a Circular Economy

2.4

Reduction of Environmental Impact

2.5

Protection of Biodiversity

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Hyundai has established environmental management

governance in which its highest decision-making

body(C-suite) participates. We also have an

environmental management system in place for

sustainable business operations, including management

and supervision of environmental management at

the company level based on the environmental rule

and policy. Environmental management enables us to

respect nature capital and fulfill our corporate social

responsibilities, thereby achieving sustainable growth

through continued communication with stakeholders.

Each business site operates an environmental

management system based on international standards,

and strives to manage it systematically and effectively

by receiving outside certification and conducting

internal audits. In particular, we establish a mid- to long-

term environmental management plan to respond to

climate change, expand resource circulation, and reduce

pollutants. A performance evaluation system based

on environmental management goals is also set in

place with an aim to raise environmental management

awareness and internalize it at the company level.

Environmental Management System

ENVIRONMENTAL MANAGEMENT GOVERNANCE

Roles of the BOD

The BOD and its subcommittee (Sustainability Management

Committee) receive reports on environmental management performance as

well as major risk factors and improvement activities on a permanent basis,

and provide supervision. They also review and approve agenda items that are

essential for business strategy execution and management activities, such as

establishing mid- to long-term environmental management strategies that

include carbon neutrality and making environmental investments.

Roles of the Management

The Hyundai Business Strategy Meeting (or

ESG Committee), in which the C-level executives participate, examine major

company-wide environmental management plans and implementation

status, including strategies for electric vehicle (EV) expansion and carbon

neutrality, review improvement performance, discuss countermeasures for

major risks, and manage other matters required to spread and disseminate

environmental management. Environment-related issues that are expected

to have a major impact on execution of business strategies, from among

matters that are reported to the management, including the Hyundai

Business Strategy Meeting, are reported to the BOD and subcommittee

(Sustainability Management Committee).

Roles of the Dedicated Environmental Organization

Hyundai has

a company-wide supervising organization under the CEO and CSO’s

responsibility and an operating organization by business site in order to

implement environmental management, and have two-way discussion on a

regular basis for more efficient environmental management.

Company-Wide Supervising Organization

The supervising organization at

the head office is in charge of company-wide environmental management

governance to implement sustainable environmental management

in Korea and abroad. It performs diverse tasks, such as establishing

a system to respond to environmental accident risks; planning and

operating environmental management KPIs; responding to environmental

regulation improvements; and planning and managing the supervision of

environmental investment/culture/technology/training, through which it

plays a central role in establishing an environmental management system,

thereby achieving our environmental vision and goals.

Business Site Management Organization

The environmental management

organization at each business site is in charge of such roles as establishing

and operating an environmental management system; enhancing business

site environmental efficiency; and operating facilities to manage and reduce

pollutants that occurs in the business operation process. It also implements

environmental policy; identifies and addresses environmental risks; spreads

and disseminates environmental management; and receives and handles

environment-related grievance reports.

Environmental Management

2. Basic principles

Raw and subsidiary

materials

B. Energy

C. Water

D. Greenhouse gas

E. Waste

F. Waste product

Pollutants and

hazardous materials

H. Local community

3. Execution system

A. Governance

Training and

dissemination

Stakeholders

communication

Performance

management

1. Overview

Purpose of

establishment

B. Application scope

Implementation

measure

Composition of Environmental Management Policy

Hyundai Motor Company Environmental Management Policy

R&D Organization

With our R&D Center performs a central role, the R&D

organization is in charge of conducting R&D on environmental technology,

developing eco-friendly products such as EVs, and carrying out other

environmental improvement activities. Theses include reducing vehicles’

carbon and tailpipe emissions by developing EVs; developing eco-friendly

design which takes recycling into account; conducting life cycle assessment

(LCA); developing eco-friendly materials; replacing harmful substances, and

developing decarbonization technologies such as carbon capture, utilization

and storage (CCUS) technology.

IMPLEMENTATION OF ENVIRONMENTAL MANAGEMENT

Environmental Management Principles

We established the environmental

management rule to actively practice environmental management based on

recognition of the environment as a key corporate element. We periodically

amend it by reflecting environmental regulations and the latest issues in

Korea and abroad (recent amendment in 2022). Consisting of seven items,

it includes items that we must focus on managing while implementing eco-

friendly management. Key management items include responding to climate

change, reducing pollutants, protecting biodiversity, preserving natural capital,

and supporting environmental management of suppliers. Through this rule,

Hyundai declares active efforts toward corresponding activities.

Environmental Management Policy

Hyundai and all its subsidiaries and

business units continually improve environmental performance according

to the environmental policy and strive to minimize negative environmental

impact of business activities and the overall value chain. In addition, we

encourage our supply chain, including all suppliers and contract partners, to

implement environmental management by recommending them to comply

with our environmental management policy and providing necessary

support. We place priority on compliance with environment-related laws and

regulations in each country where we do business over our environmental

management policy. We implement environmental management according

to this policy in cases where the respective country’s laws and regulations

do not cover matters or do not have special clauses. We are periodically

improving our environmental management policy by reflecting the

establishment and amendment of laws and regulations and changes in the

external market environment and corporate circumstances.

Environmental Management Execution

Our environmental management

is implemented based on the plan-do-check-action process that includes

1) Comply with laws and regulations; 2) Declare the environmental

management policy; 3) Establish an environmental management system and

adopt internal management standards; 4) Monitor and analyze environmental

performance and data; 5) Identify risks and implement improvement activities;

and 6) Continually improve environmental performance.

Establishment of an Environmental Management System

Hyundai’s all

business sites in Korea and overseas plants had established an environmental

management system (EMS) that meets international standards, including

ISO 14001 and are obtaining certification from a third-party organization

to secure the environmental management system’s credibility and public

confidence. Business sites that obtained ISO 14001 certification regularly

receive an audit from a certification agency every year and implement

improvement measures based on the audit. They also receive a renewal

audit every three years. In addition, internal auditors inspect whether the

environmental management system is working properly. In addition, an audit

and verification are received on the environmental management system

from external environmental experts, such as TÜV NORD. The supervising

organization at the head office implements internal audit and performance

assessment on domestic and overseas sites’ environmental management.

System for Responding to Business Site Environmental Accidents and

Regulations

Hyundai has set in place an emergency response system to take

immediate measures in the event of an environmental accident, such as air/

water/waste and chemical substance leakage, based on international safety,

health & environment (SH&E) standards. The head office and each business site

have an emergency response organization and emergency contact system, and

also have an emergency response manual that includes the status of disaster

prevention facilities and equipment aimed at responding to environmental

accidents and have all employees familiarize themselves with the manual.

In addition, we create an alternative scenario for environmental accidents

and continually conduct an emergency response drill at each department. In

particular, we estimate environmental accident cases that may occur at business

sites, based on which departments disseminate and provide training on actually

applicable response measures. With regards to responding to regulations,

a Hyundai/Kia environmental council is held every quarter through which

employees in charge at each business site systematically discuss environmental

regulations and response measures and respond to the regulations as part of

business site environmental management.

Status of ISO 14001 Certification

Site

Term of validity

Domestic sites

2020-2023

Hyundai Motor Manufacturing Alabama (HMMA)

2021-2024

Beijing Hyundai Motor Company (BHMC)

2021-2024

Hyundai Motor India (HMI)

2020-2023

Hyundai Motor Manufacturing Russia (HMMR)

2022-2025

Hyundai Motor Brasil (HMB)

2021-2024

Hyundai Motor Manufacturing Czech (HMMC)

2021-2024

Hyundai Assan Otomotive Sanayi (HAOS)

2021-2024

Hyundai Motor Manufacturing Indonesia (HMMI)

2022-2025

Hyundai Truck & Bus China (HTBC)

2020-2023

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Environmental Management

MANAGEMENT OF ENVIRONMENTAL PERFORMANCE

Management of Environmental Goals

Through our environmental

management implementation system, we set mid- to long-term performance

goals for environmental factors that have a considerable environmental

impact due to business operations, such as carbon emissions. Mid- to long-

term performance goals are set in consideration of business as usual (BAU) as

well as external economic circumstances, government policy direction, and

internal business strategies.

To respond to climate change, we set the goal to achieve carbon neutrality

by 2045 throughout the entire life cycle that ranges from raw material

collection to parts procurement, production, and operation. To achieve the

goal, we are implementing such strategic tasks as a strategy to transition

to EVs, achieving RE100 at business sites, and reduction of supply chain

carbon emissions. For quantitative improvements to environmental

indexes, excluding carbon, we set improvement goals for water and wastes

based on the direction of suppressing increases in water consumption

and waste generation that are on the rise in connection with production

that is increasing after COVID-19. In addition, we strive to reduce pollutant

emissions (air: dust, NOx, SOx, THC / water quality: TOC, TP, BOD, SS) at our

business sites by setting higher pollutant emissions standards than those

required by law.

Evaluation of Environmental Management Performance

To improve

business site environmental performance, we are reflecting and managing

operational efficiency improvements, energy reduction activities, adoption

of renewable energy, other GHG reduction performance, and internal goals

on environmental pollutants in business site KPIs. In case of business site

environmental pollutants, we examine monthly emission indicators. For

business sites in excess, we analyze the cause and implement improvement

measures. In the area of products, we set and manage our fleet average fuel

economy or CO

emissions, electric vehicle sales goal achievement rate, and

others as KPIs.

Environmental Investment Plan and Execution

Hyundai established a

plan to invest a total of KRW 109.4 trillion (KRW 47.4 trillion in R&D, KRW 47.1

trillion in facility investment, KRW 14.9 trillion in strategic investment) by

2032 to achieve its mid-to long-term electrification strategy. In addition, we

established a mid- to long-term investment plan that additionally invests

KRW 24 trillion by 2030 to strengthen the upstream and downstream EV

industry ecosystem, such as building EV-dedicated production facilities

in Korea and expanding EV charging infrastructure, at the Group level.

Hyundai’s environmental investment budget in 2022 was KRW 667.6

billion, of which KRW 506.1 billion was executed. A total of KRW 21.5 billion

was executed in 2022 as environmental facility investments to reduce the

emission of environmental pollutants at domestic sites.

ENVIRONMENTAL MANAGEMENT COMMUNICATION

Training to Raise Environmental Management Awareness

Hyundai

operates an environmental management training course that addresses

requirements specified in environment-related laws and regulations,

company-wide environmental management goals and plans, outstanding

cases of environmental management activities, matters required to perform

major duties, and results of benchmarking relevant companies. Various

opportunities are provided to employees in charge of the environment

so as to enable global ESG responses, including participation in overseas

forums and seminars. In addition, environmental expert ISO auditor training

is provided to improve practical environment-related job competencies and

to systematically manage statutory environmental training. In 2022, a total

of 48,837 employees completed environmental training, and total operation

hours of the programs stood at 95,372.

In addition to our employees, we provide environment-related training

programs to suppliers. Through an online platform’s ESG training course, we

are communicating the need for environmental management and suppliers’

roles. In addition, a group course and seminars are provided to offer in-depth

environmental training.

Stakeholder Engagement and Consultation

Hyundai conducts a

stakeholder survey every year to identify sustainability issues, including

environmental issues. By regularly holding an ESG Non-Deal Roadshow

(NDR) for domestic and overseas investors, we are strengthening investor

communication on ESG issues, including environmental issues. Furthermore,

on the basis of consultation and communication with industry associations

(Korea Automobile Manufacturers Association, European Automobile

Manufacturers Association, etc.), environmental groups and government

organizations (Healthy Seas, Korea Forest Service, etc.), we present opinions

and conduct eco-friendly activities in areas related to our business.

Grievance Handling Channel

We operate a channel for receiving

environment-related grievance from various stakeholders, including

employees. Once received, the grievance reports are handled and notified

according to set procedures and standards. In particular, the ESG Committee

discusses countermeasures for grievances that have a high possibility

of violating laws and regulations and may cause a considerable setback

in business operations or expect to have a negative impact on the local

environment. Environment-related grievances can be reported to an

organization exclusively in charge of the environment at each business site

and key grievance-handling channel (ESG@hyundai.com).

Environmental Management Goals and Implementation Status

Classification

Mid- to long-term goal

Performance in 2022

Transition to

electric vehicles

Plan to sell 940,000 EVs by 2026,

2 million EVs by 2030

• Sold a total of 506,793 units of electrified vehicles

• Sold a total of 210,352 units of EVs

• Sold 15,594 units of Genesis EV models

Achieve 100% electrification of Genesis by 2030

Sell only EVs in Europe by 2035

Sell only EVs in main markets by 2040

Hydrogen

business synergy

Expand hydrogen mobility sales

• Sold 11,217 units of FCEVs

Produce and supply green hydrogen

•

Collaborated with H

Pro to develop high-efficiency hydrogen production technology

•

Collaborated with NextHydrogen to develop a green hydrogen water electrolysis system

Carbon neutrality

in our factories

Achieve RE100 by 2045

•

Renewable energy accounted for 7.7% of total electricity consumption in 2022

(HMMC 100%, HAOS 51.7%, HMI 42.1%)

Carbon neutrality

in our supply chain

Encourage to achieve carbon neutrality

by 2045

•

Conducted investigation of GHG emissions by tier-1 suppliers, and reviewed major

companies’ reduction plans

•

Distributed carbon neutrality guidelines to tier-1 suppliers

•

Provided training to around 360 tier-1 suppliers to strengthen their carbon neutrality

capabilities

Stakeholder Engagement and Consultation

Stakeholder group

Engagement

Government Agencies

•

Hyundai shares its environmental management performance with government agencies and proactively responds to

changes in the direction of their policies. Overseas, the company systematically monitors and complies with each country’s

environmental laws and regulations.

Shareholders and Investors

•

Hyundai will achieve environmental performance that meets the requirements of its shareholders and investors, thereby

building long-lasting, trusting relationship and expanding investment aimed at improving its corporate value.

Supply Chain

•

Hyundai shares its know-how and experience in environmental management across entire supply chain, while operating

communication channels to enable continuous consultation with its suppliers aimed at creating environmental values

throughout value chain.

Customers

•

Hyundai provides environmental information on its products and services while reflecting opinions gathered through

customer contact channels in the process of developing eco-friendly products and services.

Local Communities

•

To mitigate the environmental impacts of its business operations, Hyundai collects opinions from local organizations and

public-private consultative bodies, while also striving to identify and resolve grievances raised by local communities.

Employees

•

Hyundai shares its environmental management principles and policies with its employees and raises their awareness of

environmental management through environmental education. The company also reflects its employees’ proposals to

improve environmental performance.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Response to Climate Change

Hyundai responds to climate change at a company

level by identifying, evaluating, and managing related

risks and opportunities on a constant basis. We also

have set major climate strategies through our climate

change governance to analyze the potential impact

of climate change on our business and respond to

macroscopic changes in the business environment

due to changes in laws and regulations. We identify

various climate risk and opportunity factors, and

preemptively respond to changing market demands

through the development of eco-friendly mobility and

various mobility solution technologies.

Climate Change Risk Management

CLIMATE CHANGE GOVERNANCE

Roles of BOD and Management

Hyundai preemptively identifies its risks

related to ESG and strengthens its management activities, while strategically

utilizing various ESG factors to explore new business opportunities and

develop competitive advantages. Major ESG issues, including climate

change, are discussed semiannually by the Sustainability Management

Committee and the ESG Committee under the Board of Directors. The ESG

Committee, a subcommittee within the Hyundai Business Strategy Meeting,

shares and discusses information on the company’s ESG status and issues

among its executive members. Important agenda items selected by the ESG

Committee are presented to the Sustainability Management Committee,

which reports directly to the BOD and makes decisions on important ESG

issues reported to management.

Greenhouse Gas Council

In order to respond to climate change and achieve

its mid- to long-term goals of carbon neutrality, Hyundai has formed company-

wide GHG response organizations and does its best to improve energy

efficiency, expand the use of renewable energy, and improve the working

environment at its business sites.

ROLES OF DEDICATED TEAMS

Company-wide Planning Team

In 2021, Hyundai established the Carbon

Neutrality Execution Team, a dedicated organization within the Planning &

Finance Division at the head office respond to climate change more actively.

The team works with relevant organizations to establish implementation

strategies in various areas such as product, business site, and supply chain.

R&D Organization

Hyundai also makes efforts at the R&D organization level

to respond to climate change and achieve its goal of carbon neutrality. As part

of these efforts, in March 2022, Hyundai entered into a joint research agreement

with Aramco and KAUST on ultra-lean combustion engines and eco-friendly

synthetic fuels and embarked on joint development to reduce GHG.

CLIMATE RISK AND OPPORTUNITY MANAGEMENT

Climate Risk and Opportunity Management Process

Hyundai identifies,

assesses, and manages risk and opportunity factors to respond to climate

change issues at the company level. The climate change issues identified

by each region/organization are submitted to the head office’s Planning

& Finance Division, which then figures out risk and opportunity factors for

each issue, assesses the strategic and financial impacts of each factor on the

company, and determines companywide response strategies.

Identification Stage

In the identification stage, we figure out issues by region

and team regarding risks and opportunities that may affect the company

due to climate change at the Product Committee and the Hyundai Business

Strategy Meeting.

Assessment and Reporting Stage

The Planning and Finance Division at the

head office figures out the strategic and financial impact that factors and issues

identified in the identification stage may have on the company, and depending

on their materiality, reports them to the CEO or the BOD through the ESG

Committee for decision-making.

Management Stage

The decided climate change issues are proactively

reflected in the KPIs of each working-level division of the relevant region or

organization. The Carbon Neutrality Execution Team and related organizations

join forces to systematically manage climate change factors in various areas.

Identification, Assessment, and Management Process of Climate Risk/Opportunity

Incentives for Climate Change Management

Hyundai includes climate

change-related items in the KPIs of the CEO, plant managers (heads of

manufacturing subsidiaries), and employees (related teams), with the results

of the performance evaluation aligned with the incentive and annual salary

system. The CEO performance evaluation items includes the implementation

rate against carbon neutrality target and the level of establishment of carbon

neutrality implementation system, while the performance evaluation items

for plant managers include GHG emissions, emissions per vehicle, and

RE100 target achievement rate. In addition, we have set goals related to GHG

emissions reduction for employees at related teams and use them for their

performance evaluation.

Target

Incentive

KPIs

KPI Details

CEO

Financial

rewards

(Included in

bonus)

Carbon

neutrality

& Energy

transition

1) Accomplishment rate to carbon

neutrality goal

2) Level of carbon neutrality

implementation system

Plant managers

(Heads of

manufacturing

subsidiaries)

GHG

emissions

reduction

1) Total emissions

2) Emissions per vehicle

3) RE100 target achievement rate

Employees

(Related

teams)

Set goals related to GHG

emissions reduction for staff at

related teams and use them for

performance evaluation

Climate Change Governance

Hyundai Business Strategy Meeting (ESG Committee, division heads or equivalents)

CEO

BOD (Sustainability Management Committee)

Planning & Finance Division (Carbon Neutrality Execution Team)

Responsible

organizations

by region/

business site

Procurement

Division

R&D Division

Product

Division

Identification of

risk/opportunity

factors and

assessment of

impacts

Development of

action plans

Implementation by

region/organization

Monitoring and

diagnostics

Agenda review for the Hyundai

Business Strategy Meeting

(ESG Committee)

* Agenda selection for the BOD report

Review of agenda by the BOD

(Sustainability Management

Committee)

Climate change

scenarios

(Transition/Physical)

Priority check and

establishment of

response strategies

* Agenda selection for

reports to top management

Identification of

company-wide issues

related to climate change

(Planning &

Finance Division)

Identification of issues

related to climate change

by region/organization

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1. Introduction

Methodology for Deriving Climate Risk/Opportunity Factors

RISK ANALYSIS OF CLIMATE CHANGE SCENARIO

Scenario Analysis Methods

Hyundai systematically addresses potential

climate risks and opportunities through transition and physical scenario

analysis. We carefully set various timeframes – short-term (1-3 years), mid-

term (3-10 years), long-term (10-25 years) – which allows us to identify

potential impacts on value chain stages, including domestic and overseas

business sites, as well as upstream and downstream operations. We conduct

annual analyses of these scenarios, utilizing the findings to develop proactive

response plans.

In regard to the transition scenario, we have established our own “2045

Carbon Neutrality Plan” with the goal of electrification, hydrogen society,

smart city, and circular economy ecosystem in line with the level required by

IEA NZE 2050. For the physical scenario, we have evaluated the impact on our

business by using RCP 8.5 (non-reduction scenario), the most conservative

of the RCP (Representative Concentration Pathway) scenarios based on the

concentration of CO

in the atmosphere. Based on the evaluation results, we

set response priorities for each major issue and manage them preemptively.

Overview of Transition Risk Scenario Analysis

As the damage caused

by abnormal climate has increased rapidly, a number of major countries

including Korea have declared their commitment to carbon neutrality.

In order for them to achieve the goal of carbon neutrality, however, it is

essential to reduce GHG emissions in the transportation sector. In its efforts

to take active part in the eco-friendly industry, Hyundai has conducted an

analysis that takes into account the requirements for carbon neutrality by

2050 and an annual average reduction rate of more than 4.2% on the basis

of the IEA NZE 2050 scenario.

To meet the level required by IEA NZE 2050, we analyzed our energy

consumption status and trends, based on which we derived business

as usual (BAU) scenario using growth rate and regression analysis. We

then calculated the amount of our GHG reduction compared to BAU and

reviewed various measures to achieve the goal. First, we sought ways to

directly reduce GHG emissions and estimated the reduction potential based

on applicable reduction technologies. We established the RE100 roadmap,

which aims to use 100% renewable energy in our global production plants

by 2045. We plan to promote carbon neutrality at our business sites by

improving energy efficiency for major manufacturing processes and

switching to hydrogen and other eco-friendly fuels. Lastly, for areas where

direct reduction is difficult, we have sought ways to offset GHG emissions

and achieve the net zero goal through carbon capture utilization & storage

(CCUS), a technology that captures and treats CO

in the atmosphere; the

Hyundai Green Zone Project, a global ecological restoration project; and the

marine ecosystem restoration and upcycling project.

Estimating the Damage Caused by Transition Risk

Under the Paris

Agreement, governments around the world are setting targets to reduce GHG

emissions by 2030. Europe announced “Fit-for-55,” which aims to reduce

carbon emissions by 55% compared to 1990 by 2030. To comply with vehicle

emission standards, Hyundai will adopt the internationally recognized

Worldwide Harmonized Light Vehicle Test Procedure (WLTP) as the standard

for light vehicles. Failure to meet this standard poses the risk of lawsuits and

penalties for non-compliance. CO

emission standards vary by type of vehicle,

but if the standard is not satisfied, a penalty of “number of cars sold x amount

of CO

exceeding the standard (1g/km)” will be incurred, which may cause

significant financial damage to the company.

Overview of Physical Risk Scenario Analysis

Electricity accounts for

around 70% of Hyundai’s Scope 1 & 2 GHG emissions. Electricity has

therefore a significant impact on Hyundai’s operating costs, and since

electricity consumption has a direct impact on global temperature rise,

physical scenarios were analyzed based on RCP 8.5, which predicted a

3-4ºC increase in global temperature in the future. First, based on the World

Resources Institute (WRI) scenario and the physical scenario analyzed by the

Korea Meteorological Administration, we have analyzed risks posed by RCP

scenarios for all our business sites in Korea, the U.S., China, India, Turkey, the

Czech Republic, Russia, and Brazil.

RCP 8.5 scenario analysis shows that the failure to actively respond to

physical scenarios will directly lead to an increase in operating costs, which

will have a significant impact on consumer burden and our product sales

due to higher production costs. Hyundai therefore recognized climate

change as a critical issue and has set Net Zero and RE100 targets by 2045.

We plan to actively participate in setting and implementing these goals to

contribute to lowering the global GHG concentrations and minimize the risk

of operating cost risks.

Estimating the Damage Caused by Physical Risks

Analysis of the effects

of climate change disclosed by the WRI and the Korea Meteorological

Administration confirms that the global temperature is continuously rising,

which means that the impact on Hyundai varies depending on the extent

of the temperature rise. In the case of RCP 8.5, we have compared the

operating costs in 2100 to the present, assuming a 3

℃

increase by 2100

compared to 2021 and a 1.5-fold increase in electricity consumption for

every 0.5

℃

increase in global temperature. The result shows that if we do

not take active part in responding to climate change, we will incur about 8.4

times more electricity costs than present.

Moreover, as climate and environmental charges have been reflected

in the unit price of electricity in Korea since 2021, the rise in global

temperature will act as a factor in increasing the electricity unit price,

which will also increase operating costs. Assuming that the unit price of

electricity increases KRW 0.3/kWh when the earth’s temperature rises

by 1

℃

, Hyundai will be affected very seriously for electricity takes large

portion of its energy consumption.

Response to Climate Change

• Transition

IEA B2DS, IEA STEPS, NZE 2050, NDC

• Physical

RCP 8.5 (baseline scenario),

RCP 2.6 (below 2

℃

scenario),

RCP 1.9 (1.5

℃

scenario)

• Business sites

All global operations

(including new ones, expected facility

life-cycle considered)

• Upstream activities

Purchased goods and services,

employee commuting, business travel, etc.

• Downstream activities

Transportation, use (customers),

end-of-life treatment and recycling, etc.

Climate scenarios in use

Scenario analysis

Application timelines

Application scope

Transition

Physical

Quantitative

Qualitative

Short term

(0-3 years)

Long term (10-25 years)

Medium term

(3-10 years)

Business sites

Upstream

Downstream

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1. Introduction

Response to Climate Change

MAJOR CLIMATE RISKS AND COUNTERMEASURES

Regulatory Risk

Hyundai responds to climate change by designating and managing the laws and regulations of

various countries and regions where it operates as regulatory risk. We faithfully comply with laws and

regulations, preemptively respond to expected regulations according to climate change scenarios, and

minimize the impact and damage.

Transition Risk

Hyundai is making various efforts to analyze the trends in the rapidly changing vehicle market and

satisfy consumer preferences. Hyundai has taken the lead in expanding hybrid/plug-in hybrid EVs

(HEVs/PHEVs), EVs, and fuel cell EVs (FCEVs) markets, as well as bolstering its related technology

development capabilities.

Physical Risks

Due to climate change, the frequency and intensity of extreme weather events are increasing.

Hyundai is equipped with a system to identify business sites that are exposed to short-term physical

risks (typhoons, floods, heat waves, etc.) and long-term physical risks (changes in precipitation, sea

levels rise, etc.) to take preemptive countermeasures to physical risks.

RISK FACTORS

Subject to the allocation of emission rights in

accordance with the Act on the Allocation and

Trading of Greenhouse Gas Emission Permits,

Hyundai participates in the Korea Emissions

Trading Scheme (K-ETS). Accordingly, if we emit

more GHGs than allocated by the law, we must

purchase rights for the shortfall or, in the event

of failure to do so, pay a fine equivalent to three

times the average price of allowance units. We

bought allowance units in 2022 because we

produced more emissions than our allowance for

the year, which was about 1.46 million tCO

-eq.

COUNTERMEASURES

In order to avoid financial losses due to excess

carbon emissions, Hyundai has set a more

stringent reduction target than allowed by the

government while continuing to invest in GHG

emissions reduction and energy conservation

programs. Furthermore, when purchasing

emission permits, we strive to minimize the

purchase cost by selecting the most optimized

option based on an analysis of transaction

prices and volumes.

GHG Emissions Trading System

RISK FACTORS

As part of each government’s efforts to reduce

GHG emissions in the transport sector in

accordance with the Paris Agreement, regulations

on CO

emission standards for vehicles sold

are being strengthened along with those on

corporate average fuel economy. The European

Union adopted a target to reduce CO

emissions

to 0g/km by 2035, which means that from 2035

the sale of new vehicles with internal combustion

engines (ICEVs) will be banned in the EU market.

If Hyundai fails to meet its CO

emissions target,

it may incur significant additional costs in

proportion to its sales volume, which will lead to

higher manufacturing costs and product prices.

COUNTERMEASURES

Hyundai is focusing on improving the fuel

efficiency of ICEVs of its Genesis brand and mid-

to-large SUVs in response to the tightening of CO

emission standards and the corporate average

fuel economy regulations in major markets,

including EU, as well as changes in market

demand due to the spread of CO

emission-

based automobile taxation. Furthermore, to

reduce the carbon emissions of all products

produced by Hyundai, we are striving to improve

the fuel efficiency of existing internal combustion

engines in the short term while developing and

distributing eco-friendly vehicles in the long term.

Fleet-wide CO

Emission Standards and Taxation

RISK FACTORS

The EU countries gave final approval to a

landmark law to end sales of new CO

-emitting

cars by 2035. The EU law will require all new

cars sold to have zero CO

emissions from 2035,

and 55% lower CO

emissions from 2030 versus

2021 levels. The targets are designed to drive

the rapid decarbonization of new car fleets

in Europe. Among the EU member countries,

France will ban the sale of ICEVs from 2030

while nations around the world are tightening

regulations on electrification.

COUNTERMEASURES

Hyundai has established a mid- to long-term

roadmap for the transition from ICEVs to EVs and

has been accelerating the relevant technology

development and EV launching. Starting with

Europe by 2035, we will complete the transition to

100% electrification in other regions as well, while

continuing to expand our FCEV lineup. On the back

of such efforts, we will achieve the goal of 100%

electrification of all vehicles sold in the European

market by 2035 and other major markets by 2040.

Accelerating the Electrification

RISK FACTORS

According to the International Energy Agency

(IEA), global sales of eco-friendly vehicles, such as

EVs, exceeded 10 million units for the first time in

2022 while the trend of eco-friendly consumption

by automobile consumers is strengthening as

well. Demand for EV batteries are growing and

is expected to rise to a maximum of 4,028 GWh

by 2030.

COUNTERMEASURES

As part of our efforts to secure the highest

quality batteries, we have signed an investment

agreement with LG Energy Solutions to build

battery cell plants together. We are also

developing technology for the solid-state

battery, a next-generation battery, to improve

stability, mileage, and charging time of our EVs.

Promoting Eco-friendly Consumption

RISK FACTORS

In the long term, climate change may cause a

decrease in average precipitation, which can

have a significant impact on water supply

shortages and rising water costs, posing risks to

business operations.

COUNTERMEASURES

Hyundai has conducted a water depletion risk

assessment for its major business sites in Korea

and overseas, and five business sites are rated

as high-risk. Accordingly, we are striving to

establish a zero-wastewater discharge system

in stages for the relevant business sites. The

Asan Plant has taken measures such as securing

sufficient water usage, reducing wastewater

generation through wastewater reuse facilities,

and resupplying all its reprocessed wastewater

as industrial water.

Water Shortage due to Reduced Precipitation

RISK FACTORS

Hyundai operates a facility in Alabama, located

in the southeastern region of the U.S., which is

susceptible to tornadoes. There is a projected

substantial increase of GHG emissions by

2030 compared to 2010, which can contribute

to heightened occurrences of severe climate

events like hurricanes and tornadoes. These

events pose a potential impact on the company's

operations in the U.S.

COUNTERMEASURES

Hyundai Motor Manufacturing Alabama (HMMA)

strives to minimize tornadoes damage by

expanding shelter for employees, strengthening

bridge superstructures, developing emer

gency

response manual, purchasing disaster insur-

ance, and making other various efforts.

Damage to Facilities Due to Abnormal Climate Events

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1. Introduction

Response to Climate Change

Climate Risks and Opportunities

Type

Issues

Risks

Opportunities

Response Directions

Financial Impact

Technologies

•

Acceleration in competition for technology

development for eco-friendly vehicles

•

Strengthening fuel economy regulations worldwide

•

Declining market share upon failure to lead technological change

•

Proving the EV technological prowess by winning global automotive

awards, aimed at increasing market share

•

Expanding R&D investment in FCEVs, etc.

•

Establishing a goal of 100% electrification for vehicles sold in major

markets by 2040

•

Launching brands based on E-GMP, an EV-dedicated platform

High

Markets

•

Increased sales of EVs and FCEVs in line with

the expansion of EV markets

•

Increase in procurement costs of raw materials (lithium, cobalt,

nickel) due to limited supply following rising demand for

EV batteries

•

Decrease in sales if not achieving sufficient FCEV profitability

•

Achieving large potential EV/the second life EV battery customers,

including car rental/car sharing/ESS

companies

•

New industrial fuel cell (ship/AAM

) business expansion

•

Increased sales of EV/FCEV models

•

Diversifying supplier diversification

•

Conducting real-time monitoring of raw material prices

•

Recycling waste battery and developing the solid-state batteries

•

Scaling up FCEV/fuel cells

High

Reputations

•

Increase in demand from investors and other

stakeholders to respond to climate change

•

Failure to disclose climate change information and lack of response

to climate change leading to a decline in brand image, withdrawal of

investment and customer attrition

•

Raising brand image and securing investment through

active climate change information disclosure and response

•

Disclosing climate data transparently

•

Participating in international initiatives such as CDP

•

Joining RE100 and promoting carbon neutrality goal by 2045

•

Encouraging the Group affiliates and suppliers to participate in

climate change response

Mid-high

Legal

•

Tightening fuel economy regulations for

ICEVs

•

Increased response costs due to fines imposed on non-compliance

with regulations

•

Degradation of brand image, withdrawal of investment and

customer attrition due to fuel economy-related lawsuits

•

Reduced regulatory response costs through fuel economy

innovations

•

Monitoring peer litigation cases

•

Conducting research on fuel efficiency improvement and joint

development of new energy parts with suppliers

•

Promoting fuel efficiency improvement by vehicle unit

High

Regulation

Current

•

Emissions Trading Scheme

•

Penalties due to emission in excess of emission allowances

•

Generating revenue through the sale of spare credits

•

Increasing use of renewable energy

•

Establishing a management system for the entire process including

emission forecast and reduction

Mid

Emerging

•

Strengthening of CBAM

of EU

•

Rise in costs and shifts to customers due to tax increases

•

Securing price competitiveness by increasing the portion of

local purchase overseas

•

Conducting life cycle assessment (LCA) by vehicle model

•

Conducting continuous monitoring of the inclusion of automotive items

•

Implementing practical ways to reduce carbon emissions

High

Physical

Acute

•

Increasing abnormal weather phenomena

(typhoons, floods, heavy snowfall, etc.)

•

Damage to facilities, production facility shutdown and delays, etc.

•

Increasing damage to business sites located on the coast

•

Increased market share due to stable product supply when

compared to competitors

•

Monitoring weather change

•

Establishing emergency response manuals

•

Strengthening stability in the workplace

High

Chronic

•

Increasing rate of sea level rise

•

Increased risk of flooding in most domestic workplaces located

near the coast

•

Attracting potential customers by supporting local communities

and helping them adapt to climate change

•

Conducting continuous monitoring of sea level rise

•

Reviewing plans to relocate business sites in the mid- to long-term

•

Establishing drainage measures to prevent flooding at business sites

located on the coast

High

Energy storage system

Advanced air mobility

Carbon border adjustment mechanism

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1. Introduction

Response to Climate Change

Carbon Neutrality

CARBON NEUTRALITY STRATEGY

Carbon Neutrality Direction

Hyundai is committed to its vision of “Progress

for Humanity”, valuing mobility for human being while ensuring minimal burden

on the environment. Hyundai has instituted the Integrated Solutions to Climate

Change to achieve carbon neutrality by 2045 at IAA Mobility in September

2021 as part of its efforts to pass on a sustainable global environment to future

generations and do the right thing for humanity. With Clean Mobility, Next-

Generation Platform, and Green Energy at its core, we will establish a sustainable

operating system for future generations by expanding our electrification

capabilities and transitioning to renewable energy. Additionally, we will continue

to strive to build a circular economy ecosystem with the goal of achieving

carbon neutrality across the entire mobility value chain.

Based on its own hydrogen energy production technology and integrated

solutions that encompass the entire city, Hyundai will realize a sustainable

future that includes not only electrification but also a hydrogen society and

smart cities. For the electrification business, we are considering ways to

reduce GHG emissions even after vehicle sales, such as recycling batteries.

In the hydrogen business, we plan not only to build a lineup of passenger and

commercial FCEVs, but also to promote storage, transportation, charging,

and production of hydrogen energy. Moreover, we are also accelerating the

development of new mobility based on eco-friendly power, such as advanced

air mobility (AAM) and purpose-based mobility (PBV), for a clean and mobility-

free urban lifestyle of the future.

Carbon Neutrality Targets

Hyundai’s carbon neutrality target goes far

beyond simply reducing GHG emissions at its business sites and aims

to completely eliminate and offset the GHG emissions generated by our

customer’s use of sold vehicles (Tank to Wheel) through electrification.

Regarding vehicle emissions, Hyundai aims to achieve 100% electrification

in the European market by 2035 and 100% electrification in other major

markets by 2040. In the emerging markets, we plan to accelerate

electrification by considering consumer needs, market conditions and

infrastructure construction status. To reduce GHG emissions in the process

of vehicle production, we will establish a cooperative system between

subsidiaries and directly produce renewable energy through solar panels,

etc. Additionally, we will implement RE100 (100% Renewable Energy)

by 2045 through renewable energy procurements (PPAs, RECs) and the

purchase of green premium electricity, among others. For supply chains

such as parts and raw materials, we will encourage them to achieve carbon

neutrality by 2045 by collaborating for energy transition and reducing carbon

emissions of critical raw materials supply chain.

To deal with residual carbon emissions, Hyundai will invest in CCUS and

will continue to pursue offsetting activities such as recycling second life

batteries for ESS and restoring marine ecosystems. In addition, we plan

to maximize the synergy between the hydrogen business and carbon

neutrality through hydrogen power generation and processes by using the

electrification process based on the hydrogen fuel cell system.

GHG reduction targets were established based on the “Science-based Target”, and the reduction targets were calculated for 100% of the base year's emissions.

Vehicle emissions: Emissions from the customer’s vehicle operation process (tank-to-wheel: TTW)

Supply chain emissions: Emissions from raw material and parts suppliers we aim to reduce and achieve encourage carbon neutrality

Business sites emissions (plants/buildings): Sum of Scope 1 + Scope 2 emissions

2045 Carbon Neutrality Roadmap

(Unit: tCO

-eq)

■ Vehicle emissions

■ Supply chain emissions

■ Business site emissions (Plants/Buildings)

Classification

2019 (base year)

2030

2035

2040

2045

Business

sites

Business site emissions

(2,705,383 tCO

-eq)

Reduction of 1,217,422 tCO

-eq

(45% down compared to 2019)

RE 60% transition

RE90% transition

RE100% achieved

Supply chain

Supply chain emisions

(20,024,630 tCO

-eq)

Cooperation with major suppliers

for raising awareness on carbon

neutrality and energy transition

Encouraging carbon reduction

in core raw material supply chain

Encouraging supply chain

to achieve carbon neutrality

Vehicles

Vehicle emissions

(97,941,942 tCO

-eq)

30% electrification

80% electrification

100% electrification

100% electrification of

Genesis vehicles

100% electrification of

European market sales

100% electrification of

major market sales

Accelerating electrification

in emerging markets

emissions

•

100% Electrification

of Genesis

•

Expanding the use of

renewable energy

•

100% Electrification

in European market

•

Electrification of all

commercial vehicles

in Korea

•

100% Electrification in

main market

•

Expanding the

application of hydrogen

technologies

2019

2030

2035

2040

2045

20,024,630

97,941,942

2,705,383

CARBON

NEUTRALITY

Social reduction offset

(offset/absorption)

Carbon Neutrality of Hyundai

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1. Introduction

FIVE MAIN AREAS TO ACHIEVE CARBON NEUTRALITY

Electronification

To achieve carbon zero beyond carbon reduction, Hyundai

has declared 100% electrification of the Genesis by 2030 and 100% electrification

in the European market by 2035 while aiming for 100% electrification for all

its vehicles sold in major markets by 2040. For commercial vehicles such as

large trucks and buses, we plan to completely convert all lineups to electrified

vehicles by 2028. We are also continuing R&D and investment in commercial

FCEVs. In 2023, we launched the UNIVERSE hydrogen electric bus in Korea and

introduced the XCIENT fuel cell tractor in North America.

Reducing Our Carbon Emissions at Work

Hyundai is an active supporter

for the Paris Agreement and recognizes its corporate role and responsibility

to reduce global GHG emissions. In this regard, we strive to achieve carbon

neutrality at our business sites by 2045 by switching to renewable energy,

improving the energy efficiency of production processes through the

introduction of high-efficiency motors and inverters, and utilizing hydrogen

energy. In the short term, in conjunction with the RE100 roadmap, we plan

to promote the transition from electric energy used in the manufacturing

process to renewable energy first. In the long term, our goal is to achieve carbon

neutrality by 2045 by expanding the application of green hydrogen and the use

of renewable energy in conjunction with the realization of a hydrogen society.

Social Activities for Reducing Carbon Emissions (treatment of residual

emissions)

In addition to reducing carbon emissions, Hyundai is strengthening

its activities such as carbon absorption and removal and resource recycling.

We developed CCUS technology in 2012 and has since applied it in Korea while

continuously pursuing designs that can recycle waste batteries and maximize

recycling at the scrap vehicle stage. We apply recycled plastic materials to wheel

guards, under covers, and battery trays while actively utilizing eco-friendly

materials in the production of the IONIQ 6.

Hydrogen Business Synergy Effects

Hyundai announced its hydrogen

business vision of “2040, The Completion of Hydrogen Energy Shift” in 2021,

based on which we are striving to increase the popularity of the hydrogen

business by focusing on three primary areas (scalability, economic feasibility,

and eco-friendliness) so that hydrogen energy could be used widely in all

areas of human life and industry, beyond the means of mobility, by 2040. To

achieve this vision, we will continue to grow and develop both our hydrogen

energy system-related business and technology use endeavors. We will

supply hydrogen energy systems at competitive prices and contribute to

carbon neutrality and environmental improvement through the transition to

hydrogen energy.

Support for Net Zero in the Supply Chain

In line with global trends such

as climate change, carbon neutrality, and ESG management, Hyundai

not only improves the quality and technology of its suppliers, but also

encourages and supports their carbon neutrality. To achieve this objective,

our initial step involves assessing the carbon emission status of our primary

suppliers. We will then identify key suppliers for enhanced management and

provide them with guidelines to align their practices with our sustainability

goals. Additionally, we plan to carry out reduction activities for each

supplier grouped according to their characteristics, and prepare supply

chain collaboration programs, including carbon neutrality education and

awareness raising. In particular, we will join forces with the suppliers of raw

materials with a high proportion of carbon emissions to promote a joint

response in conjunction with automotive design technologies, such as

recycling materials and expanding the use of new materials.

To restore sea forests, we plan to create sea forests

through seaweed planting activities in the coastal

areas of Korea whose ecosystem is severely damaged

due to ongoing sea desertification. Restoration of

sea forests will bring various positive effects, such as

reducing GHG emissions, improving species diversity

in marine ecosystems, and purifying marine water

quality by removing heavy metals such as nitrogen

and phosphorus. Through these efforts, we intend to

contribute to the preservation of the environment and

the response to climate change.

The project will include the planting of seaweed

in areas where ecosystems have been severely

damaged by marine desertification caused by rising

water temperatures and reckless development in

coastal areas. Sea forest restoration not only reduces

greenhouse gas emissions, but also has various

positive effects, such as promoting the diversification

of species in the marine ecosystem, purifying

marine water by removing nitrogen, phosphorus

and heavy metals, and contributing to communal

fishing. Hyundai will also contribute to environmental

preservation and respond to climate change through

a blue carbon seaweed related project that is currently

under the spotlight around the world.

* Source: Korea Fisheries Resources Agency

BUSINESS CASE

Blue Carbon Project

As part of implementing a unique carbon offsetting

strategies to respond to climate change, Hyundai has

been reviewing marine ecosystem restoration projects,

and has discussed cooperation plans with related

organizations for the creation of sea forests. Based on

these discussions, on May 10 of 2023, Hyundai signed

an MOU with the Ministry of Oceans and Fisheries and

the Korea Fisheries Resources Agency for cooperation

in the development of seaweed blue carbon.

The term “sea forest” describes a coastal area

characterized by abundant growth of seaweed, forming

a forest-like ecosystem that serves as a habitat for

diverse marine species. It is known to be able to absorb

carbon dioxide, in addition to its excellent ecological

value. Blue carbon refers to the carbon absorbed by

marine ecosystems such as seaweed and tidal flats.

Under this agreement, Hyundai will support research on

carbon reduction effects and development of related

methodologies so that seaweed blue carbon can be

officially recognized by the international community

as a carbon sink.

Furthermore, Hyundai plans to participate in the Sea

Forest Blue Carbon Council, which consists of the

Ministry of Oceans and Fisheries, the Korea Fisheries

Resources Agency, academia, and NGOs, according

to the agreement while striving to create synergies

by leveraging our global network. The Sea Forest Blue

Carbon Council is scheduled to be launched in the

second half of 2023 after discussing its composition.

With the goal of seaweed being registered as an

official sink of blue carbon with the Intergovernmental

Panel on Climate Change (IPCC), an organization

devoted to assessing the impact of climate change,

we will share research data and develop results.

As a member of the council, Hyundai will consider

methodology registration and R&D support while

serving as a potential source of blue carbon credits to

achieve carbon neutrality.

Response to Climate Change

ESG Magazine

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1. Introduction

Response to Climate Change

Monitoring GHG Emissions

Hyundai uses LNG as its main fuel to produce

the heat necessary for vehicle production and to heat its business sites, with

GHG emissions from LNG combustion accounting for a significant portion of

Scope 1 emissions. Our Scope 2 emissions from the use of electricity at our

business sites account for approximately 70% of all our Scope 1 and Scope 2

emissions. Scope 3 emissions refer to other indirect GHGs emitted outside

the company to produce goods and provide services for the company or to

consume products and services offered by the company. Emissions from the

use (driving) of vehicles sold by the company account for the largest share

(approximately 80%) in Scope 3.

Participation in the GHG Emissions Trading Scheme

The Greenhouse

Gas Emission Trading Scheme is a GHG reduction system that allows the

government to allocate emission rights on an annual basis to businesses that

emit GHGs in accordance with Article 17 of the Kyoto Protocol, so that they can

emit GHGs within the allocation range. Then their actual GHG emissions are

evaluated, and their remaining/insufficient emission rights can be traded with

other business sites. Hyundai strives not to exceed the government-allocated

emission allowance by setting strict GHG reduction targets and reducing

emissions through efficiency improvements and facility improvements at its

business sites. Additionally, we seek to minimize the financial losses caused by

the purchase of emission credits when we need to do so.

Data Disclosure through the Environmental Information Disclosure System

The environmental information disclosure system aims to enhance the

voluntary will of companies to promote environmental management in

accordance with the Environmental Technology and Industry Support Act.

It not only lays the foundation for environmental management throughout

society but also contributes to green loans and green investments for

eco-friendly companies by providing financial institutions with verified

environmental information. As a company subject to environmental

information disclosure, Hyundai discloses key information on environmental

management promotion system, resource and energy conservation, and

environmental pollutant emission reduction goals and achievements.

Hyundai energizes environmental management through the disclosure of

environmental information and increases achievements through continuous

environmental information management.

Hyundai manages Scope 1 and Scope 2 GHG emissions from activities at the

business sites owned, operated, and managed by the company, while further

strengthening management of Scope 3 emissions from upstream suppliers

and downstream distribution networks. Based on Scope 1, Scope 2, and Scope

3 emission data, we will promote effective GHG reduction activities and

investment through scientific estimation, analysis, and verification processes.

Third-party Verification of GHG Emissions

Hyundai undergoes third-

party verification of its GHG emissions. In 2022, we received independent

verification from LRQA (Lloyd’s Register Quality Assurance) for our GHG

inventory and energy consumption. In particular, we were evaluated for

compliance with the GHG protocol as well as the accuracy and reliability of

the information on direct GHG emissions (Scope 1), indirect GHG emissions

(Scope 2) from our domestic and overseas operations, and other indirect

GHG emissions (Scope 3).

Establishment of Supply Chain GHG Data Management System

In the

second half of 2023, we plan to monitor the carbon emissions of domestic

suppliers through the establishment of a carbon emission history

management system for our suppliers. Through the system, we intend to

provide a basis for our suppliers to calculate and manage their own GHG

data. By assisting suppliers in enhancing their capacity to measure and

manage GHG emissions, Hyundai is poised to play a leading role in carbon

reduction initiatives.

Scope 1 and Scope 2 Emissions

Classification

2020

2021

2022

Scope 1

716,237

724,013

704,726

Scope 2 (location-based)

1,680,079

1,660,058

(1,853,813)

Scope 2 (market-based)

1,684,121

Scope 1 + Scope 2

2,396,316

2,384,071

2,388,847

Emission intensity (GHGs emissions per vehicle produced)

0.642

0.616

0.597

Scope 3 Emissions

Classification

2020

2021

2022

Upstream

emissions

Supply chain (purchase of raw materials and parts)

17,014,155

18,359,619

19,852,763

Capital goods (purchase of furnishings and equipment)

139

326

Other energy-related activities (excluding Scope 1 and 2)

6)7)

93,518

149,556

145,177

Waste generated in operation

1,760

1,911

1,978

Employee business trip

5,222

7,069

21,370

Employee commuting (commuting buses)

14,314

5,911

6,617

Downstream

emissions

Transportation and distribution (by sea and land)

655,831

838,575

964,206

Use of sold vehicles (Tank to Wheel)

81,598,073

80,887,513

81,959,096

End-of-life treatment of sold vehicles (recovery, disassembly, disposal)

780,338

810,794

2,133,743

Leased assets (headquarters and leased office buildings)

3,325

804

539

Investments

10)

369,926

728,902

704,970

Scope 3

100,536,484

101,790,793

105,790,785

According to the results of the conformity assessment of the domestic emissions trading scheme, the 2021 emissions have been slightly adjusted.

In 2022, additional sites were added (Indonesia, Vietnam, and Mexico). The sum of Scope 1 and 2 emissions produced in 2022 excluding the added sites is 2,242,879tCO

-eq.

Scope 2 emissions: Addition of market-based emissions in 2022

Began to calculate the sum of Scope 1 and 2 emissions (market-based) in 2022

Some Scope 3 emissions increased because of reopening after COVID-19 recovery (increase in product sales, increase in employee business trips, normalization of supply chain, etc.)

Based on the country where the Headquarters is located

Upstream emissions of fuel consumed at business sites (excluding electricity and steam)

Excluding emissions before vehicles are fueled/charged (Well-to-Tank)

Emissions produced at the end-of-life treatment stage was increased due to the addition of emissions in 2022 produced during the recycling process

10)

Scope 1 and Scope 2 GHG emissions from six of the listed investee companies in which Hyundai owns more than 20% of the shares.

(Unit: tCO

-eq)

(Unit: tCO

-eq)

Major markets (Korea, U.S., Europe) 48%

Reducing Product Carbon Footprint

CONVERSION TO ELECTRIFICATION

Transition Direction of Electrification

Hyundai does its utmost to achieve

carbon neutrality by 2045 by promoting carbon reduction and zero-emission

in our vehicle sales. To accomplish this, we are transitioning our business

structure from internal combustion engine vehicles to an electrification-focused

approach. Hyundai is continuously developing and producing not only hybrid

and PHEVs but also EVs and FCEVs that have zero carbon emissions during

operation. Hyundai is prioritizing the development of EV-focused technologies,

such as the E-GMP (Electronic-Global Modular Platform), and enhancing the

performance of hydrogen fuel cell systems that can be applied to a variety

of types of vehicles, including passenger cars and commercial vehicles.

Additionally, we are actively driving the expansion of electric and hydrogen

infrastructure to ensure convenient and accessible charging and refueling

facilities anytime and anywhere. As a Mobility Solution Provider, we are not only

focused on improving the hardware performance of mobility devices but also

on strengthening our software capabilities to consistently provide optimized

services, generate revenue, and promote sustainable development.

Gaining EV Technology Competitiveness

To expand EV sales, Hyundai

is implementing a comprehensive battery strategy that combines three

key strategies – stable battery supply, next-generation battery technology

development, and modularization. To procure the required large-scale

batteries for the sale of 2 million EVs by 2030, Hyundai is strengthening

collaboration with global top-tier battery suppliers. In addition, we are

pursuing local battery sourcing in key production regions and establishing a

battery cell joint venture factory in Indonesia. We are focusing on maximizing

the performance of existing lithium-ion batteries to achieve EV performance

improvements and cost reductions. Simultaneously, we are also investing in

the development of next-generation battery technologies such as all-solid-

state batteries. Furthermore, Hyundai is working toward the standardization

and modularization of key EV components like batteries and motors through

the development of an integrated modular architecture (IMA) system, which

is expected to be completed by 2025.

Development of Dedicated EV Platforms

Hyundai's E-GMP is a vehicle

chassis that encompasses the battery, motor, and power electronics system.

It is a modularized and standardized integrated platform that allows for

the configuration of a variety of types of vehicles, thanks to its expandable

wheelbase. Additionally, Hyundai plans to introduce two dedicated EV

platforms – the “eM” platform for passenger vehicles and the “eS” platform

for PBVs. The eM platform features an expanded common range compared to

E-GMP, and will be developed in a form that can be applied to all segments. eS

will be developed with a flexible structure and will play a key role in responding

to B2B demand such as delivery and car hailing. We are developing our

next-generation EV-dedicated platforms with the goal of increasing battery

capacity by 40% and motor output by 28%, while raising competitiveness by

increasing the charging time following increased battery capacity. In addition,

we are seeking to reduce the slow charging time by 50% compared to the

current level. In terms of safety, we plan to introduce a new structure that will

not be exposed to flames in the event of a battery fire, while maintaining the

existing highest crash safety performance in all regions.

Standardization and Modularization of Core EV Components

Hyundai aims

to standardize a total of nine types of battery systems, allowing for easy

response to battery demand based on vehicle class. Furthermore, we plan

to transition from the current “cell-to-module” structure to a “cell-to-pack”

approach by 2025, removing the module stage. This transition is intended to

enhance energy density and improve overall battery performance.

Expanding EV Charging Infrastructure

Hyundai is expanding the charging

infrastructure for EVs and FCEVs to enhance the convenience of using eco-

friendly vehicles and accelerate their adoption. In Korea, we have been

expanding our service operations for the high-speed EV charging service known

as “E-pit” ever since its launch in 2021. In Europe, we are expanding high-speed

charging infrastructure through strategic investment in IONITY, an EV charging

network company. In the U.S., we have entered into a business agreement with

global energy company Shell to explore and review options for expanding EV

charging infrastructure and enhancing charging convenience.

E-pit – Ultra-fast EV Charging Station

E-pit provides the fastest charging speed

in South Korea, allowing EVs to be charged in less than 18 minutes (based on

the IONIQ 6, from 10% to 80% battery charge with a 350-kW ultra fast charger.)

Furthermore, E-pit offers several services to its customers, including Digital

Queue which provides estimated charging time and queue information to users;

Plug & Charge Technology which enables users to automatically authenticate,

charge, and make payments; Digital Wallet which allows users to authenticate

and make charging payments even at other charging networks; and Route

Recommendation which guides users to the nearest available charging station

with the optimal route.

H Moving Station – Mobile Hydrogen Charging Station

H Moving Station

is a mobile charging station (truck) that can be easily moved to areas where

hydrogen charging stations are not provided or are out of order. Hyundai’s

mobile hydrogen charging station, H Moving Station, can store 80 kg of

hydrogen per unit and charge up to 25 FCEVs per day with a charging pressure of

350 bar. In particular, these charging pressure figures are in accordance with the

international standard charging protocol (SAE J2601), and durability and safety

for mobile facilities are also procured. Going forward, we will expand operations

to enable the charging of a variety of mobilities such as heavy equipment and

drones that use hydrogen fuel.

2030 Mid-to Long-term Electrification Strategy

In its efforts to achieve

the 2030 electrification strategy goals, Hyundai is pursuing a comprehensive

electrification strategy that includes expanding production within regions where

there is high demand for EVs, developing next-generation battery technologies,

implementing battery modularization, and enhancing the marketability of

EVs through the integration of hardware and software. In particular, we are

accelerating the transition toward carbon neutrality by pursuing the following

electrification initiatives of achieving 100% electrification for Genesis vehicles

by 2030, 100% electrification in the European market by 2035, and 100%

electrification in major markets by 2040.

We plan to increase our share of global EV production from 8% in 2023 to

34% by 2030, while gradually expanding our regional production volume by

employing a two-track approach to line conversion and the establishment of

new plants, rather than focusing solely on production in Korea.

ESG Magazine

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4. Governance

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1. Introduction

Response to Climate Change

Vehicle Electrification Roadmap by 2030

2045

• 100% electrification of

Genesis models

• 100% electrification for

the European market

• 100% electrification for

the major markets

• Accelerate electrification for

the emerging markets

(carbon neutrality achieved)

2030

2035

2040

Transition to EV Production

Increase the portion of EV production

efﬁciently through transition to EV lines

and addition of new dedicated EV plants

by region

Global EV production portion

54%

30%

2023

2026

2030

Europe

16%

2023

2026

2030

Others

75%

37%

0.7%

2023

2026

2030

U.S.

36%

24%

14%

2023

2026

2030

Korea

2023

2026

2030

34%

18%

EXPANSION OF ELECTRIFICATION

Starting with the development of the dedicated eco-friendly model

IONIQ in 2016, Hyundai unveiled the Kona EV, a compact SUV, in 2018, which

was followed by the 2020 launch of IONIQ, a dedicated EV brand based on

E-GMP. As of 2022, we have six EV models (3 models from Hyundai and 3

models from Genesis), including the IONIQ 6. Hyundai’s global EV sales in

2022 stood at 210,352 units, up 49.1% from the previous year.

HEV and PHEV

Hybrid models are available for all models except for large

SUVs and small sedans such as IONIQ, Elantra (AVANTE), Kona, Sonata,

Tucson, Santa Fe, and Grandeur. We are also offering a plug-in hybrid lineup

in our IONIQ, Sonata, Tucson, and Santa Fe models. In 2022, Hyundai’s global

HEV sales volume stood at 239,181 units and PHEV sales were 46,043 units,

up 2.6% and 20.3%, respectively, from the previous year. Going forward, we

will increase the sales portion of HEVs and PHEVs to 15.6% of the entire sales

volume with sales of 910,200 units (HEV:873,900, PHEV:36,300) by 2030.

EV Sales Performance and Expansion Plan

EV Sales Performance

In 2022, Hyundai’s EV sales volume is 210,352 units,

accounting for approximately 5.3% of total vehicle sales. This figure grew by about

49.1% compared to 2021 EV sales of 141,101 units. In particular, IONIQ 5, IONIQ 6,

and GV60 based on the EV-dedicated platform E-GMP led EV sales growth.

EV Sales Goal

As global EV demand grows faster than market forecasts,

we have raised the 2030 sales target that we announced at the 2022 CEO

Investor Day from 1.87 million to 2 million units. We have also raised our sales

targets for each of our major regions, and are prepared to flexibly adjust

those sales targets according to regional market demand.

Expansion of Models Based on EV-dedicated Platform

Hyundai plans to

launch the IONIQ 7 in 2024 following the release of the IONIQ 5 and the

GV60 in 2021, based on the first EV-dedicated platform E-GMP, and the

IONIQ 6 in 2022. Based on the next-generation EV-dedicated platform,

which will inherit the original features of, and further develop, the E-GMP, we

plan to expand our EV lineup significantly by launching nine new models (four

Hyundai and five Genesis models) from 2025 to 2030.

FCEV

The NEXO, launched by Hyundai in 2018, is a leading FCEV with a

maximum driving range of 611 km (US certification) and a charging time of

about 5 minutes (6.33 kg per charge). We are expanding our FCEV lineup by

expanding our FCEV leadership and mass-producing the Elec-City fuel cell

bus, and the XCIENT fuel cell heavy-duty truck. Hyundai’s global FCEV sales

in 2022 stood at 11,217 units, up 22.5% from the previous year.

Other Eco-friendly Vehicles

Hyundai has also launched regional eco-

friendly models that run on bioethanol, liquid petroleum gas (LPG) and

compressed natural gas (CNG). In South America, we launched the HB20, a bi-

fuel vehicle, to meet the demand for bioethanol, while in India we introduced

the Aura CNG model to respond to the country’s growing demand for CNG.

Going forward, we are aiming to expand the sales portion of flex-fuel vehicles

and liquid petroleum gas vehicles to 5.2% and 1.5% by 2030.

ESG Magazine

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1. Introduction

Response to Climate Change

Sales of Other Eco-friendly Vehicles

(Unit: Vehicles)

2019

2020

2021

2022

Flex-feul vehicles

(Bio-ethanol/Bi-fuel)

201,874

152,977

179,193

195,485

Compressed Natural

gas vehicles

3,005

1,352

1,489

1,581

Liquid petroleum

gas vehicles

59,634

49,534

40,350

35,797

Total

264,513

203,863

221,032

232,863

Global Sales of Electrified Vehicles

(Unit: 1,000 units)

EV Sales Goal for 2030

(Unit: 10,000 units)

Europe

U.S.

Korea

Others

2026

(18% of total sales)

2030

200

(34% of total sales)

2023

(8% of total sales)

■

HEV

■

PHEV

■

FCEV

110

136

141

234

210

239

192

259

422

507

2019

2020

2021

2022

Development of EV Battery Efficiency Improvement Technology

Hyundai

continues to research and develop “thermal management technology” to

minimize the waste heat in EVs and increase battery efficiency. To minimize

the energy supplied from the battery for heating, Hyundai has developed

“radiant heat warmer” technology, which raises the temperature of the

heating element based on radiant heat. We have also developed the “heated

glass defrost system” technology, which uses heated glass to remove

snow and ice from the front windshield, rather than using hot air. Hyundai's

dedicated EV batteries are designed to provide a maximum driving range

of 250,000 to 300,000 kilometers when reaching 70-80% of battery

performance. This translates to a cumulative usage of 12 to 15 years when

assuming an annual driving distance of 20,000 kilometers. Furthermore, to

maintain optimal charging speed and efficiency under a variety of weather

conditions, Hyundai is developing an “external thermal management

station”. This system injects cooling water of the required temperature from

the outside during charging to optimize the battery temperature.

Battery Management Based on Digital Twin

Hyundai is implementing

digital twin technology to manage the performance of a key component of

EVs – batteries. The battery life prediction technology, utilizing digital twin,

analyzes a variety of factors based on the actual vehicle's driving history to

continuously re-evaluate the battery life, enabling more accurate battery life

predictions. By creating a virtual EV in the digital world based on a variety

of driving data collected from real-world driving of EVs (such as the IONIQ

5), Hyundai predicts the battery life for each vehicle. The integration of AI,

machine learning, and physics models is utilized in a sophisticated data

analysis model to comprehensively analyze vehicle-specific information,

including charging/discharging, driving habits, parking, and driving

conditions, which can impact EV battery performance. This approach aims

to increase the accuracy of battery life predictions.

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1. Introduction

Response to Climate Change

IMPROVING FUEL ECONOMY

Improvement of Vehicle Fuel Economy

Hyundai is aiming for a long-

term transition to EVs while also making efforts to minimize greenhouse gas

emissions from ICEVs which take large portion of our total sales volume as

of current. Through continuous research and development of powertrain

efficiency improvement, we are adapting to country-specific fuel economy and

emission regulations while achieving greenhouse gas reduction during vehicle

operation. Furthermore, we are focusing on R&D aimed at making vehicles

more lightweight, enhancing aerodynamics, and other measures to improve fuel

economy, thus enhancing both environmental and economic benefits.

Technologies to Enhance Vehicle Fuel Economy

The 7th generation

Grandeur, launched in 2022, was able to reduce its carbon emissions despite

increased vehicle specifications and improved convenience features, thanks

to aerodynamic enhancements and a variety of fuel economy technologies.

Compared to the previous models, the 7th generation Grandeur achieved a

maximum 9.2% reduction in carbon emissions, decreasing from 178 g/km

to 163 g/km. The hybrid model, in particular, achieved an additional 10.2%

reduction, lowering carbon emissions from 97 g/km to 88 g/km. This was

achieved by setting development goals for aerodynamic improvements in

design and engineering across a variety of areas, such as optimizing bumper

curvature, trunk end kick-up, and full undercovers, as well as applying

technologies like air guards (ICEV) and active air flap (HEV) to reduce cooling

resistance. In addition, the optimal injection method suitable for driving

conditions was achieved by applying the 3rd generation powertrain involving

the advantages of both MPI and GDI, resulting in a 4.9% improvement

in fuel economy. The integration of a flow control valve also allowed for

optimizing cooling water temperature control based on driving conditions,

further enhancing fuel economy. Furthermore, the addition of fuel economy

technologies such as Continuously Variable Valve Duration (CVVD) in the

intake system and Low-Pressure Exhaust Gas Recirculation (LP-EGR) in the

HEV powertrain contributed to the reduction of carbon emissions.

Making Vehicles Lightweight

Hyundai uses not only carbon-fiber-reinforced

plastics but also lightweight materials such as aluminum, clay nano, and clad

metal. The Genesis G70, for example, incorporates aluminum in its hood (-9.1

kg), front suspension (-6.7 kg), and rear suspension (-5.2 kg), resulting in a

weight reduction of 29.7 kg.

Enhancing the Public Confidence in Fuel Economy Testing

Hyundai

complies with the fuel economy regulations of key markets such as Korea,

North America, Europe, China, and India. To obtain fuel economy certification,

we conduct tests according to the standards of each country. To enhance

the reliability of fuel economy and emission measurements conducted in

controlled conditions (on-cycle), Hyundai undergoes inspections of fuel

economy measuring equipment by external specialized organizations

such as the Korea Laboratory Accreditation Scheme (KOLAS) and the

Korea Automotive Technology Institute (KATECH). Furthermore, Hyundai

collaborates with a variety of government research institutes and conducts

fuel economy tests jointly to ensure public confidence in the accuracy of the

fuel economy measurement results. The results of on-cycle and off-cycle test

comparative analysis are reported to the executive in charge of powertrain

research and development at least once a year.

Real-Road (Off-Cycle) Fuel Economy Test

The vehicle fuel economy is

influenced by a variety of factors, including internal factors such as gear shifting,

vehicle weight, and air conditioning, as well as external factors like road conditions

and traffic congestion. In light of this, Hyundai conducts fuel economy tests not

only in controlled conditions (on-cycle) considering a variety of factors but also

performs off-cycle tests that simulate real-world driving profiles.

Collaboration with Third-Party Agencies

Hyundai conducts correlation

analysis between the fuel economy test results obtained from real-world (off-

cycle) tests and those of other organizations. In the US market, we compare

our fuel economy data with those published by third-party organizations

such as the EPA, J.D. Power, and Consumer Reports. In the European market,

comparisons are made with data from third-party organizations such as

Green NCAP, Auto Bild, and Spritmonitor. By comparing the fuel economy

measurement results with those of third-party organizations in each country,

we enhance the credibility of our own fuel economy test results.

Certified Energy Efficiency by EV Model

Model

Korea (Combined)

Europe (WLTP)

U.S. (EPA)

Electrified G80

4.3 km/kWh

19.1 kWh/100km

97 MPGe

Electrified GV70

4.6 km/kWh

19.2 kWh/100km

91 MPGe

GV60

5.1 km/kWh

17.0 kWh/100km

112 MPGe

Kona Electric

5.5 km/kWh

14.7 kWh/100km

120 MPGe

IONIQ 5

5.2 km/kWh

17.0 kWh/100km

114 MPGe

IONIQ 6

6.0 km/kWh

14.3 kWh/100km

140 MPGe

IONIQ Electric

6.3km/kWh

13.8 kWh/100km

133 MPGe

Electriﬁed G80 (19-inch, 2,265 kg), Electriﬁed GV70 (19-inch, 2,230 kg), GV60 (standard 2WD), Kona Electric (long range, 1,720kg), IONIQ 5 (long-range 2WD exclusive,

without built-in cam), IONIQ 6 (long-range 2WD, 18-inch)

Europe and the USA make distinctions based on the representative TRIM standards for each model

FCEV Battery Performance

Vehicle

Fuel tank capacity

Fuel economy (combined)

Driving distance per charge

Warranty period for separately

guaranteed parts

Nexo

6.33 kg / 156.6 Liter

96.2 km/kg

609 km

10 years, 160,000 kilometers

Based on Modern I 17-inch tire

Responding to Fleet average CO

standards (Fuel Economy) in Major

Markets

The fleet average CO

standards or corporate average fuel

economy regulations, implemented in major countries, are continuously

being strengthened to achieve their carbon reduction goals. In the EU,

regulatory targets have been adopted to reduce passenger car CO

emissions by 55% by 2030 compared to 2021 and achieve complete

decarbonization of vehicle CO

emissions by 2035. The US government

has announced regulations starting in 2023 to progressively increase fuel

economy standards by 5-10% annually, aiming to reach 55 miles per gallon

by 2026. They have also set a target to replace 50% of new vehicle sales

with electrified vehicles (including EVs, PHEVs, and FCEVs) by 2030. The

government of California in the U.S. plans to replace 35% of new vehicle

sales with zero-emission vehicles (including EVs) starting from 2026,

increasing to 68% by 2030, and has set plans to prohibit the sale of new

internal combustion engine vehicles starting from 2035.

Hyundai is expanding the sales of electrified vehicles in response to the

strengthening of CO

regulations in major regions until 2030, aiming to

reduce the average carbon emissions of our fleet in each region. We have

a long-term goal of achieving zero fleet carbon emissions, and to minimize

regulatory risks, we at Hyundai are calculating and incorporating the

regulatory compliance volume, including the volume of EVs, into our annual

sales volume plan. We also monitor and evaluate regulatory compliance

based on monthly sales performance. To prepare for the possibility of not

meeting regulations, we adjust our sales volume and utilizes a variety of

measures such as the use of accumulated credits to mitigate regulatory risks

in advance.

The EU has finalized its goals through a resolution by the European

Parliament, which includes reducing the current fleet average CO2 standards

for passenger cars (119 g/km based on WLTP), with an aim to achieve a 15%

reduction by 2025 and a 55% by 2030 compared to the levels in 2021. In

addition, the EU has set a goal to achieve a 100% reduction in emissions

from passenger cars by 2035. As a result of these regulations, starting from

2035, the sale of new ICEVs in the EU market will be practically impossible.

Furthermore, countries like Norway, the Netherlands, and Germany are

even pursuing individual national policies to prohibit the sale of new internal

combustion engine vehicles earlier than 2035.

Korea

Korea has strengthened its GHG regulations related to automotive emissions, demanding a reduction in vehicle emissions from 97 g/km in 2020 to 89 g/km by 2025 and 70 g/km by 2030. In case the emission limits are exceeded, a fine of

KRW 50,000 per gram is imposed. Furthermore, a basic plan has been presented to promote eco-friendly vehicles, aiming to supply 2.83 million units by 2025 and 7.85 million units by 2030, leading to a 24% of exhaust gas emission reduction.

U.S.

The US government has increased their average fuel economy target from

40 miles (64.4 km) per gallon to 55 miles (88.5 km) per gallon by 2026. They

have also set a goal to reduce greenhouse gas emissions from 224 grams

per mile to 161 grams per mile by 2026. Furthermore, both the federal and

state governments are expanding incentives for the transition to eco-friendly

vehicles through increased purchase subsidies. The federal government has

set a goal to transition 50% of all vehicles, including electric vehicles (EVs), to

zero-emission vehicles by 2030. Additionally, the California state government

is pursuing a policy to ban the sale of internal combustion engine vehicles

starting in 2035.

China

The Chinese government is also continuously strengthening fuel efficiency

regulations and enhancing the mandatory sales requirements for new

energy vehicles (NEVs), including EVs. In particular, they aim to progressively

increase the mandatory sales share of NEVs, reaching 20% by 2025, 40%

by 2030, and 50% by 2035. Additionally, they have set a target for EVs to

account for over 95% of NEV sales by 2035.

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1. Introduction

Response to Climate Change

6.00

6.28

Average Fuel Economy in China

(Unit: L/100km)

2021 performance is not able to be compared with the performance of prior years

for the Chinese government changed the fuel economy certification standard from

NEDC to WLTP.

WLTP

6.15

6.28

2018

2019

2020

2021

2022

NEDC

5.61

The average fuel economy in the U.S. and China is determined annually based on

the average fuel economy performance of individual car brands as disclosed by

the respective government agencies (NHTSA) in the U.S. and the Ministry of State

Security in China).

Average Fuel Economy in the US

(Unit: mpg)

2018

2019

2020

2021

2022

36.1

27.2

27.1

29.4

30.9

Light truck

Passenger vehicle

Combined

Average CO

Emissions in the EU

(Unit: g/km)

2021/2022 performance is not able to be compared with the performance of prior

years for the EU Commission (EC) changed the CO

emission standard from NEDC

to WLTP; and the regulatory value was also from 95 g/km (2020) based on NEDC

to 112.5 g/km (2021) based on WLTP according to the change of methodology.

The figure for 2021 has been revised from our internal estimate (109.7 g) to the

officially announced figure by the European Commission (107.1 g).

***

The input figure for 2022 is based on our sales performance and is our own estimate.

Going forward the final confirmation of the figures by the EC will be necessary.

WLTP

124.3

123.5

94.7

107.1

106.0

2018

2019

2020

2021

2022

NEDC

38.9

38.5

40.0

42.8

45.1

38.1

38.0

39.3

40.8

38.5

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1. Introduction

Response to Climate Change

Carbon Reduction at Business Sites

DIRECTION OF CARBON REDUCTION AT BUSINESS SITES

Energy Efficiency

Hyundai acknowledges and supports the direction

and goals set by the 2015 Paris Agreement, and we recognize our role and

responsibility in global greenhouse gas reduction and have been actively

developing and implementing a variety of energy-saving initiatives. Leading

example includes the adoption of energy-efficient facilities to reduce energy

consumption in our operations, and we strive to transition to renewable

energy sources as part of our commitment to sustainability.

Carbon Capture Utilization and Storage

To achieve carbon neutrality, it is

necessary to cease the use of fossil fuels in the automotive manufacturing

process. However, reaching the target point for energy transition requires a

significant amount of time. During this transitional period, Carbon capture

utilization and storage (CCUS) technology, which involves capturing and

processing CO

emitted from fossil fuel combustion, is being recognized as

a practical solution and a high-potential means for carbon neutrality.

TRANSITION TO RENEWABLE ENERGY

RE100 Implementation Plan

Hyundai, along with other major Group

affiliates of Kia, Hyundai MOBIS, and Hyundai WIA, declared our commitment

to the global initiative RE100 in July 2021, aiming for 100% renewable energy

usage. In April 2022, this commitment was approved. Hyundai now aims to

achieve 100% renewable energy transition by 2045, ahead of the RE100’s

target year, 2050. To achieve this goal, we take into account the renewable

energy supply environment, government policies and regulations, and plant-

specific conditions in each country. We plan to install solar panels on the

roofs of key production plants, purchase renewable energy certificates, and

establish power purchase agreements (PPAs) with external renewable energy

generators. The aim is to gradually expand the use of renewable energy until

2045 by applying optimal solutions. Hyundai’s manufacturing subsidiaries in

the United States, India, and Turkey, specifically, have set a target to achieve

RE100 by 2025.

ADOPTION OF RENEWABLE ENERGY AND ENERGY SAVING AT MAJOR

BUSINESS SITES

R&D Sites

To reduce GHG emissions, Hyundai utilizes recycled waste heat

and steam from facilities and equipment in its research facilities. We also

harness waste heat generated during waste disposal. In addition to the

existing 562 kW-scale photovoltaic power generation facility, we plan to

install an additional 3 MW-scale facility.

Hyundai Motor India (HMI)

HMI sources approximately 33.3% of its total

electricity consumption through the purchase of eco-friendly energy (PPAs) to

power its factories, and 8.5% of its electricity is purchased through renewable

energy certificates (RECs). Furthermore, HMI has its own photovoltaic power

generation facility, with a capacity of 0.3% (0.69 MW). It procures 42.1% of its

total electricity from renewable sources and aims to meet 100 percent of its

electricity consumption with renewable energy by 2025.

Hyundai Motor Manufacturing Indonesia (HMMI)

HMMI achieved RE100

in its vehicle production in 2023 by signing a forward purchase agreement

for RECs issued by a geothermal power plant located in Bandung in the West

Java province.

Hyundai Motor Manufacturing Czech (HMMC)

HMMC has transitioned

to 100% renewable energy for the electricity used in its plant through the

guarantee of origin (GO) system in 2022. It has also implemented the Eco

Smart vapour emission control (VEC) system, based on the gas monitoring

system in the paint shop, to improve energy efficiency. In addition, HMMC

is implementing measures such as compressed air supply control and LED

lighting replacement to reduce energy consumption.

Hyundai Assan Otomotiv Sanayi (HAOS)

HAOS in Turkey set the goal of

achieving RE100 by 2025, so did HMI and HMMC. HAOS procures 51.7% of

its total electricity from renewable sources, and it has also implemented a

variety of process improvements and introduced state-of-the-art equipment,

such as reducing compressed air usage and installing high-efficiency

inverters, to minimize unnecessary power consumption.

Hyundai has been developing CCUS technology to capture carbon emitted

by LNG in manufacturing processes, given that a large amount of the fuel is

used despite its relatively low carbon emissions among fossil fuels. In addition,

Hyundai’s research institute is conducting CCUS pilot studies to commercialize

the technology, aiming to extend its application beyond the automotive industry

to other business sectors. Continuous market monitoring is also being carried

out to stay updated on the latest developments in CCUS technology.

Improvement of Production Process

Hyundai is committed to improving

energy efficiency in our production processes through a variety of efforts.

We plan to incorporate high-efficiency motors and inverters and transition to

renewable energy sources. By using hydrogen energy, we aim to achieve carbon

neutrality at our business sites by 2045, and we will be replacing fossil fuels and

electric energy used in the manufacturing process with renewable energy. Also

planned is to enhance the efficiency of the paint process, which primarily uses

LNG fuel, through the introduction of high-efficiency equipment, waste heat

recovery, and process improvements.

Sites with the Energy Management System (ISO 50001) Certification

Site

Certificate validation date

Beijing Hyundai Motor Company

(BHMC)

Jan. 26, 2025 (Renhe/Yangzhen Plants)

Dec. 12, 2024 (Changzhou Plant)

Site

Certificate validation date

Hyundai Motor India (HMI)

Oct. 04, 2024

Hyundai Assan Otomotiv Sanayi

(HAOS, Turkey)

Jul. 16, 2024

Energy Consumption

(Unit: MWh, MWh/vehicle)

Classification

2020

2021

2022

Non-renewable energy

consumption

LNG

3,534,350

3,562,760

3,442,276

Diesel, kerosene, gasoline

184,158

154,015

131,268

Steam, heat

98,777

90,510

94,027

Other fuel

123,433

143,460

172,986

Electricity (non-renewable)

3,344,292

3,338,657

3,377,133

Renewable energy consumption

Electricity (renewable)

70,376

120,171

280,498

Total of energy consumption

7,355,386

7,409,573

7,498,188

Energy intensity

1.97

1.91

1.87

Intensity: A value representing the environmental resources used or the environmental impact emitted when producing one car

Due to changes in energy consumption calculation criteria and an expansion of the calculation scope, the data for previous years has been revised.

In 2022, additional sites were added (Indonesia, Vietnam, and Mexico). The total of energy consumption in 2022 excluding the added sites is 7,217,893 MWh.

RE100 Roadmap

Jul. 2021

Apr. 2022

2030

2040

2045

• Declared the joining of

RE100

• Received the approval

to join RE100

• Aim to achieve 60%

electricity transition to

renewable energy

• Aim to achieve 90%

electricity transition to

renewable energy

• Aim to achieve 100%

electricity transition to

renewable energy

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1. Introduction

Response to Climate Change

Life Cycle Carbon Reduction

CARBON REDUCTION IN THE SUPPLY CHAIN

Supplier Carbon Neutrality

Hyundai is committed to encouraging its

tier-1 part suppliers and raw material suppliers to achieve supply chain

carbon neutrality. GHG emissions generated by our raw material supply

chain are 20 million tons, which is about 18% of total GHG emissions

generated throughout the life cycle of Hyundai’s products. To support

the carbon neutrality of suppliers, we plan to establish a monitoring and

management system for suppliers' carbon emissions. In the long term,

we plan to promote carbon reduction in the supply chain through eco-

design and the use of low-carbon materials. In addition, we developed and

distributed the Carbon Neutral Guide for Suppliers and plan to introduce

the CDP Supply Chain program starting from 2023 to engage suppliers

in environmental initiatives and support them. As such, we are making

multifaceted efforts to reduce GHG emissions throughout the entire

automotive manufacturing process in addition to helping our suppliers

reduce their carbon emissions.

Support for Suppliers’ Carbon Reduction Efforts

Hyundai conducts surveys

on suppliers' carbon emissions and reduction plans, and based on the

results, we establish and implement initiatives to support suppliers’ carbon

reduction. We offer training courses to raise awareness of carbon neutrality

among suppliers' employees and provide them with guidelines for

implementing carbon neutrality. In March and July 2022, we operated the

Supplier Carbon Neutrality Council to gather opinions on Hyundai's carbon

neutrality strategy and exchange views on key issues. Furthermore, we set

greenhouse gas emission standards and targets for top-emitting suppliers

and promote their establishment of internal carbon neutrality response

systems through support activities.

Participation in CDP Supply Chain

Hyundai and Kia have jointly joined

CDP Supply Chain in 2023. CDP Supply Chain is one of the environmental

disclosure projects operated by CDP, which enables the assessment of

suppliers' carbon-related information such as climate change issues,

strategies, carbon emissions, and more. To facilitate smooth participation

of suppliers in CDP Supply Chain, Hyundai provides on/offline training

on a variety of topics including carbon neutrality overview, emissions

calculation, and questionnaire guidance to some 360 tier-1 suppliers

in Korea. Continuous support is also offered through the production of

instructional videos and the operation of a Help Desk.

Creation of an Ecosystem for Low Carbon Logistics and Transportation

Hyundai strives to reduce carbon emissions from the “first mile” stage,

where freight moves from production plants to logistics warehouses, to

the “middle mile” and “last mile” stages, where it moves from warehouses

to a variety of hubs. In the first mile stage, hydrogen-powered electric

trailers suitable for long-distance driving are being deployed. In the middle

mile and last mile stages, electric trucks and other innovative technologies

such as EVs, FCEVs, urban air mobility, and robotics are being utilized to

lead the reduction of carbon emissions in the logistics and transportation

service ecosystem. Furthermore, Hyundai has signed a multi-stakeholder

agreement with Hyundai Glovis, the Ministry of Land, Infrastructure

and Transport, the Ministry of Trade, Industry and Energy, and the

Ministry of Environment to expand the electrification of the logistics and

transportation sector by 2030. Hyundai is striving to distribute 10,000

hydrogen-powered trucks in the logistics field by 2030.

Activities for Supporting Suppliers’ Carbon Reduction Efforts

Activity

Description of activities

Training for and

raising awareness

of suppliers

•

CEOs: Hosting the Partnership Day for suppliers and introduce

Hyundai’s carbon neutrality strategies

•

Employees: Offering training on the enhancement of suppliers’

capabilities of carbon neutrality (Global Partnership Center)

Operation of the

Supplier Carbon

Neutrality Council

•

Convening the Supplier Carbon Neutrality Council

(March and July 2022)

•

Gathering opinions on Hyundai’s carbon neutrality strategies

and exchange opinions on major issues

Providing

suppliers with the

carbon neutral

guide for suppliers

•

Presenting suppliers with an implementation guide to

promote carbon neutrality

•

Establishing an in-house management system, reducing

GHG emissions at business sites/supply chain/logistics,

disclosing emission information, etc.

Activity

Description of activities

Survey of

suppliers’ GHG

emissions

and energy

consumption

•

Investigating GHG emissions and energy consumption of

parts suppliers, etc.

•

Promoting the establishment of a supplier carbon emission

management system (second half of 2023)

Review of

suppliers’

reduction targets

and development

of support

programs

•

Specifying suppliers’ GHG emission reduction plans

(criteria and targets)

•

Promoting projects such as support for carbon reduction

facilities for suppliers and consultation on GHG emission

diagnosis

Roadmap for Supply Chain Carbon Neutrality

Encourage energy transition of

major suppliers

Encourage carbon reduction in

the supply chain of key raw materials

Encourage carbon neutrality of

supply chain

2019 (Base Year)

2030

2040

Establish supplier carbon

neutrality management system

Apply low-carbon

raw materials

2045 (Target Year)

Carbon neutrality

Supply Chain Carbon Information Disclosure & Services for Logistics/Transportation Energy Efficiency

When used as a packaging material for automobile parts, foldable plastic boxes can be recovered and folded up to a fifth of their size, greatly increasing the amount of boxes that

can fit into a collection container.

Eco-driving of

cargo vehicles

Achievement of

packaging efficiency

Transitioning to eco-friendly

transportation means

•

Enhancing the integrated transportation management system within the logistics business and

improve the fuel efficiency of cargo vehicles

•

Monitoring fuel efficiency improvement activities by installing a digital tachograph (DTG)

•

Reducing the amount of energy used for collecting packing materials through the

development of foldable plastic boxes

•

Pursuing packaging efficiency through cooperation with suppliers and expand logistics

energy

efficiency

•

Enhancing energy efficiency and reduce GHG emissions through coastal shipping

Services for

enhancing the

efficiency in

logistics and

transportation

Goal

•

Establishing a plan to specify and support our supply chain carbon reduction strategy by

disclosing information on carbon emissions of suppliers

Efforts for education

and support

•

Conducting on/offline education related to CDP Supply Chain (carbon neutrality overview and

emission calculation, guidance on questionnaire items, etc.)

•

Continuing support for suppliers by offering educational videos, verifying carbon emissions,

and operating a help desk

Future utilization measures

•

Planning to upgrade the calculation of carbon emissions (Scope 3, Category 1) at suppliers’

workplaces using the CDP supply chain

•

Planning a review to reflect CDP supply chain results in purchase policy

Disclosure of

carbon

information of

the supply chain

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1. Introduction

Response to Climate Change

LCA Expansion

Based on the LCA process established until 2021, LCA

was conducted for four powertrains (ICEV, HEV, EV, FCEV), a total of 14

passenger vehicle models and 2 commercial vehicle models in 2022. In

addition, the Genesis brand has completed LCA for all of its vehicle models.

Use of LCA

Hyundai comprehensively analyzes the environmental

impacts at each stage of the entire process based on the results of LCA.

Using this information, we identify and promote activities to improve the

environmental friendliness of our vehicles. In the raw material extraction

stage, we are expanding the use of eco-friendly steel and aluminum

materials. In the part-manufacturing and vehicle-production stages, we

are committed to carbon neutrality through initiatives like RE100 and

resource circulation. When developing new models, we aim to minimize

environmental impacts by considering LCA.

LCA Results

As of 2022, we have completed LCA for a total of 20 vehicle

models. The LCA results of 14 passenger vehicle models that underwent

LCA are shown on the right. The results for the remaining factors, such as

parts manufacturing and vehicle maintenance stages, which are currently

not included, will be addressed and improved through advanced LCA

methodologies.

Impacts Covered by LCA

Ecological consequences

Resource use

Human health

Acidification

(AP)

Ecotoxicity

(ETP)

Eutrophication

(EP)

Abiotic depletion

(fossil fuels,

minerals)

Human Toxicity

(HTP)

Global Warming

(GW)

Ozone

Depletion

(ODP)

Photochemical

Ozone Formation

(POCP)

Water Depletion

Vehicle Chain

Life Cycle

Manufacturing of

components

Transport of

components

Manufacturing of

vehicles

Distribution of

vehicles

Operation of

vehicles

End-of-life

treatment

Extraction of

raw materials

Well-to-Tank

Tank-to-Wheel

Cumulative Vehicle Models and Ratio of Sales by Model in 3-year Full-LCA

2020

2021

2022

1 vehicle model (2.62%)

4 vehicle models (14.14%)

20 vehicle models (25.03%)

Model

Classification

GHG emissions

Percentage of GHG emissions generated by life cycle stage

NEXO

FCEV

224.8

IONIQ 6

157.4

Grandeur (IG)

ICEV

220.2

Grandeur (IG)

HEV

169.1

Grandeur (GN7)

ICEV

215.4

Grandeur (GN7)

HEV

156.8

GV60

146.9

G70

ICEV

236.8

GV70

ICEV

265.2

GV70E

214.7

G80

ICEV

311.6

G80E

234.1

GV80

ICEV

325.6

G90

ICEV

311.0

■

Pre-manufacturing

■

Transportation

■

Manufacturing

■

Distribution

■

Use

■

End-of-life treatment,

Recycling

LCA Results by Model

Based on the case using hydrogen produced via steam methane reforming (SMR) process

Based on gasoline 3.5 AWD

(Unit: gCO

-eq/km)

LIFE CYCLE ASSESSMENT

LCA Methodology

Hyundai conducts life cycle assessments (LCA) based

on ISO 14040 and 14044 international standards to assess the environmental

impacts throughout the entire process of vehicle production, including raw

material extraction, component manufacturing, component transportation,

vehicle manufacturing, vehicle distribution, vehicle operation, and end-of-

life treatment. As of 2022, the proportion of vehicle models that underwent

LCA was 25.03%. The LCA was conducted using the full-LCA methodology

for all vehicle models.

LCA was conducted using the CML (Centrum voor Milieukunde Leiden)

methodology, considering a variety of impact categories such as global

warming (GW), abiotic depletion potential (ADP), acidification potential

(AP), eutrophication potential (EP), ozone depletion potential (ODP), and

photochemical ozone creation potential (POCP), as well as human and

ecosystem impact categories. To assess the impacts arising from suppliers’

manufacturing processes, reliable commercial databases were utilized. For

factors such as vehicle transportation, distribution, and energy use, as well

as pollutant emissions, actual data measured at the facilities were applied.

In 2022, the accuracy of the LCA was improved by differentiating primary

materials, such as aluminum, into virgin and recycled sources at the raw

material extraction stage. Additionally, the operational stage of EVs involved

predicting the impact on future electricity production based on the basic

plan for power supply.

Life Cycle Stages Covered by LCA

Eco-friendly materials applied to Electrified G80

Eco-friendly materials applied to IONIQ 5

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1. Introduction

Establishment of a Circular Economy

Hyundai complies with the end-of-life vehicle (ELV)

recovery and disposal regulations in countries where

it sells its vehicles, while also implementing extended

producer responsibility (EPR) to increase the recovery,

disposal, and recycling of ELVs. [Re-think] We continue

look for materials that minimize negative impact on

the environment and human health starting from the

vehicle design phase. [Reduce] While reducing the

use of one-time raw materials, such as plastics, as

much as possible, we are increasing the application

of eco-friendly materials. [Recycle] In addition, we are

shifting our business operation method from a linear

structure to be circular so that recyclable materials

can be recycled. To increase the recovery, disposal,

and recycling of ELVs, we are intensifying the process

internally while also strengthening cooperation with

outsourced companies.

Extended Producer Responsibility

DESIGN FOR RECYCLING AND RECYCLED MATERIALS

Designs for Recycling

Starting from a new vehicle’s design and development

phase, we take the recovery, disposal, and recycling of wastes that are

generated from ELVs. In addition to increasing the application of recyclable

materials, we are replacing non-metals, such as plastic and glass, with recycled

materials, biomaterials, and other eco-friendly materials to enhance vehicles’

eco-friendliness. Hyundai vehicles are 85% recyclable if vehicles’ thermal

energy is not recovered, and the recyclability rate rises to 95% if the recovery of

thermal energy from waste disposal is included. In particular, metals, such as

ferrous and non-ferrous materials, account for approximately 70% of vehicle

materials, and we are reusing or recycling most of them.

Eco-friendly Material Technologies

Hyundai values recycling as a way to

preserve a sustainable future environment. We are therefore expediting the

establishment of a closed loop for recycling plastic waste, while also building

an open loop system for waste from other industries than automobile industry

as well as domestic waste as part of our efforts for eco-friendly activities that

consider the recycling ecosystem.

Increased Application of Eco-friendly Materials to New Vehicles

Hyundai

is applying eco-friendly materials, including recycled materials, to its

new EV models first. Yarn extracted from sugar cane and processed yarn

from recycled PET bottles were applied to the IONIQ 5’s door trims and

seats, followed by expanded application to the head linings, pillar trims,

sun visors, and package trays of the IONIQ 6, GV60, Electrified GV70, and

Electrified G80 models. In addition, materials made of recycled waste

fishing nets that were discarded in the ocean were applied to the floor

mats of the IONIQ 5 and IONIQ 6. Natural fabric that contains 30% wool

was applied to the front of the headrest and side of seats for the Electrified

GV70. Also, the Electrified G80 applied forged wood decoration that is

made of leftover pieces of wood.

Application of Eco-friendly Materials to EV Models

IONIQ 5

Bio paint extracted from rape blossoms and corn, oil

extracted from flaxseed, yarn extracted from sugar cane,

processed yarn from recycled PET bottles, etc.

IONIQ 6

Paint from recycled waste tire, plant raw material-based

paint, yarn extracted from sugar cane, processed yarn

from recycled PET bottles, etc.

GV60

Bio-polyol derived from corn and sugar cane, processed

yarn from recycled PET bottles, etc.

Electrified GV70

Natural fabric containing 30% wool, processed yarn from

recycled PET bottles, etc.

Electrified G80

Natural dye, processed yarn from recycled PET bottles,

forged wood made of recycled leftover pieces of wood, etc.

Based on the circular plastic system, we make continued efforts to expand

the use of recycled plastics to exterior parts of lamps and closure parts,

in addition to applying recycled plastics to interior parts of wheel guards,

undercover parts, battery trays, and fan-shrouds. We have established a mid-

to long-term plan on continually discovering new wastes and developing

recycling element technologies, and are giving concrete shape to strategies

on applying and expanding recycled plastics based on these internal

resources. Moreover, we will build a system that can monitor the status of

recycled plastic application to our vehicles to efficiently manage the entire

recycled plastic application process.

In addition to recycled plastics, we produce bioplastics made of raw

materials extracted from sugar cane and wood, and use them for finishing

materials of dashboards and others, and also use eco-friendly paint that

uses coconut seed extracts. Vegetable oil that is produced from flaxseeds

is applied for seat processing, and we have developed eco-friendly

anthropogenic leather that applies bio-polyol derived from cornstarch,

thereby reducing around 47% in carbon generation compared to previous

anthropogenic leather. As part of an environmental project that makes

marine environment pollutants into resources and applies them to

automotive parts, we developed a technology that recycles waste tuna

fishing nets and applied them to floor mats and plastic parts. To expand

application, we are establishing collaborative relations with outside parties,

such as agreements with the fishing industry. We are continually securing

recycled material technologies, such as developing parts that apply bio-

composite materials using coffee grounds and developing interior parts that

reuse waste wood, including whiskey/oak barrels.

Eco-friendly plastic HDPE

Used for door garnish,

etc.

Forged wood made

of recycled leftover pieces

of wood

Used for console, doors,

crash pad, and

rear armrest

Processed yarn from

recycled waste PET bottles

Used for head linings,

pillar trims, sun visors,

package trays, etc.

Natural dye

Used for seats, console,

rear armrest

Oil extracted from ﬂaxseed

Used for seat leather

processing

Yarn from

recycled PET bottles

Used for door trims,

seats, etc.

Yarn extracted from

sugar cane

Used for head linings,

ﬂoor mats, etc.

Bio paint extracted from

rape blossoms

Used for horn cover,

switch, steering wheel,

etc.

ESTABLISHING THE ELV RESOURCE CIRCULATION SYSTEM

Eco-friendly ELV Service

In line with customers’ requirement for eco-

friendly ways of scrapping vehicles, we provide a one-stop service that assists

our customers through the vehicle recovery, dismantling, and recycling

processes. Customers can apply for the service at Hyundai’s website. We

pick up the scrapping vehicle at the time and place desired by the customer,

after which the vehicle is sent to an eco-friendly junkyard for eco-friendly

dismantling and recycling based on the principle of indoor storage of

recovered materials and recycling of all recovered parts and materials.

Recovering and Recycling ELVs

Hyundai signed an agreement with

the Korean Ministry of Environment in 2011 to implement a pilot project to

advance the recycling system for ELVs by justifying the adoption of EPR

in the automobile sector after introducing it to packaging materials and

electronic products. We are strengthening collaborative relations with

scrap car companies, such as providing vehicle dismantling manuals and

necessary training to scrap car companies, supporting the eco-friendly

disposal of waste refrigerants contributing to climate and ecosystem change,

and subsidizing the recycling of materials that are difficult to recycle. In 2022,

we recovered about 199,443 tons of resources at the end-of-life stage, with

the recycling rate of end-of-life cars reaching 82.4% without including heat

recovery and 91% when included. In the meanwhile, Hyundai does not have

a financial benefit from the end-of-life vehicles’ take back programs.

UPCYCLING PROJECTS

Hyundai goes beyond the reuse and recycling of wastes and continues with upcycling projects that create new value based on wastes, such as fashion accessories, new materials, and renewable energy. We will make continued efforts to

conduct various upcycling projects, thereby creating new value of waste resources in the automotive industry as well as other industries.

ESG Magazine

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1. Introduction

Re:Style

Hyundai unveiled “Re:Style”, an eco-friendly

upcycled fashion platform, in 2019 in collaboration

with designer Maria Cornejo to combine leftover

leather and fabric from car seats that are discarded

in the automobile manufacturing process with

Maria Cornejo’s signature pieces to be reborn as

15 innovative pieces of clothing. For the second

project of Re:Style, we took a step further from

the 2019 project to use various waste materials,

such as vehicles’ glass, carpet, and airbag that

are discarded in the automobile manufacturing

process, and create a collection that reflects the

philosophies of six eco-friendly designers.

In early 2023, we joined hands with the world-

renowned fashion designer Jeremy Scott and

unveiled a collection that used bio plastic skin (fabric

containing a bio-material extracted from sugar

cane), an eco-friendly material that was applied to

the IONIQ 6, as well as wipers, tail lights, and seat

belts used for EVs. In addition, the “parametric pixel”,

which gives a geometric form to pixel, the smallest

unit to constitute an image, was used to produce

various accessories for sale, including micro mini

bags, notes, and keyrings.

Producing clean hydrogen

using biogas based on

organic waste resources

Hyundai is moving forward with a business that

produces and supplies clean hydrogen by using

biogas (methane) generated at public sewage

treatment plants in collaboration with the Ministry of

Environment, Cheongju City in North Chungcheong

Province, and Institute for Advanced Engineering,

through which we seek to contribute to reducing

carbon and vitalizing the hydrogen ecosystem.

We plan to complete construction of a hydrogen

production facility in a public sewage treatment

plant in 2024 after commencing construction in

2023 in partnership with Cheongju City, with an aim

to begin operations in 2025. Once the hydrogen

production facility goes into operation, 500 kg of

hydrogen is planned to be produced a day. The

facility will later be extended to increase daily

hydrogen production to 1,000 kg in 2027. Hydrogen

produced at the facility will also be supplied to

hydrogen charging stations in the local community

to supply local residents with clean hydrogen at

reasonable prices compared to byproduct hydrogen.

Its areas of use will be expanded to include mobility

for public services, such as hydrogen buses and

hydrogen cleaning trucks.

Overseas, we are running a business of producing

electricity by converting livestock excretions into

biogas in Lampung, located on the island of Sumatra,

Indonesia, through which we are contributing to

reduction of GHG emissions and job creation for

the local community.

Appling renewed materials

based on marine waste

In partnership with Healthy Seas, a marine

conservation organization in Europe, Hyundai

is carrying out marine ecosystem restoration

activities while providing marine pollution-related

education and striving to prevent marine pollution.

In 2022, we undertook large-scale cleanup and

education project in Ithaca, Greece and collected

18.5 tons of abandoned fishing nets and 5 tons of

other marine wastes. The collected fishing nets

and marine wastes are processed into ECONYL®

(nylon material recovered from upcycled nets

and cloths) to be used in diverse areas, including

fashion products, clothing, and floor mats of the

IONIQ 5 and IONIQ 6. In addition, in collaboration

with Enaleia, an NGO in Greece, we provided

incentives to fishermen who stopped fishing in the

breeding season, when fish should be protected,

and instead collected marine plastic wastes. We

plan to widen the scope of marine ecosystem

restoration activities to include northern Africa and

Korea, in addition to Europe. Going forward, we

will expand the application of marine waste-based

renewed materials to new car models and our

brand accessories.

Resources Recovered from ELVs

(Unit: Tons)

2019

261,971

2020

209,754

2021

195,370

2022

199,443

Eco-friendly ELV Principles

Prevention of soil and

water pollution

•

Carry out the dismantling

process indoor

•

Store recovered parts and

materials indoor

Resource circulation, prevention

of global warming

•

Recover liquid waste and

A/C refrigerant by type

•

Recycle all recovered parts and

materials

Establishment of a Circular Economy

Establishment of a Virtuous

Circulation System for Batteries

ECO-FRIENDLY BUSINESS BASED ON SECOND-LIFE BATTERIES

Establishment of Cooperative System for Battery Circulation

Based

on the battery life cycle, Hyundai is establishing an eco-friendly battery

circulation system that aims for sustainability through the recycling and

reuse of second-life batteries generated from end-of-life EVs. The battery

life cycle consists of an eco-friendly loop encompassing manufacturing

of battery cells using raw materials to production of battery systems for

electric vehicles, reuse of batteries after use, extraction of materials from

finally discarded batteries, and application of the extracted materials to

battery manufacturing. We formed a taskforce team in 2022 to establish

a group-wide cooperative system throughout the battery life cycle, while

exploring green business models and developing relevant competencies.

In building a cooperative system for battery circulation among Hyundai

Motor Group affiliates, Hyundai Motor Company will be in charge of

creating a system that enables us to obtain large amounts of second-

life batteries through our global sales and service network. We will also

establish a virtuous circulation system for batteries through which we

extract such key battery materials as cobalt, lithium, and nickel, from

second-life batteries that cannot be recycled or remanufactured, and then

use them for battery-manufacturing process.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Strengthening the

Global Battery Supply Chain

Hyundai Motor Group is expanding battery cell plants in areas located

near EV production sites in order to procure required batteries stably and

locally for the global expansion of EV production and sales. To this end, it

is increasing investments and strategic alliances with battery companies,

including LG Energy Solution and SK on. Through local procurement of

battery cells that are optimized in line with electric vehicles’ performance

and detailed specifications, we seek timely production and sales of high-

efficiency, high-performance safe EVs with a high level of competitiveness

in accordance with market circumstances. In addition to establishing EV-

dedicated production plants in Korea and the US, we are changing previous

internal combustion engine vehicle (ICEV) production sites to a system

optimized for EV production. In particular, the manufacturing innovation

platform that Hyundai Motor Group Innovation Center in Singapore

(HMGICS) demonstrated and developed will be applied to new electric

vehicle production sites to enable demand-centered intelligent control, use

of eco-friendly, low-carbon construction methods, and safe, efficient work.

Establishment of a Battery Cell Production

Joint Venture in North America

In partnership with SK on, Hyundai Motor Group is constructing a plant

with an annual battery cell production capacity of 35 GWh in Georgia, US

to stabilize battery procurement in North America. Hyundai MOBIS will

assemble battery packs using cells from the plant, then supply them for the

production of Hyundai, Kia, and Genesis EV models manufactured in the

US. In addition, the plant is located close to Hyundai Motor Manufacturing

Alabama (HMMA) and Hyundai Motor Group Metaplant America (HMGMA),

EV production subsidiary that will be launched in 2025, which is expected

to enable us to have a stable local procurement system based on which

we will strive for increasing EV sales in North America.

Construction of a Battery Cell Plant in Indonesia

Hyundai Motor Company, Kia, Hyundai MOBIS, and LG Energy Solution are

establishing a joint battery cell plant with an area spanning 330,000 m

Indonesia to strengthen the battery cell supply chain that is optimized for

EV-dedicated models. The plant will have the capacity to produce a total

of 10-GWh worth of lithium-ion battery cells every year and is scheduled

to begin mass production in the first half of 2024. In particular, Hyundai

Motor Group will perform the role of strengthening battery cell production

capability through integrated quality control regarding overall battery

systems and application to finished vehicles. The battery cells produced at

the joint plant in Indonesia will be used in various electric vehicles that will

be produced in 2024 and onwards.

Hyundai GLOVIS plans to use its global logistics network to conduct a

business that recovers second-life batteries through ground/marine

transportation and reuses the collected second-life batteries for energy

storage system (ESS). Hyundai MOBIS is planning a remanufacturing

business that prolongs the life of batteries by means of new packaging,

such as sorting out collected batteries and restoring performance, and

inputs them for use. Remanufactured batteries will be used for old electric

vehicles and repair (after-sales service).

Recovery of Second-Life Batteries

In partnership with Hyundai GLOVIS,

we are building up a global network and transportation control system to

collect and transport second-life batteries discharged from various places

including junkyards and dealers around the world. Hyundai GLOVIS has

developed and acquired a patent for a dedicated platform container that

can transport hard-to-handle used batteries safely and effectively, and

is equipped with logistics systems that meet the complex and diverse

regulations of various countries. We will use Hyundai GLOVIS’ logistics

know-how and network to establish a second-life battery recovery system

throughout the battery life cycle and complete the link between the

downstream and upstream segments.

Reuse of Second-Life Batteries

Hyundai has been conducting pilot

projects to reuse second-life EV batteries for ESS. In December 2020, we

became the first company in Korea to obtain approval to give a special

regulatory sandbox demonstration of an energy storage device for reusing

second-life batteries. Having built a 2 MWh ESS and a 300 kWh ESS,

respectively, at our Ulsan plant and the Gongju plant of OCI Specialty,

our demonstration partner, we began commercial operations using

photovoltaic power in January 2021. In April 2022, in cooperation with

the Korea Water Resources Corporation, we built a new 400 kWh ESS in

Busan Eco Delta Smart City, which will be used in the P2P-based power

transaction pilot project. Starting in 2023, Hyundai’s various ESS pilot

projects based on second-life batteries will be led by Hyundai GLOVIS,

which is planning to convert into a full-fledged second-life battery reuse

business equipped with a unified pipeline ranging from a recovery system

to a reuse business.

Remanufacturing of Second-Life Batteries

Among second-life batteries

generated from our battery life cycle, top-quality second-life batteries with

high residual value will be linked to remanufacturing business according to

our own classification criteria. We will work together with Hyundai MOBIS

to establish a collection system and a remanufacturing base by using the

domestic and global after-sales parts supply chains of Hyundai MOBIS.

We then remanufacture purchased/collected second-life batteries into

batteries for old vehicles and after-sales service, thereby prolonging the

service life of batteries.

Recycling of Raw Materials from Second-life Batteries

Second-life

batteries that cannot be remanufactured or recycled via Hyundai’s battery

circulation system are broken into pieces and sent to a recycling business

that extracts from them valuable metals such as lithium, cobalt, and nickel.

Hyundai is concentrating on securing technology that can recycle a large

amount of second-life batteries in an eco-friendly, safe way. By linking

the raw materials that are secured as a result with battery manufacturing

processes, we will complete the virtuous circulation system of batteries.

We plan to build a stable electric vehicle ecosystem by strengthening our

battery raw material supply capabilities in the region through the virtuous

battery circulation system.

Establishment of a Circular Economy

Virtuous Battery Circulation System

Commercialization,

including ESS

Use as replacement

and after-sales

service battery

Life cycle extension and reuse

Repair to recover performance

Reuse

Remanufacturing

New vehicle

application

Battery

manufacturing

Battery diagnosis

Battery recovery

(car replacement,

scrapping)

Recycle

Extract raw materials

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Reduction of Environmental Impact

Companies have the responsibility to meets the needs

of the present without compromising the ability of

future generations to meet their own needs. Hyundai

is making utmost efforts to perform this role. There are

rapid changes in the internal and external environment

that surrounds companies, while water shortage

grows in severity due to climate change and reckless

corporate activities, and such environmental issues

as air and water pollution cause great harm to Earth

and all life on Earth. In addition, there is increasing raw

material risk, which was triggered by war and inflation.

Amid stricter regulations of environmental authorities,

sustainable use of natural resources has become an

important issue more than ever. Hyundai therefore

strives to restrain increases of resource use and waste

generation that are connected to the rise in production,

which has been increasing after COVID-19.

Sustainable Use of Resources

RESOURCES INFLOWS

Increased Efficiency of Raw Material Input

Volatility of raw material

prices is rising, mainly attributable to global inflation, supply chain

circumstances, and the Russia-Ukraine War. Raw material price volatility

is a factor that directly affects finances. Hyundai is therefore striving to

minimize internal and external risks that can be triggered by raw materials,

including a rise in costs, instability in supply and demand, and depletion of

natural capital, by improving efficiency in raw material use and expanding

the three Rs (Reduce, Reuse and Recycle). Main raw and subsidiary

materials that are used at Hyundai’s production plants are steel sheets

(steel), aluminum, paint, thinner, foundry sand, and plastics. In case of

scraps that are generated by the press process, where steel sheets (steel)

and aluminum are mainly used, we sell them to outside parties and enable

reuse of the entire amount. In 2022, Hyundai Motor Manufacturing Russia

(HMMR) not only recycled 4,351 tons of scrap iron, but also 1,877 tons of

cartons and 172.55 tons of plastics as part of efforts to improve its raw

material efficiency. Hyundai Motor Brasil (HMB) adjusted fender thickness

and reduced steel input by around 8%. Hyundai Motor India (HMI) reduced

steel use by 161 tons by reducing blank pitch.

RESOURCES OUTFLOWS

Expanding Waste 3Rs (Reduce/Reuse/Recycle)

Various kinds of waste

materials are generated in the automobile production process. Of these

waste materials, metals are 100% recycled. We strive to recycle other

waste materials as much as possible, such as waste paint, waste thinner,

packaging materials, and sludge. In 2022, we recycled 90.8% of all waste

materials generated at our business sites, while treating difficult-to-recycle

waste in an environmentally-friendly way. The Asan Plant changed the

filter media of the pressure filter at its industrial water purification plant

to a recycling treatment method. Our service centers in Korea are holding

campaigns on preventing loss of major resources, including aluminum

wheels and batteries. The waste reduction target for 2022 was set as

59,875 tons, a 10% reduction from the estimated waste volume that was

determined based on the 2022 production plan. Actual waste volume was

50,453 tons. Beijing Hyundai Motor Company (BHMC) changed the waste

paint drying method from natural drying to electric heating and reduced

final waste volume by 36.75 tons. Hyundai Motor Manufacturing Czech

(HMMC) makes continuous efforts to reduce sludge in its wastewater

treatment process through sludge dryers and compressors.

Strengthening Water 3Rs (Reduce/Reuse/Recycle)

As the global

water shortage caused by climate change intensifies, a number of risks

associated with water resources have already emerged. In response,

Hyundai evaluates water risks by business site based on the WRI Aqueduct

Water Risk Atlas Tool. As a result, we have identified HMI and HAOS as

business sites with extremely high water stress and are increasing water

3Rs (Reduce, Reuse and Recycle) mainly at high-water-risk business

sites. HMI and the Asan Plant in Korea have established a zero liquid

discharge system to reuse and recycle 100% of the water they use. HMI,

located in Chennai, India where water shortage is severe, reduced daily

water consumption by 130 tons by taking diverse measures, such as

strengthening rainwater harvesting facilities and expanding reservoirs.

HMB reuses washing water in some production process steps. In 2022,

water reuse amounted to 2,284,154 tons, a year-on-year increase of 5%,

and the reuse rate remained similar to the previous year’s at around 21%.

The water usage target for 2022 was set as 10,868,795 tons, which is a 5%

reduction from the estimated amount of use that was determined based

on the 2022 production plan. Actual water usage was 10,790,093 tons.

Waste Discharge

(Unit: Tons, Tons/Vehicle)

Classification

2020

2021

2022

Total reuse/recycling

455,211

492,787

498,162

Total waste volume

43,105

45,986

50,453

Waste volume per vehicle

0.0115

0.0119

0.0126

Sum of landfilled, incinerated, biodegraded waste that does not include the reused/

recycled amount

Ratio of waste recycling in 2022

90.8%

(498,162 tons)

Total discharge

548,615

tons

Water Use

(Unit: Tons, Tons/Vehicle)

Classification

2020

2021

2022

Total use

10,967,709

9,941,274

10,790,093

Reuse and Recycling

2,179,600

2,284,154

Use per vehicle

2.94

2.57

2.70

Value resulting from excluding the discharge amount from the sum of urban water

and water supply facility, surface current, and underground water intake amount

Ratio of water reuse and recycling in 2022

21.2%

(2,284,154 tons)

Total use

10,790,093

tons

Raw Material Use

(Unit: Tons, Tons/Vehicle)

Classification

2020

2021

2022

Steel/aluminum use

1,031,113

1,138,929

1,177,082

Use per vehicle

0.27

0.29

Steel/aluminum scrap

382,965

400,419

408,662

Ratio of scrap amount in 2022

Total use

1,177,082

tons

34.7%

(408,622 tons)

ESG Magazine

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1. Introduction

Reduction of Environmental Impact

Management of Harmful Substances

HARMFUL SUBSTANCE MANAGEMENT SYSTEM

Harmful Substance Management Standard

Hyundai classifies and

manages harmful substances in three stages – prohibition of use, limited

use, strengthened management – according to international standards and

initiatives. Substances classified as “prohibition of use” are banned from use

as high-risk regulated substances for which substitutes must be found, while

substances falling into the category of “limited use” can only be used for

purposes specified in the exception article, and those falling into the category

of “strengthened management” can only be used under constant monitoring

and systematic management.

Although we strive to minimize harmful substances under internal standards,

it is difficult to completely block harmful substances from products because

automobiles consist of many thousands of parts. We therefore apply the

same management standards for harmful substances to our supply chain in

order to ensure that the products that are delivered to us do not contain any

regulated substances.

Inspection and Analysis of Harmful Substances

Hyundai has adopted

the International Material Data System (IMDS), jointly operated by global

automobile manufacturers, to systematically manage information on

harmful substances. We also apply the Material Analysis Management

System (MAMS), developed in-house, to conduct risk assessments based

on substance information on parts collected from the development/design

stage of a new vehicle, thereby blocking the use of high-risk substances

from the outset. Moreover, we investigate the inclusion of regulated

substances during the new car development stage in order to preemptively

respond to newly regulated substances. Hyundai also checks information on

substances that are liable to change during the mass production processes

through parts and material analysis and inspections during regular supplier

site inspections.

Management of Harmful Substance Information

Hyundai does its utmost

to prevent accidents by preemptively reviewing new high-risk substances

and replacing them with alternative substances. Upon handling hazardous

chemicals, we are striving to maintain a safer working environment by

utilizing the integrated monitoring system of environmental facilities to

check for leakages of hazardous chemicals in real time. Since 2003, we have

been sharing information on domestic and international harmful substance

regulations and response requirements with our suppliers, as well as strictly

managing harmful substances in the supply chain by helping suppliers

set up their own systems of response to harmful substance regulations,

whenever necessary, in addition to running annual IMDS user trainings to

improve the consistency of IMDS data.

Preemptive Response to Regulation and Initiatives

Hyundai supports

international regulations, standards, and initiatives concerning harmful

substances. We strive to preemptively develop and apply alternatives even

before finalization of regulations that prohibit/restrict the use of harmful

substances in Korea and abroad. In response to amendment and/or

strengthening of legislation on end-of-life vehicles (ELV) and REACH of EU,

a leader of governing harmful substances, we work on replacing high-risk

substances. Persistent organic pollutants (POPs) that have recently become

known to be resistant to environmental degradation accumulate in the body

of animals and plants through the food chain, causing damage to the central

nervous system and disturbances in the immune system, thereby adversely

affecting the ecosystem and human health. As global discussions are in full

swing on regulations that prohibit use of POPs, Hyundai has preemptively

established countermeasures. Discussions on regulations concerning

perfluorinated compounds (PFAS) have been taking place in Europe. Aiming

to prohibit PFAS use before 2027, which is when regulations are expected

to be adopted, we are identifying alternatives and the status of regulated

substance use and reviewing when to apply alternatives.

Focused Management of Four Major Heavy Metals

Hyundai prohibits

use of the four major heavy metals – lead, cadmium, hexavalent chromium,

mercury – that are prohibited from use in the EU market based on the July

2003 EU ELV regulation and that can accumulate in the human body and

cause heavy metal poisoning. In addition, we strictly prohibit the use of high-

risk substances such as brominated flame retardants. We manage such

harmful substances in accordance with the harmful substance management

standards established in December 2002.

Pyramid-type chemicals

management system

Hyundai has set in place a pyramid-type chemicals management system

that covers the head office–business sites–unit plants. We also operate the

department responsible management system and social media communication

channels for real-time sharing of chemicals injection information (planned time

of injection, injection amount, etc.), thereby taking preemptive measures to

prevent chemicals accidents.

Ulsan Plant’s commitment to

zero hazardous chemicals

Hyundai’s Ulsan Plant is striving to reduce hazardous chemicals

themselves with a goal of reducing chemical accidents. It has been making

continuous plant facility improvements since 2014, while developing

alternatives together with suppliers. As a result, it achieved a 90% reduction

in hazardous chemicals and plans to become a zero hazardous chemicals

business site by 2030.

Reducing Pollutant Emissions

Hyundai has set stricter in-house

management standards than the legal standards of the countries in which

its business sites are located as a way to preemptively respond to air and

water pollution. The Ulsan, Asan, and Jeonju plants have each established

an integrated monitoring system for IoT environmental facilities to comply

with the environmental laws and prevent serious environmental accidents.

They have reduced risks caused by environmental pollutants and established

an efficient workplace environment management system by introducing

advanced new technologies such as water level alarm systems for water

tanks, remote disaster prevention facilities, and flow management of

environmental facilities, as well as air quality monitoring. HMMC manages

its air pollutant emissions considerably lower than the legal standards by

reducing air pollutant emissions from each process. It has been planting

trees on unused land within the factory, and checks for mercury (Hg) and

cadmium (Cd) discharge every day and manages it to be less than 15% of

the legal standards. HTBC does not use transport vehicles and utility center

boilers any more, and thus reduced boiler load during cold weather to less

than 5 t/h, leading to reduced pollutant emissions. The Asan Plant raised

wastewater treatment efficiency by installing an additional vacuum dryer,

resulting in stable production and supply of industrial water. In addition,

facility improvements were made to result in increased wastewater treatment

efficiency. HMI reduced pollutants by using chemical and biological

treatment methods at its wastewater treatment plant.

Pollutant Emissions

(Unit: Tons, kg/Vehicle)

Classification

2020

2021

2022

Air

pollutants

Total emissions (tons)

935

1,211

1,411

Emissions intensity (kg/vehicle)

0.250

0.313

0.353

Water

pollutants

Total emissions (tons)

605

643

723

Emissions intensity (kg/vehicle)

0.172

0.166

0.181

VOCs

Total emissions (tons)

11,047

10,756

7,796

Emissions intensity (kg/vehicle)

1.062

0.915

0.547

BUSINESS CASE

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Reduction of Environmental Impact

Hyundai is improving quantitative environmental indicators for each business site in Korea and overseas. Our business sites also have been taking active part in eco-friendly activities and initiatives. These qualitative activities are included in business sites’ performance indicators, along with quantitative indicators, and

reflected in their environmental performance evaluations. Based on this performance system, we are strengthening the eco-friendly activities of each business site and leveling up the company’s environmental management based on the horizontal development of excellent environmental activities.

Business Sites in Korea

Ulsan Plant

As the company’s largest single manufacturing plant

complex, the Ulsan Plant engages in a range of eco-friendly initiatives

individually tailored to each of its manufacturing plants. Plant 3 plans to

build a wastewater reuse system including water transfer piping so that

effluent from the wastewater treatment plant can be reused as circulating

water for the scrubber in the painting booth, enabling the plant to reuse

52,000 tons of water per year. The engine transmission plant has installed

a real-time leakage detection system to prevent environmental accidents

caused by leakage of cutting oil used for cooling, rust prevention, and

lubrication. The flow of leaked cutting oil is identified in real time, and an

alarm system is activated immediately if necessary, enabling the plant to

take action before any leaked oil enters the drainage ditch.

The materials plant became the first in Korea to apply an automatic

management system for washing water of wet scrubbers to eliminate

odor and reduce hydrogen chloride discharge concentration. If the

pollution level – set based on this system – exceeds, washing water is

automatically replaced, which has enabled us to manage air pollution

prevention facilities in a more stable and efficient way. We also strive to

implement ESG management through a wide range of cultural events

that promote environmental management, such as ZUPZUP campaign of

the Plant 1 and labor-management environmental workshop of the Plant 2.

Asan Plant

The Asan Plant’s waste recycling ratio is 95%, which is higher

than the average waste recycling ratio (91%) of all our plants across the

globe, and its waste-to-landfill is close to zero at 0.04%. Based on a high

recycling ratio and very low landfill, the Asan Plant is working on receiving

external Zero Waste To Landfill (ZWTL) certification which assigns a

grade according to the actual recycling rate after confirming a business

site’s waste recycling level. According to the preliminary inspections

of the certificate agency, the Asan Plant is anticipated to achieve Gold

level validation. This will be the first ZWTL validation among automotive

manufacturing plants, contributing to enabling Hyundai to strengthen its

ESG competitiveness.

Jeonju Plant

The Jeonju Plant is strengthening management step by step

across the entire scope of air measurement, ranging from selection of an air

measurement company to management of measurement result data, to prevent

regulation risks from stricter laws concerning self-measurement of air pollutants

and incorrect measurements. In particular, it has dual measurement companies

to enable mutual comparison and analysis of results. In addition, it strengthened

field surveys and continually discovers and reflects new pollutants. It is also

strengthening follow-up improvement activities based on measurement and field

survey results, such as scrubber improvements.

Asan Plant’s Waste Treatment Status

Overseas Business Sites

Hyundai Motor Manufacturing Alabama (HMMA)

Located in Montgomery,

Alabama in the U.S., HMMA is carrying out multi-faceted improvement activities

to reduce wastewater pollutants to protect Montgomery’s water supply. In

January 2023, HMMA established a regular conference body with an external

professional company to inspect the water quality of wastewater, in addition

to significantly strengthening water treatment standards of the wastewater

treatment facility. It has also established a real-time wastewater quality

monitoring system and strengthened water quality inspection equipment.

Hyundai Motor Brasil (HMB)

HMB was the first Hyundai business site to

achieve zero waste-to-landfill. Based on this performance, it became the first

automotive company in Brazil to obtain the Responsible Company Seal in relation

to waste management and the Waste Zero Seal for two consecutive years in 2023.

In addition, HMB is conducting a regular impact assessment (monitoring) on the

overall environment – including air, water quality, biodiversity, soil, underground

water – to minimize its environmental footprint, while also making improvement

based on assessment results.

Hyundai Motor Manufacturing Czech (HMMC)

HMMC is strengthening its

efforts to reduce sludge waste from the sewage treatment plant to protect

nearby water supply. In order to improve its sludge compression process, HMMC

changed the sludge coagulant to one with stronger alkalinity, thereby reducing

sludge waste by 37%. It will adopt an additional sludge compressor to reduce

sludge waste by at least 60%.

Hyundai Motor Manufacturing Russia (HMMR)

Soil loss and erosion trigger

floods and soil erosion, not to mention damage to biodiversity. To minimize

negative impact from soil loss and erosion, HMMR is improving the business site

environment by restoring old pipes in the business site that have a possibility of

soil loss and erosion and inserting filter cartridges in areas where there was soil

loss, thus preventing additional loss.

Hyundai Motor India (HMI)

Air pollution caused by rapid industrialization is

emerging as a social issue in India. In response, HMI is continually strengthening

improvement activities aimed at reducing air pollutants, including Particulate

Matter (PM) and nitrogen oxide (NOx). It recently built a system that recovers

waste heat from regenerative thermal oxidizers (RTOs) and uses the waste heat

as a substitute for boilers, resulting in a 27% reduction in air pollutants generated

during boiler use. In addition, it has reduced fuel consumption by 91% through

waste heat recycling, contributing to energy saving and cost reduction.

Hyundai Assan Otomotiv Sanayi (HAOS)

HAOS has achieved a reduction of

about 23% in the amount of contaminated wastes per vehicle in the last three

years, but found it difficult to measure it by department since it was taking

total measurements for HAOS. It therefore adopted a waste barcode system

to address difficulties in detailing activities by department. By attaching a

barcode sticker to each shop contaminated waste bag and measuring the

weight in the waste warehouse, it can conduct real-time monitoring of the

amount of contaminated waste by department. HAOS plans to implement

additional reduction activities by department based on monitoring results.

Beijing Hyundai Motor Company (BHMC)

The BHMC Yangzhen Plant

in China reused and adopted a waste cutting oil treatment facility of the

Changzhou Plant, which stopped operation according to a mid- to long-term

plant operation plan, to strengthen treatment of waste cutting oil, which is

an environmental pollutant. This has enabled the Yangzhen Plant to prevent

environmental pollution that is caused by waste cutting oil by being equipped

with a dual (separation/microbial) waste cutting oil treatment system that

includes microbial treatment.

Hyundai Motor Manufacturing Indonesia (HMMI)

HMMI began its plant

operations in 2022 and provided employee training to raise environmental

awareness in consideration of its low environmental implementation score

compared to neighboring countries, including Singapore and Thailand.

HMMI created an emergency manual and set up emergency equipment to

respond to emergency situations, such as pollutant leakage and other such

environmental accidents. It is also strengthening relevant employee training

so that they can become familiar with relevant matters.

Recycling

95.43%

Heat recovery

incineration

4.03%

Neutralization

0.07%

Landfill

0.04%

ECO-FRIENDLY ACTIVITIES BY PLANTS

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1. Introduction

Protection of Biodiversity

Biodiversity is an essential element for life on Earth to

maintain balance with the natural environment. Hyundai

recognizes that biodiversity has a significant impact

on humanity’s food security, health, air, water, and soil

quality. To minimize biodiversity loss due to business

operations, we are assessing species composition and

diversity as well as improving environmental factors

that influence biodiversity. Moreover, we will undertake

various projects that take characteristics of the natural

ecosystem into account with a goal of enhancing

biodiversity. To this end, we will continue with projects

aimed at preserving/restoring species and population

near business sites or local communities, and restoring

habitats and establishing alternative habitats.

Preservation, Restoration,

Expansion of Biodiversity

BIODIVERSITY PROTECTION SYSTEM

Establishment of Biodiversity Protection Policy

In 2022, Hyundai

established the Biodiversity Protection Policy based on the Convention on

Biological Diversity (CBD), Convention on International Trade in Endangered

Species of Wild Fauna and Flora, and Guidelines for Applying Protected

Area Management Categories. We are complying with laws and regulations

on diversity promotion, wild fauna and flora management, natural habitat

conservation, and use of forest/soil/water resources of countries where

our business sites are located. Also implemented based on the biodiversity

policy includes the assessment of environmental impact throughout our

business operations and conservation/restoration activities. Implementation

of our pledge on mid- to long-term biodiversity restoration and promotion,

biodiversity policy declaration and establishment/amendment, assessment of

biodiversity and setting of impact reduction activities, and forest destruction

prevention and reforestation project is endorsed by BOD or management.

Biodiversity Assessment and Protection by Business Site

Hyundai conducts

an environmental impact assessment of its large business sites based on

relevant laws and regulations in the respective country to forecast and

analyze the impact on resident life and natural environment by environmental

factors that arise in the process of newly building/extending business sites

or operating business sites. The air environment, water environment, land

environment, fauna and flora, and other factors are subject to environmental

impact assessment. Based on assessment results, we identify major risk

factors and establish mitigation measures. Some production subsidiaries

additionally conduct a biodiversity risk assessment that identifies numbers

of fauna and flora and ecosystem status, through which they forecast impact

and risk factors on specific species and population and establish mitigation

measures. In addition, each business site carries out biodiversity and

habitat protection activities and collaborates with government and relevant

organizations, non-profit groups, and professional organizations to raise the

effectiveness of protection activities.

Methods for assessing the species and individual inhabitation status (picture-taking, spot survey, field inquiry)

Hyundai Motor Company Biodiversity Protection Policy

Biodiversity Assessment – Numbers of Fauna/Flora and Analysis of Impact

①

Select species and individuals

We select species and individuals that are subject to an assessment in a

way that allows identification of fauna and flora as well as the ecosystem

status in consideration of a business site’s operation method, operation

size, and nearby local environment characteristics. In particular, we include

endangered animals, protected wild animals, natural monuments, and

species that are designated for preservation/protection by international

agreements in assessment targets.

②

Set the assessment area (range)

The area that has the business site’s major axis length as the radius is

used as the basis, but we set impacted neighboring areas from business

site boundaries as the assessment range. If needed, we expand the

assessment range in consideration of fauna and flora’s movement route,

area of activity, and vegetation distribution. Also, in consideration of

seasonal characteristics, we conduct an assessment at a different time.

③

Define the assessment method (means)

We carry out a basic survey of ecosystem geography and ecology,

including an inquiry, documentary survey, and questionnaire. We identify

the status of numbers of species through unaided eye observation, field

inquiry, picture-taking, sound detection, spot survey, and trap installation,

in consideration of fauna and flora’s area of activity, time, frequency,

and other factors. Assessment results are managed as characteristics

information, including method of confirming species per assessment

spot, legally protected species, indigenous species, and observed and

confirmed population.

④

Forecast and analyze impact

We forecast and analyze the impact and risk factors of natural environ-

ment changes caused by business operations, air/water/soil pollution,

and noise and vibration generation on changes in species and

population. When forecasting impact, we refer to similar assessment

cases, such as establishment of new business site, capacity expansion,

and business operation. Based on assessment results, expected

changes to species and population are described in quantitative or

qualitative form. We forecast impact in detail for major species and

individuals that are expected to be substantially impacted from business

operations. Priority is placed on considering species that are sensitive to

anthropogenic interference.

⑤

Establish mitigation measures

Based on the results of forecasting and analyzing negative impact on

species and population, we establish measures on mitigating negative

impact on fauna and flora species and population. We change business

site locations, adjust business operation schedules, and establish

alternatives to avoid significant impact, and adopt environmental

facilities to remove and minimize environmental pollution. In case of

unavoidable damage to a major habitat, we establish alternative habitats

and vegetation belts, and artificial space, including wildlife passage.

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5. ESG Factbook

1. Introduction

Protection of Biodiversity

BIODIVERSITY PROTECTION APPROACH AND MITIGATION MEASURES

Hyundai’s Approach

Hyundai’s Mitigation Measures

Avoid

•

Restrict or put off the establishment and extension of business sites in areas that have

a high impact on biodiversity

•

If negative impact is confirmed, conduct restricted operations until the impact is offset

•

Before establishing/changing/expanding a large business site, we pre-assess how the activity will impact the nature assets, including biodiversity (flora and fauna) and natural environment (air, water, soil), of the planned

project site and surrounding area. According to assessment results, we decide on carrying out the project or restricting/putting off the project.

Reduce

•

Make facility investments to remove and minimize the discharge of air, water, and soil

pollutants

•

Develop technologies that reduce environmental pollutants that arise in the process

of manufacturing and using vehicles

•

We adopt environmental facilities that can minimize discharge of air/water/soil pollutants of our business sites, such as use of the regenerative thermal oxidizer (RTO), dust collector, zero liquid discharge system, and

waterborne-based paint.

•

We conduct life cycle assessments (LCAs) in the areas of global warming, acidification, eutrophication, and photochemical oxidant generation to assess our vehicles’ potential impact on the environment

- LCA results indicated that EVs can reduce the carbon footprint as much as 67% compared to ICEVs, when using new and renewable energy-based electricity. Hyundai is therefore striving for 100% electrification by 2045.

•

We apply exhaust gas-reducing technologies, such as the gasoline particulate filter (GPF) and diesel particulate filter (DPF), to reduce vehicle exhaust gas such as NOx and PM.

Transform

•

Make structural improvements to the topography of business sites or surrounding

areas so that there is no impact on biodiversity

•

Participate in policy-making and engage in cooperation in the industrial sector to

reduce negative environmental impact

•

We are establishing eco-friendly ecological parks based on private-government cooperation and developing/spreading new technologies that restore the ecosystem.

- We established the Yeouido Saetgang Ecological Park based on a three-party agreement among Hyundai Motor Company, Seoul Metropolitan City, and social cooperative Hangang, adopted non-point pollutant source

reduction facilities, and conducted a planting project in the area.

- In partnership with The Nature Conservancy (TNC) in Brazil and Sao Paulo State University’s Department of Forest Science, we established a research forest to develop new technologies for forest restoration (Green Field,

etc.) and are spreading new technologies.

Restore

•

Promote species and population that reduced or became extinct in a business site’s

surrounding or nearby area

•

Establish (alternative) habitats to maintain-restore species and population

•

We restore endangered high-risk species and endangered species threatened by climate change.

- Animal restoration: Preserving and restoring species, such as by setting protection zones for the endangered long-billed ringed plover and eagle, which is a natural monument, living in the Taehwa River in collaboration with

Ulsan Metropolitan City and East Asian-Australasian Flyway Partnership

- Plant restoration: Following a project in the Hongcheon area to restore Korean fir and tulip tree, endangered species threatened by climate change, we collaborated with the Korea National Park Service and conducted a

project on restoring plants on Mt. Deokyu that are categorized as endangered species threatened by climate change, including the Korean fir, spruce, and yew.

Regenerate

•

Contribute to enhancing natural/biological capital and improving productivity

other than business site surroundings

•

Induce increases in species and population by improving the forest, ocean, and soil

environment

•

We undertake a land/marine/pond ecosystem regeneration project.

- Land ecosystem: Through “IONIQ Forest” project, we will regenerate forests by planting 1 million trees by 2025 across the globe, to provide sustainable habitants for both flora and fauna (Trees support over 80% of the world’s

terrestrial biodiversity).

- Marine ecosystem: In collaboration with Healthy Seas, we will collect a total of 230 tons of ocean waste (waste fishing nets, etc.) in 10 European countries and Korea by 2025 to increases in marine life population, including

return of marine fish species.

- Pond ecosystem: Together with the Gurugram city government of India, we are regenerating the ecosystem of three ponds. By regenerating ponds, which serve as habitats of various forms of life, we are inducing the

restoration of species that mainly live in ponds.

Classification

Region

Metrics

Target

Progress

Terrestrial

ecosystem

Korea, U.S., Brazil, Europe

(the Czech Republic)

•

Area of regeneration

•

No. of trees planted to

build forests

•

Area of regeneration: Regenerate a total of 650 ha

of terrestrial ecosystem (forest, grassland) by 2025

•

Planting trees: Plant 1 million trees by 2025

•

Area of regeneration: Completed regeneration of a total of 270 ha of the terrestrial ecosystem,

including forests and grasslands, from 2016 to 2022 (achieved 41% of the target)

•

Planting trees: Completed planting a total of 225,923 trees from 2016 to 2022

(achieved 23% of the target)

Marine

ecosystem

10 countries in Europe,

including Greece,

Korea (Gangwon Province)

•

Collected marine

wastes, including waste

fishing nets

•

Collect 230 tons of marine wastes by 2025

•

Completed collecting a cumulative 100 tons of marine wastes across around 20 occasions in 8

European countries and Korea from 2021 to 2022 (achieved 43% of the target)

Pond

ecosystem

India (Hariahera, Palasoli,

Tajnagar)

•

Number and area of

regenerated ponds

•

Regenerate three ponds with an area of a total of

2.3 ha by 2023

•

Completed regenerating 3 ponds with a total area of 2.3 ha from 2022 to the first half of

2023. Together with the regeneration of the pond ecosystem, 132,623 cum of water storage

potential was secured (achieved 100% of the target)

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1. Introduction

Protection of Biodiversity

BIODIVERSITY IMPACT ASSESSMENT – HYUNDAI MOTOR BRASIL (HMB)

Overview of

Biodiversity Assessment

Hyundai Motor Brasil (HMB) has been carrying

out the seasonal biodiversity impact assessment

annually since 2010 to track changes in biodiversity

change near its business site, attributable to the use

of natural capital required for its business operations

and to the impact of the business operations. It also

conducts biodiversity assessments to identify the

impact that its internal restoration project of riparian

forests (Corrego Capim Fino) has on surrounding

biodiversity.

Forecasting and

Easing Biodiversity Impact

It was assessed that cumulative anthropogenic

impact as a result of the development of farmlands

and residential areas surrounding the business

site and daily life activities of local residents

and crop cultivation is significant on changes

in species in the biodiversity assessment area,

rather than environmental factors that arise during

HMB operation having an impact on biodiversity.

In addition, an imbalance in the number of

species, such as a dominating specific species, or

overpopulation of a specific species was not found

in the assessment area and neighboring regions.

Based on the biodiversity assessment results, HMB

is conducting a qualitative habitat improvement

project for net positive impact on species. Starting

in 2012, it has been planting indigenous plants through

the project on restoration of riparian forests near the

business site. HMB completed planting 50 thousand

trees near the bus

iness site. Starting in 2023, it will

collaborate with The Nature Con

servancy (TNC)

to further improve the habitats of land species by

planting a total 100 thousand indigenous trees in a

40-ha area of Sao Paulo, where a Hyundai plant is

located, and State of Minas Gerais nearby Sao Paulo.

Methodology

With participation by an ecology expert, HMB

conducted sample and field surveys on amphibians,

reptiles, mammals, and birds. Based on literature

materials on the status of biodiversity distribution

of the assessment area, HMB pre-identified the

species and population and then confirmed them

by means of an unaided eye observation, field

inquiry, picture-taking, sound detection, and spot

survey. When the biodiversity assessment was

conducted, optical image equipment, trap cameras,

and GPS and sound-recording devices were used in

consideration of the geographical characteristics of

the assessment area and weather environment at

the time of the assessment. HMB directly confirmed

and estimated species’ abundance, frequency, and

area occupancy through the Seasonal Biodiversity

Assessment, and also conducted a sensitivity

analysis that estimates changes in species as a

result of anthropogenic influence, including reduced

habitats, depleted water resources, water pollution,

fire, and traffic operation.

Species and Individual

Inhabitation Status

The assessment results indicate that there are no

indigenous species and introduced species that

live only in the area and that there are no high-risk

species, such as endangered species. Most species

are generalist species that adapt to changes in

the surrounding environment and anthropogenic

influence. Some mammals and birds were confirmed

as specialist species that are sensitive to changes

in the surrounding environment. These specialist

species are highly dependent on forests and

sensitive to changes in the surrounding environment.

They have been analyzed as species that inevitably

move to a new habitat if there is a change in the

environment. From among assessment areas, most

species live near the river and areas that house

indigenous vegetation. An imbalance in species or

overpopulation was not found.

Species

No. of species

identified in

2022

Cumulative no. of

species identified

since 2010

Amphibians/

reptiles

Mammals

Birds

197

Total

101

255

Including 2 newly identified species

1. Sample areas of the Seasonal Biodiversity Assessment

(T-1, T-2, T-3, T-4)

2. Methodology – Night survey

3. Cururu toad – Amphibians identified through the

species and individual inhabitation status survey

BUSINESS CASE

Description of

the Assessment Area

The areas chosen for the biodiversity assessment are

identified as Area T1, Area T2, Area T3, and Area T4,

near Piracicaba City in the Brazilian state of Sao Paulo

where HMB is located. In principle, a biodiversity

assessment area should be within a 1-km radius

from the business district, but the assessment area

range can be expanded in consideration of the

characteristics of amphibians, reptiles, mammals,

and birds, which are the fauna mainly subject to the

assessment. Area T-1 corresponds to the region of the

mouth of Ribeirão Capim Fino, and has a secondary

forest area where eucalyptus monoculture, a major

plant species that grew naturally, was re-established.

Area T-2 corresponds to the region of the permanent

preservation areas (APPs), and this site has well

preserved secondary forest. It is in the center of

two residential condominium areas. Area T-3 is a

water resource protection area, and this region has

anthropic pressure on the borders due to intense

sugar cane cultivation. The T-4 area has the APP

of a water resource that flows directly into the Rio

Piracicaba. This region has anthropic pressure on the

edges due to the intense cultivation of sugar cane and

the highway that runs along one side of the fragment.

HMB is identifying the status of species and

numbers in areas surrounding the business site and

also assessing the level of biodiversity impact of

environmental factors that arise from the business

site through the seasonal biodiversity assessment.

If negative impact on biodiversity is expected, HMB

carries out mitigation activities (maintain-restore-

promote) to decrease impact and monitors whether

the activities are effective for maintaining-restoring-

promoting biodiversity. In addition, it conducts the

Seasonal Biodiversity Assessment on a regular basis to

track and manage changes (increases and decreases)

in the number of species.

Social

“for Tomorrow” initiative powered by Hyundai and UN Development Programme (UNDP)

The primary purpose of every business is to

generate profit. However, those which fail to

fulfill their obligations as responsible members

of society in the process of creating economic

value are no longer sustainable.

Having committed itself to the pursuit of

sustainable growth, Hyundai considers

the right direction for achieving growth and

the right changes for society as a member of

the global community, spreading social value

so that more people can benefit from

the greater value created by Hyundai.

3.1

Creative Organizational Culture

3.2

Health, Safety and Welfare of Employees

3.3

Sustainable Supply Chain

3.4

Customer Experience Innovation

3.5

Creating Shared Value

3.1

Creative Organizational Culture

3.2

Health, Safety and Welfare of Employees

3.3

Sustainable Supply Chain

3.4

Customer Experience Innovation

3.5

Creating Shared Value

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1. Introduction

ESG Magazine

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4. Governance

5. ESG Factbook

1. Introduction

Hyundai is building a human resources and

organizational management system that can deliver

the highest level of value throughout the entire life

cycle of employees, including talent acquisition,

development, evaluation, compensation, benefits,

and retirement. This system ensures the timely securing

of outstanding talents through continuous recruitment

and employee referral programs while investing in

infrastructure to foster a self-driven learning culture.

Furthermore, at Hyundai, we have implemented

a performance evaluation and fair compensation

system based on mid- to long-term business objectives;

run tailored welfare programs that employees can

perceive in their daily lives; and build

an autonomous work environment to improve

employee engagement. We also promote activities that

enhance diversity, enabling employees with a variety

of cultural backgrounds to work together, aimed at

creating an organizational culture that values creativity

and achievement. In our efforts to continue improving

organizational culture, 5% of KPIs for executives reflect

the internal culture survey scores.

Creative Organizational Culture

Strategic HR Management

TALENT RECRUITMENT AND MANAGEMENT

Talent Recruitment Process and System

Hyundai has moved away from the

annual recruitment system and introduced a year-round recruitment system

to flexibly respond to changes in the business environment and labor market.

A procedure is now being operated that allows the field to take the lead in

selecting job-oriented talents in a timely manner. Departments that want to

hire talent define the expertise such as competence, qualifications, and skills

required of applicants, as well as establishing selection criteria and making

decisions. In the process of selecting applicants, job competencies are verified

in a variety of ways, such as assignment presentations and group interviews,

to hire talents who meet the criteria. In order to support the expansion of field

departments' participation in the recruitment process by introducing a year-

round recruitment system for excellent talent, a “Recruit Support Center” is in

operation for each large-scale business site to provide support throughout the

recruitment process. Additionally, decision-makers involved in recruitment,

such as the HR department responsible for hiring and the business

departments carrying out practical work, actively participate in the selection

process to fairly assess the applicants’ professionalism and job suitability.

After the recruitment process, regular internal audits are conducted to ensure

transparency throughout the entire process. If any issues related to fairness

and reliability are identified, corrective measures are taken to address them.

Hyundai has further enhanced transparency throughout the recruitment

process by operating a checklist that allows self-assessment of the fairness of

candidate selection, and we have also reorganized our recruitment website

to provide applicants with an intuitive and convenient platform to access and

apply for job openings. The internal recruitment management system has

been upgraded as well to enhance fairness and reliability in the recruitment

process by enabling data-driven analysis of a variety of applicant information.

Target Sourcing System

Hyundai has established the Target Sourcing

System in the second half of 2022 to proactively secure talents in new

business and emerging technology fields, required for enhancing future

competitiveness. Building upon this system, we are promoting preemptive

proposals for recruitment positions and reinforcing our in-house recruiting

through talent acquisition and talent networks. In order to effectively secure

top talent, we have established a dedicated Talent Sourcing Center and are

building a proactive talent pool aligned with our new business strategies.

This involves sourcing talents from a variety of channels and establishing

connections with external talents through hosting and participating in a

variety of tech conferences. We are also expanding our network with external

talents by organizing and participating in a variety of tech conferences, which

allows us to establish connections with exceptional talents from outside our

organization while promoting industry-academia collaboration to build a

talent pipeline. These efforts contribute to enhancing our recruitment brand

image as a future mobility tech company.

Strategic Workforce Planning

Hyundai is formulating strategic workforce

plans from a mid-to long-term perspective to secure the necessary talent

for executing and achieving our long-term business strategies, including

strengthening EV portfolio and developing future strategic technologies. In

addition, we proactively attract key talents who will lead our future business,

and support their growth by helping them to design their career paths and

arranging for them to meet personally with our corporate leaders, while

striving to spread their proactive and innovative way of working throughout

the organization.

Strategic Workforce Planning Process

Planning

•

Introduce various methods of talent analysis to secure

excellent human resources and analyze their relative

competitiveness

Use

•

Use the results of the talent analysis in the core

competency analysis of the company’s manpower,

recruitment process, portfolio of HR planning,

recruitment strategy, etc.

Outcome

•

Increase collaboration between departments through

organizational network analysis

•

Conduct organizational culture assessment and make

improvements to analyze potential reasons for leaving

the organization and establish countermeasures, etc.

Metaverse job fair

Recruitment Promotion

Hyundai is communicating with applicants

through a variety of means of online recruitment promotion, providing them

with information about the company and job positions. We have introduced

a metaverse job fair which has gained attention as a means of consultation

and communication, particularly for candidates who are more accustomed to

contactless interactions.

With the adoption of contactless recruitment processes due to the spread of

COVID-19, this approach has been received as a new recruitment solution.

We have therefore established a dedicated metaverse space to communicate

with applicants on a regular basis. We are also making continuous efforts to

promote the company through such online platforms as YouTube, providing a

positive corporate image and offering in-depth information that may not be

easily accessible from external sources. Moreover, we are planning additional

promotional activities to sustain interest and awareness in the company,

taking into account the unique characteristics of each business site. This

ensures that Hyundai continues to attract ongoing attention and engagement

from potential candidates.

Talent Analysis

Employee

Competency

Analysis

Performance

Measure

•

Review job performance and competency development of each employee based on key performance indicators (KPIs) on a constant basis

•

Select outstanding talents, including employees who have consistently achieved exceptional results compared to their peers in the same

job position and level, or exceeded performance targets

Skill Gaps

Identifying

•

Define competency requirements for each job position and level, and measure and manage individual employees’ competency levels

•

Identify outstanding employees based on quantitative measurements of competencies for each element

Internal

Organization

Analysis

Network

Analysis

•

Identify inter-departmental relationships by analyzing frequency and time spent on inter-departmental collaborations as well as

the efficiency and productivity of collaboration processes

•

Select and manage departments that may feel excluded or isolated during the collaboration process

Employee

Retention

•

Conduct organizational culture assessments among employees to identify individual grievances, expectations, and potential turnover risks

•

Improve personnel policies and welfare programs, and promote proactive communication to retain top talent

External

Environment

Analysis

Competitive

Intelligence

•

Conduct regular monitoring of market conditions, including industry competition, emergence of potential competitors, and supply chain

uncertainties

•

Implement a continuous recruitment system to secure talents with required capabilities and skills

Recruiting &

Hiring

•

Generate interest from outstanding talents through online promotion and virtual job fairs in the metaverse

•

Organize separate recruitment sessions for international master’s and doctoral candidates to attract global top talents

TALENT DEVELOPMENT AND PROFESSIONAL COMPETENCIES

New Growth System

Hyundai is creating a workplace culture that

encourages self-driven learning to develop the capabilities necessary for the

transition towards electrification, software competitiveness, and future growth

drivers such as autonomous driving, PBV, AAM, and robotics. In particular,

we are formulating career development and competency enhancement

plans based on employee growth guides and competency assessment data,

followed by the development of programs which enable employees to engage

in continuous learning and facilitate knowledge-sharing.

The accumulated data (experience points) through continuous learning and

knowledge-sharing is used for the development of growth platforms and

new educational programs. The data is also incorporated into HR processes

such as evaluation, promotion, and career development. Based on the data

and insights obtained through the operation of the new growth system,

Hyundai plans to develop and enhance platforms that allow experiences

and knowledge to spread beyond individuals and across the organization,

providing support for employee learning and development.

Global Career Development

Hyundai runs a Global Career Development

program, where highly talented individuals with a global mindset and

recognized expertise in their respective fields are regularly dispatched to

over 50 overseas locations worldwide. This program allows employees

to lead global field organizations in areas such as research, production,

and sales, providing them with valuable opportunities to drive future

business plans and generate results, serving as a significant opportunity for

employees to grow into global talents.

Internal Recruitment and Job Transfer

Hyundai has established the

“Internal Recruitment and Job Transfer” system which enables the company

to have right talent in a timely manner within its talent pool and provides

opportunities for employees to gain new job experiences. When there is a

need for personnel in a particular department, employees can apply for the

desired department and position based on their career and competency.

Through the evaluation process, including document review and interviews,

candidates for internal transfer are selected. Hyundai actively utilizes this

system to reduce costs associated with new recruitment, shorten the

organizational adjustment period, and provide opportunities for existing

employees to develop their abilities as managers.

Performance Evaluation System

Hyundai implements an objective and

fair performance evaluation system, with a focus on employee performance.

This includes KPI evaluations based on management by objectives (MBO),

360° multi-faceted evaluations, and peer-to-peer evaluations. The MBO-

based KPI evaluation is applied to general and research employees, while

all other employees set individual goals based on their job responsibilities or

specific targets aligned with the objectives of their respective departments.

Feedback is provided to employees based on their performance against

these goals. As a result, all employees at Hyundai are subject to the MBO-

based performance evaluation system. Furthermore, through team unit

evaluation and KPI settings by each division, Hyundai attempts to evaluate

performance in various level.

360° Multi-Faceted Evaluation

Hyundai has implemented a multi-faceted

evaluation system that includes “Leadership Surround View” and “Peer

Surround View” evaluations. In 2022, this evaluation system was conducted

for 95.8% of executives, general employees, and research staff. Moreover,

Hyundai imposes restrictions on the highest rating, enabling the comparison

and analysis of performance among employees at the same rank. This

indicates that the evaluation system incorporates relative elements under

the framework of an absolute evaluation system.

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1. Introduction

New Growth System

Using growth results

“What’s the career path to become

an expert?”

“What are the competencies required

for growth?”

“What learning solution will be

the best for me?”

“How to share my work skills?”

“Growth activities are accumulated

as data.”

“The growth results are reflected in

the HR process.”

Constant feedback from/to team leaders

Growth guide → Career planning

Capacity assessment →

Capacity improvement plan

Learning curation

• Internal/external

program

• Learning maps

Knowledge sharing

• In-house instructors

• Creating and

sharing contents

Growth data

• Learning

experiences

• Knowledge-sharing

experiences

Reflecting in

HR process

• Evaluation,

promotion, career

development, etc.

Setting a growth plan

Continuous learning and

knowledge sharing

Learning Lounge

Hyundai operates the “Learning Lounge”, a new

growth support system designed to respond swiftly to rapid market and

environmental changes. Through the Learning Lounge, employees can

establish future growth plans and receive recommendations for learning

solutions tailored to their individual growth plans, enabling them to engage

in autonomous continuous learning. The Learning Lounge provides

approximately 12,000 learning solutions, empowering employees to

proactively drive market changes and transform into game-changers.

Learning Lab

The “Learning Lab” is a study group formed voluntarily by

employees to independently acquire knowledge on common topics. It is

designed to enhance employees’ competency and promote a culture of

growth by allowing them to autonomously select the learning content, time,

location, and participants. In addition to their assigned tasks, employees

can participate in groups focused on deeper learning and engage in

sharing and discussing creative ideas. The Learning Lab facilitates activities

such as exploring and experimenting with advanced location positioning

technologies, researching, and analyzing data related to e-mobility trends,

and understanding and implementing monitoring systems for autonomous

driving vehicles.

View-T System

Use leader feedback for

performance evaluations

[Team Member]

support requests, constraints, etc.

[Leader]

Provide comprehensive evaluation and

feedback on team members’ performance,

work processes, etc.

Department

Leader

Set business plans and

performance goals

Assess and provide feedback on job

performance, efforts, etc.

Team

Member

24/7 Feedback (View-T)

Hyundai operates a 24/7 feedback system called

“View-T” which allows leaders and team members to share and exchange

feedback on job performance, career development, skill enhancement,

and performance management. When team members register their work

plans, progress, support requests, constraints, and other related information,

leaders evaluate and provide feedback based on not only the outcomes

but also the team members' efforts and the process of task execution.

The feedback and shared performance information between leaders and

team members through the continuous feedback system are utilized in the

performance evaluation process.

Remuneration System

Hyundai provides variable pay (performance-based

bonuses) that is linked to performance evaluations. Base salary is increased

annually to ensure the well-being of employees, and the magnitude of the

increase is adjusted considering internal and external economic conditions,

market conditions, and business performance. The company does not

discriminate among employees when it comes to setting base salaries or

determining salary increases. Wages calculated accurately according to their

working hours (above the minimum wage under the local law) are paid to

them on a regular basis on fixed dates.

Performance-based Compensation

At Hyundai, employees’ variable pay

is determined fairly based on their job performance. In addition to variable

pay based on performance evaluations, we also motivate our employees

by distributing surplus profits to all employees annually based on the

company’s business performance.

Employee Stock Ownership Plan

Hyundai has implemented an employee

stock ownership plan (ESOP) to enhance employee motivation, job

engagement, and alignment of business objectives with personal values.

As part of this plan, a portion of the variable pay is provided to employees

in the form of company stock. In 2022, Hyundai offered 1,020,552 shares to

employees. By 2022 we had granted a total of 2,857,635 shares, equivalent

to 1.3% of total shares, to our employees through the ESOP. All our full-time

employees, who account for about 90% of the company’s total workforce, are

eligible for both the ESOP and the employee stock repurchase plan.

Creative Organizational Culture

Results of Project-based Joint Research in 2022

Development

of new

technologies

Creation of

solutions to

on-site problems

Patents

and

research paper

Dissemination

of research

results

Participation

rate

65%

* The participation rate is calculated as the number of participants among the R&D development

personnel who are subject to training in the “Project-based Joint Research Programs.”

Results of Car Master Training Program in 2022

Based on Korea

Own operations

Agency

Total

Number of courses held

No. of participants

11,610

12,252

23,862

Participation rate

100%

* The Participation rate is calculated as the number of employees who participated among own

operations and agency workers who are subject to education of “Customer-oriented Car Master

Training Program”.

Sustainability Education Programs in 2022

Human

rights

Safety

Environment

Quality

Total

No. of courses

948

772

671

2,414

* Keyword search results in the Learning Lounge platform

Project-based Joint Research Programs

In collaboration with renowned

research institutions at home and abroad, Hyundai is running a “project-

based joint research” program. Through this program, we are strengthening

R&D capabilities in future core technologies and address persistent issues in

our products. The outcomes of these joint research efforts are then applied to

our finished vehicles and advanced technologies. In addition, we have been

organizing a variety of research dissemination seminars based on these research

findings to foster technology internalization and enhancing their research and

development capabilities.

Customer-oriented Car Master Training Program

Hyundai focuses on

customer-centricity through our “Car Master Training Program” to cultivate

talents in sales, customer service, and service sectors from a customer

experience perspective. We have established a service convergence education

system to strengthen product knowledge (electric vehicles, luxury cars) and

enhance consultation skills (CSR, CS) through training. This enables us to enhance

customer touchpoint services. As a result, the Korean Customer Satisfaction

Index (KCSI) has shown improved customer satisfaction in all passenger vehicle/

RV sectors compared to the previous year. We have achieved consecutive wins

in the passenger vehicle sector for 29 years and in the RV sector for 19 years.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

HMG Developers

Conference

The importance of software development capabilities in future

mobility has been on the rise. In particular, efforts are being made

to develop core software technologies such as artificial intelligence,

autonomous driving, and data science to implement software

defined vehicles (SDV), which are vehicles centered around software.

Hyundai is making multifaceted efforts to enhance and internalize

our software technology capabilities, with a particular focus

on strengthening developer competencies. We hold the “HMG

Developers Conference” to facilitate the exchange of mobility

development experiences and expertise between Hyundai Group

developers and external experts. In 2022, over 60 executives and

developers leading research and development presented on some

50 topics related to key technologies for the transition to the SDV era,

including autonomous driving, infotainment, data science, artificial

intelligence, car cloud, electronics, and body. These presentations

provided opportunities for interaction and collaboration with

external participants.

H-Mobility Class

In response to the rapid change in the mobility industry ecosystem, the

importance of nurturing mobility talents has increased significantly. In

line with this, the HMC R&D Division operates the “H-Mobility Class”

for undergraduate and graduate students who are interested in the

future automotive industry. The H-Mobility Class is designed as a

“match-up” program, where Hyundai employees in the field design

job-oriented educational curricula and receive support from the

Ministry of Education. The entire program is provided free of charge,

and the educational courses are conducted online. So far, we have

provided educational programs on vehicle electrification, autonomous

driving, and robotics to approximately 5,000 engineering students and

graduate students. Upon completion of the education, participants

are granted eligibility to take certification assessments for the

corresponding technical positions, and outstanding learners receive

benefits such as exemption from certain R&D Division documentation

requirements. Hyundai will make continuous efforts to establish a

variety of educational programs to support the development of future

talents and connect them to employment opportunities.

Leadership and Job Competency Training

The solid leadership of the top

management is of paramount importance in realizing Hyundai's management

philosophy of realizing the dream of mankind by creating a new future through

creative thinking and taking on endless challenges. Hyundai is conducting a

variety of leadership training programs such as a customer-oriented mindset for

top leaders, a collaboration system that can create synergy with the highest level

of expertise, and an organizational culture to generate innovative minds. In order

to enhance competitiveness in future mobility, we are operating job competency

reinforcement training courses to learn about major core technologies such as

vehicle electrification and autonomous driving. Furthermore, we encourage and

provide support to employees aiming to obtain job related certificates.

Training to Internalize Sustainability

Hyundai is conducting sustainability

awareness improvement training to integrate sustainability into the job

responsibilities of our employees. In particular, we operate ESG education programs

in the areas of human rights, safety, environment, and quality to enhance the

management of our suppliers. Furthermore, we strive to internalize the concept of

sustainability among our employees by providing specialized ESG training tailored

to specific job roles. Through this approach, our aim is to build a sustainability

mindset and strengthen the capabilities of sustainability management.

On/Offline Training for Leadership and Competency

No. of coursers (on/offline)

Percentage of learning hours

Leadership

995

1.4%

Job

15,638

84.2%

Organizational

culture

230

0.6%

Onboarding

144

7.8%

Others

140

6.0%

Total

17,141

100%

Education Offered through Learning Lounge in 2022

(Unit: No. of courses)

Education, lectures, and Learning Lab

Company-related

Management/strategy (329), Product/automobile

technology (956), Development process (28),

Organizational and corporate culture (464)

Leadership-related

Continuous learning (1,007), Formal education (557)

Job-related

Quality/production-related (1,720), R&D (2,076),

Strategic technology/ICT (524), Business-related (1,538)

Compulsory

education

Compliance/security (126), Fire/safety, etc. (463)

External training

Offline lecture (462),

Online learning such as e-learning (264)

Program aimed at supporting the incubation of technology startups through the

private-led-investment and government’s matching support for R&D.

Creative Organizational Culture

Discovery and Nurturing of

External Startups

Hyundai has been active in the discovery and nurturing of external

startups through its open innovation platform, ZER01NE. Through

the ZER01NE ACCELERATOR program, we are promoting more

than 100 collaborative projects with internal field teams, providing

support for equity investments, product development, exhibitions,

and investment attraction. Furthermore, we have been supporting

the technological development of 31 technology startups by

participating as an operating company in the TIPS (Tech Incubator

Program for Startup) program

, organized by the Ministry of SMEs

and Startups, since 2015 until the present year of 2023. Hyundai

aims to foster mutual growth and collaboration with startups by

facilitating coordination with internal field teams, providing equity

investments, and offering a variety of nurturing programs.

Support for In-house Startups

Hyundai operates an in-house start-up system to support employees

with creative ideas, discover promising new businesses and

commercialize them. In 2000, we started operating “Venture Plaza”,

an in-house startup fostering program, and since then, we have

expanded the support field to include promising new businesses

beyond automobiles. Through the in-house start-up system, we

are achieving the effect of establishing a stable supply chain and

creating jobs through the localization and mass production of future

technologies. So far, 76 in-house startup teams have been selected

and nurtured, and 30 companies have spun off. Among the spin-

off companies is “Auton”, a KOSDAQ-listed company, and Hyundai

supports the stable growth of the startups through open innovation

even after the spin-off.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

In 2022, a total of 5,713 ideas were proposed, and we are currently

conducting execution reviews and implementations for the 47 selected

outstanding ideas. Additionally, we organized a New Year’s event in the

form of “Town Hall Meeting” where management and employees can freely

communicate. We also operate channels for anonymous communication,

such as “Hyundai Bamboo Forest” to encourage our members to lead

changes actively and horizontally.

Hybrid Work System

We have implemented a hybrid work system to foster

an organizational culture that respects the diverse lifestyles of our members

and allows them to immerse themselves in their work autonomously,

regardless of location. We have formed a consensus on the introduction

of this policy based on the opinions of our employees. In order to facilitate

efficient work even in remote situations, we have established a VPN

environment that enables mobile PC access from outside the office and

have utilized online video conferencing IT tools. We have conducted a variety

of transformative activities to create an environment conducive to effective

remote work.

Way of Working, “CoC (Code of Conduct)”

Hyundai conducted a survey

called “Kill the Company” among all employees to identify employee

perspectives on working in a way that can save the company. Based on

the survey results, we developed Hyundai's way of working, “CoC (Code

of Conduct)”. From the CEO to new hires, all employees participate in

sharing their own thoughts and commitments regarding a positive mindset,

responsibility, tenacity, and embracing new challenges and initiatives.

As such, we plan to develop a corporate culture program to immerse

employees in their work based on voluntary participation and continuous

communication.

CoC – Hyundai’s way of working

Hyundai Motor Group Town Hall Meeting (New Year’s event)

The Hub Office “H-Work Station”

Hyundai operates eight sites of the hub

office “H-Work Station” in Seoul and Gyeonggi-do. In order to enhance work

efficiency, a variety of spaces such as café-style seating, stand-alone seating,

and conference rooms have been created. The H-Work Station is operated

on a pre-reservation basis to provide employees with a pleasant working

environment. Through the H-Work Station, employees have the flexibility to

choose their working location beyond the traditional office setting, which is

expected to improve work efficiency and job satisfaction.

Labor Union Communication in Korea

Hyundai guarantees the rights that

are fundamentally respected based on the Constitution, such as the right

to organize, the right to collective bargaining, and the right to collective

action for our workers. We have established and operates a collective

bargaining consultation body and a labor-management council. In addition,

we have formed the Future Change Response TFT and the Job Stability

Committee to promote pre-discussions and consensus-building between

labor and management regarding future changes. Hyundai is committed to

enhancing trust between labor and management, establishing mature labor-

management relationships, and fostering organizational culture innovation.

Based on these efforts, Hyundai has successfully concluded four years of

peaceful collective bargaining since 2019.

In 2022, Hyundai established the 4th Advisory Council for the Job Stability

Committee, consisting of a total of six experts. With the acceleration of

changes in the automotive industry, such as electrification and future

mobility, and increasing internal and external uncertainties, the 4th Advisory

Council sought solutions for employment issues and crisis management.

The 4th Advisory Council also played a role as mediators in resolving any

differences of opinion between labor and management.

Labor Union Communication Overseas

Among Hyundai’s overseas

subsidiaries, unions have been established in Hyundai Motor Manufacturing

Czech (HMMC), Hyundai Motor Brasil (HMB), and Hyundai Motor India (HMI).

Overseas subsidiaries in China have established the Chinese Trade Unions,

a worker representative organization. Corporations with established labor

unions engage in collective bargaining with labor unions in accordance with

local labor-related laws and regulations. We hold regular or ad hoc meetings

to find out the working conditions and welfare system that employees want,

and based on this, we are trying to find an agreement from a viewpoint

that is mutually reasonable and can satisfy both labor and management.

Although there are no labor unions established in subsidiaries in the US,

Russia, Turkey, and Indonesia, we listen to the voices of our employees

through active and direct communication with them.

In addition, at the head office level, surveys and interviews are conducted

among executives and employees of overseas subsidiaries on a biennial

basis, and based on the results, improvement activities are conducted to

enhance employees’ satisfaction, trust, and pride in the company. Each

overseas subsidiary is making efforts to preemptively resolve employees'

grievances and requests by individually holding regular meetings between

employees and management, operating grievance counseling centers, and

touring the field sites.

H-Work Station

2019

63.2

2020

66.3

2021

68.5

2022

72.9

Creative Organizational Culture

Great Workplace Culture

IMPROVING WORKPLACE CULTURE

Diagnosis of Organizational Culture

Hyundai recognizes that high

employee engagement is a significant factor that influences the company’s

performance and individual talent development. We therefore conduct a

diagnostic assessment to gauge the level of organizational culture among

our employees. The assessment consists of 67 questions in five areas of Biz,

People, Work, Leadership, and Organizational Effectiveness, as well as two

areas related to company-wide systems and infrastructure. In 2022, 72.6% of

all employees, including general, research, and legal positions, participated

in the organizational culture diagnostic assessment. Based on the results, we

will make continuous efforts to enhance employee engagement.

Accelerating Change and Innovation by Division

Hyundai promotes

innovation of the organizational culture at each division in two directions –

a top-down method initiated by leaders and a bottom-up method driven

by team members. Through executive-level workshops, we engage in

discussions regarding the direction of organizational culture. Each division’s

leader, in partnership with the designated person to take charge of changes

in the organizational culture and innovation for each organization, works

together to lead a cultural shift within their respective divisions. They

continuously monitor organizational culture issues and strive to implement

solutions based on the voice of employees (VoE), enabling tangible

transformational activities to take place.

Idea Contest for Organizational Culture Innovation

Hyundai operates a

continuous idea sharing platform called the “Hyundai Idea Contest” where

all employees can freely participate at any time. Once a year, outstanding

ideas are selected and rewarded, and the chosen ideas undergo a thorough

review by field departments to develop concrete implementation plans and

bring them to life.

Results of Culture Survey

(Unit: Points)

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

PROMOTING EMPLOYEE DIVERSITY

Establishing Diversity Policy

Hyundai strives to create an organizational

culture that respects diversity and to contribute to the transition to an inclusive

society. To this end, we formulated and released the “Hyundai Motor Company

D&I Policy”, which stipulates our diversity and inclusion management factors, in

June 2022.

Basic Principle of Diversity

Diversity Programs

Hyundai provides opportunities for enhanced

communication and teamwork among diverse groups through workshops,

training, and other activities. These programs have significantly improved

the awareness of cultural diversity within the organization and have made a

significant contribution to fostering a greater acceptance of diversity.

Employee Resource Groups (ERG)

Hyundai believes that sharing common

interests and promoting cultural exchange among employees with diverse

backgrounds is one of the effective ways to foster a leading organizational

culture. Therefore, we at Hyundai support Employee Resource Groups (ERGs)

where employees with shared interests, including gender, culture, age, and

hometown, can communicate and connect. Through the ERG program, we

provide career development opportunities at the individual and team levels,

cultural-based mentoring, and engagement in external activities such as

community involvement. Hyundai hopes that these initiatives will not only

have a positive impact within the company but also extend to the local

community, spreading positive influence.

Hyundai ERG Activities

Title

Target

Key activities

Women @ Hyundai

Female

•

Create an inclusive environment that grants independence to female employees, customers,

and employees of partner companies

•

Implement mentoring programs and females-supporting activities aimed at career

development from the perspective of female employees

Hyundai @

Soul

Black and African American

•

Discuss how to enhance the Hyundai brand image within the black and African American

community

•

Provide a variety of support to improve cultural competency of Hyundai management

HANA (Hyundai Asian

Network Alliance)

Asian

•

Discuss methods to enhance the Hyundai brand image within the Black and African American

community

•

Provide a variety of support for cultural competency improvement within Hyundai's executive

leadership

Amigos Unidos

Hispanic and Latin American

•

Present innovative management ideas using the cultural intelligence of the Latino community

•

Present ideas for Hyundai’s future direction from the perspective of Latino employees

Young Leaders

Millennials

•

Think about a variety of ideas, solutions, and improvements using the strengths of the

millennial generation

•

Conduct a mentoring program for individual employee development and self-development

Equality

LGBTQ+

•

Provide training, career development, networking, and workplace collaboration opportunities

for LGBTQ employees

•

Share ideas to raise awareness of Hyundai's brand within the LGBTQ community

Hyundai CARES

Disabled

•

Improve the work life of the disabled and raise positive awareness of disability

•

Support employees with congenital or acquired disabilities, middle-aged employees with

disabilities due to aging, etc.

Stars & Stripes

Veteran

•

Implement a forum where Hyundai employees, their spouses, their families, and supporters

of U.S. Army veterans gather

•

Provide a safe and inclusive space where one can feel a sense of belonging

Key Diversity Programs

Classification

Outline

Onboarding course for

heads of overseas subsidiaries

This course covers discussions on the role of corporate leadership in building a "healthy communication and working culture" within an organization

where members with diverse cultural backgrounds work together.

Expatriate Staff

Assignment Course

This course includes conducting the GlobeSmart assessment to enhance understanding of the cultural diversity in which one will be assuming the post.

Based on the assessment results, educational sessions are offerred to enhance awareness and understanding of cultural diversity.

Cross Cultural Seminar

This seminar focuses on providing cross-cultural understanding and communication training for foreign executives.

Learning Lab

(All employees) Under this platform, members of the organization with similar interests and job roles come together for voluntary learning, experience

sharing, and other activities aimed at enhancing organizational synergy.

Remembrance Day

(R&D Division) This program provides education to newly appointed department heads, team leaders, and members with a focus on building a positive

organizational culture based on mutual understanding.

Connect-fit

(Korea Business Division) This program facilitates experience sharing and career mentoring through connecting junior employees, who are scheduled

for their initial rotation, with experienced senior employees.

Hyundai shall prohibit discrimination against employee’s gender, race,

ethnicity, nationality, cultural background, age, individual gender identity,

differences in political and religious beliefs, weakness in social status, etc.,

without due reasons, and provide equal opportunities in employment,

promotion, education, wages, and welfare.

Article 1. Gender

Hyundai shall treat all employees and stakeholders equally, regardless

of gender, gender identity, sexual orientation, etc.

Article 3. Age

The employees of Hyundai shall respect and communicate with each

other in an open manner, regardless of age.

Article 4. Disability

Hyundai shall not discriminate against employees based on disability

or disease without reasonable grounds.

Article 5. Veterans

Hyundai honors veterans and their families, such as those of national

merit and independence, during the recruitment process.

Campaign Commemorating

the International Women’s Day

Every year on March 8th, the world celebrates International

Women’s Day, honoring the social, economic, cultural, and political

achievements of women worldwide. In commemoration of

International Women’s Day, Hyundai created and distributed a playlist

titled “Who drives the world?” to bring happiness to women traveling

on the roads. The playlist features songs by diverse women musicians

from around the world, including Lizzo, Miley Cyrus, Victoria Monét,

and others. Through this engaging and meaningful campaign,

Hyundai aimed to celebrate International Women’s Day.

“Who drives the World?” Playlist

Creative Organizational Culture

Hyundai Motor Company D&I Policy

Non-Discrimination & Anti-Harassment Policy

Hyundai accounted a

Non-Discrimination & Anti-Harassment Policy, aiming to prevent incidents

and issues related to workplace discrimination, harassment, and sexual

harassment while respecting the right of employees to be treated equally

and without discrimination. In accordance with the Non-Discrimination &

Anti-Harassment Policy, the following behaviors are strictly prohibited –

exclusion or rejection of individuals or groups based on their differences;

inflicting physical or mental suffering by leveraging one’s position or

relationship within the workplace; and engaging in actions that cause sexual

humiliation or feelings of disgust.

Handling of Human Rights Grievance

Hyundai has set in place a procedure

for receiving, addressing, and taking action on issues related not only to

discrimination, harassment, and sexual harassment but also to improving

organizational culture and working conditions. The grievance handling

channels are operated in a variety of forms, both online and offline, such as

postal services, hotlines, and cyber audit office, to enhance accessibility for

complainants. The anonymity and confidentiality of complainants are ensured,

and any form of retaliation, identity exposure, or adverse employment

actions related to reporting complaints is strictly prohibited. Upon receiving

a complaint, the process involves promptly assessing the situation according

to the established procedures. If necessary, efforts are made to address the

root causes of the complaint, improve internal systems or work methods, and

prevent recurrence. Furthermore, for employees who have had a negative

impact on human rights through actions such as discrimination or harassment,

we review the criteria and procedures specified in employment rules and

disciplinary regulations to consider appropriate personnel measures.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Human Rights Management

BUILDING A FOUNDATION FOR HUMAN RIGHTS MANAGEMENT

Human Rights Management Governance

We report on the revision and

dissemination of the Human Rights Policy, the planning, execution, and

outcomes of human rights risk assessments, risk mitigation and reduction

measures, and the effectiveness of such measures to the ESG Committee and

Sustainability Management Committee under the Board of Directors, in which

the management participates.

Our ESG, HR, Compliance and Procurement

departments share responsibility of implementing the human rights

management, and organically collaborate on managing human rights risk.

Human Rights Policy

Hyundai implements human rights management

while also striving to prevent human rights violations and mitigate related

risks in our business operations by establishing and revising the Human

Rights Policy. The Policy includes key elements for internalization and

dissemination of human rights management, such as the commitment

to prohibiting forced labor/child labor, freedom of association, collective

bargaining rights, and the prevention and respect of non-discrimination.

Hyundai’s Human Rights Policy applies to all employees (executives, staff,

and non-regular workers), domestic and international production and sales

corporations, subsidiaries, and grandchild subsidiaries, as well as joint

venture employees. Hyundai employees are expected to adhere to the Policy

when dealing with suppliers, sales, and service organizations. Furthermore,

we encourage all stakeholders in business relationships to respect and

uphold the Human Rights Policy.

Hyundai refers to “Principle 31” of the UN Guiding Principles on Business and

Human Rights to verify the effective and efficient operation of the grievance

handling procedure, encompassing channels, receipt, processing, actions,

and prevention of recurrence.

Human Rights Education

Hyundai has developed and implemented

human rights education programs to promote compliance with the Human

Rights Policy and enhance awareness of human rights. The human rights

training programs offered by Hyundai encompass a total of 23 courses.

These include not only compulsory education on such topics as sexual

harassment prevention and improving awareness of disabilities but also

broader education on the concept of human rights management, cases of

human rights violations, legislation related to human rights, and industry

trends in human rights management.

In addition, Hyundai organized briefings on “Supply Chain ESG Risk Assessment

and Auditing” and “Conflict Minerals Management Process” specifically for

our suppliers. These briefings aimed to explain the importance of human

rights management and provide guidance on managing human rights risks.

Furthermore, we provided online training courses on the Supplier Code

of Conduct, which outlines the fundamental principles of human rights

management that suppliers are expected to comply with. These principles

include non-discrimination, humanitarian treatment, and management of

working hours. The ESG briefings for suppliers saw the participation of 303

representatives, covering 100% of Hyundai's domestic suppliers. The online

training courses had a participation of 1,123 supplier representatives in total.

Human Rights Education in 2022

ESG Mindset Education

(Korea)

Number of employees

subject to training

Approximately

73,000 people

Training participation

rate

Approximately 90.1%

Supplier ESG Briefing

Ratio of participating

suppliers

Domestic - 100%

Online Training

for Suppliers

No. of participating

suppliers

410 companies

(6,882 persons)

Consisting of 5 areas – human rights, ethics, safety, environment, and general ESG.

Education on the concept and importance of each area of human rights, best

practices, etc.

Human Rights Policy of Hyundai Motor Company

Hyundai Motor Company

Non-Discrimination & Anti-Harassment Policy

Human Rights Management Governance

BOD (Sustainability Management Committee)

ESG Committee

Top Management (C-Level)

Procurement

Compliance

ESG

Overseas

Procurement

Compliance

ESG

BOD/

Management

Working-

level

Grievance Handling Procedure

Receiving

complaints

Counseling

Investigation

and

judgment

Personnel

measures

Improve reporter

accessibility by

operating a variety

of on/offline

channels such as

mail, hotline, and

cyber audit office

If necessary, the

person in charge

of each region that

has received the

grievance provides

counseling to the

complainant, victim,

witness, etc.

Investigate

complaints received

without delay in

accordance with

procedures

Implement

corrective and

personnel actions

based on the zero-

tolerance principle,

and, if necessary,

improve systems

and practices to

prevent similar

cases

Creative Organizational Culture

ESG Mindset Education

•

Purpose:

To improve employees’ basic understanding and

awareness of ESG

•

Target:

About 73,000 people in general, research, legal, technical,

maintenance, and sales positions

•

Content:

Education on the concept and importance of each ESG

area, best practices, etc.

• Composed of a total of 5 videos

(ESG overview, ethics, human rights, safety, environment)

Watching ESG Mindset Videos

•

Summary of video training content

•

Summary of ESG content speciﬁc to Hyundai

Sending Newsletter

• Providing continuous learning content through our internal

learning platform “Learning Lounge”

Continuous learning

Education Roadmap

Ethical Management Education

STEP 1.

STEP 2.

STEP 3.

Expanding principles and convictions to the individual

→

leader

→

organizational level

Experiences in ethical decision-making situations and

methods for upholding principles and convictions

Establishing a plan to be reborn as a leader who protects and

spreads principles and convictions

* Plan to develop an ethical management training course specialized for

expatriate staff and heads of overseas subsidiaries (targeted for the second

half of 2023)

•

Purpose:

To foster a shared understanding of ethical management

and enhance the role of team leaders in promoting ethical

sensitivity and improvement in the workplace.

•

Target:

All team leaders in Korea

Content

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

HUMAN RIGHTS RISK MANAGEMENT PROCESS

Scope of Human Rights Risk Assessment

Hyundai prioritizes conducting

human rights risk assessments for domestic business sites, including the

headquarters, research institutes, Ulsan plant, Asan plant, Jeonju plant, as well

as regional headquarters and subsidiaries in Europe, North America, Central and

South America, India, China, and other overseas locations, covering business

sites with more than 300 employees. This initiative already encompasses over

90% of Hyundai’s workforce. Moving forward, we aim to refine and enhance the

indicators and standards for human rights risk assessment. In addition, the scope

of assessments will be expanded to include distribution centers and subsidiaries,

with the goal of achieving 100% coverage in conducting these assessments.

Human Rights Risk Assessment Targets

Taking into account factors such

as employee composition, business operations and locations, products

and services offered, environmental and community impact, as well as the

sourcing of products and services from the supply chain, Hyundai has identified

employees, women, children, migrant workers, workers in partner companies,

and local residents as key subjects for assessing human rights risks.

Design of Human Rights Risk Assessment Indicators

Hyundai strives

to accurately identify potential human rights risks within the scope of our

human rights risk assessment. To this end, we develop and implement our

own indicators for human rights risk assessment and due diligence based on

variety of resources, from our own Human Rights Policy to all of the followings:

domestic and international human rights management standards, industry

initiatives manuals, and best practices in similar industries, past grievances

that have been reported and handled, input from employees, and a review

process by third-party expert organizations.

Prediction of Human Rights Risk

Prior to conducting document-based

assessment and on-site inspections of human rights risks, Hyundai conducts

research on the following: the legal and regulatory landscape regarding

human rights in each country; investigative materials from domestic and

international institutions and media related to human rights; documentation

from industry initiatives on human rights; interviews and consultations with

business site personnel to gather their insights and opinions. By investigating

the internal and external environments, Hyundai aims to proactively

anticipate potential human rights risks that could arise from a variety of

groups, including employees, women, children, migrant workers, supplier

employees, and local residents.

Based on the preliminary assessment of human rights risks, Hyundai

applies assessment and due diligence indicators differentiated by business

site and stakeholder group. These indicators are continuously refined and

strengthened to ensure a more accurate identification of risks. The pre-

emptive identification of human rights risks has highlighted potential risks

related to the working environment, working conditions, occupational health

and safety, local communities, and the risk of conflict minerals within our

supply chains. Specifically, there is an anticipated possibility of human rights

risks related to child labor and female workers in the sourcing and supply

chains of conflict minerals.

Document-based Human Rights Risk Assessment

Hyundai identifies

potential human rights risks among a variety of worker groups through

document-based assessments conducted in the form of surveys, based on

our differentiated indicators and criteria for human risk assessment and due

diligence. To facilitate the document-based assessments at each business site,

we provide specific assessment criteria and requirements, ensuring an effective

assessment process. The potential human rights risks identified through

document-based assessments are further verified and validated through on-

site inspections. In 2022, we conducted document-based assessments based

on a total of 63 indicators. Going forward, we plan to maintain, expand, and

streamline our indicators to proactively identify and address potential human

rights risks within our business sites based on the implications derived from the

results of human rights risk assessments.

On-site Human Rights Risk Assessment

To ensure the reliability of the

document-based assessment results, Hyundai selects business sites for on-

site inspections taking into consideration of various factors such as the location

of the site, operational characteristics, worker composition, and impact on the

local community. Particular attention is given to business sites where potential

human rights risks are identified or where negative impacts are anticipated,

prioritizing them for on-site inspections. On-site inspections are conducted by

internal experts responsible for HR, safety, and organizational culture. Consulting

by external experts in labor and law may be involved if necessary. To assess

working conditions, a variety of documents are reviewed, and interviews are

conducted with key personnel. Site visits are also conducted to verify the safety

measures and working environment. Hyundai continuously improves the on-

site inspection process to incorporate diverse perspectives and enhance the

reliability of human rights risk assessments.

Results of Human Rights Risk Assessment (Document-based & On-site)

(Unit: %)

Classification

Results

Hyundai business sites

Ratio of business sites where human rights risks assessment was conducted

90.4

Ratio of business sites where risks were identiﬁed

8.3

Ratio of improvement measures and activities taken

Suppliers

Ratio of suppliers where human rights risks assessment was conducted

100

Ratio of suppliers where risks were identiﬁed

Ratio of improvement measures taken

100

Percentage of number of employees of business sites where the human rights risk assessment was conducted to total number of employees

Human Rights Risk Assessment Process

Indicator

design

Document-based

assessment

On-site

inspection

Analysis of

results

Improvement

measures

Integrate and analyze the

Human Rights Policy of

Hyundai Motor Company,

Korean and international

standards, and industry

initiatives to design

distinguished indicators

Identify potential human

rights risks or negative

impact factors based on

Hyundai’s unique indicators

and standards

Visit business sites based on

the results of document-based

assessment in order to clarify

detailed causVisit business sites

based on the results of document-

based assessment in order

to clarify detailed causes and

discover further potential risk

(Note: some of the visits in 2022 were

replaced by untact interviews due to

COVID)

Combine the results of

document-based assessment

and on-site inspection to

draw implications such

as risk definition and risk

characteristics by business

site or location

Each business site

establishes an optimal

improvement plan for

each risk type and checks

the implementation

status to ensure practical

risk improvement.

Creative Organizational Culture

Work environments

(including emotional labor,

discrimination, freedom of association, etc.)

Low Risks

Potential Risks

Work conditions

(including hours, pay, and child and

forced labor, etc.)

Low Risks

Potential Risks

Health and safety

(including workplace safety

facilities, wearing safety equipment, etc.)

Low Risks

Potential Risks

Business impacts

(environmental and social

impacts on places near businesses)

Low Risks

Potential Risks

Conflict minerals

(concerns about raw materials

when procuring raw materials)

Low Risks

Potential Risks

Employees

Women

Children

Immigrant and

contract workers

Suppliers

Local

communities

Human Rights Issues

Targets of Human Rights Risk Assessments

Preliminary Diagnostics of Human Rights Risk and Major Risks Identified

Results of Human Rights Risk Assessment by Region

Hyundai has

diagnosed human rights risks at its domestic business sites, as well as

joint venture company (Beijing Hyundai Motor Company), and 16 overseas

business sites in North America, Central and South America, Europe, India,

and China. This has enabled us to identify current status of human rights

management at each region, and thus to develop improvement measures

and implementation plans.

Measures to Address Human Rights Risks

Through document-based

assessments and on-site inspections, improvement tasks are identified,

and each business site establishes implementation plans for these

tasks and takes relevant measures. For identified risks, the business site

representatives discuss and establish improvement tasks, considering

the timing, approach, and potential issues related to the implementation.

The progress of implementing improvement tasks according to each

business site is monitored, tasks that require a significant amount of time or

necessitate regulatory or systemic improvements or large-scale investments

and structural changes are set as company-wide tasks, and long-term

implementation plans are being developed from a strategic perspective.

Plan to Advance Human Rights Risk Assessment

Hyundai is committed

to establishing a system to manage potential human rights risks that may

arise at business sites and minimizing the negative impact of human rights

risks on business operations. To identify and address actual issues with

high operational impact and potential risks at business sites, we plan to

enhance assessment and due diligence indicators. Through assessment

and due diligence, identified human rights risks will be actively mitigated

to prevent further dissemination and transmission. Since 2022, we have

been incorporating the rates of human rights assessment and due diligence

and the handling of grievances into KPIs of, CEO and relevant departments

responsible for human rights. Furthermore, we plan to enhance the efficiency

of document-based assessments and on-site inspections. Prior to these

procedures, pre-explanatory sessions on the procedures and indicators for

assessment and due diligence will be conducted for site-specific personnel.

We will also be providing training to strengthen the capacity for assessment

and due diligence and response.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Measures to Address Risks by Type

Distribution of

Human Rights Policy

and Non-Discrimination

& Anti-Harassment

Policy

•

Distribute the Human Rights Policy aimed at

strengthening awareness of respect for human rights

and spreading human rights management

•

Establish and distribute the Non-Discrimination &

Anti-Harassment Policy to prevent discrimination

and harassment in the workplace and raise

awareness

Statement of salary

in English

•

Provide pay slips in English, including wages,

allowances, deductions, etc. for foreign workers

Measures to Address Risks by Region

India

•

Operate company-wide complaint reception

channels (HR, Audit Department) related to

workplace bullying. Upon receipt, complaints are

subjected to immediate investigation followed by

disciplinary action, where appropriate.

•

Operate in-house daycare facilities and guarantee

maternity/parental leave to improve social

awareness

•

Build legal and institutional safeguards is underway

to improve women’s human rights (late-night

commuting bus for females, external investigators,

participation in investigation of sexual harassment

cases, etc.)

China

•

Operate an offline grievance handling center to

report and handle cases of workplace bullying and

sexual harassment

•

Consider implementation and introduction of

EAP for individual psychological counseling and

organizational diagnosis

Communication with Global Investors

Hyundai held ESG non-deal roadshow (NDR) targeting global investors in

August 2022 in Boston and San Francisco in the US, London and Edinburgh

in the United Kingdom, Singapore, and Tokyo, Japan. Through these events,

we shared our key activities related to supply chain ESG risk management,

strengthening industrial safety and health, and assessing human rights

risks. We received inquiries from global investors regarding human rights

risk assessment, mitigation and improvement plans, and our strategy in

responding to the implementation of the EU Corporate Due Diligence

Directive, and we shared our current activities, achievements, and future

plans. The demands and opinions of global investors will be considered

in the development and planning process of human rights management

activities, aiming to enhance sustainability. Going forward, we will expand

communication with investors through a variety of channels based on the

outcomes of the ESG NDR.

Measures and Activities to Address and

Mitigate Child Labor in Suppliers

Hyundai conducted a comprehensive investigation and assessment of its

overall supply chain in North America after confirming the employment of

underage workers at two companies, SL Alabama and SMART Alabama,

which have a cooperative relationship with Hyundai Motor Manufacturing

Alabama (HMMA) in 2022. We identified that a third-party employment

agency had misrepresented applicant information, and thus we immediately

discontinued our business dealings with the respective employment agency.

In addition, SL Alabama agreed to establish a special audit committee to

oversee compliance with relevant labor laws. Furthermore, HMMA is in the

process of divesting our ownership stake in SMART Alabama.

HMMA conducted investigations on 29 tier-1 suppliers in North America

through interviews, on-site inspections, and other methods. HMMA has also

been actively collaborating with the US Department of Labor to implement

employment-related regulatory compliance training since March. The

training covers Hyundai’s zero-tolerance policy regarding unfair employment

practices, methods for verifying applicants’ identities during the hiring

process, and compliance with the code of conduct for suppliers. In addition,

we have instructed our suppliers to establish an anonymous grievance

hotline for workers and provided education on prohibiting employment

through third-party employment agencies. Our Board of Directors receives

regular reports on the facts and follow-up actions regarding these issues

through the Sustainability Management Committee. The Board has directed

the company’s management to enhance the ESG management system,

including the management of unfair employment issues, across all aspects

of our business.

Results of Human Rights Risk by Region

Europe

Subsidiaries in Europe strictly

prohibit discrimination based

on gender, ethnicity, age, race,

and other factors through our

Code of Conduct. The company

provides clear guidelines on

how employees should act in

the event of human rights risks,

specifying the appropriate

actions to be taken.

North America

Both federal laws and state

regulations provide detailed

provisions for human rights

protection. The country

ensures national-level human

rights protection for minorities,

including gender, ethnicity,

race, and sexual orientation.

India

Although the formal caste

system has been abolished, the

influence of social stratification

persists. Societal awareness

regarding workplace harassment

is relatively low, yet, severe

consequence is imposed in case

of human rights violation occurs

within the company. In order to

protect maternity, subsidiaries

in India operate various support

policies such as guaranteeing

maternity and postpartum leave

and operating an in-house

daycare center.

China

At the national level, there is a

system in place for collecting and

managing ethnic information of

workers, and there is a lack of

obligation for collective bargaining.

The legislation regarding workplace

harassment and sexual harassment

is still in its early stages, and there

is a lack of social awareness on

these issues. Multiple subsidiaries

in China have started implementing

employee assistance programs

(EAP) for individual counseling and

organizational diagnostics, aiming

to address the psychological well-

being of employees.

Central & South America

Subsidiaries in Central & South

America have independently

implemented human rights

protection policies, including

the establishment of policies,

dissemination them among

employees, and conducting

education on preventing sexual

harassment and workplace

bullying. In this region, a variety

of policies and regulations are

being enacted to address labor-

related issues and promote

their resolution.

Creative Organizational Culture

Results of Document-based Assessment and On-site Inspection

The results

of document-based assessment and on-site inspections showed that the

compliance rate for indicators at domestic and international business sites all

exceeded 85%. Specifically, Korea showed a compliance rate of 96.3%, Europe

98.8%, North America 98%, Latin America 100%, China 93.1%, and India 93.7%.

The European region has demonstrated leadership in minority protection

and non-discrimination, with ongoing improvements in working conditions

aligned with social safety nets. Manuals have been created and disseminated

to guide workers in reporting and addressing human rights issues. In India

and China, it has been observed that human rights management is still in the

early stages due to national laws and regulations, social customs, and cultural

backgrounds. In terms of specific areas of assessment and due diligence, risks

have been identified in policy and systems, non-discrimination, humanitarian

treatment, forced labor, and human rights of customers.

Analysis of Document-based Assessment and On-site Inspection Results

by Area

Based on the document-based assessment and on-site inspection

results, potential risks have been identified in certain domestic and overseas

business sites, including in the policy and system category. The evaluation

of policy and system focuses on the internalization of Hyundai's Human

Rights Policy through employee guidance and human rights-related

education, rather than assessing actual risks. In addition, potential risks have

been identified in the categories of non-discrimination and humanitarian

treatment. To manage the identified risks, we have implemented company-

wide distribution and education of the Human Rights Policy and are taking

mitigating measures concerning the identified risk factors.

Labor-Management Joint Declaration to Create a Safe Workplace

In April

2022, representatives of labor and management, including CSO, gathered

to prioritize respect for employees’ lives and announced a joint declaration

of labor-management for the prevention of industrial accidents and the

creation of a safe workplace. The joint declaration includes the establishment

of a culture of voluntary safety management, joint efforts to prioritize safety,

safety inspections for high-risk processes, identification and improvement of

risk factors, expansion of continuous investment in safety, establishment of

a systematic health and safety management system, promotion of activities

to enhance safety awareness and improve risk factors, and support for

subcontractors' health and safety. Furthermore, both labor and management

have agreed to actively cooperate on preventing major accidents and formed

a joint labor-management task force team to that end.

Safety Leader Seminar

Hyundai conducted safety leader seminars (one in

the first half and one in the second half of the year) to keep abreast of external

trends related to the enforcement of the Serious Accidents Punishment

Act and to strengthen its safety leadership and safety awareness. The CSO

participated in these seminars to disseminate safety policies and foster a

shared understanding among domestic and international safety professionals

regarding the establishment of a safety culture and improvement of the

company’s health and safety management systems. Hyundai is taking the lead

in creating a safe workplace through such efforts as enhancing on-site safety

awareness and strengthening two-way communication.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Hyundai places the highest value on the life and safety

of all its employees and other stakeholders, thereby

promoting activities aimed at enhancing health and

safety based on firm principles and standards of health

and safety. We have established a company-wide

health and safety system in order to comply with the

relevant laws and regulations, while identifying and

improving hazards and risk factors so as to promote

our employees’ health and enhance their working

environments. We are also making active investment

in human and material resources to implement

mid-to long-term roadmap, thereby achieving key

performance objectives. Moreover, we will contribute

to spreading a culture of health and safety built upon

participation and communication by sharing our

progress and implementation status with all of our

stakeholders including employees.

Health, Safety and Welfare of Employees

Strengthening Health and Safety Leadership

HEALTH AND SAFETY SYSTEM

Establishment of Health and Safety Governance

Hyundai’s Board of

Directors and management inspect and supervise the operation of the health

and safety system, the status of its implementation against the set goals,

action plans, and major achievements at least once per quarter. A Chief Safety

Officer (concurrently serving as the CEO) has been appointed to operate the

overall health and safety governance, and the company-wide health and

safety organization is operated under the direct control of the CEO.

Under the overall supervision of the Chief Safety Officer (CSO), the health and

safety managers at each business site prioritize health and safety management,

establish implementation plans, and conduct regular meetings in which

managers and employees from across the organization and specific workplaces

participate in order to share and discuss health and safety issues and risks.

Furthermore, external experts in industrial health and safety inspect the health

and safety conditions at workplaces and identify potential injuries, illnesses, and

accidents, while also participating in post-incident investigations. Management,

responsible personnel at each business site, and process managers with health

and safety responsibilities set health and safety KPIs and evaluate performance

based on the status of their implementation compared to the targets.

Introduction of the Health and Safety Management System

All domestic and

international workplaces have implemented a health and safety management

system that includes the establishment of implementation plans, identification

and improvement of hazardous and risky factors, evaluation of health and

safety performance, and the development of improvement measures based

on an activity analysis. Each workplace obtains a third-party certification for

its health and safety management system, taking into consideration the laws,

regulations, market conditions, and business characteristics. Additionally,

efforts are made to encourage and support subcontractors in establishing their

own health and safety management systems, thereby enabling them to secure

their own health and safety capabilities.

Safety Vision Strategy Roadmap

In December 2022, Hyundai conducted

an in-depth diagnosis of the safety management system at its business sites,

with the participation of safety experts engaged in research and consultation,

and carried out a survey of global best practices. Based on the results, we

developed a safety vision and strategy roadmap comprising a development

plan for the safety management system. The safety vision and strategy

roadmap also includes our long-term vision as well as phased and annual

strategies for realizing its core safety values. It is also focused on strengthening

the alignment between corporate core values and safety culture, enhancing

safety education, improving safety communication and leadership, and

promoting collaborative activities between labor and management.

In accordance with the safety vision strategy roadmap prepared based on the

comprehensive in-depth diagnosis, we plan to carefully establish mid- to long-

term implementation plans for each stage. We also plan to conduct in-depth

diagnosis by industrial safety sector in order to come up with specific solutions

for improving site safety. Furthermore, we will strengthen the management

system for the five key safety elements (organization/manpower, budget,

training, labor-management relations, and safety culture) with the aim of

becoming a global top-notch safety company.

Results of the 2022 Safety Leader Seminar

Date

Seminar Overview

No. of

Participants

First half

• Issues related to the Serious Accidents

Punishment Act and safety trends

• Sharing of excellent improvement cases

and advanced safety technologies

Second

half

• Dissemination of the safety policy of

the CSO

• Safety leadership for me and my colleagues

Directions of Safety Vision Strategy

Establishment of

a safety culture

•

Establish Hyundai’s unique safety culture by realizing safety-first core values and developing it into a “Just Safety

Culture” as an advanced company

Advancement of

safety training

•

Advance the specialized training programs to raise the safety awareness of employees and strengthen their risk

awareness capabilities in order to strengthen safety education beyond the level required by laws and regulations

Leap towards

the Global Best

•

Establish future strategic tasks centered on the headquarters to expand global safety governance, and actively

promote a pilot introduction of advanced cases, such as the safety management system (Safety Career)

Field-based

risk assessment

•

Establish self-regulation by conducting risk assessment activities in which all employees participate, develop and

advance employee capacity building programs for this purpose, and establish a system for identifying and improving

harmful risk factors

Strengthening

labor-management

cooperation

•

Introduce various systems (Safety Merit System) to strengthen the capability to comply with labor-management

health and safety standards and enhance labor-management cooperation.

Win-win

cooperation

•

Reinforce various support measures (excellent partner discovery system, etc.) in order to raise the safety management

capabilities of our partners to the same level as Hyundai

Health and Safety

Management System

(ISO 45001)-certified

Workplace

of all manufacturing

subsidiaries at home

and abroad

100

Business Plan of the Foundation

for Industrial Safety Partnerships

Creation of a

Sustainable Safety

Ecosystem

SPREADING THE CULTURE OF HEALTH AND SAFETY

Management of Leading Indicators for Industrial Accidents (H-LWC)

Hyundai

has introduced the leading indicator, “H-LWC (Hyundai-Lost Workday Case)”,

as a shift from the traditional lagging indicator-based management of accident

rates. This has enabled us to analyze accident types in advance and focuses

on activities designed to reduce industrial accidents. Leading indicators are

used to measure the processes and behaviors related to preventing industrial

accidents. These indicators include safety consciousness and cultural level,

equipment integrity, exceeding the scope of safe operations, improvement

of health and safety management systems, and the effectiveness of activities

to prevent industrial accidents from recurring. Through the management of

leading indicators, the accident rate has been reduced by approximately 9%

compared to 2021. In particular, the total number of safety accidents has been

reduced by approximately 21% by focusing on reduction activities targeting

specific types of workplace accidents.

Assessment of the Health and Safety Management Level (H-SAT)

Hyundai

has set in place the “H-SAT (Hyundai-Safety Assessment Tool)”, a tool

developed inhouse in order to quantitatively evaluate and analyze the health

and safety level of its business sites, address vulnerable areas, and raise

the overall level of health and safety. The results of the evaluation are being

linked to the KPIs of the management and business site managers, with

the aim of enhancing health and safety leadership and promoting activities

to prevent workplace accident. The evaluation is composed of safety,

health, fire, and environment sectors. It utilizes specific indicators such as

the achievement of accident reduction targets, the management of work

stoppage accidents, and assessments of the health and safety roles and

responsibilities of leaders.

Application of Safety Design Criteria

Hyundai is establishing and

expanding safety design criteria that include warnings for hazardous

areas and facilities, instructions or guidance for emergency situations,

and safe behaviors to be followed during work processes. Safety Design

encompasses the development and application of measures based on the

conditions and state of the workplace, such as restricted access, warnings

for fire hazards and falling objects, the use of personal protective equipment,

emergency evacuation procedures, and guidelines for safe behavior prior

to commencing work.

In addition, safety designs are attached to places

or facilities that workers can easily recognize, and training is conducted on

matters necessary for workers to understand the related contents.

Safety

design can be applied to various areas such as new construction and

improvement projects in the workplace, logistics handling areas, automated

transport systems, and lifts for material handling, among others. It is

expected to show a high degree of effectiveness in reducing accidents.

Health and Safety Training

Hyundai ensures that all its employees are

able to access health and safety training easily and conveniently via an

online education platform. The online education videos, titled “Future Safety

Education Content”, consist of six episodes, including six in-depth videos

and 30 micro-learning videos. They cover various topics related to safety

regulations, accident prevention, and major disaster prevention, providing

diverse contents for employees. In particular, starting in October 2022, we

further increased employee accessibility to education by enabling them to

receive regular health and safety education via mobile devices. In addition,

Hyundai operates VR experience-based safety education contents and

facilities where employees can wear VR devices to experience simulated

hazards in virtual reality, enhancing their awareness of safety. Hyundai

also provides health and safety education to not only its employees but to

all its subcontractors and SMEs in the same industry through the Global

Partnership Center and the Foundation for Industrial Safety Partnerships.

Furthermore, Hyundai requires all partner companies entering the workplace

for work or construction purposes to complete pre-entry safety education.

Application of Wearable Devices

Hyundai is developing and adopting

wearable devices with improved functionality and convenience to prevent

musculoskeletal disorders among its workers. The first industrial wearable

device, “CEX”, is a knee-joint-assist robot designed to help workers maintain

a seated posture. Despite its lightweight design of 1.6 kg, it can support a

weight of up to 150 kg. In addition, it can be adjusted to suit the user’s height

and posture, thereby reducing approximately 40% in the activation of the

waist and lower body muscles, significantly improving work efficiency.

Meanwhile, “VEX” is a vest-type wearable robot that assists workers who

engage in overhead tasks for long periods. Weighing only 2.5 kg, it does not

burden the worker, and its joint structure and springs are combined with

body movements, enabling it to exert a force of up to 5.5 kgf.

Launching of Hyundai Motor Group’s Foundation for Industrial Safety

Partnerships

In September 2022, Hyundai, in partnership with six Group

affiliates, established the Foundation for Industrial Safety Partnerships to

enhance the safety management capabilities of SMEs in industries such as

automotive parts manufacturing, steel, and construction. The Foundation’s

mission is to support SMEs in establishing independent safety management

systems and acquiring advanced safety management capabilities, with the

aim of preventing safety accidents and major disasters, and eliminating

the root causes of risks. The Foundation carries out projects to improve

the overall safety level of industries, including small subcontractors, and to

promote a culture of mutual safety, while fostering a strong commitment

to safety as a top priority across the entire group of companies, as well as

among subcontractors and SMEs.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Health and Safety Training Programs in 2022

Classification

Target

Training Hours

Mandatory

safety training

New hire training

New hires (5,516 persons)

8 hours and more per year

Special training

Those subject to special training (39 types)

16 hours and more per year

Regular training for all employees

On-site staff (33,045 persons)

6 hours and more per quarter

Regular training for managers and

supervisors

On-site supervisors (1,531 persons)

16 hours and more per year

Training on operational changes

Workers who change work

2 hours and more

Competency/

specialized training

Competency-based training

Safety managers, safety promoters, etc. (253 persons)

Up to 2 nights and 3 days

Psychological

safety counseling

Psychological counseling and

training

Employees, employee families, subcontractors, etc.

(1,449 persons)

About 1 hour each

Composition of H-SAT

Areas

Management System

Assessments

On-Site Workplace

Inspections

Safety

Safety meetings by

management, etc.

Robot protection

devices, etc.

Health

Management of

musculoskeletal

diseases, etc.

Ventilation facilities,

etc.

Firefighting

Emergency response

systems, etc.

Fire-prone areas, etc.

Environment

Environmental facilities

licensing, etc.

Air pollution prevention

facilities, etc.

VEX – vest-type wearable robot; and CEX

– chair-type industrial exoskeleton robotic system

Health, Safety and Welfare of Employees

Safety management system inspection

and technical support projects aimed at

preventing industrial accidents

Education and training support projects

designed to foster professional human

resources and improve quality among

others

Safety information and data support

projects, such as safety-related best

practice seminars

AI-based utilization support projects, such

as smart safety management technology

Awards for outstanding SMEs and for

contributors to improving industrial

management

Win-win cooperation fund support projects

to vitalize business safety and safety

management

Scholarship support for bereaved families of

workers who have died in serious accidents

Other projects related to improving the

overall safety level of the industry

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

PROMOTION OF HEALTH AND SAFETY ACTIVITIES

Health and Safety Management Activities

Hyundai conducts risk

assessments and health and safety diagnoses, measures noise and hazardous

chemicals in the work environment, and provides emergency response training

for workplace health and safety management. Based on these efforts, Hyundai is

promoting safety measures, preventing health hazards, and enhancing its health

and safety activities regarding the work environment, machinery, instruments,

and facilities. In 2022, we strengthened construction safety supervision on

holidays at domestic business sites, safely carrying out 3,646 cases of facility

construction work. Furthermore, we conducted fire safety inspections at our

production plants, research laboratories, service centers, and facilities related to

eco-friendly vehicles. A total of 101 improvement measures were identified, and

action plans have been developed for their implementation.

Furthermore, we conduct investigations and assessments of hazardous factors

to prevent the kinds of occupational diseases that may affect our employees.

We also carry out post-measures such as individual health check-ups and

treatment. We have developed measures and programs for the prevention of

musculoskeletal disorders and continue to implement activities designed to

improve employees' lifestyle habits and prevent job-related stress.

In particular, at our workplaces, we plan and promote health management

campaigns, including smoking cessation clinics and smoking cessation camps,

and we are also promoting smoke-free facilities.

Preventing Serious Accidents at Workplaces

Along with compliance

with the relevant laws and regulatory requirements, such as the Serious

Accidents Punishment Act, we plan and operate company-wide programs

for the prevention of serious accidents based on domestic and international

trends in major accident response. To prevent major accidents, we regularly

conduct safety inspections to identify on-site hazards, store and manage the

data obtained through these inspections in a database, and establish and

implement major accidents prevention measures based on analysis of the

database. Furthermore, we establish and manage post-incident response

measures and measures for preventing recurrence in the event of industrial

accidents, including major accidents. We also distribute accident case studies

and examples of excellent industrial safety management to ensure that accident

prevention activities are continuously carried out on-site.

Preventing Serious Accidents at Subcontractors

To improve the safety

management level of its subcontractors, Hyundai provides safety education and

operates a reward system for excellent safety management partners. We also

have developed a subcontractor safety management system that enables us to

assess potential accident prevention capabilities in advance and select qualified

subcontractors in the first place. To establish a safety management system for

our subcontractors, we have carried out safety management activities such as

registering subcontractors’ information, evaluating our subcontractors’ safety

management competency (1,515 cases), operating a safety council (160 times),

and conducting joint inspections (48 times). In addition, we strived to help our

subcontractors prevent serious accidents by conducting special construction

safety training (3 sessions) for the CEOs of 120 construction companies and

safety supervisor training for internal subcontractors (4 sessions).

Comprehensive Emergency Response Drills

Hyundai has set in place

a robust emergency response system to respond actively to emergency

situations, including disasters such as fires, explosions, and leakages, as well

as non-natural emergencies like cyber-attacks and information breaches.

We conduct comprehensive emergency response drills twice a year, during

the first and second halves of the year, with the participation of all employees

at each workplace. This training is aimed at maintaining and improving

employees’ ability to respond to emergency situations. It includes developing

a schedule, creating scenarios for different situations, implementing response

protocols for each emergency scenario, and organizing the participants into

groups and assigning specific tasks to each group.

Investigation Procedures And Step-by-step Actions in

Case of a Safety Accident

Step

Action

Secure a statement

Securing the statement of the first eyewitness

Process confirmation

Check the process and listen to the cause of

the accident

Photo shoot

Entire process and accident reenactment

photography

Cause analysis

Root cause analysis of accidents

Take measures

Apply the most appropriate countermeasure after

establishing several countermeasures

Behavioral instructions for an accident investigation: In the event of an accident, follow

the steps above and do not omit a step or rush through the steps

Prevent missing information by conducting an accident investigation that is based

on the “5 Ws and 1 H”, and start from large causes and then move onto small causes

(top down approach)

Main Activities to Prevent Serious Accidents at Workplaces

Classification

Description of Activities

Regular mobile

safety inspections

•

Continuous risk management by conducting

mobile-based safety checks on a regular basis

to ensure the safety of work processes and

operating facilities

Installation of smart

motion sensors in

blind spots

•

Installation of smart motion sensors in safety

management blind spots to identify risk factors

and prevent accidents in advance

Installation of

human body

detection sensors

•

Installation of human body detection sensors,

etc. to reduce the risk of accidents caused

by workers’ negligence when operating

transportation machinery such as forklifts

Development of

safety management

regulations

•

Development of step-by-step regulations for

managing non-routine construction work

conducted during non-working hours, from

design to construction

Health and Safety Management Activities

We identify hazards and

risks related to the work

environment, machinery,

equipment, raw materials,

gases, vapors, and work

procedures; and based on

the findings, we implement

preventive measures to

mitigate risks and hazards.

Risk

Assessment

We put the safety sign

tags in identifiable

locations to warn

employees and visitors of

hazardous or risky areas,

facilities, or substances;

and provide guidance

on how to behave in

emergency situations.

Tags of

Health and

Safety Signs

We set management

criteria for areas where

there is a risk of falls,

collapses, drops, or

other potential hazards;

and perform regular

maintenance and

inspections.

Safety Measures

for Working

Environments

We take protective

measures that take into

account the functions

and characteristics of

machinery, equipment,

and facilities, and perform

regular maintenance and

inspections to eliminate

potential hazards.

Safety Measures for

Machinery, Equipment

and Facilities

To prevent health hazards

caused by raw materials,

gases, vapors, high

temperatures, noise, etc.,

we implement necessary

preventive and health

measures.

Preventive and Health

Measures against Health

Hazards

We provide appropriate

personal protective

equipment (PPE) for the

work environment and

ensure the availability and

management of spare

PPE. Wearing protective

equipment is mandatory.

Provision of

Personal Protective

Equipment

We conduct health and

safety diagnoses of

workplaces that have

a high risk of safety

accidents, such as falls,

collapses, fires, explosions,

and leaks of hazardous

materials.

Health and Safety

Diagnosis

We conduct training

based on emergency

scenarios such as falls,

collapses, fires, and

leaks of hazardous

materials. We also inspect

the functionality of

firefighting equipment on

a regular basis.

Response to

Emergencies

We compile and provide

a list of material health

and safety information for

the handling of hazardous

substances. We also

regularly measure and

address physical and

chemical hazardous

factors, and implement

improvement measures.

Management of

Hazardous Substances

We conduct regular

health check-ups and

implement programs

for the prevention of

work-related diseases

such as respiratory

and musculoskeletal

disorders, as well as

managing job-related

stress.

Activities for

Health Promotion

We have established a health

and safety management

system for subcontractors

to substantialize risk

assessments, and have

strengthened accident

prevention through close

management including

diagnosis, education, and

consultation.

Support for Health and

Safety at Subcontractor

We conduct investigations

of the causes of any

accidents that may occur

and develop measures to

prevent their recurrence.

We also perform statistical

analysis of industrial

accidents and incorporate

them into our performance

improvement goals.

Investigation of

Accidents

Health, Safety and Welfare of Employees

The training coordinator evaluates whether the training is being conducted in

accordance with the established standards and procedures. The evaluation

criteria for the comprehensive emergency response drills are continuously

revised to enhance the level and intensity of the training. The emergency

response scenarios and response systems are also being updated by analyzing

deficiencies and implications identified during the training.

Efforts to Prevent Industrial Accidents Involving Subcontractors

Hyundai

has strengthened external collaboration for on-site and process safety

management at each business site by considering the nature of the

business operations, the types of subcontractors, and potential risks

comprehensively. In 2021, the Asan Plant entered into a business agreement

with its key subcontractors (30 in total) to create an industrial accident-

free automobile parts manufacturing industry. Efforts are being made

to support subcontractors through safety diagnosis consulting and to

establish a foundation for collaborative safety inspections between the

automakers and subcontractors. In 2023, the Jeonju Plant entered into a

business agreement for the prevention of major accidents and overall safety

with all its subcontractors. Joint on-site inspections between labor and

management were conducted, focusing on three major types of accident

(falls, entanglements, and collisions) and eight major risk factors. Based

on the results of the on-site inspections, guidance was provided for the

improvement and implementation of safety measures in those areas where

deficiencies were identified.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Customized Welfare Benefits

EMPLOYEE WELFARE SYSTEM

Flexible Work Hours

Hyundai implements a flexible working-hours

system that allows employees to choose their own most efficient working

hours, taking into consideration the nature of their work. This flexible system

applies to certain job positions, allowing employees to select their own start

and end times for work within the available time slots, excluding mandatory

working hours. By enabling employees to determine their own efficient

work hours through the flexible working-hours system, Hyundai aims to

enhance employee engagement and support performance outcomes.

RETIREE SUPPORT PROGRAM

Retirement Pension System

Hyundai is implementing a retirement

pension scheme for all its employees to enable employees who are eligible

for retirement to prepare for life after retirement and old age. The retirement

pension is protected by the external accumulation of retirement pension

reserves, and education on the relevant products is provided to subscribers

to create a stable foundation for employees after their retirement.

Retirement Planning

Hyundai operates various programs to support

and assist employees with their post-retirement planning. These programs

include differentiated future planning courses and specialized educational

programs based on employees' positions and job functions, which have

been provided to a total of 4,232 persons.

Hybrid Work System

Hyundai has put in place a hybrid work system

that utilizes IT technology to enable employees to work flexibly without

being constrained by a specific location. To ensure smooth remote work,

Hyundai has established a mobile PC environment, VPN access for external

connectivity, and online video conferencing servers, thereby creating a

virtual work environment. This allows our employees either to work-from-

home arrangements or to work from designated shared spaces rather than

traditional office settings.

Support System for Maternity, Childcare, Family Care, and Employee Health

Classification

System

Description

Maternity

Reduced hours during

pregnancy

•

The daily working hours of employees in early pregnancy (within 12 weeks) or late pregnancy (beyond 36 weeks) are reduced by

two hours. The reduction can be taken either as 2 hours after the start of the working day, 2 hours before the end of the working day,

or 1 hour after the start of the working day plus 1 hour before the end of the working day.

Maternity leave

•

Providing a 90 days maternity leave to female employees before and after childbirth (120 days for multiple pregnancies)

Bereavement leave

•

Offering a leave whose period is determined by the pregnancy period in case of miscarriage or stillbirth

Partner’s leave

•

Offering up to 10 days of partner’s leave within 90 days of childbirth

Child Happiness Travel

•

Providing hotel lodgings and meals within six months before and one year after a childbirth to employees and their spouses,

which includes up to two nights at hotels designated by the company

Childcare

facilities or

contributions

Parental leave

•

Providing up to two years of leave of absence for each child under the age of 8 or a child in second grade to both male and female

employees

Reduced hours during

childcare period

•

For employees with children under the age of 8 or in the 2nd grade of elementary school, both male and female employees are

eligible for a maximum of 2 years of reduced working hours per child. (The reduced working hours can be divided twice in the first

year, and they can be divided once in the second year)

•

The reduced working hours can be taken in conjunction with parental leave or separately, but the total usage of reduced working

hours, including parental leave, cannot exceed 2 years.

•

Employees can take a reduction of 2 or 4 hours before starting work, a reduction of 2 or 4 hours before the end of work,

or a reduction of 2 hours after starting work plus 2 hours before ending work.

Providing breast-feeding

time

•

For female employees with infants under 1 year old, a paid lactation break of 120 minutes per day is provided

In-house daycare centers

•

Offering married employees and the children of single-parent families access to in-house daycare centers – available at five

locations: Headquarters, Ulsan Plant, Asan Plant, Jeonju Plant, and Namyang Technology Research Center

Employee

health

Workplace stress

management

•

Operation of the Talk Talk Center (a psychological counselling center) and the Employee Mindfulness Class

(offering psychological counseling and emotional well-being programs that address childcare, job-related stress management, and

conflict resolution within the workplace)

•

Operation of an International SOS service for employees stationed overseas or GEP employees, as well as their accompanying

family members (support for stress management)

Sports and health initiatives

•

Operation of dedicated fitness centers (gymnasiums) and exercise programs for employees at our headquarters, the Ulsan, Asan

and Jeonju plants, and the Namyang Research Center

Family care

Family care leave

•

Offering up to 90 days of family care leave per year to employees whose parents, children, spouses, or spouses’ parents need care

due to illness, accident, or old age

Retirement Pension Asset under Management

(Unit: KRW million)

Classification

As of 2021 year-end

As of 2022 year-end

Insurance products

5,840,100

5,985,348

Others

3,235

2,572

Total

5,843,335

5,987,920

Retirement Planning Programs in 2022

Targets

Managers or below (Union members)

Senior employees

Course

Future planning 57-60

Counseling

Basic course in planning for life

after retirement

Intensive course in planning for

life after retirement

Age

57-60

Participants

2,716

775

351

390

Type

Lectures, experiential learning,

etc.

Counseling

Lectures and counseling

(online)

Lectures and counseling

(online)

Curricula

•

Self-examination for

awareness of changes and

happiness in old age

•

Customized education and

consulting according to

retirement plans

•

One-on-one customized

career counseling

•

Re-employment, farming, self-

development, lifetime design,

business start, etc.

•

Channing perception about

retirement and exploration of

careers/interests

•

Financial diagnosis and

planning

•

Career analysis and decisions

according to individuals’

desired paths

Health, Safety and Welfare of Employees

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

With “Win-win Growth Agreement” leading supplier

collaboration in the automotive industry, Hyundai

enhances the foundation for win-win growth, through

operating the Transparent Purchase Practices Center,

Foundation of Korea Automotive Parts Industry

Promotion, and Global Partnership Center. Based on a

“Win-win growth agreement” aimed at leading win-

win cooperation in the automotive industry, Hyundai

operates the Transparent Purchase Practices Center,

Foundation of Korea Automotive Parts Industry

Promotion, and Global Partnership Center, thereby

strengthening the foundation for win-win growth.

We are also establishing a systematic cooperation

system with suppliers, the government, and relevant

organizations for a successful transition to a future of

mobility, including electrification and autonomous

driving. In our efforts to promote automobile industry,

we run capability-building programs for quality,

technology, and overall management of suppliers;

increase joint R&D activities and patent applications;

provide financial and tax support, and facilitate

business diversification. Going forward, we will establish

a win-win growth model that goes beyond fair trade

between large companies and SMEs, and thus develop

competitiveness, productivity, and technological

capabilities of the entire automotive industry.

Sustainable Supply Chain

Establishing a Win-win Growth Ecosystem

EXPANDING A CULTURE OF WIN-WIN GROWTH

Fair Trade Agreement

Hyundai signs “fair trade agreement” to eliminate

unreasonable practices that may arise in supplier trade relations and to

fully establish fair trade between Hyundai and suppliers. We share four

major measures about subcontracting and the Supplier Code of Conduct,

while also operating corruption and irregularity report channels, in order to

prevent such unfair conduct as delayed payments. We strive to enhance the

competitiveness of an industrial ecosystem by providing training, technology,

and fund support to suppliers, and we are also improving payment conditions

for tier-1 as well as tier-2 suppliers. Since signing the first agreement in 2008,

we have concluded the 14th agreement with our suppliers in 2022.

Signing of a New Win-win Growth Agreement

In October 2022, Hyundai

Motor Group entered a Win-win Growth Agreement in pursuit of “support

for win-win in the automotive industry and enhanced competitiveness in the

future mobility” with the Ministry of SMEs and Startups and Foundation of

Korea Automotive Parts Industry Promotion. The agreement’s main content

includes contributing funds to stabilize the supply chain of parts suppliers,

spreading the payment linkage system, supporting the construction and

advancement of smart factories, establishing joint investment-type R&D

funds, matching startups with suppliers and supporting their technological

cooperation, and providing consulting for suppliers’ business diversification

and facilitating commercialization.

Building Long-term Cooperation System

Hyundai pursues win-win

growth with tier-1 suppliers that supply parts to it directly, tier-2 suppliers

that supply parts to tier-1 suppliers, and general suppliers that deliver

general raw and subsidiary materials. Through a long-term cooperation

system with suppliers, we actively support them not only in production

technologies but also in R&D efforts.

Outcome of Long-term Cooperation System

Average duration of

business relationship

35 years (the average lifespan of small and

medium-sized Korean manufacturers is 13 years)

Size of corporate growth

Sales volume increased by 4.4 times from 2001

Joint entries into

overseas markets

730 suppliers have entered overseas markets with

Hyundai

* As of 2022

STRENGTHENING THE FOUNDATION FOR WIN-WIN GROWTH

Supplier Grievance Handling

Transparent Purchase Practices Center

It is important for Hyundai to

provide suppliers with guidelines on ethical conduct and carbon neutrality

in order to establish a fair and transparent win-win partnership. To this

end, Hyundai Motor Group operates the Transparent Purchase Practices

Center on its win-win growth website while operating a “suggestion box for

transparency and ethical practices” and “suggestion box for tier-2 and tier-3

suppliers” so that its suppliers can voice their difficulties and propose various

system improvements. We are making utmost efforts to establish fair trade

practices and strengthen transparency throughout the supply chain, such as

implementing a “retaliation prohibition policy” so that even when a supplier

reports Hyundai’s fair trade law violation to a relevant organization or raises an

objection with content in a contract with Hyundai, we do not suspend trade

with the supplier or restrict traded products and quantity.

Supplier Competency Building

Global Partnership Center

Global Partnership Center (GPC) is helping

suppliers enhance their competencies and competitiveness in the world’s

automotive industry based on the principle of “establishing a virtuous cycle

in which Hyundai Motor Group and our suppliers can grow together.” In

addition to providing training programs targeting tier-1·tier-2 suppliers, the

Center provides training facilities and instructors to suppliers in need of their

own training. It also offers 18 tracks and some 437 training programs in five

categories – future competitiveness, global competency, leadership, nurturing

automotive industry experts, and basic job training – for tier-1·tier-2 suppliers.

Supplier Training in 2022

(Unit: Persons)

Classiﬁcation

No. of

Participants

Remarks

Foundation of Korea

Automotive Parts

Industry Promotion

Quality and

Technology School

2,869

13 customized training

courses

General training, etc.

1,697

General training,

on-site training, etc.

GPC

Training by industry,

etc.

63,082

510 courses

Total

67,648

Foundation of Korea Automotive Parts Industry Promotion

Hyundai

operates the Foundation of Korea Automotive Parts Industry Promotion

together with Kia and Hyundai MOBIS to strengthen automotive parts

suppliers’ overall capabilities in the areas of quality, technology, and

management. We run various programs, including field instruction activities

and training, as a way to contribute to improving quality and technological

competencies as well as to nurture talent in the automotive parts industry.

Technical Training for Suppliers

Hyundai provides technical training through

the Foundation of Korea Automotive Parts Industry Promotion to help both

metal suppliers (presses, heat treatments, welding, metal plating, forging) and

non-metal suppliers (rubber, painting, electrical & electronics, IT) improve their

parts quality and productivity. We anticipate these efforts will lead to improve

suppliers’ quality defects, reduce raw material purchase costs, and increase

productivity.

Management Consulting for Suppliers

Hyundai offers management

consulting to suppliers, free of charge, through which we share professional

experiences and know-how so that suppliers can strengthen their

management capabilities in the areas of R&D, production, quality, logistics,

cost, and management activities.

No. of Suppliers Received Technical Training or

Management Consulting

(Unit: No. of companies)

■

Technical Training

■

Management Consulting

2018

2019

2020

110

109

106

108

2022

2021

Composition of the Transparent Purchase Practices Center Website

• Supplier Code of Conduct

•

Guidelines on implementing carbon neutrality

•

Four major measures about subcontracting

•

Guidelines on retaliation prohibition

•

Suggestion box for transparency and ethical practices

•

Suggestion box for tier-2 and tier-3 suppliers

Transparent Purchase Practices Center

Supplier Training in 2022

(Unit: Persons)

Classiﬁcation

No. of Participants

Remarks

Foundation of Korea Automotive Parts Industry

Promotion

Quality and Technology School

2,869

13 customized training courses

General training, etc.

1,697

General training, on-site training, etc.

GPC

Training by industry, etc.

63,082

510 courses

Total

67,648

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

ENHANCING QUALITY COMPETITIVENESS

5-Star System

Hyundai sets in place the “5-Star System” which quantitatively

evaluates suppliers’ level of quality, technology, and delivery level to provide

the evaluation results so that suppliers can set detailed improvement goals

and achieve them. We provide incentives to 5-star-certified suppliers, such as

giving advantageous payment conditions and priority for new car development.

Through the 5-Star System, suppliers can expect such effects as curtailing

quality control costs and developing independent export capabilities, in addition

to enhancing their competitiveness in quality, technology, and delivery.

Quality Evaluation of Tier-2·Tier-3 Suppliers (SQ Mark)

Hyundai operates

the “Supplier-Quality Mark” program with an aim to identify professional

business types that have a major impact on automotive parts quality and

improve the quality of tier-2·tier-3 suppliers in the respective business

areas. We evaluate tier-2·tier-3 suppliers based on process management

activities, such as raw and subsidiary material inspection criteria, facility

preservation and daily inspection activities, and creation and improvement

of operation standards, as well as quality management activities, including

finished product inspections, corrective measures, and continuous field

improvements. The SQ Mark is provided to outstanding suppliers.

Activities to Improve Durability

Hyundai shares its know-how in

enhancing durability with suppliers in order to help them effectively address

their chronic issues (customer inconveniences and economic losses, such

as claims and recalls). We have a technology meeting three times a year

to improve dependability issues that occur at suppliers. In addition, we are

collaborating with around 100 tier-1 suppliers to resolve dependability issues.

Quality Education for Suppliers

Hyundai holds the “monthly supplier

quality meeting” that is participated in by all local supplier representatives at

all plants in Korea and abroad every month to secure and enhance suppliers’

quality reliability. At this meeting, we share best practices and matters that

require improvement concerning delivery quality. We also monitor the

progress and effectiveness of implemented improvement measures. In

addition, once mass production of a new vehicle is finalized, the head office

dispatches an employee in charge of quality to the overseas plant to support

supplier education, thus taking measures so that suppliers’ delivery level is in

line with our quality standards.

Quality Management Seminars for Suppliers

Hyundai holds quality

management seminars every year for the CEOs and employees of all its tier-

1 suppliers. At the 2022 quality management seminar, we introduced cases

of responding to quality issues in the US and explained about the quality

management items that suppliers needed to manage in the country through

a lecture by a third-party auditor (TPA). The Quality Division introduced

Hyundai’s key quality assurance promotion strategies while the Procurement

Division guided the roles of suppliers in strengthening the quality capabilities

for new vehicle development and securing the quality competitiveness of

mass-produced vehicle parts. Suppliers introduced examples and effects

of improving qualitative quality and shared difficulties in responding to

the transition to electrification and the knowledge they have gathered to

overcome them.

IMPROVING TECHNOLOGY DEVELOPMENT CAPABILITIES

R&D Technical Support for Suppliers

Hyundai runs a win-win growth

program whereby it shares its R&D and technology development know-how

with suppliers, and thus helps suppliers strengthen their capabilities in areas

which need improvements. The supplier R&D technical support program

consists of case studies and function/design concept training to enhance their

quality mindset; customized technical support that conducts prior analysis

of areas for R&D improvements and helps suppliers improve key pending

matters; and R&D competency-building support that improves product

development capabilities by using new technologies and methods. We look

into supplier requests in the process of quality improvement, customized

technology, and R&D capability-building support, and then reflect them in

improving the technical support program. We also run consultative bodies and

exchange meetings among suppliers in the same industry to continue mutual

communication and cooperation.

Sharing Technology Patents

Hyundai shares patent, free of charge, with

suppliers, and transfers patents that suppliers need. When a supplier requests

for a patent transfer, we conduct on-site investigations and consultations

regarding the supplier’s major business areas; technologies that the supplier

owns and is developing; supplier’s patents; and patent that the supplier hopes

to be transferred. By having discussions with the supplier, we finalize the

patent transfer and sign a patent agreement. We also hold New Technology

Exhibitions after patent transfers to share information on cases of patent

application to advance R&D and patent application to products.

Building Smart Factories

Hyundai implements a smart factory-building

project for SME tier-1·tier-2 suppliers. The project uses ICT to integrate the

entire production process, ranging from product planning to sales, to produce

customer-tailored products at minimal costs and time. A total of KRW 15 billion

was contributed to the project from 2019 to 2021 to provide consulting and

facility investments required for building a smart factory to 660 suppliers so

that they can switch to a smart factory. The smart factory-building project is

categorized into different levels in consideration of the status of production

facilities of tier-1·tier-2 suppliers. They include the basic level which enables

partial standardization, data management, and real-time production information

monitoring; mid-level which supports collected information-based control and

optimization of decision-making through simulations; and advanced level where

monitoring to control-optimization takes place autonomously.

Guest Engineer System

Hyundai sets in place a guest engineer system,

through which parts suppliers’ research staff in charge of design/evaluation take

part in our new car development process. We provide a free office space where

supplier researchers can stay, as well as the facilities, equipment, and test sites

needed for parts performance evaluation. We also transfer our parts design

and performance development know-how. Through new car parts design and

performance development collaboration, Hyundai and suppliers anticipate

to raise parts and performance development efficiency, develop quality in

advance, and nurture technical experts at suppliers.

Benchmarking Advanced Technologies

Hyundai operates the technical

material escrow system for safe storage of suppliers’ key technical materials

and trade secrets, and proof of technology development in the event of

leakage of a supplier’s key technology or a dispute. We develop technologies

jointly with suppliers and then make patent applications together to

prevent the possibility of infringement upon small- to mid-sized suppliers’

technologies and patents. We also strive to protect supplies’ technology

directory or indirectly by providing online patent education on patent

application and patent search methods and helping them reduce their

patent cost.

5-Star Evaluation Items

Quality 5-Star

Technology 5-Star

Delivery 5-Star

• Quality

management system

• Defect rate

• Claim

reimbursement ratio

• Quality management

performance, etc.

• Technology development

personnel, investment

• New technology

development, patent

• Parts development work

system (planning/design/

evaluation), etc.

• Production line

stoppage cases,

time, reimbursement

amount (ratio)

• A/S parts delivery rate

• CKD parts delivery

rate

2022 Quality & Safety Training Programs (Suppliers)

Quality related training

Target

Cycle

No. of suppliers

Quality management

seminar (face-to-face)

All suppliers

in Korea

Once a year

345

Quality management

training (Monthly quality

meeting)

All suppliers

Once

a month

1,680

R&D Supplier Tech Day

In October 2022, Hyundai held the “2022 R&D Supplier Tech Day”,

where suppliers with outstanding new technologies were awarded

and suppliers’ technologies were mutually exchanged, to strengthen

suppliers’ R&D capabilities and promote joint growth based on

mutual cooperation. We chose and rewarded four suppliers with

significant R&D achievements, including a dual power supply

controller for autonomous driving systems; coolant and refrigerant

system parts modularization; integrated vehicle body-battery

underbody structure; and high-voltage battery packs. In addition, a

total of 32 suppliers participated in a video exhibition to introduce

new technology and share 60 R&D cases. Useful information

was also shared on ways of cooperation to develop global R&D

competitiveness based on win-win growth.

Sustainable Supply Chain

STRENGTHENING THE TIER-2 AND TIER-3 COOPERATION NETWORK

5-Star System for Win-Win Cooperation

In our efforts to build win-win

relationship between tier-1 suppliers and tier-2 suppliers and to establish a

culture of win-win growth, we operate the “5-Star Win-win Cooperation”

system, which evaluates tier-1 suppliers’ win-win efforts toward tier-2

suppliers and reflects the results in the bidding process. We evaluate tier-

1 suppliers’ win-win activities toward tier-2 suppliers, and evaluation items

include payment terms; including cash payment ratio and payment period;

contractual fairness, such as use of a standard subcontract; and win-win

support, including management fund, R&D, and productivity support. We

also conduct qualitative evaluations on tier-2 suppliers’ subjective evaluation

about tier-1 suppliers’ win-win activities. Survey items include transaction

relationship, including fair trade and transaction conditions; cooperation

relationship, such as for management fund, R&D, and productivity; and

overall operations, such as vision-sharing and implementation system.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

STRENGTHENING A FOUNDATION FOR SUSTAINABLE GROWTH

Making Cash Payments and Adjusting Raw Material Prices

Since 2006,

Hyundai has been making payments in cash to MEs and SMEs with sales less

than KRW 500 billion and in promissory notes (60 days) to large companies

and MEs with sales more than KRW 500 billion. Also, we make payments

on a weekly basis. For large companies, MEs, and SMEs that supply parts

for exports, we make payments fully in cash once a month. In addition, to

ease the burden on suppliers that is caused by raw material price increases,

Hyundai absorbs the impact from raw material price changes. In case of

steel plates and precious metal, we operate a system whereby we directly

purchase the items at international prices and supply them to suppliers.

In case of aluminum and plastics, we adjust payments made to suppliers

according to international prices.

Joint Entries into Overseas Markets and Support for Increased Exports

Hyundai is jointly entering overseas markets with suppliers to support their

continued growth and globalization. As of the end of 2022, we expanded to

global markets with a total of 730 suppliers, including 341 tier-1 suppliers and

389 tier-2 suppliers, through which suppliers have harnessed opportunities

to receive orders from overseas OEMs. To help Korean parts suppliers

increase overseas exports, we are supporting the establishment of joint

logistics and proof-of-origin systems. We identify difficulties experienced by

suppliers in the export process and continue to explore activities that make

actual improvements.

Improving Quality and Technology of Tier-2·Tier-3 Suppliers

Hyundai

has been making continued efforts to improve quality, technology, and

productivity of tier-2 and tier-3 suppliers by dispatching experts with

automobile-related expert skills and know-how to tier-2 and tier-3 suppliers.

Win-Win Payment System

Hyundai has set in place a win-win payment

system that enables tier-2·tier-3 suppliers to be paid in cash on the payment

date and cash in their payments in advance. Within the limit of the accounts

receivable bond (payment) issued by Hyundai, a tier-1 supplier issues a bond

to a tier-2 supplier and a tier-2 supplier issues a bond to a tier-3 supplier for

settlement.

This system ensures tier-2 and tier-3 suppliers to receive payment on the

payment date. Tier-1 and tier-2 suppliers that make payment can receive

financial benefits, including interest income from the win-win payment deposit

account and commission income from early encashment of win-win payment.

Technical Training (Quality and Technology)

Composition

Technical experts in various production areas

Duration &

Frequency

3 to 12 months per year, providing guidance on

shortcoming related to manufacturing technologies

free of charge

Areas

Listen to supplier opinions on key quality/technology-

related difﬁculties and supports improvements; and

provide focused instruction on quality management

system operation to improve suppliers’ ability to

respond to the Supplier-Quality Mark system

Quality and Management Consulting (Supplier Support Group)

Composition

Professionals with experience in the automobile

industry as senior executives

Duration &

Frequency

3 to 12 months per year, providing consultation on

overall management, free of charge

Areas

Consulting on overall management, including

managing production, managing quality, and

pioneering overseas markets

Major Fund Support Programs for Suppliers

Future Growth Mutual Fund

• Deposited KRW 37.4 billion, provided KRW 93.5 billion

- Provide investment funds at low interest rates for quality and productivity improvements of tier-1 and

tier-2 suppliers (Industrial Bank of Korea)

Future Growth Win-Win Fund

• Deposited KRW 100 billion, provided KRW 150 billion

- Provide investment funds at low interest rates for quality and productivity improvements of tier-1 and

tier-2 suppliers (Hyundai Commercial)

Win-win Mold Equipment Fund

• Deposited KRW 50 billion, provided KRW 75 billion

- Support suppliers’ financing based on new model mold and equipment collateral value and their

interest rate stability

Win-win Cooperation Fund

• Provided KRW 50 billion

- Support labor costs of tier-2 and tier-3 supplier workers with funds raised by Hyundai

Dedicated Loan for Tier-2 and Tier-3 Suppliers

• Provided KRW 200 billion

- Provide investment funds intended to improve the management environment of tier-2 and tier-3

suppliers and operating funds at low interest rates

5-Star System for Win-win Cooperation

Tier-1 suppliers’ win-win

cooperation activity

performance

(Quantitative evaluation: 50%)

Tier-2 suppliers’ subjective

evaluation about win-win

cooperation

(Qualitative survey: 50%)

• Payment terms

(cash payment ratio,

payment period, etc.)

• Fair contract

(use of a standard contract,

etc.)

• Win-win support

(financial, R&D, productivity

support, etc.)

• Transaction relationship

(fair trade, transaction

conditions)

• Cooperation relationship

(financial, R&D, productivity

support, etc.)

• Operational systems

(vision-sharing,

implementation system, etc.)

Goal

Win-win cooperation and joint growth

between tier-1 and tier-2 suppliers

Outline

Evaluate tier-1 suppliers’ win-win cooperation

efforts toward tier-2 suppliers and reflect the

results in the supplier selection (bidding)

process (Evaluate once a year)

Support for Innovation of

Automotive Parts Company

in 2022

•

Consulting to 20 companies

making preparations

Business Reorganization

Partnership and Support

Program in 2022

•

Identified 27 support companies

•

Supported business reorganization

approval for 27 companies

Sustainable Supply Chain

Support to Shift to Future Vehicle Parts Business

Internal combustion

engine parts business faces a range of challenges due to the expansion

of electrification and shift to autonomous driving. In our effort to help our

suppliers preemptively respond to the future vehicle market by moving

forward with business diversification, we built a comprehensive support

system together with the Korea Automotive Technology Institute and

Foundation of Korea Automotive Parts Industry Promotion. In addition, we

operate the “automotive parts company innovation support” program that

provides analysis of R&D capabilities and consulting on future direction,

support for discovery and selection of new business items in relation to future

vehicles, and support for patent analysis and business reorganization for

SMEs that are preparing for expansion of the future vehicle parts business.

We also have the “business reorganization partnership selection and support”

program that provides necessary support for SMEs that are expanding their

business in future vehicle parts to receive government approval on business

reorganization. Incentives are provided to companies approved for business

reorganization, including tax benefits, loan interest discounts, and application

of additional points when applying to build a smart factory.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Supply Chain ESG Management

SPREADING ESG IN THE SUPPLY CHAIN

Enactment and Amendment of the Supplier Code of Conduct

Hyundai’s

Supplier Code of Conduct stipulates basic matters in the areas of ethics,

environment, labor and human rights, safety and health, and management

systems that should be observed by all suppliers that provide goods and

services or signed a contract for other transactions. All suppliers that signed

a contract with Hyundai must comply with the Supplier Code of Conduct

and also recommend compliance with matters specified in the Code of

Conduct to the overall supply chain, including companies they trade with

(lower suppliers).

Suppliers must consider the matters presented in the Code of Conduct in

their management decision-making and business operation processes, and

actively respond to an ESG risk diagnosis and due diligence that Hyundai

carries out directly or through a third-party organization. In addition, in

accordance with Hyundai’s risk improvement recommendations, suppliers

must establish a risk mitigation plan and implement measures based on

mutual discussion. The BOD supervises and reviews important matters

related to supply chain ESG management plans and programs.

Implementing ESG in Supplier Selection Process

Hyundai distributes

standard guidelines on safety, health, and environmental management and

examines the status of suppliers’ safety and environment accidents through

ESG risk diagnosis and due diligence. We apply a penalty during supplier

selection to suppliers that had an accident. When choosing a new supplier,

we evaluate the supplier’s quality management system, financial structure,

and management capabilities while also evaluating its ESG including safety

and health, after which evaluation results are reflected in trade conditions.

Supplier ESG Improvement Roadmap

Hyundai created the “Supplier ESG

Improvement Roadmap” to support suppliers’ sustainable development and

socially responsible activities. In accordance with the ESG improvement

roadmap, we strengthened supplier ESG risk evaluation criteria and

expanded ESG risk diagnosis and due diligence targets to include suppliers

that entered overseas markets. In addition, we shared information with

suppliers so that they can secure ESG capabilities and adopt major ESG

regulations and policies, while also sharing a data management template.

Supplier ESG Improvement Roadmap

Even suppliers we have been trading with can be subject to a penalty,

such as bidding restrictions, according to evaluation results. In addition,

we strengthened supply chain due diligence regulations and adopted the

regulations to our website and basic contracts, thus demanding suppliers to

comply with supply chain ESG-related standards.

Receiving ESG Documents for Supplier Registration

If we determine that

a supplier is qualified for trade as a result of a supplier evaluation, we receive

from the supplier its evaluation report, survey on actual conditions, financial

statements, as well as pledges on improving sustainability, including a

written ethics pledge, a written agreement on supplying eco-friendly parts, a

written quality pledge, and a written information protection pledge.

Current Status of Hyundai Suppliers

Hyundai’s suppliers are in various

regions across the globe, including Korea, US, China, Europe, India, Latin

America, Southeast Asia, etc. Of these suppliers, those that supply core parts

(hydrogen fuel cell parts, battery parts, control parts, electrification parts,

etc.), have a low level of replaceability, or have a large trade volume are

chosen and managed as

significant (key) suppliers.

Tier-1 suppliers registered and managed in 2022 totaled 1,680 (purchase

percentage of 100%), consisting of 380 suppliers in Korea and 1,300

suppliers overseas. Of the tier-1 suppliers, there are 47 core suppliers

(purchase percentage of 65%). In addition to tier-1 suppliers, we identify tier-

2 suppliers that have a significant impact on business operations. Number of

core suppliers among tier-2 and lower suppliers stands at 24.

Spreading and Disseminating ESG Among Suppliers

Win-win Growth Newsletter

Hyundai produces the “win-win growth

newsletter” to provide information on programs that we operate for win-win

growth with suppliers and to share major policies and activities in the fields

of occupational safety, information security, and sustainability management.

The newsletter is issued every other month and distributed to all tier-1

suppliers through notices, the win-win growth portal (http://winwin.hyundai.

com), and the website of Hyundai Kia Automotive Suppliers Association.

Key Supply Chain Sustainability Management in 2022

Briefings and Online Training

We hold briefings and run training courses

for suppliers to prevent ESG risks throughout the supply chain and improve

suppliers’ ESG capabilities. We operate online training courses that can

be taken by all suppliers. We also hold various briefings for working-level

ESG employees of suppliers and share information on index that should

be managed in major ESG areas, including ethics, environment, labor and

human rights, and safety and health, major trends, and best practices.

Environment

•

Establishment of

an environmental

management system

•

GHG and energy

management, biodiversity,

etc.

Labor and

Human rights

•

Guarantee of freedom of

association

•

Prohibition of child and

forced labor, etc.

Management

Systems

•

Transparent

management and

anti-corruption

•

Prevention of unfair

trade, etc.

Ethics

•

Transparent

management and

anti-corruption

•

Prevention of unfair

trade, etc.

Safety and

Health

•

Establishment of an

occupational health and

safety management

system

•

Response to emergency

situations, etc.

Criteria to Select Significant Suppliers

Supply of

core parts

Replaceability

Purchase

size

ESG

Cut-off Line for Significant

Supplier Selection

Signiﬁcant

suppliers

Supplier ESG Capability-Building Training in 2022

Total

hours

No. of participating suppliers/

No. of staff who received training

609

hours

1,123

persons

303

suppliers

2023

•

Advance ESG evaluation

- Increase the evaluation scope

to include overseas suppliers

- Continue to upgrade the index

•

Increase ESG evaluation and

consulting support

- Online evaluation,

on-site inspection, on-site

improvement consulting, etc.

2021

• ESG briefing

- Provide a seminar on ESG

evaluation and conflict

minerals, send a win-win

cooperation letter

• Evaluation and feedback

- Self-diagnosis, written

evaluation, on-site evaluation

- Distribute an evaluation

results report to each supplier

2022

•

Support for establishing an

ESG management system

- Share guidelines, including a

data template

- Create an online ESG training

course

•

Expand ESG evaluation

targets

- Increase the evaluation scope

to include suppliers that

entered overseas markets

• February

Made key plan on supplier ESG

improvements in 2022

• May

Made notice of guidelines on supplier

execution of carbon neutrality

• October

Shared the progress of supplier ESG

evaluation and improvement in 2022

Basic Principles of the Supplier Code of Conduct

Sustainable Supply Chain

Hyundai Motor Company

Supplier Code of Conduct

Supply Chain Management Strategies

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

SUPPLY CHAIN ESG DIAGNOSIS AND DUE DILIGENCE

Risk Diagnosis and Due Diligence Process

Hyundai’s supply chain ESG risk

evaluation management consists of document-based assessment, on-site

due diligence, high-risk supplier selection, and improvement and monitoring.

We continue to improve diagnostic indicators in accordance with global

trends to effectively identify potential ESG risks in the supply chain.

Composition of Risk Diagnostic Indicators

Hyundai established its unique

supply chain ESG risk diagnostic indicators by using laws related to fair trade/

environment/labor/safety and health/supply chain due diligence, the OECD

Guidelines for Multinational Enterprises, EcoVadis, Responsible Business

Alliance (RBA), Drive Sustainability, and other indices and standards. The

supply chain ESG risk diagnostic indicators consist of ethics, environment,

labor and human rights, and safety and health areas. In consideration

of a supplier’s size and whether it satisfies key indicators, we reflect the

evaluation results in supply chain operation strategies.

Risk Filter

Before a risk diagnosis and due diligence, Hyundai identifies, in

advance, risks that it expects or are occurring in the supply chain. Hyundai

chose 47 tier-1 core(significant) suppliers and 24 tier-2 core(significant)

suppliers in 2022 after going through the prior identification process.

Document-based Assessment

Hyundai diagnoses supply chain ESG

risks based on its unique, distinctive indicators and criteria. A document-

based assessment is conducted using an online evaluation system that

can be accessed by all suppliers in Korea and abroad. Suppliers respond to

evaluation indicators by means of a self-diagnosis and attach documentary

evidence. Supplier document-based assessment results serve as basic data

for checking suppliers’ ESG risks, choosing suppliers subject to on-site due

diligence, and categorizing high-risk suppliers.

On-site

Hyundai chooses suppliers that are subject to on-site due

diligence by comprehensively considering countries where suppliers are

located, business type, supplied parts and raw and subsidiary materials, and

document-based assessment results. Primary on-site due diligence targets

include suppliers that submitted insufficient responses and documentary

evidence for the document-based assessment and suppliers that have been

confirmed to have potential or actual ESG risks based on document-based

assessment results. On-site due diligence and evaluations are conducted

by ESG consulting and diagnosis and due diligence experts, in close

collaboration with Hyundai’s purchase sector.

Diagnosis and Due Diligence Aligned with Supply Chain Management

Strategies

Hyundai established top five strategic directions of supply

chain management for suppliers’ quality competitiveness, technological

competitiveness, supply stability, compliance with fair trade, and establishment

of an eco-friendly production system. To achieve the top five strategic directions,

we established major performance indicators (delivery defect rate, reliability

testing capabilities, KD parts delivery rate, payment terms, energy consumption,

etc.) for each direction and monitor the execution status on a regular basis. In

addition, we designed “management indicators aligned with strategy” and “ESG

risk diagnostic indicators” to identify whether suppliers are participating in and

executing our supply chain management strategies. Based on these indicators,

we are conducting a diagnosis and due diligence (evaluation) of supplier levels.

During the on-site due diligence process, we checked the relevant supplier’s

systems and regulations to confirm measures regarding code of ethics,

legitimate handling of wastes and pollutants, management of working hours

and payment of salaries based on a working hour management system,

hazard evaluations, and establishment of emergency situation response

plans. We plan to review and apply ways to effectively identify concerning

ESG risks at work sites during on-site visits.

Supply Chain ESG Risk Diagnostic Indicators

ESG risk

diagnostic

indicators

Ethics

Environment

Labor and human rights

Safety and health

Management system

• Prohibition of corruption

•

Prevention of unfair

trade

•

Prevention of counterfeit

parts

•

Compliance with export

restrictions

•

Information protection

• Responsible purchase

•

Environmental

management system

•

Energy and GHG

•

Water resources

• Air pollutants

• Wastes

• Chemical substances

•

Non-discrimination

•

Wage and welfare

•

Working hours

•

Humane treatment

•

Freedom of association

•

Prohibition of child labor

•

Prohibition of forced

labor

•

Safety and health

management system

•

Machine/instrument/

facility safety

•

Emergency response

•

Accident management

•

Safety diagnosis

•

Health management

•

Disclosure of corporate

statement

•

Appointment of a person

in charge

•

Risk checks

•

Education and

communication

•

Information management

•

Grievance system

•

Business partner

management, etc.

Identification of

risks by country,

business type,

part and raw

and subsidiary

material

We identify and manage risks by country where our

suppliers are located, business type, supplied part,

and raw and subsidiary material. To this end, we use

materials disclosed by each country’s government

and research organizations as well as various media

and social network materials.

Analysis of

supply chain ESG

risk diagnosis

Confirmed risks are managed by categorizing

them based on each ESG area, including ethics,

environment, labor and human rights, and safety

and health. They are reflected in deriving supply

chain risk improvement measures and amending

diagnostic indicators.

Global

presence of

suppliers

Hyundai’s suppliers are located across the globe,

and continue cooperation to build a stable supply

chain, including ESG.

Asia

52%

Other

Americas

20%

Europe

27%

Steps of Risk Diagnosis and Due Diligence

Risk filter

Analyze expected ESG risks by country where suppliers are

located, affiliated industry, and supplied product

Document-

based

assessment

A supplier accesses an online system (IT), and conducts a

self-diagnosis (checklist) on its ESG risk level and provides

documentary evidence

On-site due

diligence

A visit is made to a supplier together with an outside expert

to check the on-site situation or confirm authenticity of

documentary evidence

Improvement

measure

Request for immediate improvement or recommend to make

an improvement plan for high-risk factors identified in the

document-based assessment or on-site due diligence process,

Support for

execution

Provide such financial and non-financial support as training,

consulting, and guidance, to suppliers to help them implement

improvement measures

Sustainable Supply Chain

Strategic Directions

Performance Indicators

Quality competitiveness

Technological competitiveness

Supply stability

Fair trade

Eco-friendly production system

Delivery defect rate, claim reimbursement ratio, quality management,

onsite evaluation of manufacturing processes, outsourcing management

Basic competencies, performance competencies, capabilities for the future,

reliability testing capabilities, S/W veriﬁcation capabilities

Smooth supply of parts (prevention of production line stoppage),

A/S parts delivery rate, KD parts delivery rate

Payment terms, contractual fairness, law/regulation compliance,

win-win cooperation (support for win-win growth)

Environmental management system, energy consumption, air pollutant,

waste, hazardous chemicals management

Top five strategic

directions of

supply chain

management

Results of Supply Chain ESG Risk Diagnosis and Due Diligence

(Unit: Companies)

Classification

No. of companies

Remarks

Document-based

assessment of ESG risks

Tier-1 suppliers

1,680

Purchase percentage of 100%

Tier-1 core suppliers

65% of tier-1 purchase percentage

Tier-2 core suppliers

Identification of

high-risk suppliers based

on document-based

assessment

Tier-1 suppliers

Goal: Complete the written assessment of all core suppliers

Tier-1 core suppliers

Tier-2 core suppliers

On-site due diligence

of ESG risks

Tier-1 suppliers

Including 13 high-risk suppliers identified through the

document-based assessment

Tier-1 core suppliers

Goal: Complete the onsite assessment of all high-risk suppliers

Tier-2 core suppliers

Improvement measures

for high-risk suppliers

Suppliers with negative impacts identified

Identified 1 core supplier among tier-1·tier-2 suppliers

Suppliers with established improvement plans agreed upon

Including the 1 core supplier

Suppliers that completed implementation of improvement plans

Including the 1 core supplier

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Key Areas of Improvement

Hyundai conducted the on-site due diligence

(evaluation) and thus identified key areas which need improvement

as follows. We share evaluation result report with the average score of

benchmark companies and the top score in addition to areas of weakness

and areas for improvement for each company, thereby inducing them to

make improvement.

Areas

Improvement required

Ethics

Have a responsible raw and subsidiary material procurement

policy, track and manage conflict minerals

Environment

Environmental data index management, environmental

management communication

Labor and

human rights

Have a human rights charter, adopt a child labor prohibition policy

Safety and

health

Establish safety and health governance, manage serious accident

index

Finalization of Risks and Establishment of an Improvement Plan

We are

deriving improvement points to ease suppliers’ ESG risks through on-site

due diligence (evaluation). Immediate corrective measures are taken for

matters that can be improved right away during an on-site due diligence.

For other confirmed risks, we hold discussions with the respective supplier

on the time and method of implementation and expected issues, and

establish improvement tasks. In addition to conducting a supply chain ESG

risk diagnosis and due diligence, we monitor whether suppliers implement

improvement measures. We also actively provide support in case suppliers

do not have enough ability to make improvements themselves.

Support to strengthen

ESG diagnosis/evaluation

response capabilities

We shared improvement guidelines and

best practices of ESG management so that

suppliers can establish ESG risk improvement

plans and take measures. In particular, we

have been strengthening support needed for

on-site improvement consulting since 2023

so that suppliers can develop the capabilities

needed to manage and improve ESG risks.

ESG online

training portal

To raise suppliers’ ESG awareness and streng-

then their ESG capabilities, we operate the

“ESG online training portal” that employees

of all suppliers can use anytime. It provides

content (ESG concept, trends in Korea and

abroad, best practices, etc.) that is connected

to our supply chain ESG risk diagnosis

and due diligence items, including ethics,

environment, labor and human rights, and

safety and health.

Training to enhance capabilities

in relation to carbon neutrality

in the supply chain

Through the Global Partnership Center and

Global Learning Center, Hyundai is providing

training to around 360 suppliers on the outline

of carbon neutrality, trends in Korea and abroad,

method of calculating GHG emissions, and

response measures regarding carbon information

disclosure. We also run a program that supports

equipment purchasing when a supplier replaces

a carbon reduction facility that is needed at a

business site as well as a consulting program that

helps improve business site energy efficiency

and curtail costs. We will continue to develop

diverse carbon reduction programs and provide

support so that they can be applied to suppliers,

helping suppliers continually raise their carbon

management levels to achieve carbon neutrality.

Labor and human rights

management training for the

supply chain in North America

In partnership with the US Department of Labor,

we offered a training program to the overall

supply chain in North America with regards to

compliance with worker employment-related

regulations. Through this training program,

we informed participants of Hyundai’s zero

tolerance principle on unfair employment, and

explained ways to check identity in the worker

employment process, Supplier Code of Conduct

compliance requirements, opening of an

anonymous channel for grievance counseling,

and prohibition of employment through a third-

party employment broker.

Global

Supplier Day

In March 2023, we held the “Global Supplier

Day” in Montgomery, US for suppliers in the

region, semiconductor companies, facility

suppliers, and others. This program has enabled

us to strengthen cooperation with global

suppliers and to share trend information on

ESG risks that can arise in the supply chain. In

particular, we shared cases related to supply

chain ESG, including child labor issues in North

America, thereby emphasizing the importance

of supply chain ESG management.

Support Cases of Improving Risk Management

Supply Chain Sustainability Goals

Hyundai has been making continued

effort to expand the scope of the supplier ESG risk diagnosis and due

diligence to improve its supply chain sustainability. In 2022, we conducted

a supply chain ESG evaluation on all tier-1 suppliers around the world, and

encouraged them to acquire environmental management system (ISO

14001) and safety and health management system (ISO 45001) certifications.

In addition, we are providing a program that supports the establishment of

safety facilities and security systems and the reduction of carbon emissions

by 2025 to help suppliers improve their ESG capabilities.

Performance

in 2022

Supply Chain Sustainability Goals

Classification

Support provided to

Support duration

Establish safety facilities

Tier-1 and tier-2 suppliers

2023-2025

(3 years)

Establish security systems

Tier-1 and tier-2 suppliers

Support for carbon emission

reduction

Tier-1 suppliers

Support target: Choose from tier-1·tier-2 suppliers by taking company size, business

type, and other factors into consideration

Increase the scope of ESG evaluation targets

(all tier-1 suppliers)

Environment, health, and safety management system

certification (all tier-1 suppliers)

Sustainable Supply Chain

Distribution of safety

and health management

guides

We have developed and distributed the

“safety and health management guides” to

help suppliers establish a systematic safety

and health management system, such as

creating an organization dedicated to safety

and health; establishing a management

system; increasing training and investments;

identifying and addressing risks; and analyzing

disaster factors and establishing reduction

measures. We also create online safety and

health training materials, which can be viewed

by any of supplier employees.

RESPONSIBLE MINERALS MANAGEMENT

Conflict Minerals Management Governance

Hyundai understands

the significant seriousness of human rights violations and environmental

destruction caused by mineral mining in conflict and high-risk areas. We are

therefore striving to eradicate human rights violations, including exploitation

of child labor, and environmental destruction that take place in the process

of mining minerals, and to protect worker health and safety.

To this end, we have established management governance to operate a

management process for compliance with policies and execution of social

responsibilities in relation to conflict minerals. The Procurement Division’s

Win-Win Cooperation & Safety Promotion Team supervises the operation

of the conflict minerals-related management process and continually

examines responsible mineral risks of each Purchase Division and supplier.

In addition, it closely collaborates with relevant departments, including the

Sustainability Management Team that manages company-wide ESG risks.

Important matters related to conflict minerals are supervised and reviewed

by Sustainability Management Committee under BOD, and are also included

in the KPIs for CEO as a way to ensure active management of the matters.

Conflict Minerals Management Policy

Hyundai recognizes that there

are conflict minerals that are unethically mined and distributed, including

human rights violations and environmental destruction, in conflict zones,

and prohibits use of conflict minerals (tin, tantalum, tungsten, gold) that are

unethically mined in conflict areas. Based on the basic policy of “providing

products to consumers that went through a legitimate and ethical

distribution process”, we operate a conflict minerals management process

jointly with suppliers and strictly investigate inclusion of conflict minerals in

products. In addition, we are continually monitoring the cobalt supply chain

in accordance with the OECD Due Diligence Guidance to manage the issue

of child labor in cobalt mines of the Democratic Republic of Congo. We

provide suppliers with conflict minerals management guidelines and hold

relevant briefing sessions to help raise their awareness of conflict minerals.

In addition, we will make continued efforts to expand the mineral purchase

policy that calls for non-use of conflict minerals and fulfillment of social

responsibilities to include suppliers’ clients.

Conflict Minerals Management Process

Hyundai has established a

process by reviewing and analyzing the OECD Due Diligence Guidance, the

US Dodd-Frank Regulatory Reform Act, and US Securities and Exchange

Commission’s requirements, based on which it is striving for responsible

mineral supply chain management. Based on the Conflict Minerals Reporting

Template (CMRT) and Extended Mineral Reporting Template (EMRT) for

supplier information collection that are provided by the Responsible Mineral

Initiative (RMI), we are tracking the supply chain (mine-smelter-tier-1

supplier, etc.) for tin, tantalum, tungsten, gold, and cobalt. In cases where

we identify and recognize human rights and environmental risks in the

mineral supply chain, we strive to mitigate or prevent them. In addition, we

recommend suppliers to monitor whether they are trading with a smelter

located in a high-risk area or did not receive Responsible Minerals Assurance

Process (RMAP) certification. We assess whether our suppliers are trading

with smelters that obtained RMAP certification on an annual basis.

Selection of High-Risk (Risk Management) Areas

Hyundai has classified

10 African countries (Democratic Republic of the Congo, Rwanda, Burundi,

Sudan, Angola, Uganda, Zambia, Central African Republic, Congo, Tanzania)

and other conflict areas as Conflict Affected and High Risk Areas (CAHRAs).

We continue to monitor suppliers’ use of conflict minerals and cobalt that

are illegally or unethically mined/distributed in these areas. We have also

established a process for cases in which we inevitably source minerals from

conflicted areas, we confirm that there is no issue through an internal review

before use.

Investigating the Conflict Mineral Status of Suppliers and Checking Risks

We investigated the status of suppliers that use tin, tantalum, tungsten,

gold, and cobalt. For tier-1 suppliers and electric vehicle battery suppliers (43

suppliers), we received CMRT/EMRT materials from lower-level suppliers

that supply parts that used conflict minerals and cobalt. We listened to

difficulties experienced by suppliers that were having difficulty in creating

CMRT/EMRT materials or whose materials were insufficient. We also

explained on several occasions the need to actively respond to the conflict

minerals management process and recommended all suppliers subject to

investigation to submit materials.

Based on the CMRT/EMRT data submitted by our suppliers, we conducted

an analysis to determine if the suppliers were engaged in trade with

RMAP-certified smelters. In cases where suppliers were not trading

with certified smelters, we proactively requested that they implement

a mineral purchasing policy that aligns with social responsibilities and

to engage exclusively with certified smelters. We also approached tier-1

suppliers sourcing conflict minerals from uncertified smelters, requesting

a comprehensive improvement plan outlining their mid to long-term

intentions to transition to certified smelters. These measures included all

suppliers in our conflict minerals management program, allowing us to fulfill

our social responsibilities and address risks effectively.

Despite our efforts, we explore alternative procurement options and take

decisive actions, such as suspending relationships with suppliers who

show reluctance to improve their practices. These endeavors exemplify our

commitment to responsible sourcing and minimizing the impact of conflict

minerals in our supply chain.

Disclosing Conflict Mineral Activity Details

Hyundai established a

conflict minerals management policy and disclose it through its website,

while also issuing an annual Conflict Minerals Report. We are striving to

create greater corporate value by communicating and identifying with all

stakeholders, including customers, employees, and shareholders, and by

continuing change and innovation. We will continue our efforts to strengthen

communication by issuing reports in accordance with standards required by

the international community.

Raising Supplier Awareness of Conflict Minerals

Beginning with the

establishment of criteria and finalization of a schedule to investigate the

conflict mineral status of suppliers in March 2022, we identified in advance,

whether items that are used for major electric model production use conflict

minerals or cobalt. In addition, we held briefing sessions and provided

training to tier-1 and tier-2 suppliers that use conflict minerals, electric

vehicle battery suppliers, and Hyundai employees in charge of purchasing

with regard to the background of conflict minerals management, conflict

minerals regulation trends in major countries, Hyundai’s conflict minerals

management policy, CMRT/EMRT outline and investigation plan, and trading

with RMAP-certified smelters as part of our activities aimed at raising overall

awareness of conflict minerals management.

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1. Introduction

Conflict Minerals (Responsible Minerals) Policy

Conflict Minerals Management Process

Establishing

policy

Raising supplier

awareness

Investigating

suppliers’ status

Checking

risks

Disclosing

activity details

• Clarification of

management

system, operation of

governance

• Acquisition of

information through

prior investigations,

holding of briefing

sessions for suppliers

• Analysis of suppliers’

actual status,

compliance with RMI

standard forms

• Expansion of lower-

level supplier

management, annual

monitoring of certified

smelter trading

• Hyundai Motor

Company Conflict

Minerals Report, etc.

Procurement

Division

Relevant

Departments

Sustainability

Management

Committee

Win-Win Cooperation &

Safety Promotion Team

Sustainability

Management Team

Vehicle Parts

Procurement Sub-Division

Electric Vehicle Parts

Procurement Sub-Division

Suppliers

Conflict Minerals Management Governance

Sustainable Supply Chain

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1. Introduction

Customer Experience Innovation

Hyundai is striving to achieve its quality philosophy of

“producing defect-free vehicles without breakdowns”

and develop new safety technologies that protect

drivers, passengers, and pedestrians. To this end, we

continue upgrading overall quality and safety systems

not only by promoting preemptive quality and safety

measures from the vehicle development stage but

also by preventing any significant problems afterward

through early detection, early improvement, and early

after-sales actions. In particular, we are focused on

building a sustainable safety management system by

developing training programs, operating quality and

safety reporting centers, analyzing safety information,

and establishing safety test sites to strengthen our

quality verification capabilities, which in turn will enable

us to maximize customer satisfaction and build trust.

Quality Management Standards for Electrified Vehicles

Hyundai has

established quality management standards and criteria designed for each

type of electrified vehicles, such as hybrid vehicles, EVs and FCEVs, in its efforts

to actively respond to the global paradigm shift towards electrification. We

manage our quality risks through continuous quality checks, case analysis, and

improvement activities while continuously revising our quality management

standards and criteria based on the data collected and analyzed.

Preemptive Management of Quality Risks

From the early stage of new vehicle

development, such as vehicle design, Hyundai conducts pre-verification of parts

suppliers and inspects the quality of our own production processes to eliminate

quality risks and related production process impediments in advance. Based on

product drawings, we inspect the function, structure, reliability, and durability of

parts. We issue the final approval through the inspection of supplier processes,

self-inspection of production processes, etc. In addition to our own verification

of test vehicles, the test-drive opinions of customers and professional quality

organizations are utilized as guidelines to identify major issues and carry out

improvement activities in parallel. Moreover, Hyundai holds quality inspection

meetings on a regular basis, and reports the quality risk assessment results and

taken measures to the highest level of management on the verge of new car

models’ mass production.

Prevention of Mass Production Quality Risks

When a quality risk is detected

from information acquired through statistical process control, periodic

inspections, and shipment pass rates, we conduct joint investigations and take

necessary countermeasures for quality improvement. Also, in order to prevent

quality risks from occurring in the vehicle production process, we take thorough

preventive measures, such as suppliers’ process management, assessment of

quality prevention activities, validation of quality inspection equipment, and

reliability testing of parts. We have established a control tower devoted to the

management of vehicle quality risks in the production process.

Prior Verification of Quality Risks with the Participation of Employees

Hyundai runs an experiential program in which its employees experience

its products and services from the customer’s point of view, aimed at

product perfection with higher standards while they feel rewarded and

immerse themselves in their work. In 2022, our employees in a variety

of sectors participated in the final quality inspection of new cars ahead

of mass production as test drivers, for a total of six new models and full-

change models (IONIQ 6, The all-new Grandeur, The all-new Kona ICE,

G90, ELECTRIFIED GV70, and G70 SHOOTING BRAKE). They meticulously

checked even the smallest details from the customer’s point of view and

strived to procure the highest level of quality.

Quality Mindset Campaign

Through the Quality Mindset Campaign,

Hyundai continues striving to internalize the quality-first mindset among its

employees and build a quality culture throughout the entire process from

vehicle development, production, sales and beyond. In order to minimize

inconvenience through casual communication with customers, we conduct

customers’ quality diagnosis and employees’ input; meetings between

customers and employees; and on-site meetings between customers and

production quality officers.

Strengthening Quality Verification Capabilities

We enhance our

verification capabilities throughout our quality value chain by regularly

conducting training on roles and major tasks in the areas of pre-

manufacturing quality, manufacturing quality, and market quality. Each

course includes not only basic theoretical education but also practical

and experience-oriented education if necessary. Furthermore, we offer

expert courses on quality verification in collaboration with external

educational institutions to verify new technologies following the transition

to electrification and to strengthen the verification of quality issues from the

customer’s point of view.

2022 Quality & Safety Training Programs (Employees)

Quality related training

Target

Cycle

No. of

trainees

Regular training

(group training, e-learning, etc.)

All quality

organizations

Once a

year

11,412

Continuous learning

(videos, digital textbooks, etc.)

Constant

basis

23,131

Quality-related certifications

Status of Quality

Management System

(ISO 9001) Certification

No. of business

sites subject to

acquisition

Third-party

certification rate

100

• Prevent risk and prepare

countermeasures in the areas

of process management,

regular vehicle inspection,

shipment pass rate, etc.

• Plan new vehicles by taking

customer complaints into

account, vehicle breakdown

information, and other

quality and safety issues

• Review and verify part

function, structure, reliability

and durability along with

inspection of suppliers’

production processes

• Conduct in-house quality

verification for test

vehicles and collect quality

improvement opinions from

third-party agency

Planning

• Establish quality requirements

and quality management

plans according to quality

management techniques and

standards

• Review and verify part

function, structure, reliability

and durability along with

inspection of suppliers’

production processes

Design

Sales

Purchase

Test

Mass

Production

Product Responsibility

PRODUCT QUALITY MANAGEMENT

Establishing Quality Management System

Hyundai operates a quality

management process for preemptive quality management of new car

development, quality management of mass-produced vehicles, response

to customer complaints, and quality assurance. We achieve systematic

quality management by sharing quality risks, quality defects, and consumer

complaints identified through our quality management system with all our

business sites as well as our suppliers to produce improvement plans. Prior

to mass production, the Pilot Center at the Namyang R&D Center measures

and verifies quality, such as body strength and function, with a test vehicle,

and we opened the Global Quality Control Center to inspect the quality of

leading mass-produced vehicles from the customer’s point of view.

Establishing an Integrated Quality Management System

We have

established a company-wide integrated quality management system to

satisfy our customers’ diverse quality and safety requirements, while each

of our production sites operates their own quality management system

to promote thorough quality management in all processes, including

automobile design, parts development, process operation, pre-mass

production, and mass production. Both domestic and overseas production

sites have acquired ISO 9001 (quality management system) or automotive

industry quality management system standard certification based on it.

We convert and update certifications in line with the conversion of quality

management system standards.

Quality Management Techniques

Hyundai has introduced and applied

quality management techniques to strengthen its market competitiveness

on the basis of “defect-free quality”. The techniques consist of “the best

experts in each field (Man)”; “optimal equipment (Machine)”; “thorough

verification (Measurement)”; and “commitment to defect-free quality

(Moral).” Based on the merits, we provide customers with the highest quality

vehicles in all areas, including R&D, production, sales, and services.

Quality Management Process

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1. Introduction

QUALITY ASSURANCE AND MANAGEMENT

Hyundai has expanded the scope of its quality assurance and management

from quality control and vehicle development and production to include

after-sales customer safety and protection.

Warranty for Free Repairs

Hyundai applies the free repair warranty period

in consideration of the average life cycle, durability, and sustainability of

each type of vehicle, such as passenger cars, SUVs, and commercial vehicles

(trucks and buses). In particular, we expand the sustainability of eco-friendly

vehicles by extending the warranty period for engines and main power

transmission parts applied to hybrids, EVs and FCEVs. Regarding older high-

emitting models, we strive to minimize their air pollutant emissions with

guarantees for catalyst devices, electric control devices, and other exhaust

gas parts.

Voluntary Recall

Hyundai voluntarily implements vehicle recalls to

preemptively protect customers. When we identify a manufacturing defect

likely to cause accidents through our constant monitoring of customer

complaints, we determine a vehicle recall and inform our customers of

the defect, corrective actions, and compensation such as free service. In

addition, warranty provisions are set aside as a way to proactively manage

our financial risks caused by recalls and quality assurance.

Blue Basic Inspection

Hyundai provides its Bluemembers customers with

a basic inspection service free of charge to enable them to maintain their

vehicles in top condition (8 times in 8 years for passenger vehicles, 7 times in

3 years for commercial vehicles).

Emergency Roadside Service

Hyundai offers emergency roadside services

to help with on-site first aid, simple maintenance, and transportation to

a designated maintenance shop in the event of vehicle breakdown. The

services are provided free of charge within a warranty period of up to six

years after a vehicle leaves the factory.

Warranty for Eco-friendly Car Engines and Power Transmission Parts

Classiﬁcation

Model name

Warranty

period

Hybrid

Grandeur, Sonata, IONIQ, AVANTE (Elantra),

Tucson, KONA Hybrid, IONIQ Plug-in

10 years /

200,000 km

KONA Electric, IONIQ Electric, IONIQ 5,

IONIQ 6

10 years /

160,000 km

* Based on passenger vehicles and SUVs

Voluntary Recall Status

(Unit: 10,000 units, KRW million)

Classification

2019

2020

2021

2022

No. of recalled

vehicles

196

623

272

389

Costs of recalls

78,000

305,200

1,442,300

320,900

Warranty Provisions

(Unit: KRW million)

Classification

2019

2020

2021

2022

Provision

warranty balance

at the beginning

of the period

5,177,128

5,447,307

8,514,173

9,048,185

Warranty costs

during the period

2,261,010

1,963,782

2,551,716

3,133,544

VOC Filings in 2022

2022 VOCs by Type

Type

No. of cases

Ratio

Service

495,996

26.7%

Sales

420,204

22.6%

Quality

385,991

20.8%

Membership

200,359

10.8%

Support

159,284

8.6%

Others

104,089

5.6%

Reservation

91,652

4.9%

Classification

No. of cases

Ratio

Inquiry

1,731,538

93.2%

Complaint

107,119

5.8%

Suggestion

13,537

0.7%

Compliment

5,381

0.3%

1,857,575

Total

1,857,575

Total

Key Case of Quality VOC Response

In June 2022, following the proliferation of TikTok videos of Hyundai

vehicle thefts in the U.S., victims filed a class action lawsuit in

response to a series of thefts of older models without engine

immobilizers. In response, we provided free software upgrades

for anti-theft, subsidized the purchase of anti-theft devices to

some vehicle owners who were unable to upgrade the software,

and distribute over 65,000wheel locks. In addition, we plan to

provide cash compensation for damages not covered by insurance,

while providing a variety of insurance options in collaboration

with American Automobile Association to customers who have

difﬁculties purchasing and maintaining insurance. All vehicles sold

by Hyundai Motor America comply with the laws and regulations

required by the US authorities, with the subsidiary doing its best to

ensure customer safety and compensate for damages based on our

corporate philosophy of putting customers ﬁrst.

Response to Quality VOCs

Hyundai continues to promote business

innovation based on voice of customers (VOCs) to establish a company-

wide customer complaint response system. In addition, we operate the VOC

Improvement Council participated by the Quality Division and R&D Center,

and other related divisions, to diversify quality improvement agendas and

respond to urgent VOCs in our efforts to focus on quality improvement

based on customer opinions. We operate a variety of techniques and

systems to connect, integrate, and analyze VOC data while passing on

customer complaints to each service center for improvement measures. As

an extension of our efforts to prioritize customer safety and satisfaction, we

reflect and manage the quality index, which is linked to the number of claims

that occur within three months of customer use after vehicle sales, as 5% of

the CEO’s KPI.

AI-based Quality Control

Hyundai operates smart factories using AI

and big data to create the best products. We collect and analyze external

information as well as data from all our systems in the factory, such as

product quality management, production facilities, and logistics. Then,

we turn it into big data so that AI can operate the factories based on the

information. We increase the accuracy and efficiency of our production

processes by securing accurate data and eliminating unnecessary

processes. We are accelerating the construction of a complete smart factory

following the completion of the Hyundai Mobility Global Innovation Center in

Singapore (HMGICS) in April 2023. HMGICS serves as a test bed to develop

and verify intelligent manufacturing platforms that incorporate AI and the

IoT while the data obtained by the center is used to build E-FOREST, a smart

factory ecosystem.

Scanning & Deep-Learning of Paint Inspection Sheets

The scanning &

deep-learning of paint inspection sheets developed by AIRS Company, an

in-house organization dedicated to AI, has incorporated AI technology into

the automotive paintwork inspection process. The technology builds big

data by quickly extracting information written on the checklists (inspection

time, vehicle model, type of abnormality, location of abnormality). This helps

to improve quality by quickly identifying problems that frequently occur

in the painting process or errors that repeatedly appear in certain vehicle

models without human intervention. Going forward, we plan to expand the

application of this technology to other production processes and factories,

such as under-vehicle inspection and vision inspection of finished vehicles.

Automatic Wheel Alignment Adjustment Technology

Hyundai is

improving driving stability by incorporating AI technology into the wheel

alignment adjustment process. Wheel alignment is the process of aligning

the angles of the wheels of a vehicle. If it is not properly adjusted, the wheels

will pull to one side or the steering will not be smooth, causing problems

with normal driving. The automatic wheel alignment adjustment technology

improves adjustment accuracy by utilizing deep learning in the process. AI

learns past wheel alignment data and works with the predicted adjustment

value. Through iterative learning, which is the process of passing data back

to the computer, the technology can predict the optimal adjustment value

even when given a new wheel angle.

Customer Experience Innovation

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1. Introduction

PRODUCT SAFETY TECHNOLOGY

Determination of Safety Specifications (Crash Test)

In order to ensure

optimal crash safety, Hyundai established a 40,000-square-meter Safety

Test Building at its Namyang R&D Center in 2005 and has since conducted

approximately 650 crash tests per year. The Crash Test Site with an area of

2,900 square meters can perform tests required to tow vehicles weighing up

to 5 tons at speeds of up to 100 kilometers per hour. In addition to achieving

the highest level of passenger safety, the site is equipped with various test

environments to respond to major crash safety assessments around the world.

More than 500 collision analysis processes are performed to determine the

safety specifications of a test vehicle while upwards of 100 tests are carried

out until the vehicle is mass-produced. We conduct vehicle-to-vehicle crash

tests and vehicle-to-structure crash tests in parallel. We also conduct crash

tests that simulate a variety of accident situations, such as collisions on ramps,

collisions with pedestrians, and collisions in diagonal directions.

After the crash test, we systematically verify the safety of the vehicle. The

verification process is divided into the verification process immediately after

the collision and the analysis process after the crash test. First, immediately

after a collision, we focus on the speed of the vehicle and the area of impact

to ensure that the vehicle meets the safety performance requirements.

Subsequent analytical verification measures collision more accurately. Sensors

applied to the dummy are used to calculate injury measurement data and

measure the degree of body deformation to analyze overall vehicle safety. If

an item is found that fails to meet the target requirements, the data is analyzed

to identify the cause and an improvement plan is established accordingly.

Depending on the collision part, close consultations are carried out with

the relevant divisions while verification is repeated until the actual vehicle

reflecting the improved specifications meets the final safety standards.

Collision Preparedness (Structural and Construction Methods)

Hyundai

enhances safety against collisions with a body structure that is divided into an

annular structure and a sequential structure as well as a rigid body completed

with the hot stamping method. The annular structure connects the horizontal

and vertical parts of the body like a loop and weaves them like a skein of

thread, allowing the vehicle to have solid rigidity and reduced weight.

Prevention of Accidents

Multi-Collision Brake

Hyundai uses a multi-collision braking (MCB) system

to prevent secondary accidents. When a vehicle airbag deploys as a result of

an initial crash, the system activates the appropriate braking function in the

vehicle to mitigate multiple collisions. All of this is done in a fraction of the

time, thanks to a third-generation CAN network with speeds of up to 200

MB per second. While the purpose of traditional safety technologies was to

avoid or prevent accidents, the MCB plays an expanded role in determining

the aftermath of an accident and protecting not only the occupants but also

the surroundings of the accident vehicle.

Advanced Driver Assistance System

Equipped with advanced driver

assistance systems (ADAS), Hyundai analyzes risk factors and prevents

accidents in advance. ADAS accurately recognizes objects and movements

around the vehicle using a front camera mounted on the windshield, front

and rear radars. It warns the driver or controls the vehicle when a collision

risk is detected. ADAS has advanced to the level where vehicles drive at a

distance from the vehicles in front of them in their own lane while the camera

recognizes traffic signs and slows down to meet the prescribed speed.

Key Features of ADAS

Forward Collision-

Avoidance Assist

(FCA)

Warns and automatically assists with braking when

a risk of collision is detected, such as when the

preceding vehicle rapidly decelerates or a stopped

vehicle or pedestrian appears in front

Lane Keeping Assist

(LKA)

Warns and automatically assists steering if the

driver leaves the lane without operating the turn

signal switch while driving above a certain speed

Blind-Spot Collision-

Avoidance Assist

(BCA)

Gives an alert when there is a risk of collision with

a vehicle behind while driving, and automatically

assists with braking when there is a risk of collision

with a vehicle nearby while reversing out of a

parking space

E-GMP Safety Features

Mitigating impact and

minimizing damage

to passengers and

batteries

Shock

absorption

Battery protection in the event

of a side-impact collision

Strengthening the stiffness of

the battery and body coupling

Forward collision structure

Rear collision

structure

Battery

protection structure

Battery through-bolt

fastening structure

(2 points in the front,

6 points in the middle)

Crash Test Procedures

Establishment of safety

performance goals and

development of new

technologies

Define vehicle

specifications and

crash criteria

Crash test

(situational,

environmental)

Verification of safety

performance before/

after collision

Verification of

analysis based on

measurement data

Safety Features for the EV-dedicated Platform

“E-GMP”, Hyundai’s EV-

dedicated platform, features Hyundai’s commitment to passenger safety.

The platform uses the battery pack as a structure increasing body rigidity

while aluminum extrusions applied inside the side sills distribute impact in

the event of a side collision to ensure safety. In addition, the rear member is

deliberately deformed to absorb shocks in order to prevent accidents caused

by battery damage in a rear-end collision, and at the same time, the lower

member is reinforced with hot-stamped steel plates to prevent deformation

of the safety zone. A lattice-structured battery case and a protective lower

cover are also added to perfectly cope with any collision energy that may

occur in driving situations.

Redundancy System

As driver intervention is being reduced according to

the development of autonomous driving technology, it is essential to secure

precise safety technology in preparation for emergency situations. Hyundai

has developed an autonomous driving redundancy system that ensures

the safety of passengers by safely driving and stopping the vehicle when a

system failure is detected during autonomous driving. Redundancy refers to

a dual configuration of steering, braking, power, and communication. When

a function does not work properly, the redundancy system helps the vehicle

to run safely by replacing it with an assistive device. We plan to speed up the

development of level 4 autonomous driving element technologies, including

redundancy systems, with the goal of internalizing autonomous driving

technology by 2025.

The sequential structure allows the car body to sequentially absorb the

energy of a high-speed car colliding with another object. In the event of a

head-on collision, the side member is first distorted to absorb energy, then

the impact is transmitted to the fender apron, and at the same time, it is

also transmitted to the top of the A-pillar to distribute the rest of the energy

evenly. Furthermore, to ensure the even distribution of impact energy during

side-impact collisions, bulkheads (partitions) are installed in areas where the

impact is most likely to occur.

The hot stamping method technology increases the rigidity of the car

body while reducing development costs. The material heated at a high

temperature is pressed and cooled rapidly at the same time to ensure that

the car body is quenched firmly. The body becomes 3-5 times stronger than

before processing, so the passenger compartment is safely protected in the

event of a collision.

Collision Shock Dispersion (3rd-Generation Platform)

Hyundai’s third-

generation platform is designed to minimize the final energy received

by passengers by efficiently dispersing collision energy in the engine

compartment. We have developed a multi-skeleton engine compartment

to minimize the impact transmitted to passengers in frontal and small-

overlap collision situations and to reduce the impact energy to the other

vehicle. We have increased the initial collision energy absorption rate by

newly applying a “#”-shaped subframe to the front wide crash box and

have ensured that not only the side members that support both sides of the

engine room, but also the subframe and fender apron are organically woven

together to allow the impact energy to be absorbed or dispersed in multiple

paths. Furthermore, we have increased the dispersion effect by widening the

subframe and strengthening the connection between the side members and

the surrounding skeletal members. In particular, the additional application of

the slide away behavior technology, which moves the wheels slightly outside

the body in the event of a small overlap collision, has further reduced the

possibility of occupant injury. It can significantly reduce secondary accidents

as it maintains the driving direction while minimizing the impact energy

transmitted to passengers.

Customer Experience Innovation

Driver Protection

Devices that protect drivers and passengers in the event

of an accident are just as important as multi-collision prevention automatic

braking, advanced driver assistance, and autonomous driving redundancy

systems that prevent accidents while driving. Hyundai ensures the safety

of drivers and passengers by researching and developing devices that

strengthen/utilize vehicle platform functions, apply collision prevention/

mitigation technology, and reduce the rate of injury in the event of an

accident. To help drivers make safe driving a habit, we run various programs

such as the Safe Driving Habit Guide Broadcast, School Bus Safe Driving

Campaign, and Connected Car Safe Driving Insurance Discount.

Pedestrian Protection

The active hood system unveiled by Hyundai uses a

hood multi-cone structure that allows the vehicle to detect a collision with a

pedestrian and lift the bonnet to protect the pedestrian. When a pedestrian

collides with a vehicle, the actuator under the bonnet moves, raising the

bonnet by about 6 cm. The shock-absorbing space between the bonnet

and the engine compartment can significantly reduce the risk of injury to

the pedestrian’s head. Preventing a pedestrian’s head injury is a critical

factor influencing a pedestrian’s survival. In addition, the lower leg form and

lower stiffener features increase safety by minimizing the bending of the

pedestrian's knees in the event of a collision while preventing the pedestrian

from entering under the vehicle after the collision, preventing the first impact

followed by the second impact. They lower the possibility of a secondary

accident in which, in a collision with a vehicle, the pedestrian will fall into the

road in the direction the vehicle was traveling and be hit again by the vehicle.

Main Functions of the Occupant Protection Airbag

Multi-collision

Airbag

Hyundai’s world-first multi-collision airbag precisely calculates a variety of conditions such as the occupants’ unstable posture and speed when

the impact is so weak that the airbag does not deploy in the first collision. In subsequent collisions, the reference impact strength is lowered or the

timing of activation is adjusted to make the airbag easier and faster to operate.

Center Side

Airbag

The center side airbag is mainly deployed between the driver and the passenger in the event of a side-impact collision to prevent the passenger

from crossing to the other side, thereby preventing collisions between people as well as collisions with interior materials. Hyundai has applied the

“thermal compression folding” method to achieve the world’s smallest and lightest form while maintaining safety and obtained domestic and

international patents for the related technology.

Hug Airbag

Developed by Hyundai to compensate for the limitations of fixed airbags for self-driving cars, the Hug airbag consists of three chambers that

perform their respective roles. As if they were one body, the six chambers on the left and right protect the occupants. Going forward, we plan to

refine the technology so that it can be applied to autonomous vehicles in the 4-5 stage.

VEHICLE SAFETY ASSESSMENT

Crash Safety Assessment

Hyundai responds to more complex types of

accidents by utilizing actual accident data disclosed by the NHTSA (National

Highway Traffic Safety Administration) and GIDAS (German In Depth

Accident Study), and a variety of information provided by the company’s

after-sales service network and quality divisions in our research, which is

reflected in the product development process. As a result of these studies,

in 2019, we developed the world’s first “multi-collision airbag” to prevent

secondary accidents. In addition, we have 170 sets of 27 types of manikins

(dummies) that take over the role of occupants in real vehicle crash tests. This

is the largest in the industry, enabling us to precisely measure even minute

injuries in a variety of collision situations, contributing greatly to improving

passenger safety performance. For your reference, when Hyundai develops

a new vehicle model, it invests an average of 4,000 hours in evaluation and

testing and KRW 10 billion in costs to ensure the highest level of crash safety.

2022 National Camp Accreditation Program

In 2022, IONIQ 6, Hyundai’s

dedicated EV model, and Genesis GV70 proved their excellent safety by

obtaining the highest safety rating of 5 stars from Euro European New Car

Assessment Program (NCAP), Europe’s leading vehicle safety assessment

agency. Euro NCAP evaluates four main categories: adult occupant safety,

child occupant safety, pedestrian collision safety, and safety assistance

systems. Both the IONIQ 6 and GV70 received high marks for adult occupant

safety and safety assistance systems, demonstrating their superior occupant

protection features.

Winners of the 2022 NACP

Region

Ratio

5-star (top rating)

Korea

100%

IONIQ 6, GV70

Europe

100%

IONIQ 6, GV70

U.S.

69.2%

18 models including Kona, Santa Fe, Elantra,

Sonata, Tucson, Palisade, IONIQ 5, G80, GV80

Ratio: The number of vehicle models rated by the NCAP with a 5-star (top rating)

divided by the total number of vehicle models rated by the Program

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Crash test site of Hyundai Motor Group (Safety Test Building at Namyang R&D Center)

Scale

Performance

No. of crash tests

40,000

Test building

100

Maximum speed

km/h

650

About

times per year

2,900

Collision test site

tons

Maximum weight

Customer Experience Innovation

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Maximizing Customer Satisfaction

SERVICES BOOSTING CUSTOMER SATISFACTION

Customer Service Standard Guide

Hyundai produces and distributes

the “Customer Service Standard Guide” based on customer experience in

the process of purchasing and maintaining vehicles. This guide distinctly

presents the direction of individual customer service and focuses on

the key response elements for each customer contact point so that

customers can receive uniform and excellent service. In addition, overseas

regional headquarters and sales subsidiaries have established customer

service strategic directions to carry out customer response activities

that comprehensively consider the market characteristics and customer

expectations of each region.

Reinforcing Customer Service Capabilities

Hyundai sets in place a

“service convergence education system” to strengthen the CS capabilities

of its employees in customer contact channels such as vehicle sales

and service. In the ICT-based CS learning environment, our employees

receive training related to customer service skills along with knowledge

of vehicles. Most notably, Hyundai’s Domestic Business Division improves

the company’s customer service capabilities by disseminating specific and

practical customer service solutions called “CS Way” to the business sites.

Moreover, we introduce service trends and ways to improve Bluehands

CS to those representatives who operate Hyundai’s official service

suppliers “Bluehands” while sharing best practices in customer service and

customized service plans according to various situations as part of training

to improve customer service capabilities.

H-Ear – Customer Communication Channel

Hyundai operates “H-ear”

(https://hear.hyundai.com), an open customer communication channel, to

listen to customer opinions and suggestions online and develop products

and services jointly with customers. Those who sign up for the H-ear website

can freely write and discuss ideas and suggestions for various fields such

as customer service, maintenance services, sales channels, markets and

trends, as well as opinions on vehicle marketability, new technology, and

eco-friendliness. Hyundai actively listens to customer opinions from the

development stage of vehicles and services as part of its efforts to design

the future together with customers through honest communication.

Bluelink – Connected Car Service

Hyundai provides “Bluelink,” connected

car services that enable vehicle control and vehicle management based on

the in-vehicle infotainment system and smart applications by converging

information and communications technology (ICT) with vehicles. Customers

who subscribe to Bluelink can access services such as remote control, safety

and security, vehicle management, route search, and simple payment.

My Hyundai – Mobile Service

We offer our customers an integrated

customer service app, “my Hyundai,” which conveniently provides all

the services we provide, from Hyundai Motor membership to vehicle

management and life of the car. When customers access the “my Hyundai”

app, they can view the same model and color as their vehicle on the

home screen, and can also view vehicle contract information, breakdown

information, and related recall information. In addition, it is equipped with

simple reservation and payment, use of Blue Members points, various

coupon benefits, and non-face-to-face service functions, through which

customers can use door-to-door car wash, hand wash, chauffeur service,

vehicle transfer (consignment), and EV pick-up and charging services.

CS Training Programs in 2022

Educational Programs

No. of Attendees / Target

H-Map (service skills for visiting customers)

330

A stroke of genius (overcoming objections)

Skill of articulation

121

CS master (CS philosophy, responding to

dissatisfied customers)

169

First meet with commercial vehicle customers

Customer service standards

On-site coaching by customer

experience champion

Master’s explanation skills

141

Hole-in-one approach to handling of

customer dissatisfaction

CS Way

Service skills for dissatisfied customers

Business manners

One-line Counseling Center

All employees in sales

and service divisions

CS Way

Major Services Related to Connected Car

Remote Control

•

Remotely controls air conditioning, charging, locking the vehicle, checking parking location, transmitting

destinations, home-to-car and car-to-home services, voice recognition to adjust various devices and functions

in the vehicle, among others.

Safety & Security

•

Emergency rescue and accident handling support in the event of an airbag deployment accident,

SOS emergency dispatch, theft tracking, burglar alarm notification, driver attention notification, rear passenger

notification, among others.

Vehicle Management

•

A/S linkage measures according to the vehicle diagnosis results, navigation software wireless update, automatic

notification of battery discharge, driving habit analysis results and safety score guidance, among others.

Directions

•

Fast and accurate directions using traffic condition and forecast information, real-time traffic situation information,

search for destinations through portal sites, sharing the current location of the vehicle, among others.

Music Streaming

•

Streaming service of music content platforms

Digital Key 2

•

Door locking/unlocking, starting the vehicle using a smartphone and an NFC card key or a smartphone with

UWB function

Genesis House New York

Bluelink Fleet

Hyundai’s customers who own commercial vehicles (trucks and

buses)

can use connected services such as vehicle control, breakdown

notification SMS, and maintenance requests through the specialized

control system “Bluelink Fleet”. By harnessing the driving analysis

data of a vehicle, along with real-time monitoring of vehicle control

parameters such as speed, battery status, and voltage, it enables to

enhance both safe driving practices and optimize vehicle operation

efficiency. In particular, green house gas (GHG) emissions from

vehicle operation are measured in real time while GHG emissions

reduced when operating eco-friendly vehicles are provided as tree

planting results. If the vehicle operating customer is a company

subject to carbon credit allocation or is participating in an external

reduction project, the estimated revenue and cost are also provided

by comparing the GHG reduction estimate with the target value.

“Genesis Space” providing

unique differentiated experience

for the luxury brand

The “Genesis Space” provides a unique customer experience with

the Genesis brand philosophy. It features a design where customers

can experience the unique elegance and sensibility of Genesis.

“Genesis House New York”, unveiled in 2021, is a complex brand

base that includes not only a car showroom, but also a restaurant,

a library, a concert hall, and a terrace garden, with an aim to be a

“cultural oasis” that satisfies the need for daily relaxation and artistic

inspiration. Visitors can experience a variety of vehicles, including

the entire Genesis lineup and concept cars that embody the future

brand vision. The Genesis Space extents the Genesis brand spirit

to customers while providing a differentiated experience unique to

Genesis with superior customer service.

Customer Experience Innovation

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Building Service Bases

Hyundai does its utmost to ensure that customers

can enjoy the best “CAR-LIFE” anytime, anywhere through a service base

that instills trust and confidence in its customers. We have strengthened

our after-sales service accessibility by establishing 1,200 Bluehands, official

service suppliers nationwide, in addition to the numerous directly-run high-

tech service centers. Furthermore, for the ever-increasing number of EV

owners, we have expanded the number of “Bluehands” dedicated to EVs to

approximately 500 while increasing the number of those dedicated to FCEVs

to over 70.

Service Brands

Bluehands

•

Hyundai’s official service suppliers

- This network of Hyundai’s official service suppliers

is dedicated to improving the environment for the

safety and convenience of customers, as well as

providing services closest to customers.

Bluemembers

•

Services for Hyundai vehicle owners

- Launched in 2007, these services for Hyundai

vehicle owners provide various members-

specific programs as well as vehicle

management services to support customers'

fun and convenient CAR-LIFE.

Bluelink

•

Hyundai Connected Car Service

- Hyundai’s connected car service taps into the

latest IT and communication technology to

provide remote control, safety security, vehicle

management, and navigation services.

Major Services

Visiting Before

Service

•

Visit a location designated by a customer and

provides vehicle maintenance and advice and

assistance

Emergency

Charging Service

•

Provide 7 kWh worth of free EV charging for

stranded drivers, enough for 22-44 km of driving

Home-to-Home

Service

•

Pick up vehicles where and when designated by

customers and deliver them after repairs are made

Car Rental

Service

•

Provide car rental service for customer

convenience when repairs are needed during the

warranty period

External Customer Satisfaction Evaluation

On the back of its efforts

to provide products and services that satisfy its customers, Hyundai has

achieved outstanding results in the National Customer Satisfaction Index

(NCSI), Korea Customer Satisfaction Index (KCSI), Korean Standard Quality

Satisfaction Index (KS-QEI), and Korean-Standard Service Quality Index

(KS-SQI), among others.

Customer Satisfaction in the Passenger Vehicle Category

(Korea Customer Satisfaction Index)

(Unit: Points)

Differentiation of Customized Services

Based on the CS philosophy

of “Connecting People with Quality Time,” Hyundai provides customized

services for each customer. We provide optimized, customized services by

digitizing the after-sales service required for vehicle maintenance. In addition

to customized services for customers in overseas regional headquarters

and sales subsidiaries, we also provide services for each vehicle model,

such as vehicle management, charging, and battery repair optimization for

customers who purchase Hyundai EVs. Hyundai will do its best to enhance

customer satisfaction by providing tailored services during all stages

following vehicle purchase.

Special Services for Genesis Car Owners

Genesis

Visiting Auto

Care Service

•

Visit any location that customers desire and provide

a replacement service for engine oil and other

consumables

Genesis

Airport Service

•

Provide Genesis customers using Gimpo International

Airport with free car valet services, consumables

replacement services while traveling

Genesis

Home-to-Home

Service

•

A home-to-home service, free of charge, as part of

Genesis Mobility Care service

IMPROVING THE QUALITY OF TECHNICAL AND MAINTENANCE SERVICES

Strengthening Engineers’ Technical and Maintenance Capabilities

Hyundai strives to improve the quality of technical and maintenance services

provided by its directly managed service centers and “Bluehands” engineers.

We train the best engineers who can comprehensively deal with problems

that may occur in vehicles, in addition to training engineers to enhance

their basic competencies in maintenance. We also continue to upgrade

maintenance manuals and vehicle manuals according to technology

development and new vehicle launches while running workshops to share

relevant knowledge.

Hyundai Master Certification Program (HMCP)

Since 2012, Hyundai

has been running “HMCP (Hyundai Master Certification Program),” an

independent technology certification system, to offer maintenance services

of top-notch quality through the cultivation of exceptional engineers.

Technical certification consists of four levels according to engineer

competency – Level 1-2 (Technician), Level 3 (Master), and Level 4 (Grand

Master). In 2022, a total of 26 people obtained Level 4 (Grand Master)

following the evaluation of expertise in a total of seven categories, including

EVs, FCEVs, engines, vehicle networks, and advanced driver assistance

systems, during the practical test.

Excessive Maintenance Prevention Program

In 2012, Hyundai launched

an excessive maintenance prevention program to provide responsible

maintenance services. If any suspicious repairs or excessive maintenance

activities are detected during the maintenance process, we offer compensation

up to tenfold based on the findings of an investigation conducted by an

external insurance company. We strive to prevent recurrence by imposing

penalties on excessive maintenance suppliers, thereby striving to provide our

customers a sense of security about our transparent customer servic

Training Support for Bluehands Maintenance Personnel

Hyundai

nurtures outstanding engineers through mutual exchange of information

and human and material resources necessary for maintenance education

with various specialized institutions such as the Ministry of Employment

and Labor, universities, and vocational schools while hiring highly qualified

engineers who have completed professional training. In addition, we have

signed an MOU with the Ministry of Employment and Labor to train eco-

friendly vehicle maintenance personnel and are working hard to cultivate

excellent talent.

Hyundai Master Certification Program Electrified (HMCPe)

Hyundai

operates the Hyundai Master Certification Program Electrified (HMCPe),

a technology certification program, to nurture maintenance personnel

specializing in vehicle electrification. Bluehands engineers complete courses

such as electrification basics, electrification customer response skill-up,

and diagnostic convocation training according to their competencies.

The e-Technician certification is given to engineers who understand the

electrification function and the overall system and can respond to customers

smoothly whereas the e-Master certification is given to engineers who

understand the entire field of electrification and are capable of independent

diagnosis, high-level repairs, and high-tech work.

Maintenance Manuals and Vehicle Manuals

Hyundai offers online access

to vehicle maintenance information. We provide maintenance manuals

and electronic circuit diagrams to customers who purchase vehicles,

directly-managed service centers, and Bluehands engineers through our

domestic technical information website (gsw.Hyundai.com). After a simple

membership registration, customers can access information necessary for

vehicle maintenance and search for necessary (genuine) parts, which has

helped improve the convenience of self-maintenance.

Directions for Improving the Quality of Technical and Maintenance Services

•

Reinforcing Engineers’ Technology

and Maintenance Capabilities

•

Training of Bluehands Maintenance

Personnel

Strengthening

Maintenance

Capabilities

•

Excessive Maintenance

Prevention Program

•

Maintenance Manuals and

Vehicle Manuals

Setting

Maintenance

Standards

•

Hyundai Master Certification

Program

•

Hyundai Master Certification

Program Electrified

Nurturing

Outstanding

Talent

2019

89.9

2020

91.8

2021

92.8

2022

93.0

Customer Experience Innovation

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Sustainable Brand

BRAND MANAGEMENT

Brand Management System

Hyundai’s brand management system

(BMS) supports the effective operation of its Brand Strategy System, Brand

Architecture, and Brand Image Guidelines. The Brand Strategy System

guides the company-wide direction for consistent external communication.

The “Brand Architecture” defines the brand and trademark system (usage

method, etc.) of vehicles, technologies, and services. We suggest how to

visually implement the brand in detail by developing and distributing the

Brand Image Guidelines as a manual.

Brand Tracking Study

We conduct a Brand Tracking Study (BTS) to check

customers’ brand awareness, purchase intention, satisfaction, etc. based

on price, performance, quality, and eco-friendliness for each brand. Most

notably, in terms of brand preference, we examine not only the reliability,

competitiveness, service, and affordability of our brands, but also their eco-

friendliness, social responsibility, and authenticity factors. Additionally, we

identify the market competitiveness of our brands by evaluating the market

value of our brand vehicles to our customers. The results of the brand

tracking study are used as basic data for establishing a brand strategy for

each sales region. We also reflect them in the marketing process, such as

deriving customer communication messages.

Tracking Study of Eco-friendly Brand

Hyundai conducts surveys on

customer purchase intentions, awareness, preference, and attribute

information (innovativeness, convenience, eco-friendliness, etc.) for eco-

friendly vehicle (HEV, PHEV, EV) brands (IONIQ, Nexo). In addition, we

conduct global brand monitoring through which we inspect the application

and utilization of brands and trademark images on a regular basis, which

enables us to manage whether brand strategies, systems, and guidelines

are being applied correctly in the field. We also operate an in-house portal

“Brand Home” and a help desk “Brand Desk” to conduct brand quality

management activities such as reviewing the use of brands in promotional

materials produced by each business division and support division. Hyundai

aims to continually enhance its brand management system, with a focus on

enhancing the value of its corporate brands and products, and implementing

systematic management practices.

Analysis of Brand Tracking Study Results

Through a brand tracking study,

we identify reasons why customers do not prefer our brands, the reasons

for dissatisfaction at each stage of the customer experience, and negative

experiences in online and offline channels. Based on the results, we identify

and redefine the attributes that a brand should have to improve customer

perception while seeking ways to manage content and improve sales

channel operation in an effort to innovate customer experience.

BRAND ENHANCEMENT ACTIVITIES

Sustainability-based Brand Campaign

Hyundai conducts marketing

activities to enhance its brand value in line with its determination to

transform itself into a smart mobility solution company. Additionally, we

are strengthening the efficiency of our sales network with a focus on

high-quality dealers while promoting various CSV activities to overcome

problems such as environmental pollution and climate change that mankind

is experiencing. Following the implementation of sustainability-focused

initiatives to enhance our brand image, with an emphasis on eco-friendliness

and public benefits, we assess the impact of these activities on key business

metrics, including vehicle sales growth, customer satisfaction improvement,

and enhanced corporate value.

“for Tomorrow” Global Project

“for Tomorrow” is a global sustainability

campaign powered by Hyundai and the United Nations Development

Program (UNDP). Launched in 2020, the “for Tomorrow” campaign

aims to increase the world’s capacity to accelerate the achievement of

the 2030 Sustainable Development Goals agreed upon by the United

Nations. To commemorate the second anniversary of the “for Tomorrow”

platform in 2022, we joined forces with local teams from many countries

including Vietnam, Sierra Leone, Peru, India, the U.S. Together, we created a

documentary with an inspiring story on grassroots innovation to combat the

sustainability challenges we all face, and presented it at the Lincoln Center’s

Walter Reade Theater in New York, in celebration of the 77th United Nations

General Assembly.

HMG Driving Experience Program

Hyundai is operating the “HMG Driving

Experience” program to give customers first-hand experience of various

brands of Hyundai Motor Group, including Kia and Genesis. Opened in 2022,

the “HMG Driving Experience Center” is the largest driving experience

center in Korea and has eight experience courses including a braking course,

a high-speed main circuit, an off-road, a round-turning course, and a kick

plate course. Starting from the 2023 season, we plan to expand opportunities

to experience Hyundai Motor Group’s EVs by adding IONIQ 6 and EV6 GT

vehicles to the EV Experience Program.

N Brand’s Electrification Vision

Since its launch as a high-performance

sub-brand of Hyundai Motor Company, the N brand has consistently

pursued pure driving pleasure from the customer’s perspective. Hyundai

has established a vision to reflect the three core elements of N vehicles

(cornering maneuvers, everyday sports cars, and racetrack driving ability)

that can maximize the fun of driving pursued by the N brand in the EV era. In

2023, the N brand plans to launch its first electric high-performance car, the

IONIQ 5 N. Starting with the launch, it will continue to conduct research and

development aiming to realize high-performance sensibilities in a hydrogen

society beyond the electrification era.

Brand Tracking Study Items

Price

• Customer acceptance of Hyundai vehicle prices compared to competitors’ (based on a price perception survey)

Performance

• Score analysis of warranty level, after-sales service quality, reliability, etc. (based on the market average of 100 points)

Quality

• Score analysis of warranty level, after-sales service quality, reliability, etc. (based on the market average of 100 points)

Brand

• Score analysis of brand reputation, authenticity, tradition, awareness, etc. (based on the market average of 100 points)

Sustainability

•

Score analysis of eco-friendliness, social responsibility, mobility vision, innovativeness, prospects, etc.

(based on the market average of 100 points)

• Separate analysis of the impact of eco-friendly vehicle models on aided awareness, brand perception, etc.

“for Tomorrow” campaign

N Vision 74– high-performance hydrogen fuel cell-hybrid “Rolling Lab”

Customer Experience Innovation

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

HYDROGEN CAMPAIGN

“H

U” Campaign for a Hydrogen Society

Hyundai is running the “H

(Hydrogen to You) Campaign” mainly in Europe to promote the value of

FCEVs and hydrogen energy, and to emphasize the urgency of transitioning

to a hydrogen society and the importance of creating a hydrogen ecosystem.

Influencers from various fields such as science YouTuber and researcher

Jacob Beautemps, German fashion model Toni Dreher-Adenuga, future

mobility journalist Don Dahlmann and Mobile Geeks co-founder Nicole

Scott are at the forefront of promoting the infinite value of hydrogen through

the H

U campaign.

“Dear My Hero” – Hydrogen Cleaning Truck

“Dear My Hero” is an integral

component of the Big Idea Campaign by Hyundai Motor Group, dedicated

to advancing new technologies that seek to revolutionize the challenging

working conditions faced by sanitation workers, promoting a safer and

healthier environment for them. A hydrogen cleaning truck is an eco-

friendly vehicle that runs on electricity by combining hydrogen and oxygen.

It produces less noise and vibration than conventional internal combustion

engine cleaning trucks while emitting less heat and dust. Hyundai will

continue to strive to contribute to creating a more comfortable and safe life

through hydrogen, an eco-friendly energy.

ETHICAL MARKETING

Advertising & Marketing Ethics Declaration

Hyundai announced its

“Advertising & Marketing Ethics Declaration” to induce customers to make

the right decision to purchase products and services and to create a healthy

advertising and marketing environment. Accordingly, Hyundai prohibits

misrepresentation or omission of product/service information, exaggeration

or reduction of product and service utility, unfair comparison of competitors

or products, deceiving consumers, and advertising and marketing activities

that do not protect the information vulnerable. We also encourage

outsourcing companies that are entrusted with advertising and marketing

by Hyundai to respect the Declaration.

Labeling of Product Environment and Safety Information

Hyundai

transparently discloses not only environment-related information, such

as GHG emissions and the amount of water used during the entire vehicle

manufacturing process, but also safety-related information such as seat

belts, occupant detection systems, and car seat attachment devices. We

strictly prohibit the dissemination of false, exaggerated, or understated

information on the environmental and social impacts of our products and

services while striving to ensure the right to know of our customers by

labeling relevant information.

Hydrogen Commercial Vehicle Unveiled at “H2 MEET 2022”

At the

“H2 Meet 2022”, Kores’s premier hydrogen industry exhibition held in

August 2022, Hyundai showcased hydrogen energy solutions designed for

universal applicability, emphasizing their potential to benefit “Everyone,

Everything, Everywhere”. Moreover, we unveiled a cutting-edge hydrogen

commercial vehicle that showcased the company’s advancements in

hydrogen-based future technologies. To showcase Hyundai’s technology

for hydrogen-powered commercial vehicles, we exhibited hydrogen fuel

cell buses, police buses, cleaning trucks, sprinkler trucks, and multicopter

drones. In addition, we introduced our hydrogen fuel cell-based M. Vision

Tug vehicles, and hydrogen-based carbon-neutral steelmaking process.

We also spared no effort to discover new sources of demand for hydrogen-

based mobility with governments, and domestic and foreign hydrogen

industry-related organizations.

Product Information Labeling in Major Markets

Korea

Product

ID labeling (type and model of car, vehicle

identification number, vehicle weight, year of

production, tire, etc.)

Environment

Fuel efficiency labeling, exhaust gas warning

labeling

Safety

Airbag warning labeling, etc.

China

Product

ID labeling, vehicle identification number

(W/screen), anti-theft warning labeling

Environment

Fuel efficiency labeling

Safety

CCC labeling, child restraint system (CRS)

warning airbag labeling

Europe

Product

ID labeling, E-marks certifying various items

(lights, safety belts, horn, mirrors, window glass,

etc.)

Environment

Diesel engine labeling, battery recycling labeling,

fuel labeling, refrigerant labeling

Safety

Airbag warning labeling, Airbag warning labeling,

ISOFIX CRS anchor labeling

North

America

Product

Manufacturer’s suggested retail price (MSRP)

labeling

Environment

VECI labeling (certified exhaust emissions data),

refrigerant labeling

Safety

Tire pressure information labeling, safety

certification labeling, airbag warning labeling

U (Hydrogen to You) Campaign

Dear My Hero Campaign

Hyundai’s hydrogen-powered commercial vehicles unveiled

at the H2 MEET 2022

Hyundai Motor Company Advertising &

Marketing Ethics Declaration

Customer Experience Innovation

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Hyundai aims to expand its positive social impact and

build a sustainable corporate ecosystem by creating

shared value (CSV). To this end, we launched the

“Hyundai Continue” initiative which represents our

commitment to a sustainable future. We will grow

together with local communities by creating social

value and solving social problems in connection with

mobility business. We will also continue our efforts

to promote harmonious coexistence with the planet,

provide freedom in mobility and connections, and

deliver hope for future generations. Moving forward,

Hyundai will strive to create a virtuous cycle of

connection by thinking and working together with

various global partners as well as our employees,

customers, and local communities.

Creating Shared Value

CSV Initiative

CSV IMPLEMENTATION SYSTEM

Implementation of CSV Strategy

In 2022, Hyundai unveiled “Hyundai

Continue”, a global CSV initiative for sustainable management focused on three

main areas – earth, mobility, and hope – based on which various activities are

being carried out as part of this initiative at business sites in Korea and overseas.

CSV Strategy System

Brand Vision

Progress for Humanity

CSV Mission

Scaling social impacts and building a sustainable business eco-system by creating shared values

Direction

Ecosystem restoration,

resource circulation, climate change response,

biodiversity conservation

Provide solutions for individuals and sectors with limited

mobility or who live in isolated regions, support for traffic

safety technology, activities aligned with future mobility

Education for future generations,

support for growth,

talent development

CSV Initiative

Core Areas

mobility

Continue to Innovate

for a New Mobility

earth

Continue to Take Care

of the Planet

hope

Continue to Create Hope

for Future Generations

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

CSV Activities

Earth

Hyundai has been carrying out waste plastic collection and

upcycling projects in Indonesia since August 2022, with the

goal of addressing environmental problems in the nation

which produces tones of plastic waste every. In partnership

with Save the Children and Plasticpay, we have offered

environmental education and installed collection bins at 10

middle and high schools in Jakarta, Indonesia, as well as two

RPTRAs which are child-friendly integrated public spaces. We

also plan to produce and provide upcycling goods using the

collected waste plastic. In addition, we have been operating

a waste recycling center in Bekasi, Indonesia since October

2022. In this way, Hyundai is helping Indonesian communities

to build a circular economy by reducing waste in their villages

and using it as a valuable resource.

2022 Key Achievements

With the creation and

expansion of the IONIQ Forests in Hongcheon-gun

and in Sinsido of Jeollabuk-do, some 12,000 trees

have been planted in a total area of 36,000m2,

absorbing about 85 tons of carbon dioxide and

250kg of fine dust, while producing additional

oxygen that can be consumed by some 6,000

people every year. Over the past three years,

Hyundai has planted a total of 215,923 trees not

only in Korea and overseas, including the US,

Mexico, and Germany.

Future Plans

We aim to plant one million trees

worldwide by 2024. To this end, we will plant

314,929 trees in Korea, North America, Brazil,

Mexico, and Serbia by 2023. In April 2023, we

promoted the IONIQ Forest North American project

at the New York Motor Show. Going forward, we

will expand our contribution areas and induce

stakeholders’ participation through active publicity.

Hyundai launched the IONIQ Forest project in 2016 and has been creating eco-

friendly forests around the world to absorb carbon and conserve biodiversity.

In 2022, we planted a total of 8,000 trees in Hongcheon, Gangwon-do to

create a new eco-friendly forest of 16,000m2 also while creating a natural

garden covering 300m2 at the National Sinsido Recreation Forest in Gunsan,

Jeollabuk-do. In the IONIQ Forest Hongcheon, we planted Korean fir trees,

which have been designated as an endangered species by the International

Union for Conservation of Nature (IUCN); black locust trees, which are a

source of pollen for honey bees whose population has declined dramatically in

recent years; and ash trees, a fire-resistant species.

We are creating the IONIQ Forest project not only in Korea but also in North

America, Brazil, Mexico, Germany, Serbia, Turkey, and the Czech Republic.

IONIQ Forest North America is conducting activities using IONIQ 5 and IONIQ

6, as well as employee volunteering. IONIQ Forest Brazil aims to restore the

Atlantic Forest by planting 100,000 trees, and operates a research forest near

our Brazilian plant with the aim of developing a methodology for restoring

rainforests in cooperation with Sao Paulo's de Queiroz College of Agriculture.

Meanwhile, IONIQ Forest Czech Republic is providing regular care of typical

mountain meadow by planting seedlings, hay raking and monitoring rare

species to preserve the biodiversity of the Beskydy Mountains.

Through its global IONIQ Forest project, Hyundai has planted approximately

210,000 trees as of 2022. Going forward, we will continue to carry out various

eco-friendly activities – such as restoring ecosystems, responding to climate

change, and conserving biodiversity – with various partners around the world

to promote coexistence between the Earth and humanity.

Waste Plastic Collection

and Upcycling

IONIQ

Forest

Hyundai has been carrying out upcycling projects such as collecting marine

wastes and recycling them to make textile products since 2021, aimed at

preserving marine ecosystems in Europe, Africa, and Korea. Together with

our cooperative partner, Healthy Seas, we are working to restore the marine

ecosystem by collecting lost fishing nets, one of the many kinds of waste that

threaten the marine ecosystem. The collected ghost nets are regenerated

into a nylon fiber called ECONYL® by the textile producer Aquafil. ECONYL®

is used as a floor mat material for IONIQ 5 and IONIQ 6 vehicles sold in

Europe, as well as in the production of various other products such as socks,

swimwear, sportswear, and carpets. Leveraging our experiences and know-

how in launching and operating these projects, we will continue to expand

eco-friendly activities and take the lead in building a global circular economy.

2022 Key Achievements

Since 2021, we have collected more than 100 tons of

waste in eight European countries as well as Korea over some 20 occasions. We

have also worked with major broadcasters such as the Discovery Channel to

produce documentaries about the subject.

Future Plans

Together with the HMG Materials Research & Engineering Center,

we plan to expand the application of materials recycled from marine waste. To

minimize carbon emissions, we will strengthen our prior search of suitable areas

for collection activities while considering introducing drones and electric boats

for our collection activities.

Marine Waste Collection

and Upcycling

2022 Key Achievements

We have installed 15

plastic collection bins in major schools and public

spaces in Jakarta, and provided environmental

education to 8,300 children. We also have

established a waste recycling center in Bekasi

which was recognized as the best case of CSR in

West Java in 2022.

Future Plans

In 2023, we will expand the

installation of plastic collection bins while

continuing to provide children with environ-

mental education related to plastic collection.

Creating Shared Value

Leveraging our mobility to help Foodbank, aimed at resolving the imbalance

in the supply of food ingredients due to income inequality in downtown and

suburban areas in the Middle East. Using Hyundai STARIA, in partnership

with local Foodbank and colleges, we have supplied food ingredients and

nutritional kits to marginalized areas with low accessibility from March to

April 2022 in five cities – two in the UAE (Ajman in March and Sharjah in

April) and three in Saudi Arabia (Riyadh, Jeddah, and Dammam in April). In

particular, we donated STARIA to NGOs in those cities to assist their donation

activities during Ramadan, when Muslims practice coexistence and sharing.

Hyundai donates eco-friendly vehicles and provides customized mobility solutions to local

governments that operate welfare vehicles for the disabled to improve the mobility of the

vulnerable. In November 2022, we donated an electric vehicle (EV), specialized for the

visually impaired, to the daily mobility support center for the disabled in Chungcheongbuk-

do. The donated vehicle was developed by applying Braille and voice guidance

convenience specifications to the IONIQ 5, an eco-friendly EV, to help visually impaired

people move about more safely and conveniently. It is expected that this eco-friendly

welfare vehicle for the visually impaired using IONIQ 5 will contribute to promoting the

mobility rights of the disabled in the province.

2022 Key Achievements

We donated three IONIQ 5 vehicles specialized for the visually

impaired to the daily mobility support centers for the disabled in Chungju City, Jecheon City, and

Boeun-gun. The donation was particularly meaningful in that it was the first ever donation of

environmentally-friendly welfare vehicles for the visually impaired in Korea.

Future Plans

We plan to expand the IONIQ 5 EV supply project to local governments that

operate welfare vehicles for the visually impaired.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Mobility

Hyundai has been running a virtual reality driving experience social

contribution program since February 2019, designed to help drivers

overcome their fear of driving and build their self-confidence. The

driving simulators used in the program are designed to enable

driving practice in various environments and situations, including

city centers, highways, national roads, and alleyways. Since 2021, in

cooperation with the National Rehabilitation Center, we have used

the simulators in the rehabilitation of victims of traffic accidents.

In 2022, we expanded the cooperative relationship to Chungnam

National University Hospital and Pusan National University Hospital.

In 2023, we plan to promote rehabilitation support activities by

providing simulators to Seoul Rehabilitation Hospital.

2022 Key Achievements

We have signed agreements with Chungnam

National University Hospital and Pusan National University Hospital to

operate rehabilitation training programs for traffic accident patients.

Future Plans

In the first half of 2023, we plan to donate a new

simulator to the Seoul Rehabilitation Hospital where it will be used to

treat patients who need rehabilitation.

H-Special

Movement Project

Supporting Underprivileged

Areas, Using Mobility

Hyundai is taking the lead in overcoming the physical

limitations and improving the mobility of people with

reduced mobility by offering rehabilitation support for

patients with paraplegia, using robotics technology. HMG

Robotics Lab has developed a medical wearable robot called

“X-ble MEX” that assists lower muscle reconstruction and

joint movement for people with limited mobility. In January

2023, we obtained permission for medical devices from

the Ministry of Food and Drug Safety, and also completed

the certification of batteries as a power source for walking

assistance. In April 2023, we signed an MOU with Asan

Medical Center and the National Rehabilitation Center to

cooperate in conducting rehabilitation treatment and related

research for paraplegic patients using X-ble MEX. Moving

forward, Hyundai will promote activities designed to support

the mobility of people with reduced mobility by actively

incorporating not only wearable robots but also other future

mobility solutions with the goal of improving human life.

2022 Key Achievements

We plan to deliver two wearable

robots each to the Asan Medical Center and the National

Rehabilitation Center for the rehabilitation treatment of

paraplegic patients and related research.

Rehabilitation Support

Using a Wearable Robot

(X-ble MEX)

Driving Rehabilitation

Support Using Virtual

Driving Simulators

CSV Activities

2022 Key Achievements

Using four STARIA

vehicles, we delivered a total of 2,000 boxes of food

ingredients in partnership with four universities and

local volunteer groups in the regions.

Future Plans

In 2023, we plan to deliver a total of

2,800 boxes of food ingredients, a 40% increase

from the previous year, and donate four Hyundai

Mighty vehicles for NGO activities.

Creating Shared Value

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Hope

Hyundai signed an MOU with the Ministry of Education to launch the Future

Mobility School in 2016. It is a free-semester middle school providing specialized

career education based on theory, practice, and experience, with the aim of

allowing young people to understand the automobile industry and explore the

related occupations. The curriculum is composed of content on eco-friendly

mobility and sustainability to enhance the students’ understanding of mobility-

related industries. In order to resolve inequality in career education opportunities,

priority is given to schools in rural areas, special schools, and alternative schools.

In 2022, we organized a creative experiential learning for elementary school

students as regular program in order to make education fun and easy from the

perspective of children.

2022 Key Achievements

In 2022, we expanded the target

over the previous year to provide education to 14,000

students in 350 schools. In addition, we launched creative

experiential learning for elementary school students as a

regular program.

Future Plans

In 2023, we plan to start a mobility-related

career experiential learning support project for students

in ASEAN countries in collaboration with the Asia-Pacific

Center of Education for International Understanding under

the auspices of UNESCO (APCEIU).

Future Mobility School

Since 2020, Hyundai has been operating the H-Mobility Class to nurture science

and engineering college (graduate) students in Korea into future talents, with

the goal of enhancing national competitiveness. The H-Mobility class consists

of three courses of future strategic technologies such as vehicle electrification,

autonomous driving, and robotics, with each course being composed of basic

education and advanced education. Launched in 2022, the robotics course

includes a hackathon as one of its in-depth education programs designed

to provide trainees with project experience and opportunities to improve

their practical capabilities. We provide recruitment benefits (exemption from

application review) to trainees who are selected as excellent learners after

completing advanced education.

2022 Key Achievements

In 2022, we opened a new robotics course and operated an

H-mobility class for a total of 2,805 trainees.

Future Plans

In 2023, we plan to open software (SW) lecture in addition to

autonomous driving course to contribute to strengthening the trainees’ SW

capabilities and fostering their mobility skills.

H-Mobility Class

H.I.R.E. stands for Hyundai Initiative for Robotics Excellence, a robotics talent training program

that Hyundai Motor Manufacturing Alabama has been promoting since 2020. The H.I.R.E.

program is run in conjunction with the Montgomery public education system to provide

education on robotics to middle and high school students, with the goal of creating a pool

of future talents for the growing technology-based industries in Montgomery and the River

Region. H.I.R.E. enables students to move beyond learning the scientific principles related to

engineering design to develop their teamwork, leadership, coding, and literacy skills, while

supporting them in their dream of forging a career in a robotics-based industry by helping them

to get into robotics at an early age.

2022 Key Achievements

All 10 middle schools in Montgomery participated in the program held in

January 2022, and a total of 90 students received robotics education. In August, the program was

expanded to include a total of eight high schools in Montgomery, and in November of the same year

a total of 17 teams participated in the H.I.R.E. Robotics Competition.

Future Plans

Hyundai Motor Manufacturing Alabama (HMMA) plan to expand the H.I.R.E. program

in collaboration with the education system in central Alabama.

H.I.R.E.

Hyundai Motor America (HMA) conducts the Hope on Wheels campaign to support

pediatric oncology research and raise awareness about childhood cancer with its dealers

participating in the campaign. Launched in 1998 with the aim of creating a happy future

in which children do not suffer from cancer, this campaign is currently being carried out

across the United States.

Hyundai Motor Company Australia (HMCA), together with its dealers, is running the Help

for Kids program, which provides financial and vehicle support to children’s charities. The

program has been ongoing since 2014, providing children and families in Australia with a

range of activities beyond essential funding, including transportation and education.

2022 Key Achievements

In 2022, the Hope on Wheels campaign donated USD 15 million and

supported the research of 1,100 pediatric oncologists, while the Help for Kids program raised

funds from donations over AUD 11 million between 2014 and 2022.

Future Plans

In 2023, the dealer networks participating in Hope on Wheels increased their

fund-raising from USD 14 to USD 22 per vehicle sold, while the network of Australian dealers

participating in Help for Kids decided to increase their fund-raising from AUD 7.5 per vehicle sale

to AUD 10 in August 2022, which is expected to lead to an increase in the donation amount.

Hyundai Hope on Wheels &

Help for Kids

CSV Activities

Creating Shared Value

Turkey

Indonesia

Korea

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Community

As social distancing was eased in 2022, various volunteer activities were

conducted in which our employees could actively participate. Leading

example includes H-pop-up trucks operated at our headquarters,

Namyang R&D Center, and Ulsan Plant. H-pop-up trucks is designed to

promote development rights and participation rights for children in local

children’s centers nationwide. 55 employees who participated in the

activity set up a play experience booth where children could enjoy VR

experiences and traditional games, as well as conducting creative craft

activities such as making wooden cars. In June 2022, Hyundai’s Ulsan

Plant resumed its various face-to-face volunteer activities such as balloon

art instruction at a local children’s center and hand and foot massage

service for people with intellectual disabilities, as well as volunteering at

soup kitchens. In addition, they conducted various volunteer activities and

delivered donations as part of H-Local Partner, a community-based social

contribution activity.

2022 Key Achievements

In 2022, 5,592 Hyundai employees participated in 627

volunteer activities for a cumulative total of 15,016 hours.

Art for Hope is an art revival program operated by Hyundai Motor India.

It was launched to provide financial support to artists who had lost their

livelihood after ceasing their creative activities due to the COVID-19

pandemic, and to increase access to the arts by building a platform

for youth, women, and local artists. It has developed into a flourishing

artist support program that grants a total of INR 4 million to 35 teams of

artists who are active in various arts fields across the 17 states of India,

based on proposals for community art projects on the theme of “Hope,

Solidarity, Gratitude”. It currently supports traditional Indian arts, crafts,

and performances. In particular, it is developing into a platform for

young artists belonging to the underprivileged classes.

2022 Key Achievements

As of the end of 2022, the program supported five

types of traditional arts and four archive projects in India, providing financial

support for a total of 60 teams (120 artists), and attracting more than 3,700

exhibition visitors. In parrel with the program, we made 12 environmental

and social issues to be the subject of public deliberation in local

communities, while inducing people to be aware of social issues through

art. It was well received for it enabled persons with visual impairment or

development disorders to enjoy the exhibition and provided audiences with

interactive workshop and guided tours.

2022 Key Achievements

In March 2022,

Hyundai donated about KRW 2.3 billion to

assist the recovery from wildfire in Uljin and

Samcheok, and provided KRW 900 million

each to help the victims of heavy rainfall in

the central region in August 2022 and the

wildfire in Gangneung in April 2023. Overseas,

we donated IDR 2 billion in November 2022

for earthquake relief in Indonesia. In February

2023, we helped victims affected by the

earthquakes in Turkey by donating USD 1

million and supporting life-saving equipment,

daily necessities, and other goods, worth EUR

0.5 million total.

Since 1985, Hyundai has been supporting the operating expenses of the Korea

Archery Association while providing various awards to the national team when

it achieves outstanding results in international competitions. Moreover, Hyundai

has used the technological resources of its research institute to develop a

shooting machine that can not only sort out bad arrows but can also apply

a precision-analysis technology to identify abnormal or defective parts, thus

enabling the national squad to achieve a very high level of skill and continue

beating their personal records. We also sponsor a number of leading archery

tournaments, including the World Archery Championships.

Future Plans

While continuing to support the Korea Archery Association, Hyundai

intends to establish a sponsorship with the World Archery Association and support

it until 2025. Based on this, we will contribute to improving the competitiveness of

archery in Korea by expanding the archery base and fostering promising archers.

Korea Archery Association

Employee

Volunteering

Art for Hope

CSV Activities

Creating Shared Value

Hyundai fulfills its social responsibility by taking

active part in supporting damage recovery in the

event of disasters or accidents globally. In Korea, we

donated funds to assist the recover from the Uljin-

Samcheok wildfire in March 2022, the heavy rains in

central Korea in August 2022, and the Gangneung

wildfire in April 2023. Overseas, we provided help

through donations for the recovery from the

Indonesian earthquake in November 2022 and

the devastating earthquake in Turkey in February

2023. These are good examples to show that we

make continued efforts to support recovery from

disasters both in Korea and abroad. In addition, if

disasters or accidents occur near our business sites

and subsidiaries, Hyundai employees work hard to

help the affected local communities recover from

the damages by conducting fundraising activities

on their own or by providing relief goods at the

discretion of each business site.

Disaster Relief

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

The Space Between: The Modern in Korean Art, Installation photograph, Los Angeles County

Museum of Art, Sep 11, 2022-Feb 19, 2023. Photo © Museum Associates/LACMA

Hyundai Commission: Cecilia Vicuña: Brain Forest Quipu

Modern 2022. Photo © Tate (Ben Fisher)

MMCA Hyundai Motor Series 2022: Choe U-Ram — Little Ark, Little Ark,

2022, recycled cardboard

boxes, metallic material, machinery, electronic device (CPU board, motor), 210 x 230 x 1272cm. Image

provided by MMCA

Global Partnership for Arts and Culture

Hyundai supports a wide range of exhibitions and

programs in partnership with art institutions around

the globe to offer a greater number of audiences

the opportunity to enjoy and experience art.

National Museum of Modern and Contemporary Art, Korea

In partnership with the National Museum of Modern and Contemporary

Art, Korea (MMCA), Hyundai has been holding the “MMCA Hyundai Motor

Series” since 2014 to expand the boundaries of Korean art. Every year, we

support a large-scale solo exhibition by an esteemed Korean artist as well

as related seminars and publication activities. In 2022, the

MMCA Hyundai

Motor Series 2022: Choe U-Ram – Little Ark

exhibition was held, and

various programs were conducted during the exhibition period, including

critic and artist talks, collaborative performances with choreographers and

musicians, to communicate with the audience.

Hyundai has also been supporting “PROJECT HASHTAG” since 2019 to

discover next-generation creators in Korea and support their experimental

and creative activities. Two teams are chosen every year to be provided

with a grant of KRW 30 million, a studio, and exhibition opportunities.

In 2022, the

PROJECT HASHTAG 2022

presented a showcase of the

geopolitical significance of underground party spaces and cultural and

social issues in virtual ecosystems from the perspective of young creators.

Tate

The “Hyundai Commission,” made possible by the long-term partnership

between Tate and Hyundai, is a series of site-specific installations by

international artists for Tate Modern's Turbine Hall. In 2022, artist and

poet Cecilia Vicuña created two monumental new sculptures for

Hyundai

Commission: Cecilia Vicuña: Brain Forest Quipu

. Continuing her long-

standing work with the Andean tradition of the quipu, quipu sculptures hung

27 meters from the ceiling at opposite ends of the Turbine Hall combined

with audio and digital installations. This multi-part installation was an act

of mourning for the destruction of the forests, the subsequent impact of

climate change, and the violence against Indigenous people, and also an

opportunity to create a space for new voices.

The “Hyundai Tate Research Centre: Transnational” continues to encourage

new perspectives on global art histories and critical research to highlight

global exchanges of artists and ideas. Including an annual symposium, the

“Hyundai Tate Research Centre: Transnational” hosts research events to

facilitate collective research and intellectual exchange.

Los Angeles County Museum of Art

Since 2015, in partnership with Los Angeles County Museum of Art

(LACMA), “The Hyundai Project at LACMA” has been supporting

exhibitions and lab projects, aimed at promoting the convergence of

technology and art, as well as research activities in Korean art history. As

part of this partnership, the

The Space Between: The Modern in Korean

Art exhibition

was held in September 2022. This exhibition featured about

150 works of art that reﬂect the historical uniqueness of Korea's modern

era and was based on long-term research and planning through our

partnership program. By showcasing modern art works reinterpreted by

Korean artists inﬂuenced by foreign cultures and contemporary works by

overseas artists, the exhibition presented an integrated perspective on

modern Korean art.

We also support innovative exhibitions and creative activities that converge

art and technology through the “Art + Technology exhibition” and the “Art

+ Technology Lab.” The selected artists for the “Art + Technology Lab”

have been working on activities that incorporate rapidly growing new

technologies such as blockchain, metaverse, and NFTs. In addition, many

artists have been implementing various ideas into their works with the

help of technology consultations from companies such as Hyundai Motor

Company, Google, SpaceX, and Snapchat.

Creating Shared Value

Governance

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

The “G” in ESG refers to the governance factors

– the fundamental basis for creating ESG

value. The establishment of a strong corporate

governance coupled with responsible corporate

behaviors can increase corporate value and

achieve sustainable growth by responding to

various risks and seizing business opportunities

appropriately. Hyundai therefore spares no

efforts in growing in an economically, socially

and environmentally right way based on the

advanced governance structure befitting its

status as a global company.

4.1

Board-centered Management System

4.2

Shareholder-friendly Management

4.3

Ethics and Compliance Management

4.4

Risk Management

4.1

Board-centered Management System

4.2

Shareholder-friendly Management

4.3

Ethics and Compliance Management

4.4

Risk Management

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Hyundai strives to appoint directors with diversity,

expertise and independence, aimed at establishing a

sound and transparent governance structure, while

also doing its utmost to maximize shareholder rights

and interests as well as corporate value based on the

understanding of its diverse stakeholders, including

shareholders and customers. As Hyundai’s highest

decision-making body, the BOD is operated with the

goal of achieving sustainable and balanced growth

based on the company’s Articles of Incorporation by

faithfully supervising the activities of management.

We have established independence and diversity

policies for our independent directors, appointed

directors with expertise, and enacted the Corporate

Governance Charter in an effort to build a better

governance system.

Board-centered Management System

Composition of the BOD

BOARD COMPOSITION

Hyundai’s BOD is composed of 13 members for effective and prudent

decision-making, with independent directors making up more than half of

its members (seven) in order to ensure its independence in accordance with

the Commercial Act. The Board consists of experts in such various fields as

management, accounting, finance, law, governance and future technology,

and respects diversity without discrimination on the grounds of gender, race,

religion, etc.

DIRECTOR TENURE

As of the end of March 2023, the average tenure of the 13 board members is

about two years and seven months. In accordance with the Commercial Act,

the term of office of independent directors cannot exceed six years. Those

appointed in March 2023 include two internal directors (one re-appointed,

one newly appointed) and two independent directors (all newly appointed).

APPOINTMENT OF DIRECTORS

All of Hyundai’s directors are appointed through a resolution of the general

shareholder’s meeting (GSM). The independent directors are selected from

among the candidates recommended by the Recommendation Committee

on Candidates for Outside Directors to appoint competent and responsible

personnel armed with expertise who can make substantial contributions to

corporate management in a balanced way. We seek to respond flexibly to

changes in the business environment by appointing independent directors

with diverse perspectives and experiences.

INDEPENDENCE OF DIRECTORS AND RESTRICTIONS ON CONCURRENT

POSITIONS

Hyundai has put in place strict independence guidelines, meeting the

legal standards required by the Korean Commercial Act, based on the

international standards. Independent directors must not only comply

with them, but also represent the rights and interests of stakeholders with

exemplary ethics and professionalism. Hyundai therefore only appoints

persons with no significant stake in the company as independent directors,

and they maintain independency from top management, monitor the

efficient operation of the company, and play a role in enhancing corporate

value. In addition, the independent directors must devote sufficient time

and effort to the faithful performance of their duties, and according to the

Commercial Act, they cannot be appointed as directors, executive members,

and/or auditors of two or more companies other than the company itself. In

order to be permitted to hold concurrent positions in other companies, they

must report the details of the duties they wish to hold concurrently to the

Board in advance and obtain its approval.

Concurrent Positions of Independent Directors

Name

Date of Initial

Appointment

Date of Term

Expiration

Details of Concurrent Positions

(Institution / Position)

Chi-Won Yoon

March 22, 2019

March 23, 2025

Sang-Seung Yi

March 22, 2019

March 23, 2025

Samsung C&T /

Independent Director

Eugene M. Ohr

March 22, 2019

March 23, 2025

Dal Hoon Shim

March 24, 2021

March 23, 2024

Samhwa Paints Industrial /

Independent Director

Ji Yun Lee

March 24, 2021

March 23, 2024

Seung-Hwa Chang

March 23, 2023

March 22, 2026

Yoon-Hee Choi

March 23, 2023

March 22, 2026

Hanjin KAL /

Independent Director

DIVERSITY OF THE BOD

Hyundai appoints directors based on the principle of diversity, such as

gender, nationality, race and religion. As of the end of March 2023, the Board

has two directors with foreign nationality (Jose Munoz and Eugene M. Ohr)

and two female directors (Ji Yun Lee, Yoon-Hee Choi).

As Global Chief Operating Officer (COO), director Jose Munoz has greatly

contributed to improving Hyundai’s performance in the global market and will

continue to play an important role in securing global market competitiveness.

Eugene M. Ohr, an independent director who is an expert in global business

and asset management, was appointed to contribute to improving our

business transparency. Ji Yun Lee, independent director, is a professor at

the Department of Aerospace Engineering at KAIST. As a world-recognized

authority on ensuring the safety of intelligent transportation and autonomous

driving systems, she contributes to innovation in future core technologies

and future mobility by advising on mid- to long-term business plans for

autonomous driving technology and urban air mobility (UAM). Professor Yoon-

Hee Choi is a legal expert and has abundant expertise in labor-management

relations, including activities at the National Labor Relations Commission and

the National Human Rights Commission of Korea.

BOD Composition

Classification

Name

Title

Career

Date of

Appointment

Gender

Nationality

Internal

Directors

Euisun Chung

Executive Chair

Currently Executive Chairman of Hyundai Motor Group

March 12, 2010

Male

Korea

Jaehoon Chang

President & CEO

Currently President & CEO of HMC

March 24, 2021

Male

Korea

Chung Kook Park

Executive President

Currently President and Head of HMC R&D Division

March 24, 2022

Male

Korea

Dong Seock Lee

CEO

Currently Executive Vice President and CSO of Domestic Productions

March 24, 2022

Male

Korea

Jose Munoz

President & GCOO

Currently Global COO of HMC and CEO of Hyundai and Genesis Motor North America

Former Chief Performance Officer of Nissan and Chairman China, Nissan

March 23, 2023

Male

US, Spain

Gang Hyun Seo

Executive Vice

President

Currently Executive Vice President of HMC Planning & Finance Division

March 24, 2021

Male

Korea

Independent

Directors

Chi-Won Yoon

Independent

Director

Former Chairman of EQONEX

Former Vice Chairman of UBS Wealth Management

March 22, 2019

Male

Korea

Eugene M. Ohr

Independent

Director

Former Partner of Capital International Inc.1

March 22, 2019

Male

Sang-Seung Yi

Independent

Director

Currently Dean and Professor of Economics, Seoul National University

Former Chairman of Korea Academic Society of Industrial Organization

March 22, 2019

Male

Korea

Dal Hoon Shim

Independent

Director

Currently Representative of Woorin Tax Partners

Former Head of NTS Jungbu Regional Office

March 24, 2021

Male

Korea

Ji Yun Lee

Independent

Director

Currently Professor, Department of Aerospace Engineering of KAIST

Former Director of American Society of Navigation

March 24, 2021

Female

Korea

Seung-Hwa Chang

Independent

Director

Currently Professor of Graduate Law School, Seoul National University

Currently Arbitrator of the International Court of Arbitration (ICC)

March 23, 2023

Male

Korea

Yoon-Hee Choi

Independent

Director

Currently Professor of Graduate Law School, Konkuk University

Former Member of National Election Commission

March 23, 2023

Female

Korea

As of March 31, 2023

Executive President & Standing Director Chung Kook Park resigned before end of term in April 2023

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Operation of the BOD

BOD MEETING

Board meetings are convened by its chair or another member appointed by

the Board. At the time of convening the BOD, each director is notified of the

convocation in writing or orally seven days prior to the date of the meeting.

However, the convocation process may be omitted when all directors agree.

A BOD resolution must be made with the attendance of a majority of the

directors and the consent of a majority of the directors in attendance. Should

the relevant laws and regulations stipulate otherwise, they shall apply.

Decision-making Process of the BOD

The BOD agenda is proposed by the chairperson, and if the other

directors wish to propose an item, the summary must be submitted to the

chairperson. The Board must prepare the minutes, in which the agenda of

the meeting, its progress and results, any opponents to the agenda and the

reasons for their opposition must be entered, and the chairperson and the

directors present must seal or sign the minutes.

Board-centered Management System

Board Meetings in 2022

Classification

Date

Contents

Whether

Approved

Attendance

Rate

Approval

Rate

1st General

Meeting

Jan.25

Approval of financial statements for the 54th fiscal year

Approved

100%

Re-approval of the 47th-53rd separate financial statements

Approved

100%

Approval of the 54th annual report

Approved

100%

Approval of the business plan for 2022

Approved

100%

Approval of the health and safety plan

Approved

100%

Approval of the limit on corporate bond issuance

Approved

100%

Appointment of the manager

Approved

100%

Assessment of the 2021 internal accounting management system, compliance management activities

and plan, and geopolitical risks related to Russia and China

Reported

Extraordinary

Meeting

Feb.23

Approval of the convocation and agenda to be submitted to the 54th GSM

Approved

100%

Results of the 2021 internal accounting management system

Reported

Extraordinary

Meeting

Mar.24

Appointment of the Chief Executive Officer

Approved

100%

Appointment of the chairperson of the BOD

Approved

100%

Appointment of Committee members (Sustainability Management Committee, Recommendation

Committee on Candidates for Outside Directors, Compensation Committee)

Approved

100%

Approval of dual-directorship (Euisun Chung –Kia and Hyundai MOBIS; Sang-Seung Yi –

Samsung C&T; and Dal Hoon Shim – Samhwa Paints Industrial)

Approved

100%

2nd General

Meeting

Apr.25

Approval of capital increase for an overseas sales subsidiary

Approved

100%

Business results of Q1 2022, business status and investment plan of Supernal,

occurrence of major health and safety issues

Reported

Extraordinary

Meeting

Jun.30

Approval of transaction between directors, etc. and the company

Approved

100%

91%

Approval of the amendment of regulations for the Sustainability Management Committee

Approved

100%

Approval of the establishment of an overseas affiliate

Approved

100%

Participation in overseas subsidiary capital increase, establishment status of an EV company in the US

Reported

3rd General

Meeting

Jul.21

Approval of the 55th fiscal year interim dividend payment

Approved

100%

91%

Approval of liquidity support for suppliers

Approved

100%

Business results of Q2 2022

Reported

Extraordinary

Meeting

Aug.11

Approval of equity investment in another corporation

Approved

100%

Approval of the establishment of an AI research institute in North America

Approved

100%

Extraordinary

Meeting

Sep.07

Approval of treasury stock exchange with another corporation

Approved

100%

4th General

Meeting

Oct.24

Approval of transaction between directors, etc. and the company

Approved

100%

Approval of disposition of treasury stocks

Approved

100%

Business results of Q3 2022, Hyundai’s response to the US IRA

Reported

Board of Directors

Shareholders

BOD’s committees

BOD

CEO

Audit Committee

Recommendation Committee

on Candidates for

Non-executive Directors

Compensation Committee

Sustainability

Management Committee

Report on BOD activities

Facilitate BOD’s efficient

operations

Appointment of directors and approval

of compensation limits

GSM

Appointment of CEO

Participate in key decision-making by

exercising their voting rights

BOD Activities in 2022

BOD Participation in 2022

Number of meetings

Number of agenda items for resolution

Number of agenda items for report

Average participation rate

Participation rate of internal directors

Participation rate of

independent directors

100

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Board-centered Management System

Profile of the BOD Members

Classification

Name

Profile

Internal

Directors

Euisun

Chung

•

CEO of Kia (2005-2008)

•

Vice-chairman of HMC (2009-2018)

•

Senior Vice-Chairman of HMC (2018-2020)

•

Chairman of HMC (2020-present)

Jaehoon

Chang

•

Head of the Management Support Division & Head of the

Domestic Business Division (2019-2020), Head of the Genesis

Business Division of HMC (2019-2022)

•

President & CEO of HMC (2021-present)

Chung Kook

Park

•

CEO and President of Hyundai KEFICO (2015-2018)

•

CEO and President of Hyundai MOBIS (2018-20)

•

Deputy Head of HMC R&D Division (2020-2021)

•

President and Head of HMC R&D Division (2022-Apr. 2023)

Dong Seock

Lee

•

Head of HMC General Production Management Division

(2017-2018)

•

Head of HMC Engine Transmission Business Division (2018-2020)

•

Production Support Director of HMC (2021)

•

Executive Vice President and CSO of Domestic Productions

(2022-present)

Jose Munoz

•

Chief Performance Officer of Nissan and Chairman North America,

Nissan (2016-2018)

•

Chief Performance Officer of Nissan and Chairman China, Nissan

(2018-2019)

•

Global COO of HMC and CEO of Hyundai and Genesis Motor

North America Division (2019-present)

Gang Hyun

Seo

•

Head of HMC Accounting Office (2015-2019)

•

Head of Finance Division, Hyundai Steel (2019-2020)

•

Executive Vice President of HMC Planning & Finance Division

(2021-present)

Independent

Directors

Chi-Won

Yoon

•

Chairman and CEO of UBS Asia Pacific (2009-2015)

•

Vice Chairman of UBS Wealth Management (2016-2019)

•

Chairman of EQONEX (2020-2022)

Eugene M.

Ohr

•

Member of BOD, Capital International Research Inc. (2004-2009)

•

Partner of Capital International Inc. (2010-2017)

Sang-Seung

•

External Expert of Governance Committee, Samsung C&T

(2015-2020)

•

Professor of Economics, Seoul National University (2001-present)

•

Dean of Economics, Seoul National University (2020-present)

Dal Hoon

Shim

•

Director of the Corporate Taxation Bureau and Director of Taxation

and Legal Affairs, National Tax Service (2013-2015)

•

Head of NTS Jungbu Regional Office (2015-2017)

•

Representative of Woorin Tax Partners (2017-present)

Ji Yun Lee

•

Director of American Society of Navigation (2019-Jan. 2021)

•

Professor, Department of Aerospace Engineering of KAIST

(2009-present)

Seung-Hwa

Chang

•

Chairman of the Trade Committee, Ministry of Trade, Industry and

Energy (2019-2022)

•

Arbitrator of the International Court of Arbitration (ICC)

(2000-present)

•

Professor of Graduate Law School, Seoul National University

(1995-present)

Yoon-Hee

Choi

•

Adjudication Committee Member of National Labor Relations

Commission (2005-2014)

•

Member of National Election Commission (2014-2020)

•

Professor of Graduate Law School, Konkuk University

(2005-present)

Internal Director Chung Kook Park resigned before the expiry of the term in April 2023.

Board Member Training in 2022

Date of

Training

Participants

Training Content

Apr. 25

Eun Soo Choi,

Chi-Won Yoon,

Eugene M. Ohr,

Sang-Seung Yi,

Dal Hoon Shim,

Ji Yun Lee

Overview and business status of Hyundai Capital

Apr. 25

Follow-up progress of Hyundai’s future business

investment (Boston Dynamics, Motional)

Apr. 25

Strategic direction for Hyundai’s charging

infrastructure

Apr. 25

Development progress and schedule Hyundai

Global Business Center (GBC)

Apr. 25

Overview and progress of overseas plant

investment

Date of

Training

Participants

Training Content

Jul. 18

Eun Soo Choi,

Chi-Won Yoon,

Eugene M. Ohr,

Sang-Seung Yi,

Dal Hoon Shim,

Ji Yun Lee

ESG trends and future directions

Jul. 18

Current status of Hyundai’s female workforce and

response to the aging society

Oct. 24

ESG risks and the BOD monitoring obligations

Oct. 24

Hyundai’s design heritage

DIRECTOR’S RESPONSIBILITIES

Hyundai’s directors must faithfully perform their duties to the company

in accordance with the provisions of the relevant laws and the Articles of

Incorporation. Hyundai compensates directors for litigation expenses, other

losses, damages, and liabilities incurred in connection with the performance

of their duties. However, we do not compensate the losses, damages and

liabilities which arise due to the malicious or gross negligence of the directors

concerned, or if compensation by the company is not permitted by law.

In addition, directors are liable to the company and third parties in accordance

with the Commercial Act and other laws in case of neglect of duties, etc. A

director’s liability to the company is limited to an amount equal to six times

the amount of remuneration he or she has received in the last one year (three

times in the case of an independent director), but this does not apply if the

director causes damages either intentionally or by gross negligence, or if the

law does not allow directors’ responsibilities to be reduced.

CHAIRPERSON OF THE BOARD

Hyundai’s BOD appoints its chairperson at the first board meeting after a

GSM, and the chairperson’s term of office is three years. The chairperson

convenes and presides over the BOD and ensures that the Board plays

its role effectively in all respects. The chairperson determines the order of

priority in which directors will act as interim chairperson in the event that

he or she is unable to attend the board meeting in person, and appoints a

temporary chairperson from among the directors to act as the chairperson.

If no chairperson is appointed, the duties of the chairperson of the Board are

assumed in the order designated in advance.

EVALUATION OF BOD OPERATIONS AND ACTIVITIES

At Hyundai, the independent directors conduct an annual evaluation of the

BOD’s operations every year, with the results discussed at Board meetings

as a way to improve the efficiency of its operations. In 2022, a third-party

evaluation was conducted by an independent evaluation agency to ensure

objectivity, and thus identified the current status of the composition and

operation of the BOD in terms of expertise, efficiency and effectiveness, with

the result that there was neither inappropriateness of the Board composition

nor ineffectiveness in its operations. In addition, we derive improvement

plans for the BOD by benchmarking best practices at home and abroad in

the same industry and, going forward, based on the final opinion of the third-

party, we will reflect the ideas for the improvement of the BOD composition

and operations.

EXPERTISE OF THE BOD

Hyundai appoints directors with expertise in various fields such as global

business, R&D, accounting, finance, legal affairs, and future technology. In

addition, we make sure that our independent directors’ ability to fulfill their duties

faithfully is being strengthened through regular visits to factories and research

institutes at home and abroad and meetings with executives in key sectors.

BOARD MEMBER TRAINING

Hyundai conducts training seminars on various topics such as business

status, ESG risks, diversity, and new businesses in order to enhance the

business understanding of its independent directors, and supports the

strengthening of their professional competency to help them fulfill their roles

as independent directors.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Functions of the BOD

RISK MANAGEMENT

Hyundai’s BOD is upgrading its management system to respond more

effectively to risks that may arise from rapid changes in automotive

industry trends, energy conversion to electric energy, and accelerated

value consumption by customers. In April 2022, Hyundai established the

Cross Functional Team, an organization directly under the CEO, to respond

promptly to internal and external risks and opportunity factors occurring

in the entire process of development, production, and sales of finished

vehicles, including the supply chain.

COMPLIANCE MANAGEMENT

Hyundai’s BOD has established a compliance management system to review

and manage its legal risks. To this end, we have designated independent

director Yoon-Hee Choi, who has considerable legal expertise, as the person

in charge of compliance management as a way to expand our compliance

management and strengthen the BOD’s compliance monitoring function,

and to play an active supervisory role in the company's compliance

management. In addition, we are striving to spread a company-wide culture

of compliance by conducting compliance inspections and compliance

training for employees.

ETHICAL MANAGEMENT

Under the supervision of the Sustainability Management Committee within

the Board, Hyundai closely reviews the protection of shareholder rights and

interests, transparency in insider transactions, and the promotion of ethical

management. Moreover, we continuously reflect improvements in the

company’s Ethics Charter through resolutions and deliberation on ethics

management-related policies and the establishment and/or revision of

ethical standards.

BOD Remuneration

CRITERIA FOR BOD REMUNERATION

Remuneration for directors is executed within the limits determined at

a GSM and is determined through deliberation by the Remuneration

Committee. The salaries of internal directors are calculated by reflecting

such evaluation factors as job function, position, leadership, contribution to

the company, talent development, etc. based on the internal executive salary

table. Bonuses are paid based on financial performance (sales, operating

profit, etc.) and contribution to the company based on performance

incentives. In the case of independent directors and members of the Audit

Committee, fixed amounts are paid to ensure their independence and

transparency, but no separate performance bonus is paid.

CRITERIA FOR EXECUTIVE REMUNERATION

Hyundai determines the remuneration of its executives based on internal

standards such as the executive salary table and the executive wage

setting standards. Management’s salaries are determined based on a

comprehensive performance evaluation that takes into consideration their

leadership, expertise, contribution to the company, length of service, and

talent development. In addition, bonuses are paid based on executive

remuneration standards (performance incentives) – the amount of bonus

is determined by their business performance, such as sales and operating

profit, achievement of business goals and contributions as members of the

management, as well as their internal and external management activities.

CEO PERFORMANCE EVALUATION AND REMUNERATION

When evaluating and rewarding the CEO’s performance, Hyundai reflects

the results of financial evaluations relating to sales, profit ratios, net cash

liquidity, debt ratios, and market shares, as well as the results of comparative

evaluations among peers with regard to stock prices, ESG, and brand

power. As of 2022, the CEO’s remuneration amounted to KRW 2,932 million,

consisting of a basic salary of KRW 1,116 million, bonuses of KRW 1,805

million, and other wage and salary incomes of KRW 11 million.

INTERNAL ACCOUNTING MANAGEMENT

Hyundai’s BOD has developed and launched an internal accounting control

system with the aim of providing reasonable assurance that the company’s

financial statements are prepared and disclosed in accordance with the

generally accepted accounting standards. The evaluation of the operational

status of the internal accounting management system, the progress, and

the approval of the evaluation plan are reported to the Audit Committee.

At the Audit Committee meeting held in February 2023, Hyundai’s internal

accounting management system was evaluated based on the Internal

Accounting Management System Design and Operation Concept System,

and it was determined that the system had been designed and operated

effectively. The external auditor also expressed the opinion that the

company’s internal accounting control system has been effectively designed

and operated from the viewpoint of materiality in accordance with the

Internal Accounting Management System Design and Operation Concept

System. In addition to the Audit Committee, the results of the evaluation of

the internal accounting control system’s operational status are reported to

the Board and the GSM every business year.

MANAGEMENT OF CLIMATE CHANGE

Firm in the belief that it must assume its responsibility to actively respond

to climate change, Hyundai has established environmental management

to strengthen its ability to respond to global environmental issues and

regulations in a comprehensive fashion. To this end, we have established a

strategy for converting to electrified vehicles and developed a roadmap to

achieve RE100. All our sustainability management strategies and climate

change issues are discussed and monitored in detail by the Sustainability

Management Committee.

HEALTH AND SAFETY MANAGEMENT

Government regulations on automobile safety at home and abroad are

tightening every year. Reflecting this trend, Hyundai establishes a health

and safety plan every year and reports it to the Board for its approval. In

order to manage its health and safety issues comprehensively, Hyundai

has newly appointed an internal director with expertise in health and

safety, and is systematically managing major health and safety plans and

progress inspections through discussions at the Sustainability Management

Committee.

Board-centered Management System

Criteria for BOD Remuneration

Classification

Payment Criteria

Internal Directors

(CEO and management)

•

Salary: Paid within the limit of directors’ remuneration set by the GSM resolution based on internal criteria, such as Hyundai’s

executive salary table and executive wage setting standards, job title, tenure, leadership, professionalism, contribution to the

company, and human resource development, etc.

•

Bonus: Paid based on performance incentives, according to both quantitative and non-quantitative indicators – the former includes

business performance, such as sales and operating profit; degree of achievement of business goals; ESG-related indicators; and brand

power, and the latter includes management performance, contribution to the company, and internal/external business environment

•

Other earned income: Paid according to the company regulations on welfare support and long-term service rewards

Independent Directors

•

Fixed amounts are paid to ensure their independence and transparency within the limit of remuneration for directors determined

by the GSM resolution, with no separate performance bonus paid.

BOD Remuneration

(Unit: KRW million)

Classiﬁcation

CEO

Board member

Independent director

Employee

CEO-to-employee pay ratio

Average compensation per person

2,932

1,221

108

105

28 x

* For further details, please refer to the 2022 business report published on the electronic disclosure system of the Financial Supervisory Service

CEO: Based on remuneration for Jaehoon Chang, President & CEO of Hyundai Motor Company

Employees: Excluding registered executives (unregistered executives and employees)

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

BOD Subcommittees

AUDIT COMMITTEE

Composition of the Audit Committee

The Commercial Act stipulates

strict criteria for appointing and forming the committee member aimed at

securing the transparency and independence of the Audit Committee, and

thus the Audit Committee must be composed of at least three directors

appointed at a GSM, and at least two-thirds of them should be independent

directors. It should also contain at least one member who is a specialist in

accounting and finance. All five members of Hyundai’s Audit Committee are

independent directors, with three (Chi-Won Yoon, Sang-Seung Yi, Dal Hoon

Shim) of whom are experts in accounting and finance. In particular, director

Dal Hoon Shim, who has accumulated a wealth of experience as a tax expert

while serving as the head of NTS’s Jungbu Regional Office among other

posts, supports the company’s overall risk management from a different

perspective to the company’s internal audit organization.

Roles of the Audit Committee

Hyundai’s Audit Committee is composed

of five independent directors with expertise in various areas including legal,

finance, accounting, and future technology. The Committee verifies the

legality of the business activities of the directors and management and

supervises the soundness and propriety of corporate financial activities and

the accuracy of its financial reporting, and also reviews matters stipulated by

the GSM related to the selection, change, and dismissal of external auditors,

other laws and the Articles of Incorporation, and the operating regulations of

the Committee.

Approval of Non-audit Services

Hyundai regularly monitors the independence

of its external auditors, and only allows them to conduct non-audit services

to the extent that they do not affect their independence. We report any

importan

t matters identified during their activities to the Audit Committee

and disclose them through quarterly reports. In order to further strengthen

the independence of the external auditors, prior approval from the Audit

Committee is required as of 2023 when signing a non-audit service contract

with an external auditor.

RECOMMENDATION COMMITTEE ON CANDIDATES FOR

OUTSIDE DIRECTORS

Composition of the Recommendation Committee on Candidates for

Outside Directors

Hyundai’s Recommendation Committee on Candidates

for Outside Directors recommends independent director candidates in

accordance with the relevant laws, the Articles of Incorporation, and the BOD

regulations. The Committee is composed of three independent directors

and two internal directors, with independent directors making up a majority

of the total number of directors, according to the laws and regulations.

Roles of the Recommendation Committee on Candidates for Outside

Directors

The Recommendation Committee on Candidates for Outside

Directors plays the role of recommending candidates for independent

directors prior to a GSM. The Committee recommends candidates who

can make substantial contributions to corporate management after

carefully examining whether the candidates’ professionalism and personal

capabilities are in line with the interests of the shareholders, and whether

there is a history of their causing damages to corporate value or infringing

shareholders’ rights.

COMPENSATION COMMITTEE

Composition of the Compensation Committee

Following the amendment

to the Articles of Incorporation for the establishment of the Compensation

Committee at the 2019 GSM, Hyundai enacted the Compensation

Committee regulations at the 4th General BOD Meeting. According to

the BOD’s rules, independent directors must constitute a majority of the

members of the Committee, which consists of two independent directors

and one internal director.

Roles of the Compensation Committee

Hyundai’s Compensation

Committee helps the company to ensure objectivity and transparency

in the remuneration decision-making process for registered directors. It

also deliberates and make decisions on matters related to the limit on

remuneration for registered directors and the remuneration system for

internal directors.

Board-centered Management System

Compensation Committee Composition

Name

Chi-Won Yoon

Dal Hoon Shim

Gang Hyun Seo

Classification

Independent director

Internal director

Expertise

Management, financial service

Finance, accounting, tax service

Finance and economy, strategy

Recommendation Committee on Candidates for Outside Directors Composition

Name

Eugene M. Ohr

Sang-Seung Yi

Yoon-Hee Choi

Euisun Chung

Jaehoon Chang

Classification

Independent director

Internal director

Expertise

Global business

Business, governance

Legal affairs

Overall management

Audit Committee Composition

Name

Chi-Won Yoon

Sang-Seung Yi

Dal Hoon Shim

Ji Yun Lee

Seung-Hwa Chang

Classification

Independent director

Expertise

Management,

financial service

Business,

governance

Finance, accounting,

tax service

Future/industrial

technology

International trade

/legal affairs

Non-audit Service Contracts with External Auditors

Business Year

Date of Contract

Service Offered

Contract Period

Service Fee (KRW million)

55th

Mar. 25, 2020

Support for renewal of the US APA

Mar. 2020 - Mar. 2022

250

Mar. 02, 2021

Refund request for the local tax assessed

Mar. 2021 – Contract termination

10% of the refund amount

Apr. 12, 2021

Refund request for the local tax paid

Apr. 2021 – Contract termination

10 + 10% of the refund amount

Dec. 21, 2021

Support for renewal of the APA of Germany (HMD)

Jan. 2022 – Contract termination

180

Dec. 17, 2021

Support for renewal of the APA of the Czech Republic

Jan. 2022 – Contract termination

180

Jan. 26, 2022

Development of the next-generation contact cente

data analysis model

Jan. 2022 – Jul. 2022

489

Mar. 18, 2022

Determination of the origin of automated facilities

Mar. 2022 – Mar. 2023

May 23, 2022

Support for renewal of the APA of Germany (HME)

May 2022 – Contract termination

180

Jul. 25, 2022

Inspection of laboratory processes

Jul. 2022 – Aug. 2022

250

Oct. 30, 2022

Review of claims for rectification

Nov. 2022 – Mar. 2023

400

Dec. 22, 2022

Consulting on FTA training for overseas subsidiaries

Dec. 2022 – Mar. 2023

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Sustainability Management Committee Activities in 2022

Classification

Date

Agenda items

Whether

approved

Approval

rate

Attendance

rate

1st General

Meeting

Jan. 25

Approval of financial transactions under the terms and conditions agreed with affiliated financial

companies

Approved

100%

Approval of transaction limit with stakeholders

Approved

100%

Approval of the major social contribution plans for 2022

Approved

100%

Reports (6)

−

Social contribution activities, etc. (Q4 2021)

−

Inspection results of the implementation of the Employee Code of Ethics, etc. (2nd half of 2021)

Reported

Extraordinary

Meeting

Feb. 23

Reports (2)

−

2021 ESG evaluation results and 2022 improvement directions

−

Mid- to long-term business strategies and financial goals

Reported

2nd General

Meeting

Apr. 25

Approval of financial transactions under the terms and conditions agreed with affiliated financial

companies

Approved

100%

Reports (5)

−

Compliance support activities, etc. (Q1 2022)

−

ESG NDR promotion plan, etc. (2nd half of 2022)

Reported

Extraordinary

Meeting

Jun. 30

Deliberation of transactions between directors, etc. and the company

Approved

100%

Appointment of an independent director in charge of compliance management

Approved

100%

3rd General

Meeting

Jul. 21

Approval of financial transactions under the terms and conditions agreed with affiliated financial

companies

Approved

100%

Reports (7)

−

Inspection results of the implementation of the Employee Code of Ethics, etc. (1st half of 2022)

−

Implementation status and plan for the Compliance Program, etc. for Fair Trade Governance

Reported

Extraordinary

Meeting

Aug. 09

Deliberation on equity investment in another corporation

Approved

100%

Deliberation on the establishment of an AI research institute in North America

Approved

100%

Extraordinary

Meeting

Sep. 05

Approval of treasury stock exchange with another corporation

Approved

100%

4th General

Meeting

Oct. 18

Approval of financial transactions under the terms and conditions agreed with affiliated financial

companies

Approved

100%

Approval of transactions with affiliates (brand usage fee)

Approved

100%

Approval of transactions with an affiliate (lease of the office building in Gye-dong)

Approved

100%

Deliberation of transactions between directors, etc. and the company

Approved

100%

Reports (7)

−

Current status of Hyundai’s carbon neutrality efforts, etc.

−

ESG NDR activities, etc. in 2022

Reported

Board-centered Management System

Sustainability Management Committee

Composition of the Sustainability Management Committee

In 2021,

Hyundai established the Sustainability Management Committee by

expanding and reorganizing the Corporate Governance & Communication

Committee. The Committee is composed of seven independent directors

and one internal director, as the functions of the former Corporate

Governance & Communication Committee with four members have been

expanded. In particular, director Chi-Won Yoon provides expert insights on

Hyundai’s shareholder return value and capital allocation policy as a global

financial expert who has worked for UBS Wealth Management.

Roles of the Sustainability Management Committee

Hyundai’s Sustainability

Management Committee serves as a practical control tower for its ESG

management, with the responsibility and obligation to deliberate and decide on

its ESG policies, plans, and major activities. In addition, going beyond the role of

the former Corporate Governance and Communication Committee, it discusses

major health and safety-related plans and implementation inspections, and the

protection of shareholders’ rights and interests, which are gradually increasing

in importance. The Committee also carries out a variety of activities to improve

Hyundai’s sustainability management practices internally and externally, such as

strengthening the transparency of the Board, expanding communication with

shareholders, and checking ethical issues related to employees.

Sustainability Management Committee Composition

Name

Chi-Won

Yoon

Eugene M.

Ohr

Sang-Seung

Dal Hoon

Shim

Classification

Independent

director

Independent

director

Independent

director

Independent

director

Expertise

Management,

financial

service

Global

business

Business,

governance

Finance,

accounting,

tax service

Name

Ji Yun

Lee

Seung-Hwa

Chang

Yoon-Hee

Choi

Jaehoon

Chang

Classification

Independent

director

Independent

director

Independent

director

Internal

director

Expertise

Future/

industrial

technology

International

trade/legal

affairs

Legal affairs

Overall

management

Major matters approved at and

reported to the Sustainability

Management in 2022

Approval of large-scale insider

transactions under the Monopoly

Regulation and Fair Trade Act

Approval of transactions

with stakeholders under

the Commercial Act, etc.

Reports related to ESG and

health and safety

Reports on governance

activities, etc.

Prior review of large-scale

investments, etc.

cases

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Hyundai respects the legitimate demands and

suggestions of its shareholders and strives to protect

their values and interests. We maintain the soundness

of our decision-making process and management so

that our corporate value can be duly evaluated, while

also doing our utmost to ensure that our shareholders’

interests and rights are not infringed upon by making

management decisions in consideration of the interests

of all our shareholders. To this end, we guarantee

their basic right to participate in profit distribution,

attend GSMs and exercise voting rights, and receive

information in a regular and timely manner as stipulated

in the Commercial Act. Moreover, we make active

efforts to communicate with our shareholders through

various IR activities, including corporate briefings and

NDRs, and thus provide them with information in a

transparent manner.

Shareholder-friendly Management

General Shareholder’s Meeting (GSM)

STATUS OF STOCK ISSUANCE

Hyundai’s total number of issued shares is 274,169,670, consisting of

211,531,506 shares of common stock and 62,638,164 shares of preferred stock.

According to the Articles of Incorporation, the total number of shares that can

be issued is 600,000,000 shares (par value of one share: KRW 5,000), of which

150,000,000 shares of preferred stock without voting rights can be issued.

As of march 31, 2023, three types of preferred stocks are issued in addition

to common stocks, but the rights for the distribution of residual assets,

redemption, conversion, etc. is not provided for preferred stocks. No preferred

stockholder’s meeting has been held for the past three years.

Stock Issuance Status

Classification

No. of shares that

can be issued

No. of shares

issued

Note

Common stocks

450,000,000

211,531,506

With voting

rights

Preferred

stocks

Preferred

stocks

150,000,000

24,113,119

Without voting

rights

2 Preferred

stocks

36,120,597

Without voting

rights

3 Preferred

stocks

2,404,448

Without voting

rights

* As of march 31, 2023

Share Ownership

GSM CONVOCATION AND NOTICE

Hyundai convenes a regular shareholder’s meeting within three months of

the end of each accounting period. An extraordinary shareholder’s meeting

may be convened, if necessary, by the CEO pursuant to a BOD resolution.

Unless all shareholders agree, no other resolutions can be made apart from

those of which they are notified in advance. When convening a GSM, a notice

or electronic document stating the purpose of the meeting must be sent to

each shareholder two weeks prior to the date of the meeting. Hyundai has

improved its work process in order to provide shareholders with information

related to GSM within a sufficient period of time, and since 2020 it has issued

each convocation notice four weeks before the GSM concerned.

GSM RESOLUTION (ONE SHARE, ONE VOTE)

In accordance with the Commercial Act and the Articles of Incorporation,

Hyundai grants one equal voting right per share owned by its shareholders

according to the type and number of stocks held by them. Unless otherwise

provided by law, GSM resolutions are made by a majority of the voting rights of

the shareholders present, who must hold at least a quarter of the total number

of issued stocks. Shareholders may exercise their voting rights with other

shareholders serving as their proxy, and the proxy must submit a document

proving their proxy right to the company prior to the opening of a GSM.

The 55th GSM (March 2023)

Agenda Items

Whether approved

Agenda item No. 1

Approval of the 55th financial statements

Approved as proposed

Amendments to the Articles of Incorporation

No. 2-1

Modification and addition of business purposes

Approved as proposed

No. 2-2

Reflecting the implementation of the electronic securities system

Approved as proposed

No. 2-3

Improvement of governance

Approved as proposed

No. 2-4

Expansion of the directors’ quota

Approved as proposed

No. 2-5

Amendment to the ground rules for directors’ severance pay

(including approval of the rules).

Approved as proposed

No. 2-6

Reflecting the improvement of the dividend procedures

Approved as proposed

No. 2-7

Addendum (March 23, 2023)

Approved as proposed

Appointment of directors

No. 3-1-1

Appointment of an independent director (Seung-Hwa Chang)

Approved as proposed

No. 3-1-2

Appointment of an independent director (Yoon-Hee Choi)

Approved as proposed

No. 3-2-1

Appointment of an internal director (Jose Munoz)

Approved as proposed

No. 3-2-2

Appointment of an internal director (Gang Hyun Seo)

Approved as proposed

Appointment of an Audit Committee member

No. 4

Appointment of an Audit Committee member (Seung-Hwa Chang)

Approved as proposed

Approval of director remuneration limit

No. 5

Approval of the limit on directors’ remuneration

Approved as proposed

Shareholder name

Type of stock

Ownership (%)

No. of shares

1 Hyundai MOBIS

Common stock

21.64

45,782,023

2 National Pension Service

Common stock

7.13

15,077,560

3 Mong-Koo Chung

Common stock

5.39

11,395,859

4 Euisun Chung

Common stock

2.65

5,598,478

Employee’s Stock Ownership

Association

Common stock

1.46

3,095,779

6 Others

Common stock

61.73

130,581,807

As of march 31, 2023

There are no golden shares possess by a government institution

***

The number of stocks owned by the National Pension Service is based on the

latest register of holders (as of March 31, 2023), so it may differ from the actual

stock ownership status as of now.

211,531,506

Total

EXERCISE OF SHAREHOLDERS’ VOTING RIGHTS AND THEIR DELEGATION

At Hyundai’s GSM, voting rights are exercised through the shareholders’

direct participation or by proxy, or by solicitation of the proxy exercise of

voting rights. In order to secure a quorum for GSM resolutions and facilitate

the smooth operation of a GSM on the principle of ‘one share, one vote’, the

power of attorney form is issued to the shareholders directly, posted on the

Internet homepage, or sent by e-mail.

We introduced an electronic voting system at the 52nd GSM to facilitate our

shareholders’ voting rights. Furthermore, we are making efforts to disclose

information in a transparent manner by disclosing the number of shares for

and against each item of agenda at each GSM.

APPOINTMENT OF DIRECTORS AS AN INDIVIDUAL ITEM OF AGENDA

Hyundai proposes the appointment of directors as an individual item of

agenda, and they are appointed with the consent of the majority of the

shareholders present at a GSM.

Communication with Shareholders

CORPORATE BRIEFINGS

Hyundai holds corporate briefings in January, April, July, and October to

announce its annual, first quarter, first half, and third quarter business results,

respectively. In March 2022, we held the first online corporate briefing

session for individual shareholders on YouTube in order to share information

and strengthen communication on shareholders’ major concerns.

Since the announcement of our business results in the first quarter of 2020,

we have been providing webcasts that anyone can listen to in real time to

improve IR accessibility for all our shareholders. The non-deal roadshow

(NDR), which is held once a year, also includes an independent director

within the Sustainability Management Committee in charge of protecting

the rights and interests of shareholders and communicating with them

about Hyundai’s sustainability management activities and goals. In addition,

since 2019, Hyundai has held a CEO Investor Day to present its mid- to long-

term management goals and to enhance investors’ understanding of the

company. Meanwhile, we also conduct meetings with domestic and foreign

institutional investors and minority shareholders; and, when necessary, our top

management participates and communicates directly with our shareholders.

TRANSPARENT INFORMATION DISCLOSURE

Information related to Hyundai can be found on its website and through

various disclosure/inquiry systems such as DART and KIND. We operate

a separate English-language website for foreign shareholders and

stakeholders, and disclose key information in IR News on the website.

We strive to provide diverse and in-depth IR materials to enhance our

shareholders' understanding of the company, while continuously improving

the level of information provided by reflecting the requests of our

shareholders and stakeholders. In particular, since 2019, we have disclosed

our mid- to long-term financial goals and strategies, while presenting our

direction for ESG improvement in the Corporate Governance Charter and

corporate briefing materials.

Going forward, we will make continuous efforts to and expand the disclosure

of our English-language materials for overseas investors. To this end, we are

improving our IR materials and the IR website.

Shareholder Interest Protection Systems

CONTROLS RELATED TO INSIDER TRADING AND SELF-DEALINGS

To enhance transparency regarding large-scale internal transactions under

the Monopoly Regulation and Fair Trade Act and self-dealings under the

Commercial Act, Hyundai’s large-scale internal transactions are subject to

deliberation and resolution by the Sustainability Management Committee,

which is composed of a majority of independent directors. It is stipulated

that self-dealings with the directors and major shareholders must be carried

out after deliberation by the Sustainability Management Committee and

resolution by the Board.

We comply with the large-scale insider trading regulations of the Monopoly

Regulation and Fair Trade Act and the self-dealing regulations of the

Commercial Act. Anticipated transactions with subsidiaries and major

shareholders are subject to prior approval of their transaction details,

including the period and amount, by the Sustainability Management

Committee and the Board. Transactions with Hyundai MOBIS, the largest

shareholder, are considered ordinary transactions under normal conditions,

with their limit approved for a period of less than one year.

PROTECTION OF SHAREHOLDER INTERESTS FOLLOWING CHANGES

IN THE OWNERSHIP STRUCTURE OR BUSINESS

Hyundai clarifies the basic principles of shareholder rights and fair treatment

in the Corporate Governance Charter, while the Sustainability Management

Committee deliberates and decides on the protection of shareholder

rights and interests. As well as guaranteeing shareholders’ basic rights to

participate in profit distribution, attend GSMs and exercise their voting rights,

and receive information in a regular and timely manner as stipulated in the

Commercial Act, we do our utmost to establish transparent governance by

communicating with our shareholders through various channels.

In 2019, we began operating a new shareholder-friendly system, in which

independent director candidates in charge of protecting shareholder

rights and interests are directly recommended by general shareholders at

home and abroad, in a bid to further expand their rights and interests while

strengthening the company’s management transparency.

Shareholder Return

SHAREHOLDER RETURN POLICY

To enhance shareholder value, Hyundai has been paying dividends whose

size is determined in consideration of the company’s investment, business

performance, and cash flow. On January 25, 2017, we announced the mid-

to long-term dividend policy through public disclosure. Under this policy,

we aim to return 30-50% of the annual free cash flow to our shareholders,

achieve a mid- to long-term dividend payout ratio comparable to that of

global competitors, and provide a reason for significant reduction or increase

of the dividend in consideration of the business environment in the future.

Subsequently, we announced our Mid- to long-term shareholder return

policy on April 25, 2023 to implement a more transparent shareholder return

policy. In order to expand the visibility and stability of dividends, we will

achieve a dividend ratio of more than 25% (including preferred shares) based

on the annual consolidated net income of the controlling shareholders,

while implementing quarterly dividends from the second quarter of 2023. In

addition, we plan to enhance our shareholder value and build shareholder

trust by implementing an aggressive stock

retirement

policy, such as stock

retirement of

3% of the outstanding shares held by the company at a rate of

1% over the next three years.

On the day of the Board’s decision to implement dividends, we disclose it

to the stock exchange, issue periodic reports, and notify the shareholders of

the relevant facts, including the payment of dividends. In line with the trend

of improving performance in 2021, efforts were made to ensure that the

rights of shareholders were respected by paying them an appropriate level

of dividend, such as by raising the amount of dividend per share at the end

of the year. The table below shows the details of the dividends issued for the

past three years.

ONLINE DIVIDEND INQUIRY SYSTEM

In April 2022, Hyundai opened an online dividend inquiry system designed

to enhance the convenience of shareholders and allow them to check the

details of dividends easily and from anywhere. By providing an online inquiry

service instead of the previous dividend notification sent by mail, we have

reduced the use of paper for mailing purposes, as well as carbon emissions

during the delivery process, thereby conserving resources and implementing

eco-friendly management.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Shareholder-friendly Management

Investor Relations Events

Shareholder Return Trend for the Past 3 years

Business Year

Stock Type

Stock

Dividend

Cash Dividend

Payout Ratio

Dividend Per Share (KRW)

Total Dividend (KRW million)

Dividend Yield

Consolidated Basis

Separate Basis

2022

Common stock

7,000

1,412,321

4.5%

24.9%

49.4%

Preferred stock

7,050

154,579

8.8%

2 Preferred stock

7,100

246,846

8.8%

3 Preferred stock

7,050

16,609

9.1%

2021

Common stock

5,000

999,057

2.4%

26.3%

201.5%

Preferred stock

5,050

111,365

5.0%

2 Preferred stock

5,100

178,275

4.9%

3 Preferred stock

5,050

11,961

5.2%

2020

Common stock

3,000

601,730

1.6%

55.1%

149.1%

Preferred stock

3,050

67,618

3.4%

2 Preferred stock

3,100

108,909

3.4%

3 Preferred stock

3,050

7,259

3.5%

Online Dividend Inquiry System

Spreading Ethical Management

ETHICS CHARTER

Hyundai has established the Ethics Management Charter with the aim of

setting an example as a global leading company that conducts its business

based on the principles of ethics and compliance. The following Five

Guiding Principles of the Hyundai Motor Group Ethics Charter serve as the

guidelines on ethical management which Hyundai employees must follow

to when dealing with various stakeholders such as customers, shareholders,

suppliers, and members of local communities.

CODE OF CONDUCT

Hyundai Motor Company Ethics Charter and Code of Conduct is designed

to increase ethical awareness among its employees by providing them

with specific procedures and measures related to the implementation of

ethical management. The Code of Conduct specifically covers corruption

and bribery, discrimination, information confidentiality, conflicts of interest,

antitrust/anti-competitive practices, money laundering and insider trading,

environment, health and safety, and whistleblowing.

ANTI-CORRUPTION/BRIBERY POLICY

Anti-Corruption/Bribery Policy of Hyundai Motor Company was enacted

in June 2021 to prevent risks associated with corruption and bribery and

guide its members towards upholding ethical and moral values. The policy

includes such guidelines as the prohibition of all forms of bribery and

solicitation, the eradication of facilitation payments, the prohibition of

political donations and sponsorships, and rules on charitable donations and

sponsorships in accordance with the company’s standards and procedures.

It also contains a clause which stipulates that the company shall establish a

reporting system accessible to all employees and stakeholders to monitor

corruption and bribery risks at all times and to take the necessary measures

immediately in the event of violations.

INTERNALIZATION OF ETHICAL/COMPLIANCE MANAGEMENT

Employee Performance Management and Promotion (Ethics/Compliance)

Hyundai includes items related to workplace ethics in its employee

competency evaluation. The core elements of the evaluation include respect

for talent and compliance with the established norms, while the evaluation

of leaders’ competency also includes their principles and convictions. In

addition, when reviewing employees’ prospects for promotion, we exclude

from promotion those who have received severe penalties related to ethics/

compliance, which is a common deliberation item for promotion and a

mandatory item that is applied equally to all our executives and employees.

Disciplinary System (Ethics/Compliance)

In accordance with Article

11 of the company’s internal rules relating to workplace ethics, entitled

“Disciplinary Actions for Violations of the Code of Ethics,” violators of the

Code are dealt with in accordance with the regulations of the Internal

Disciplinary Committee, and may be subject to disciplinary measures such

as dismissal, suspension, or a reduction of their salary.

ETHICS AUDIT AND REPORT

Hyundai strives to build an ethical culture and prevent risks related to

business ethics and compliance. To this end, we have established the

Compliance Support Advice Center within its compliance management

system to ensure employee compliance and report violations of the

law. Furthermore, with the goal of establishing and realizing transparent

management, we operate various reporting channels including the

Cyber Audit Office to handle reports of violations of ethical management,

such as unfair trade practices, unreasonable demands for or provision of

money, goods or entertainment, and misuses and abuses of authority and

solicitation. If a violation of Hyundai Motor Company Ethics Charter and

Code of Conduct is detected, the employee(s) in question may be subject

to disciplinary action that could lead to the eventual termination of their

employment, pursuant to Article 64 of the Employment Rules. In addition, we

monitor our employees’ implementation of the Code of Ethics throughout

their performance in its semi-annual and ad hoc audits, and reports the

results to the Sustainability Management Committee under the BOD.

PROTECTION OF WHISTLEBLOWERS

Hyundai guarantees the protection of whistleblowers related to employee

business ethics and compliance in its Ethics Charter, Code of Conduct, and

internal rules relating to workplace ethics regulations, while complying with

the relevant laws. We have also put in place measures for protecting the

confidentiality of whistleblowers, and posted the related information, and

we strictly prohibit the imposition of any disadvantages or retaliatory acts

against them. In the event that protection for a whistleblower is violated,

such as cases of retaliation against internal whistleblowers, the company

may impose aggravated punishment on the offenders in accordance with

Article 9 of Chapter 3 (Handling of violations of the regulations) of the

regulations on workplace ethics.

INTERNALIZATION OF CODE OF CONDUCT

Hyundai requires all its employees to pledge compliance and ethical

management on a regular basis in an effort to help them internalize the

company’s Code of Conduct. In 2022, we used our online platform and in-

house broadcasting system to conduct ethics education aimed at raising

their awareness of major ethical issues such as anti-corruption, fair trade,

and cyber security. The Sustainability Management Committee within the

BOD, which was expanded and reorganized in March 2021, is in charge of

overseeing the implementation of ethical management, as well as passing

resolutions on the revision of our major policies and codes of practice related

to ethical management.

CODE OF CONDUCT INVESTIGATION

In 2022, Hyundai took disciplinary action (such as dismissal, suspension,

reduction of salary, reprimand, warning, etc.) in 12 cases related to corruption

or bribery, discrimination and harassment, misuse of customer information,

conflicts of interest, money laundering and insider trading.

Hyundai strives to fulfill its economic and legal

responsibilities to all of its stakeholders – including

customers, shareholders, suppliers and local

communities – by practicing and spreading ethical

management activities and promoting fair trade

compliance. We have enacted the Ethics Charter and

the Employee Code of Conduct to help our employees

conduct in an ethical and responsible way, while also

setting a compliance support online system, self-

assessments, guidelines and newsletters in place as

a way to raise their compliance awareness. Moreover,

we are spreading the management's determination

to strengthen fair trade compliance throughout the

company and conduct regular employee trainings.

Ethics and Compliance Management

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Hyundai Motor Company Ethics Charter

and Code of Conduct

Anti-Corruption/Bribery Policy

of Hyundai Motor Company

Reporting Channels

Whistleblower Protections

Confidentiality:

Personal information of the informant cannot be disclosed

to the public without the informant’s consent.

Guarantee of status:

The employer or relevant department is prohibited

from imposing any disadvantages or discriminating against the informant

because of supplied information, statements and submission of evidence.

Reduction or exemption of liabilities:

If any mistake or negligence of the

informant are discovered during the investigation process, the liabilities of

the information for such faults or negligence may be reduced or waived.

Hyundai Motor Company Cyber Audit Office

Cyber Audit Office

By Fax

+82-2-3464-8813

By Phone

+82-2-3464-3500

By Mail

Hyundai Motor Group Audit Office

We shall perform our duties based on clear and transparent standards

and do our utmost to fulfill our responsibilities with integrity.

We shall compete fairly in the market and conduct business ethically

with all parties that engage in contractual relationships with us.

We shall provide safe products, exceptional services and accurate

information, and we rigorously protect personal information to increase

customer value.

We shall respect our members as independent individuals and, to this

end, provide fair working conditions and safe working environments.

We shall contribute to sustainable development by fulfilling our social

& environmental responsibilities as a member of society, so that diverse

stakeholders may prosper together in harmony.

Hyundai Motor Group’s Ethics Charter

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Compliance Management &

Compliance Support System

HMC COMPLIANCE MANAGEMENT

Compliance management embodies the management spirit by which the

company pursues transparent and fair business performance in order to

comply with the established norms and uphold sound business ethics in its

management and corporate activities. Hyundai established its compliance

control standards for compliance management in 2012, and since then it has

since introduced a compliance support system including the appointment of

the Chief Compliance Officer under the Commercial Act, while carrying out

various compliance support activities.

COMPLIANCE SUPPORT SYSTEM

Compliance Control Regulations and Policies

The Compliance Control

Standards prescribe the standards and procedures for compliance control

with which the company’s executives and employees must comply when

performing their duties in order to ensure that the company complies with

the laws and regulations and executes its corporate management practices

properly. Hyundai conducts compliance support activities based on its own

compliance control standards. In addition, through its own Ethics Charter

and Code of Conduct, Hyundai presents the standards for the conduct of

its executives and employees, while ensuring that they comply with the

company’s other compliance-related policies, such as the anti-corruption/

bribery policy and the personal information protection policy.

Compliance Support Organization

At Hyundai, the Chief Compliance

Officer is in charge of compliance support activities to prevent legal risks

and report the details and results of the effectiveness evaluation to the board

of directors on a regular basis. Furthermore, we appoint each departmental

head as the compliance officer of his or her respective department so that

he or she can carry out compliance control activities within the department.

In 2022, we appointed an independent director to take charge of compliance

management and act as an advisor and supervisor throughout the

compliance monitoring system.

Monitoring

Hyundai conducts departmental compliance inspections in

various legal areas, such as anti-corruption and personal information, so that

each department can diagnose its own work-related legal risks. In addition,

we encourage each department to improve its identified risks. In 2022, we

launched an individual compliance self-checking system, and expanded

the subjects of the inspection to include all senior employees in general,

research, and legal positions.

Compliance Program

IMPLEMENTING THE COMPLIANCE PROGRAM

Hyundai promotes fair and transparent management starting with its CEO’s

commitment to compliance program (CP) in the first and second half of every

year. In this way, Hyundai spreads its top management’s strong CP commitment

to all of its employees in addition to getting its own Guidelines on CP, which are

applied to their actual work performance.

In addition, we appoint a CP officer at a BOD meeting to manage and supervise

the company’s overall performance in terms of fair trade. In order to strengthen

the responsibilities and obligations of each business site, we report the fair

trade self-compliance operation performance and plans for the following year

to the Sustainability Management Committee, a committee within the Board,

on a semi-annual basis while fostering a CP culture by offering various fair trade

training programs and newsletters company-wide.

CP Implementation Process

FAIR TRADING EDUCATION

Hyundai not only conducts fair trading education for its employees every year,

but also informs new employees of the importance of complying with the Fair

Trade Act from the moment they join the company. We also conduct annual CP

training for all new executives and employees working in areas that are subject

or closely related to the fair trade laws. In addition, we regularly send out fair

trade newsletters so that our executives and employees can understand and

practice fair trade-related precautions. In particular, in 2022, we continued our

efforts to improve employee compliance awareness by inviting external experts

to conduct training on such topics as collusion, subcontracting, and technology

misappropriation.

Fair Trading Education Performance

Year

Number of training sessions

Number of participants

2019

1,429

2020

8,456

2021

8,261

2022

1,779

* Replaced by online training due to COVID-19 in 2020 and 2021

FAIR TRADE AND ANTI-CORRUPTION PROGRAMS FOR SUPPLIERS

In the Ethics Charter and Code of Conduct, Hyundai includes contents such as

bribes and customary fees, including rebates, to ensure that its own employees

and those of its suppliers adhere to the principles of transparent and fair trade.

We also conduct anti-corruption risk checks and report the results to the

Sustainability Management Committee under the BOD.

PROVIDING INFORMATION FOR COMPLIANCE MANAGEMENT

Distribution of Compliance Guidelines

Hyundai has published more than

forty types of compliance guidelines for its different business areas in order to

provide guidance on the main contents of the related laws and regulations that

its employees should know when performing their duties. In 2022, we published

the new NFT/Metaverse Guidelines and the guidelines on compliance with the

Serious Accidents Punishment Act, while completely revising the Guidelines

for Preventing Illegal Cartel Conduct specified in the Monopoly Regulation and

Fair Trade Act. In addition, we have produced and distributed a compliance

management handbook, which explains the necessity of compliance

management and provides specific ways of implementing it, for our executives

and employees. We also publish a compliance newsletter on a regular basis to

introduce legal issues and regulatory trends related to the automotive industry

to our employees.

Compliance Education

Hyundai provides both regular and ad hoc compliance

training for its executives and employees, including new recruits, newly

promoted employees, key employees, and expatriates. Notably, in 2022, we

conducted online compliance training on the Serious Accidents Punishment

Act for employees in general, research, and legal positions along with online

compliance training on the necessity of compliance management and major

legal risks for new team leaders and senior-level employees in an effort to

prevent the various types of legal risks that may arise in the course of business.

DIFFUSION OF A COMPLIANCE CULTURE

Hyundai aims to promote a culture of compliance by adopting diverse

approaches and distributing the relevant contents. Through the online system,

we provide legal advice, contract reviews, and compliance consultation to our

employees at all times, while providing standard contracts (30 Korean contracts,

20 English contracts) for each business area to ensure that our employees

can perform their duties in compliance with the law. In addition, to raise our

employees’ awareness of the importance of compliance and expand the culture

of compliance, we encourage them to sign the pledge to practice compliance

and ethical management, and offer them rewards for compliance.

EVALUATION OF THE EFFECTIVENESS OF THE COMPLIANCE

CONTROL SYSTEM

Each year Hyundai has a third-party evaluate whether its compliance control

standards and related systems are effectively designed and operated to prevent

or detect legal risks in a timely manner, and undertakes improvement activities

based on the results of the evaluation.

• Dissemination of the CEO’s

message emphasizing fair trade

(all employees, twice a year)

• Operation of the CP Council

• Reporting of CP performance

status and plans to the

Sustainability Management

Committee

• Offline and online training on

the Fair Trade Act, etc.

• Distribution of fair trade

newsletters

Increasing

employee

awareness

Planning

Reporting

results

Ethics and Compliance Management

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Risk Management

Hyundai is facing a situation in which it must respond

to rapidly changing internal and external business

environments due to increasing ESG and management

risks, in addition to the automotive megatrends such as

electrification, autonomous driving, and connectivity.

The new paradigm presents an opportunity for Hyundai

to leap forward as a global leading company while also

entailing risks due to uncertainty. We therefore strive

to build proactive risk management culture based on

a company-wide risk management and monitoring

system, risk-linked employee performance evaluation,

and employee training on related topics. Going forward,

we make concentrated efforts to turn crisis into an

opportunity and thus leap forward on the back of a

thorough analysis of the core risks and strengthening of

our risk management process.

Global Risk Management System

RISK MANAGEMENT DIRECTION

The automotive industry is closely intertwined with both internal and

external changes related to the government’s industrial policies and

economic fluctuations. To minimize the risks that may arise during these

transition, it is crucial to establish a responsive system to comply with

government’s regulatory standards and guarantee market competitiveness

by ensuring high-quality products with superior vehicle performance,

greater safety, and competitive pricing. Hyundai has been striving to

enhance its comprehensive capabilities in response to the increasingly

stringent regulations related to safety, the environment and the automotive

industry by strengthening its environmental management, transitioning

products and business structures towards electrification, improving

resource circulation systems, and reinforcing safety management systems.

Furthermore, we have demonstrated our commitment to improving risk

management system based on a precise analysis of the global market.

Our commitment to sustainable growth through more effective risk

management is also reflected in our medium- to long-term strategy – 2025

Strategy. By 2025, we aim to achieve such goals as winning leadership in

electrification through the ‘Smart Mobility Device’ strategy; innovating

cost structures; capturing the hydrogen fuel cell-based market; enhancing

product competitiveness and customer satisfaction; ensuring stable

profits; and mitigating supply chain and regulatory risks. We will respond

comprehensively to these goals to achieve successful outcomes.

COMPANY-WIDE RISK MANAGEMENT

The ongoing Russia-Ukraine War, concerns about a post-pandemic

economic slowdown, and other uncertainties in the international

geopolitical landscape have exposed businesses to various risks. Amid

such a complex situation, Hyundai has implemented a company-wide risk

management system that ensures proactive and comprehensive responses

to risks across different areas. This system involves the participation of all its

members – from staff to the board of directors and key executives (division

heads and above including C-suite) – in risk management. Company-wide

risks are discussed by the Management Strategy Committee, which is

composed of key executives, including the CEO, on a monthly basis. Each

division has established a risk reporting line, thereby enabling them to share

information on activities aimed at managing identified risks with the CEO

and the BOD.

Furthermore, we conduct risk response training for all employees in the

form of a video session that provides updates on the company’s overall

response strategy, such as the 2025 Strategy, to prepare future crises

and opportunities, as well as providing separate training on risks in the

ESG domain. In addition, we share the latest major risk trends through

internal risk monitoring reports such as the Weekly B.I. Briefing, thereby

promoting risk management education. Hyundai also conducts research

projects on the risk status and outlook related to various key issues such

as market trends, climate change, and legal developments. Through the

project, we derive proactive risk response strategies for managing risks and

identify insights that can leverage opportunities as active value creation

opportunities.

COMPANY-WIDE RISK SHARING

HMG Business Intelligence Institute, Hyundai’s in-house research institution,

analyzes specific scenarios involving macro and microeconomic risks, as

well as industrial risks, on a medium-term (potential) and long-term (over 3-5

years) basis. According to the findings of internal analysis, significant risks

that could have a substantial impact on Hyundai’s business activities have

been identified, including an overall reduction in consumer and investment

capacity due to the economic slowdown and deepening recession in the

US, Europe and China, as well as risks related with geopolitical factors

affecting the supply chain of raw materials. Based on the risk analysis,

Hyundai identifies issues that could have a significant impact on the

company's finances, such as an increased cost burden and a decline in

profitability due to a contraction of demand. We also actively explore

strategic response measures to address these issues.

Risk Management System

Management

Strategy

Committee

BOD

Planning & Finance Strategy Division

(Head of Planning & Finance Strategy Division)

• Management of response to major

company-wide risks

• Meetings held every month

• Response to major ESG issues and risks

• 2-4 meetings per year

Business Lines

Risk Management Line

Risk Management

Monitoring Line

Sustainability Management Committee

(Head of Sustainability Management Committee)

Audit Committee

(Head of Audit Committee)

Sales

Production

Procurement

Product development

and research

A planning part within each business division manages

business risks in their respective fields

HMG Business

Intelligence Institute

Professional

organizations by function

Legal Division

(Head of Legal Division)

Periodic risk

monitoring and

management

Risk management

regarding finance,

labor, quality, etc.

Research on

macro/micro risks

in the automotive

industry and

global economy

Audit of corruption

and unfair trade, and

monitoring of company-

wide risk management

Corporate Audit Division

(Head of Corporate Audit Division)

RISK MANAGEMENT BY DIVISION

Hyundai operates a segmented risk management system at the division

level, in addition to its company-wide approach. Within each business

unit organized by value chains, there are dedicated sales organizations

responsible for different regions, such as Korea, China, the Americas,

Europe-Russia, and India-Africa and the Middle East. The planning

organizations prioritize the assessment and management of market

risks specific to each region. Furthermore, there are separate risk-related

departments that operate independently from the business units, such as

the Legal Office, which is responsible for managing legal risks; and various

specialized functional organizations responsible for managing finances,

human resources, quality, etc. In addition, the HMG Business Intelligence

Institute conducts research on macro and microeconomic risks, and the

Audit Office under the Audit Committee carries out continuous monitoring

of acts of corruption and unfair transactions.

In order to boost the efficiency of each department’s risk management

system, Hyundai has established a risk identification and reporting

procedure for employees. Once identified, risks are managed in the order

of identification/check, report and preemptive response through weekly/

monthly/ongoing risk assessment meetings. In addition, we incorporate

risk criteria into the product development and approval process in order

to manage product-level risks more effectively. For significant issues that

have a direct impact on overall business operations, separate risk review

meetings are organized to have a monthly meeting to discuss and address

risk-related matters. Separate risk review meetings include sales and

production meetings, product management meetings for overseeing new

car development, and product strategy meetings.

OPERATION OF RISK REVIEW

Hyundai operates risk review council to proactively identify and eliminate

risk factors throughout its business operations. In April 2022, the Integrated

Risk Management CFT (Cross Functional Team) was established under the

direct supervision of the CEO to ensure swift responses to both internal

and external risks. This company-wide CFT includes representatives

from various departments, such as strategy, planning, purchasing, and

development, aimed at facilitating collaboration and decision-making.

Furthermore, the Sustainability Management Committee and the ESG

Committee, both of which operate under the supervision of the BOD,

Hyundai’s top decision-making body, receive biannual reports on risks

identified in the ESG domain, and engage in discussions, deliberations, and

decision-making processes related to the reported significant issues. They

also formulate plans and monitor the progress of their implementation,

playing a vital role in operating effective risk review council. Also Hyundai

conducts external review on its internal risk response strategies and

process such as EV optimal price strategy, operation process. The external

reviews are conducted by consulting firms.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

EU CO

Emission Reduction Targets for New Passenger Cars

150

100

2021~2024

119g/km (WLTP)

95g/km (NEDC)

150

100

2020

2025

2030

2035

2040

2025~2029

-15% from 2021

(101g/km)

2030~2035

-55% from 2021

(54g/km)

2035~

-100% from 2021

(0g/km)

Hyundai’s Risk Appetite

Laws and

regulations

Geopolitical and

geoeconomic

Macroeconomics

Procurement

Tax

Very low

Low

Medium

High

Very high

Management of Major Non-financial and

Financial Risks

ANALYSIS OF RISK SENSITIVITY AND STRESS

Hyundai sets the priorities for risk management across various non-financial

and financial categories, including company strategy, operations, finance,

regulations and reputation by taking risk appetite into consideration. We

analyze sensitivity to these risks and conduct stress test to assess the impact

of these risks on the company. Based on this analysis, we select key risks

that could significantly affect business operations and finance, while the

Management Strategy Committee, comprising C-level executives including

the CEO, reviews the results of the analysis of key risks on a monthly basis

and formulates response plans. In particular, we focus on proactively

preventing and/or mitigating key risks. If prompt responses to key risks are

inadequate, they may result in constraints on business activities and financial

losses. We therefore place a strong emphasis on proactive measures to

prevent and mitigate key risks.

REGULATORY RISKS

Automobile companies are exposed to various regulatory risks related to

their business activities, as well as the environmental, safety, quality, and

certification aspects of their products. These regulations have significant

impacts not only on their operations but also on their financial performance.

In particular, fleet-wide CO

emission standards or corporate average fuel

economy standards, which are being implemented in major countries,

are being tightened continuously in order to achieve the carbon reduction

targets of those countries. In February 2023, the European Union (EU)

Parliament adopted an ambitious targets for reducing CO

emissions from

passenger cars. The new target sets the path towards zero CO

emissions for

new passenger cars by mandating a 55% reduction by 2030 compared to

2021 levels, and 100% by 2035. To meet these targets, a significant expansion

of electric vehicles (EVs) is deemed necessary.

Hyundai, in response to the CO

emissions or fuel efficiency standards in

major countries, has been actively strengthening its EV lineup and sales.

We also incorporate regulatory compliance volumes, including EV volumes,

into our short- and long-term sales plans. We regularly monitor and evaluate

our compliance progress based on monthly sales performance. In addition,

we take measures to minimize regulatory risks, such as adjusting sales

volumes and utilizing accumulated credits, in preparation for potential non-

compliance with the regulations.

GEOPOLITICAL AND GEOECONOMIC RISKS

Political and policy-related risks, such as the serious impact on Hyundai’s

sales in China due to the Korean government’s deployment of THAAD

(Terminal High Altitude Area Defense) in 2017, have significant implications

for business operations and finances. As such, a preemptive response is

crucial. Amid escalating conflicts and tensions between Russia, China,

and Western countries, protectionist policies based on the U.S. Inflation

Reduction Act (IRA) and the EU Critical Raw Materials Act (CRMA), including

the establishment of self-sufficient supply chains for critical raw materials,

including battery materials, are posing significant risks to Hyundai.

Hyundai has established a dedicated organization called the Policy

Coordination Office (PCO) to monitor political and policy risks in key

countries such as Korea, the US, the EU and China. The PCO proactively

identifies and analyzes political and policy risks and formulates appropriate

responses. In particular, Hyundai is analyzing global supply chain

competitiveness in response to protectionist policies, including subsidies

related to establishing domestic production and securing key raw materials

supply chains in the US and the EU. We are also seeking strategies aimed

at increasing local production shares and establishing local integrated

production systems within major countries.

Analysis of IRA’s Sourcing Requirements for EV Battery Components and

Critical Minerals

2024

2025

2026

2027

2028

2029

Components

60%

70%

80%

90%

100%

Percentage of components that must be produced or

manufactured in North America

Critical

minerals

40%

60%

70%

80%

Percentage of critical minerals that must be mined and

processed in the U.S. or US ally with FTA

PROCUREMENT RISK

The shortage of vehicle semiconductors, leading to prolonged production

delays for automotive companies, is an example of how supply uncertainties

for specific components can escalate into risks that delay overall production.

In addition, the recent increase in raw material and energy prices has

caused a rise in production costs, negatively impacting profitability. In

particular, for EVs, which consume approximately six times more minerals

than internal combustion engine vehicles (ICEVs), the supply-side risks such

as mineral shortages have intensified as the production of EVs has surged

among automotive companies. Furthermore, as new mining developments

increase, there is growing demand among stakeholders for responsible

mineral sourcing due to the increase in cases of environmental and human

rights violations associated with mining activities.

Hyundai is addressing material and component procurement risks through

such measures as securing an adequate inventory for strategic materials

and components, promoting the in-house production of key components,

and expanding its direct purchasing of strategic materials. Moreover,

to address the risk of rising raw materials prices, we established a raw

material coordination body early in 2023, which involves the participation

of all departments, including the purchasing, research institutes, sales, and

finance departments. This centralized approach aims to streamline the

response system for raw material-related issues. We have also identified six

major categories for raw materials management and established a system

for real-time monitoring of market conditions and automated calculation

of profit and loss impacts. These initiatives should enable Hyundai to

respond actively to the profit and loss risks caused by fluctuations in raw

material prices.

Risk Management

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Impact Analysis of Interest Rate Fluctuations on Pretax Income

(Unit: KRW million)

Classification

1% increase

1% decrease

Cash and cash equivalents

35,897

(35,897)

Financial assets at fair value

through profit or loss

1,644

(1,644)

Short-term and long-term

financial instruments

15,584

(15,584)

Borrowings and debentures

(99,610)

99,610

MAJOR FINANCIAL RISKS

Due to the ongoing trend of interest rate hikes initiated by the US in 2022, the

interest costs associated with global funding have been increasing. In particular,

the strength of the US dollar has led to a depreciation in the currencies of

major countries, and the continuous rise in the KRW-USD exchange rate and

increased financial market volatility have accelerated these trends. To maximize

shareholder value and reduce capital costs, Hyundai strives to maintain an

optimal capital structure. In addition, we conduct sensitivity and stress tests to

evaluate the impact of market risks (exchange rates, interest rates, and prices),

credit risk, liquidity risk, derivative risk, and other related risks on Hyundai. We

also have signed derivative contracts and use them as a means of hedging risks

so as to manage identified risks more effectively.

Hyundai has been making continuous efforts to mitigate financial risks arising

from market uncertainties by monitoring debt ratio for short-term and long-term

borrowings of each of its subsidiaries, with an aim to optimize our borrowing

structure. In relation to exchange rate risks, we identify exchange rate risks based

on various scenarios involving the appreciation or depreciation of the Korean

won. We also establish preemptive measures for expanding hedging activities

and devise plans to offset potential foreign exchange losses, with the goal of

managing financial risks resulting from currency fluctuations.

Impact Analysis of Exchange Rate Fluctuations on Pretax Income in

Major Countries

(Unit: KRW million)

Currency

5% increase

5% decrease

USD

111,585

(111,585)

EUR

20,435

(20,435)

JPY

(3,585)

3,585

MACROECONOMIC RISKS

Automobiles are a prime example of consumer goods that are highly sensitive

to macroeconomic risks. They are greatly influenced by economic conditions

due to such factors as consumer spending and business investment. Major

countries have implemented quantitative easing and experienced supply chain

disruptions due to the economic downturn caused by the COVID-19 pandemic,

while events like the Russia-Ukraine War have led to even greater inflationary

pressures. In response to the high inflation crisis, major countries, particularly the

United States, have implemented rigorous monetary tightening policies, with

the result that the global economy is now facing the ‘3 Highs’ – high inflation,

high interest rates and high exchange rates. These policies are expected to

further accelerate economic downturns in major countries, and some emerging

economies with high debt levels and weak fundamentals may also face

economic crises.

Hyundai has strengthened its ability to predict changes in demand due to

economic cycles by creating a model based on macroeconomic and industrial

risk analysis, which was primarily developed by its specialized organization, the

HMG Business Intelligence Institute. It utilizes leading indicators closely related

to the demand for new vehicles to predict and analyze both the business cycle

and medium-term demand for new vehicles. In addition, it has analyzed various

global economic crisis scenarios, assuming the simultaneous occurrence of

macroeconomic risks such as accelerated US interest rate hikes, a European

economic downturn, and deepening uncertainties in the Chinese economy.

To effectively address macroeconomic risks and prepare for the worst-case

scenario, we have formulated company-wide response measures, including

production and sales adjustments, the exploration of new alternative markets,

and the strengthening of new model launches.

Path and Impact Analysis by Global Economic Crisis Scenario

Scenario

Occurrence factor/path

Duration and recovery period

Intensity of crisis

Baseline

•

Continued US interest rate hikes due to high inflation

−

Global stock market and exchange rate volatility,

and a sharp decline in asset prices

−

Increased capital outflows from emerging markets

•

After intensified sluggishness in the first half of 2023,

signs of recovery are observed in the second half

•

The global economic downturn

worsens amid financial

uncertainty

Downturn

•

Baseline scenario + deepening economic downturn in

Europe

−

Gas crisis amid worsening European interest rate hikes

•

Some emerging economies experience financial and

economic crises

•

In 2023, a mild economic slowdown occurs in the middle

of the year

−

Gradual recovery from the downturn in the US and

Europe starting from 2024

−

An economic crisis occurs in some emerging markets →

Aftereffects persist until 2024

•

Global economic slump

intensifies, and financial turmoil

escalates (approaching global

financial crisis levels)

Crisis

•

Downturn scenario + worsening economic uncertainty in

China

−

Expansion of the post-COVID-19 sequelae in China and

collapse of the real estate bubble

•

An economic downturn in the US and Europe continued

and intensified

•

Spread of the economic crisis across emerging markets

•

The economic downturn continues until 2024.

−

Gentle signs of recovery in the US and Europe after the

second half of 2024.

−

Crisis spreads across emerging markets →

Gradual easing expected after 2025.

•

A global economic crisis occurs

(at pandemic crisis levels)

Risk Management

Major Non-financial and Financial Risks

Classification

Key risk factors

Mitigation measures

Regulatory risks

Risks of regulatory violations due to product and workplace-related

regulations (CO

regulations, etc.), including environment and safety

Reﬂecting regulatory response volume in short- and mid- to long-

term business plans, etc. in response to ﬂeet-wide emission

standards and corporate average fuel economy standards, etc.

Geopolitical and

geoeconomic risks

Risk of restrictions on sales and exports due to protectionist policies

to establish a self-sufﬁcient supply chain for key raw materials

centered on the US and Europe

Increasing the proportion of local production and establishing a self-

sufﬁcient local production system, etc.

Macroeconomic risks

Risk of a decline in new car demand due to a global economic

downturn

Reinforcing demand change forecasting due to economic conditions,

analysis by scenario of global economic crisis, etc.

Procurement risks

Cost increase risk due to increase in procurement costs, production

delay/stop risk due to supply shortage

Securing adequate inventories of strategic materials and core parts,

internalizing core parts, expanding direct purchases of strategic

materials, etc.

Operational risks

Risks related to business operations such as product/technology

development, production, and sales

Identifying, analyzing, and responding to operational risks in the

planning department of each division

Exchange risks

Exchange risk due to major foreign currency market ﬂuctuations

(USD, EUR, and JPY)

Eliminating risks by matching foreign exchange inﬂows and outﬂows,

and managing exchange risks based on an analysis of Korean won

appreciation/depreciation scenarios, etc.

Interest rate risks

Rising interest costs on borrowings due to interest rate hikes in major

countries such as the U.S.

Mitigating the risk of rising interest rates by implementing such

measures as prioritizing borrowing and repayment by corporations

with ample liquidity and enhancing ﬁnancial soundness, etc.

Liquidity risks

Risk of insufﬁcient cash ﬂow and overexposure to market risk

Drawing up long-term and short-term funding plans, establishing a

funding system, managing the duration of ﬁnancial assets, etc.

Tax risks

Possible tax-related risks in overall business activities

Fulﬁlling the tax obligations in accordance with each country’s laws

and regulations

Financial risks

Non-financial risks

POTENTIAL RISKS

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

TAX STRATEGY

Hyundai recognizes that tax risk management is a prerequisite for

sustainability management, and that compliance with the tax laws plays an

important role in securing customer profits, maximizing shareholder profits,

and contributing to national finances. Therefore, as a taxpayer, we are faithfully

fulfilling our tax obligations. We also respect the principle of fair taxation by tax

authorities and strive to comply with the tax rules and principles establish

ed by

the tax authorities of the countries in which we operate.

MANAGING TAX RISKS

Strict compliance with the laws is the core of Hyundai’s tax risk management

policy. The company faithfully provides all the evidence requested by tax

authorities to take the lead in creating a transparent tax culture. Hyundai

strictly prohibits the use of tax avoidance schemes such as the creation

of non-existent commercial entities and the utilization of tax havens. We

do not engage in any practices that involve transferring value to low-tax

jurisdictions. Furthermore, as a global company, we prevent tax risks in

advance by identifying differences in the tax laws of different countries and

their intention and by analyzing their respective dispute risks. Good example

includes the arm’s length principle as a way to prevent the risk of double

taxation arising from competition for taxation rights between tax authorities

in advance.

Digital Service Competition Expected to

Intensify due to Stricter Regulations on

Data Sharing

Risk Context

With the advancement of connectivity and autonomous driving technologies, vehicles are

gradually being transformed into digital devices. The emergence of mobility service businesses

based on data generated by automobiles is becoming a new area of focus for automotive

companies. However, starting with the enforcement of the EU General Data Protection

Regulation (GDPR) in 2018, the data-related regulations are being increasingly strengthened in

major countries. In particular, the EU has taken steps to address the current industry practice

whereby the legal ownership of data generated through the use of products or services

is unclear and the usage rights are exclusively retained by IoT (Internet of Things) product

manufacturers. To tackle this issue, the EU has introduced a draft data law that establishes

the conditions for data sharing, and imposes data sharing obligations on manufacturers.

When this law takes effect in the future, manufacturers who currently have data will be legally

obligated to provide data between B2C, B2B, and B2G when certain conditions are met, and

fair contracts related to data access and use between companies will be mandatory. Due to

personal information protection measures and data-sharing obligations, there is an increased

regulatory risk regarding the utilization of vehicle data. At the same time, it is anticipated that

competition in the mobility service market will intensify due to the future sharing of vehicle

data with external companies. Furthermore, the expansion of data requests from external

sources raises concerns about the management of critical data, such as customer information

and trade secrets, as well as increasing the risk of cyber safety issues, including hacking

incidents, during the data sharing process.

Hyundai’s Approach

Hyundai has established a company-wide task force team (TFT) to address the strengthened

data regulations in major countries, including the EU. In the short term, we plan to revise the

internal criteria and management systems regarding the types and scope of publicly available

data for vehicle data generated when driving in order to comply with the EU data law. We will

also strengthen security systems in the data sharing process in order to minimize potential

risks to cyber security and safety that may arise from increased data sharing with external

parties. To preemptively prevent a decline in service competitiveness due to the weakening of

Hyundai’s exclusive position in the utilization of our vehicle data, we are making continuous

efforts to improve the Hyundai Developers platform, an open platform for vehicle data, in

collaboration with external service developers, with the aim of establishing Hyundai's own

digital service ecosystem. Furthermore, we plan to secure our own capabilities in the field of

data intelligence, leveraging data processing, analysis, and services, to generate high-value

businesses, which will in turn help sustain and strengthen our digital service competitiveness.

Increased Regulatory Risks Associated with the

Establishment of a Plastic Circular Economy

in Europe and Korea

Risk Context

The European Commission, under its circular economy strategy for plastics published in

2018, has set ambitious targets for managing plastic packaging and waste. Its principal goal

is to reuse or recycle 100% of plastic packaging and to recycle over 50% of all plastic waste

generated in Europe by 2030. To achieve these objectives, the EU implemented a ban on

major single-use plastics (SUPs) in 2021. It has also been strengthening its regulations on

the use of plastics in vehicles, and is currently pushing for the enforcement of regulations

that would require the use of recycled plastics in new vehicles. In Korea, the government is

presenting the establishment of a plastic circular economy as a major national task, so that it

is expected to change the current recommendation on the recycling of scrap cars to a 95%

recycling mandate, in addition to introducing the mandatory use of recycled plastics in new

cars, as is already the case in Europe. Once Korea has enforced the regulation mandating the

use of recycled plastic materials in new cars, it is expected that Hyundai will face multiple risks

such as the risk of an interruption of production due to a rise in the price of recycled plastic

materials combined with a shortage in supply, as well as regulatory risks stemming from a

shortage of high-quality recycled plastics that meet the safety and quality requirements for

new cars. In particular, the regulatory risks are most likely to increase when Korea enforces a

95% compulsory regulation on the recycling rate of scrapped cars, like the European ELV (End-

of-Life Vehicles) regulation because, unlike in Europe, if Korea implements the pre-shredder

method (the manual dismantling and recycling of the parts of a scrapped car), there will be

limits to the disposal and recycling of scrapped cars in large quantities.

Hyundai’s Approach

Plastics make up the second largest segment after metals, accounting for 17% of all vehicle

materials on average on an ICEV basis. However, the recycling rate of plastics used in

vehicles is low because they are composites. Hyundai has been making active efforts to

implement various plastic recycling activities with the aim of establishing a closed-loop

system for recycling end-of-life plastic components in vehicles, while concurrently promoting

the recycling of plastic waste from other industries through an open-loop system. We are

developing a mid-to long-term plan for the exploration of new waste resources and the

development of recycling technologies. We are also formulating strategies to incorporate

recycled plastics into our upcoming vehicle models by leveraging our internal resources. In

addition, Hyundai is establishing a monitoring system to track the implementation of recycled

plastics, which will ensure efficient management of the entire process of utilizing recycled

plastics. We also have developed technologies for recycling discarded fishing nets, a major

marine pollutant, and applied them to carpets and plastic components. In order to promote

the widespread application and reuse of these technologies, Hyundai is seeking external

collaborations and building partnerships with other businesses including maritime industries.

Hyundai Developers

Risk Management

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Personal Information Protection

PERSONAL INFORMATION

PROTECTION GOVERNANCE

Hyundai has set in place a framework for systematic personal information

protection governance and has formed the Security Compliance Team, a

dedicated body that is responsible for handling tasks related to personal

information protection. The company has also appointed a Chief Information

Security Officer (CISO) and Chief Privacy Officer (CPO), who serves as the heads

of the Hyundai Security Center and hold overall responsibility for personal

information protection. Each division and business unit has designated

departments, personnel, and responsible individuals who are involved in

handling tasks related to personal information protection. The Security

Compliance Team develops and distributes policies and guidelines, ensuring

continuous management and monitoring of personal information protection.

In 2022, there were no cases in which our customers’ personal data were

used for purposes other than the “purpose of collecting and using personal

information” as specified in our privacy policy for users, etc. Furthermore, we

have established a Personal Information Protection Committee composed of

key service operation teams from various divisions and dedicated departments.

The Committee meets annually to discuss major issues and matters related to

personal information protection.

MANAGEMENT MEASURES FOR

PERSONAL INFORMATION PROTECTION

Hyundai applies various management safeguards to ensure the secure

protection of customers’ personal information. In addition to establishing

a company-wide personal information protection policy and operating a

dedicated team, we conduct regular and ad-hoc training programs using

newsletters, videos, and other means to provide education to all employees

and outsourced partners involved in the relevant tasks. Furthermore, when

developing or modifying personal information processing services or systems,

we carefully assess their impact on personal information and analyze potential

vulnerabilities at the design stage, thus allowing them to establish a response

system that minimizes threats and ensures the construction of a secure

framework.

TECHNICAL MEASURES FOR PERSONAL INFORMATION PROTECTION

Hyundai applies various technical measures to enhance the effectiveness and

security of personal information protection. We ensure that customer data are

transmitted securely by encrypting communication channels and customer

information. Even in the event of external breaches, the use of customers’

personal information is made impossible. In addition, we have put in place

security solutions and intrusion prevention/detection systems, regularly update

them, and conduct periodic monitoring as a way to defend against external

threats such as hacking attempts.

INTERNAL INSPECTION AND THIRD-PARTY AUDITS OF

THE PRIVACY POLICY COMPLIANCE

Hyundai performs internal and external audits to ensure compliance with the

personal information protection laws and internal regulations (privacy policy),

while also conducting its own assessments of outsourced personal information

management practices. Furthermore, we have maintained the Information

Security Management System (ISMS) certification since 2019, and the ISO

27001 certification since 2006 for its major services and systems, including the

customer portal and connected car service. In accordance with the relevant

laws, we undergo regular inspections such as the Personal Information

Protection Commission’s survey on personally identifiable information and

the Korea Communications Commission’s survey on the status of location

information service providers.

Cybersecurity

CYBERSECURITY SCHEME

Hyundai strives to establish an advanced cybersecurity scheme, which is

essential for the transition to a smart mobility system. Through a dedicated

security organization, we have been building and monitoring a response

system for potential hacking and information leakage threats that may arise

during business operations. In January 2022, we obtained the Cyber Security

Management System (CSMS) certification in Europe. Furthermore, we set

security policies for all our internal employees and conduct an annual review

of these policies. To enhance employees’ security awareness, various efforts

are made as education on security policies, security newsletters, Security Day

campaigns, and training on responding to malicious emails.

RESPONSE TO DATA REGULATIONS

Data play a crucial role in the transition to the digital economy and serve

as a key driver for new businesses. Both domestically and internationally,

discussions on strengthening data regulation policies have been accelerating.

Hyundai recognizes the importance of establishing a data management

system that can adapt to regulatory changes. Through a centralized

organization for data protection, we conduct ongoing and regular inspections

of our data systems and operate a management system to address

vulnerabilities and take necessary measures.

ANALYSIS OF CYBER ASSET VULNERABILITY

Hyundai has established security review procedures for its computer

systems, aimed at the secure construction and operation of its business

systems, based on which it manages security vulnerabilities and improves its

security guidelines in line with advancements in IT technology. Furthermore,

we have maintained the ISO 27001 certification since 2006, demonstrating

our commitment to comprehensive information security management.

In addition, we have obtained the ISMS certification which verifies our

integrated information protection management system.

Organization of the Hyundai Security Center

ORGANIZATION AND ROLE OF THE HYUNDAI SECURITY CENTER

Hyundai operates a dedicated organization aimed at systematic and

effective information security management. We have appointed the CISO

and CPO as the Head of the Hyundai Security Center, who is responsible for

overseeing overall information security and personal data protection. Their

responsibilities include developing security policies, establishing security

systems, conducting security audits and analyses, incident response, and

managing overseas security. The Center is composed of an Information

Security Team which focuses on protecting trade secrets, and a Security

Compliance Team which handles personal information protection, national

core technology protection, and information security certification.

SECURITY DELIBERATION COMMITTEE

The Security Deliberation Committee, headed by the Head of the People &

Business Operation Support Division, serves as the top decision-making body

for security matters. Together with the heads of the relevant departments,

namely the HR, Corporate Audit, Legal, Research Center, and Production Plant

Security, the committee convenes at least once a year to deliberate and make

joint decisions on the company’s security-related issues.

CEO

People & Business Operation Support Division

Hyundai Security Center (CISO, CPO)

Information Security Team

Security Compliance Team

• Establish security

policies

• Raise security

awareness

Security

strategies

• Security of overseas

subsidiaries

• Security of

manufacturing plants

Global

security

• Security audits/

inspections

• Respond to security

breaches

Security

inspection

• Detect anomalies

• Prevent recurrence

of security incident

Security

analysis

• Establish policies,

provide training,

conduct inspections

• Impact assessment

of personal

information

Personal

information protection

• Establish security

policies for National

Core Technology

• Deliberate National

Core Technology

export

Core technology

security

• Information security

disclosure

• ISMS, ISO 27001

certifications

management

Information

protection certification

Major Activities Related to Cybersecurity

•

Appoint experts to strengthen security at overseas

subsidiaries; and expand inspection activities.

•

Strengthen security threat response via the advanced security

monitoring system/performance of self-infiltration activities

•

Specify incident response procedures according to the business

continuity plan (BCP) in the Security Incident Prevention and

Response Guidelines; and conduct inspections at least once a year

•

Provide phishing email training for employees and education

on preventing malware infections from infected individuals at

least once a year

•

Distribute a monthly security newsletter to all employees;

and hold the Employee Security Day at

least once a year

Hyundai Motor Company

Risk Management

ESG Factbook

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

5.1

Facts & Figures

5.2

ESG Certiﬁcations

5.3

GRI Index

5.4

ESRS Index

5.5

TCFD Index

5.6

SASB Index

5.7

WEF IBC Stakeholder Capitalism Metrics

5.8

Independent Assurance Statement

5.9

GHG Assurance Statement

5.10

About This Report

5.1

Facts & Figures

5.2

ESG Certiﬁcations

5.3

GRI Index

5.4

ESRS Index

5.5

TCFD Index

5.6

SASB Index

5.7

WEF IBC Stakeholder Capitalism Metrics

5.8

Independent Assurance Statement

5.9

GHG Assurance Statement

5.10

About This Report

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Facts & Figures

Sales and Financial Information

Classification

Unit

2020

2021

2022

Note

Global

Production

Domestic

Vehicle

1,618,411

1,620,231

1,732,639

India

Vehicle

521,300

636,000

706,000

China

Vehicle

465,388

334,700

255,000

U.S.

Vehicle

268,700

291,500

332,900

Czech Republic

Vehicle

238,750

275,000

322,500

Russia

Vehicle

219,491

234,150

44,163

Brazil

Vehicle

150,610

187,300

209,045

Turkey

Vehicle

137,100

162,140

208,100

Vietnam

Vehicle

71,140

71,443

63,020

Indonesia

Vehicle

82,500

Others

Vehicle

42,532

57,311

44,427

Total

Vehicle

3,733,422

3,869,775

4,000,294

Global

Sales

Domestic

Vehicle

787,854

726,838

688,884

Overseas

Vehicle

2,956,883

3,163,888

3,254,038

Total

Vehicle

3,744,737

3,890,726

3,942,922

Global

Best-selling

Models

Tucson

Vehicle

429,241

493,689

570,058

Based on Tucson

Elantra (AVANTE)

Vehicle

439,194

391,899

367,209

Based on Elantra

Santa Fe

Vehicle

221,597

227,536

218,688

Based on SantaFe

Sonata

Vehicle

217,289

168,878

134,752

Based on Sonata

Accent

Vehicle

293,560

190,833

133,847

Based on Accent, Verna, Solaris

Including production performances derived from the joint venture (JV) subsidiary, in addition to those disclosed in Hyundai Motor Company’s Business Report

Performance of CKD and consigned commercial vehicle production

Classification

Unit

2020

2021

2022

Note

Financial

Performance

Statements

of Financial

Position

(Consolidated)

Total assets

KRW billion

209,344

233,946

255,742

Total liabilities

KRW billion

133,003

151,331

164,846

Total equity

KRW billion

76,341

82,616

90,897

Statements

of Financial

Position

(Separate)

Total assets

KRW billion

78,252

79,758

83,412

Total liabilities

KRW billion

25,064

27,083

27,657

Total equity

KRW billion

53,189

52,675

55,756

Statements

of income

(Consolidated)

Sales

KRW billion

103,998

117,611

142,528

Operating profit

KRW billion

2,395

6,679

9,820

Selling and

administrative expenses

KRW billion

16,087

15,252

18,498

Net profit

KRW billion

1,925

5,693

7,984

Including non-controlling interests

EBITDA

KRW billion

6,580

11,235

14,867

Based on Bloomberg

Statements

of income

(Separate)

Sales

KRW billion

50,661

55,605

65,308

Operating profit

KRW billion

769

662

2,829

Selling and

administrative expenses

KRW billion

8,885

8,404

9,342

Net profit

KRW billion

527

646

3,702

EBITDA

KRW billion

3,550

3,766

6,222

Based on Bloomberg

Profitability

Ratio

(Consolidated)

Operating

profit margin

2.3

5.7

6.9

Net profit margin

1.9

4.8

5.6

Profitability

Ratio

(Separate)

Operating

profit margin

1.5

1.2

4.3

Net profit margin

1.0

1.2

5.7

Sum of operating profit, depreciation of tangible assets, depreciation of real estate held for investment, and depreciation of intangible assets

2022 Audited Financial Statements of Hyundai Motor Company

Classification

Unit

2020

2021

2022

Note

Financial

Performance

Distribution

of Economic

Value

(Consolidated)

Dividends

(Shareholders and investors)

KRW billion

786

1,301

1,830

Interest expenses

(Shareholders and investors)

KRW billion

362

305

536

Refer to “financial income and financial

expense” in the notes to the consolidated

financial statement

Salaries

(Employees)

KRW billion

9,099

9,614

10,667

Refer to “classification of expenses by

nature” in the notes to the consolidated

financial statement

Raw materials costs

(Suppliers)

KRW billion

59,085

67,579

80,774

Refer to “classification of expenses by

nature” in the notes to the consolidated

financial statement

Income tax

(Government)

KRW billion

169

2,266

2,964

Refer to “income tax” in the notes to the

consolidated financial statement

Donation

(Local communities)

KRW billion

Refer to “other income/expense” in

the notes to the consolidated financial

statement

Total

KRW billion

69,575

81,131

96,861

Distribution

of Economic

Value

(Separate)

Dividends

(Shareholders and investors)

KRW billion

786

1,301

1,830

Interest expenses

(Shareholders and investors)

KRW billion

124

190

Refer to “financial income and financial

expense” in the notes to the financial

statement

Salaries (Employees)

KRW billion

6,190

6,392

7,007

Refer to “classification of expenses by

nature” in the notes to the financial

statement

Raw materials costs

(Suppliers)

KRW billion

32,803

37,011

44,184

Refer to “classification of expenses by

nature” in the notes to the financial

statement

Income tax (Government)

KRW billion

(0.1)

344

474

Refer to “income tax” in the notes to the

financial statement

Donation

(Local communities)

KRW billion

Refer to “other income/expense” in the

notes to the financial statement

Total

KRW billion

39,955

45,173

53,731

R&D/

Investment

Total R&D expense

KRW million

3,108,591

3,100,111

3,340,589

Government subsidy

KRW million

(11,530)

(2,214)

(4,016)

R&D expense to sales ratio

3.0

2.6

2.3

Total R&D expenses/

sales of the year X 100

Distribution

of Investment

(Consolidated)

CAPEX

KRW billion

4,553

3,767

3,879

Based on head office and overseas

business sites

Depreciation

KRW billion

4,185

4,556

5,048

Refer to “classification of expenses by

nature” in the notes to the consolidated

financial statements

Difference

(CAPEX – depreciation)

KRW billion

368

(789)

(1,169)

Treasury stock buyback

KRW billion

303

305

193

Total

(dividend + treasury stock)

KRW billion

1,089

1,606

2,023

Environmental

Classification

Unit

2020

2021

2022

Note

Environment

Energy

Consumption

Electricity

(Non-renewable)

MWh

3,344,292

3,338,657

3,377,133

Electricity (Renewable)

MWh

70,376

120,171

280,498

LNG

MWh

3,534,350

3,562,760

3,442,276

Diesel, kerosene, gasoline

MWh

184,158

154,015

131,268

Steam, heat

MWh

98,777

90,510

94,027

Others

MWh

123,433

143,460

172,986

Total energy

consumption

MWh

7,355,386

7,409,573

7,498,188

Due to changes in energy consumption

calculation criteria and an expansion

of the calculation scope, the data for

previous years has been revised.

Energy

Intensity

Energy consumption in

producing one vehicle

MWh/

Vehicle

1.97

1.91

1.87

Greenhouse

Gas (GHG)

Emissions

Scope 1

tCO

-eq

716,237

724,013

704,726

Scope 2

tCO

-eq

1,680,079

1,660,058

1,684,121

Scope 2 of 2022 is calculated by

market-based approach

Scope 3

tCO

-eq

100,536,484

101,790,793

105,790,785

Sum of Scope 1 and 2

tCO

-eq

2,396,316

2,384,071

2,388,847

2021 emissions were slightly

adjusted according to the results

of a conformity assessment of the

domestic emission trading scheme

Business sites subject to calculation

were added in 2022 (Indonesia,

Mexico, Vietnam)

GHG

Emissions

Intensity

GHG emissions in

producing one vehicle

(Scope 1+2)

tCO

-eq/

Vehicle

0.642

0.616

0.597

Raw

Materials

Steel (amounts used)

Ton

940,277

1,041,124

1,074,071

Steel (scrap)

Ton

357,494

375,924

369,730

Aluminum (amounts used)

Ton

90,836

97,805

103,011

Aluminum (scrap)

Ton

25,471

24,495

38,892

Raw Materials

Intensity

Raw materials used for

producing one vehicle

Ton/Vehicle

0.276

0.293

0.294

Business sites (Indonesia, Vietnam, Mexico) subject to calculation were added in 2022. Total energy consumption in 2022, excluding the added business sites, is 7,217,893 MWh.

Business sites (Indonesia, Vietnam, Mexico) subject to calculation were added in 2022. Total Scope 1+2 GHG emissions in 2022, excluding the added business sites, is 2,242,879 tCO

-eq.

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Facts & Figures

Classification

Unit

2020

2021

2022

Note

Environment

Water

withdrawal

Municipal

(Industrial)

water

(or from

other water

utilities)

Ton

18,709,031

17,127,317

18,240,924

Fresh

surface water

(lakes,

rivers, etc.)

Ton

761,644

853,340

942,842

Fresh

ground water

Ton

229,871

225,861

755,804

Total

Ton

19,700,546

18,206,518

19,939,570

Water consumption

Total

10,967,709

9,941,274

10,790,093

Water discharge

Ton

8,732,837

8,265,244

9,149,477

Water Use

Intensity

Water used for producing

one vehicle

Ton/Vehicle

2.94

2.57

2.70

VOCs

Emissions

Total

Ton

11,047

10,756

7,796

VOCs

Emissions

Intensity

VOC emissions in producing

one vehicle

kg/Vehicle

2.96

2.78

1.95

Air Pollutant

By type

Ton

358

489

786

SOx

Ton

NOx

Ton

333

351

370

Ton

214

249

218

Others

Ton

Total

Ton

935

1,211

1,411

Air Pollutant

Emissions

Intensity

Air pollutant emissions in

producing one vehicle

kg/Vehicle

0.251

0.313

0.353

Water

Pollutant

By type

TOC

Ton

313

403

BOD

Ton

Others

Ton

191

196

197

Total

Ton

605

643

723

Water

Pollutant

Emissions

Intensity

Water pollutant emissions in

producing one vehicle

kg/Vehicle

0.162

0.166

0.181

VOCs: Volatile Organic Compounds

Classification

Unit

2020

2021

2022

Note

Environment

Weight of

Waste

By type

General

waste

Ton

462,421

504,183

508,701

Designated

waste

Ton

35,895

34,590

39,914

Total

Ton

498,316

538,773

548,615

Waste

Intensity

Waste discharge in

producing one vehicle

Ton/Vehicle

0.0115

0.0119

0.0126

Weight of

Waste by

Disposal

Method

Landfill

Ton

6,297

5,900

7,164

Incineration

Ton

32,230

33,147

34,975

Collected

as thermal

energy

Ton

2,531

3,754

5,451

Not collected

as thermal

energy

Ton

29,699

29,393

29,524

Recycling

Ton

455,211

492,787

498,162

Biodegradation

Ton

962

1,729

1,310

Others

Ton

3,616

5,210

7,004

Total

Ton

498,316

538,773

548,615

Weight of Harmful Chemical Substances

Ton

2,781

2,333

3,859

Environmental

Investment

Costs and investments for

environmental protection

KRW billion

563.3

722.5

506.1

Green

Purchasing

Total

KRW billion

8.65

6.25

1.22

The amount of purchasing domestic tires

(parts with environmental certification)

has been relatively decreased due to the

increase of imported tire purchasing.

Sales Portion

of Eco-friendly

Vehicles

Total

9.6

14.4

17.3

Based on managerial accounting

Sales Portion

of Models

for which

Full-LCA was

Conducted

Total

2.62

14.14

25.03

Based on no. of vehicles sold (shipment)

Waste per one vehicle of subtracting the recycled amount from total waste

Includes electrified vehicle development costs and investment costs in environmental improvement facilities at business sites (Only business sites in Korea are included in case of investment costs for

business site environment improvements)

Eco-friendly vehicles : EV, HEV, PHEV, FCEV

Sales portion of IONIQ 5 in 2022: 4.3%

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Facts & Figures

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Social

Classification

Unit

2020

2021

2022

Note

Employees

Number of

Employees by

Region (Korea/

Overseas,

By country)

Korea

Person

72,020

72,496

73,431

As of the last business day;

and based on

the number of directly

employed staff

Overseas

Person

49,383

50,325

52,638

North America

Person

10,304

15,953

18,229

Europe

Person

10,014

9,480

10,010

China

Person

13,159

10,741

9,340

India

Person

10,106

9,725

9,976

Others

Person

5,800

4,426

5,083

Percentage of overseas

40.7

41.0

41.8

Total

Person

121,403

122,821

126,069

Number of

Employees

by Duty

(Korea)

Management

Person

470

476

466

Excluding 20 senior researchers/

researchers in executive positions

Research fellow

Person

Research

Person

11,716

12,502

13,212

Office work

Person

12,716

12,903

13,373

Technical/Production/

Maintenance

Person

36,385

34,754

32,887

Sales

Person

5,798

5,562

5,264

Others

Person

4,912

6,277

8,209

Advisor, specially appointed staff for

special duties, temporary staff, etc.

Total

Person

72,020

72,496

73,431

Number of

Employees

by Nationality

(Korea)

Korea

Person

71,922

71,191

73,325

17,004 managers

(99.51% of total managers)

Foreign

Person

34 managers

(0.2% of total managers)

Germany

Person

9 managers

(0.05% of total managers)

China

Person

6 managers

(0.04% of total managers)

Canada

Person

7 managers

(0.04% of total managers)

Percentage of foreign

0.10

0.11

0.10

Total

Person

71,995

71,266

73,395

Classification

Unit

2020

2021

2022

Note

Employees

Number of

Employees

by Region/

Gender

Korea

Person

72,020

72,496

73.431

Male

Person

68,014

68,215

68,809

Female

Person

4,006

4,281

4,622

Overseas

Person

49,383

50,325

52,638

Male

Person

42,977

43,504

45,045

Female

Person

6,406

6,821

7,593

Female

executives

Korea

Person

North

America

Person

Europe

Person

China

Person

India

Person

Others

Person

Total

Person

Female

staff

Korea

Person

4,006

4,281

4,622

North

America

Person

1,811

2,740

3,431

Europe

Person

1,479

1,476

1,563

China

Person

2,040

1,761

1,645

India

Person

214

242

288

Others

Person

862

602

666

Total

Person

10,412

11,102

12,215

Percentage of

female employees

8.6

9.0

9.6

Number of female employees /

Total number of employees

Facts & Figures

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Classification

Unit

2020

2021

2022

Note

Employees

Number of

Employees by

Position/Duty

Number of managers

in Korea

Person

15,534

16,779

17,088

Managers: Includes managerial level

and higher office, research, and special

staff, and executives except for advisors

Number of female

managers in Korea

Person

710

1,042

1,071

Number of managers

overseas

Person

7,013

7,303

6,625

Number of female

managers overseas

Person

822

947

1,084

Total number of managers

Person

22,547

24,082

23,713

Total number of female

managers

Person

1,532

1,989

2,155

Percentage of female

managers

6.8

8.3

9.1

Number of female managers /

Total number of managers

Number of female

low level managers

Person

1,084

1,504

1,603

Low level manager: Defined as G2 level

Percentage of female

low level managers

6.6

8.3

9.2

Number of female

top level managers

Person

Percentage of female

top level managers

5.38

5.84

6.06

Number of female

employees in revenue-

generating departments/

positions

10)

Person

8,500

9,182

9,695

Percentage of female

employees in revenue-

generating departments/

positions

7.4

7.9

8.3

Number of female

employees in STEM

11)

positions

Person

2,295

2,418

2,590

Percentage of female

employees in STEM

positions

4.0

4.1

4.4

Number of

Employees

with Disabilities

(Korea)

Number of employees

with disabilities

Person

2,108

2,101

1,920

Based on the reported number in

December (Korea Employment Agency

for Persons with Disabilities)

Percentage of employees

with disabilities

3.12

3.13

2.82

Number of employees with disabilities

/ Total number of employees * 100

Number of

Employees by

Age

(Korea)

Under 30 years old

Person

7,147

7,516

9,263

30-50 years old

Person

32,114

32,948

32,067

Over 50 years old

Person

32,759

32,032

32,101

Total

Person

72,020

72,496

73,431

10)

Revenue-generating departments: Product/R&D/Purchasing/Quality Division, Pilot Center, Manufacturing Area, Ulsan/Asan/Jeonju Plant, Global Business Management Division, Domestic Business/Customer

Experience/Commercial/ICT Division, Innovation Division, AIRS Company, AAM Division, CDO, EV Division, Genesis Division

11)

STEM (Science, Technology, Engineering, Math) employees: R&D Division, Innovation Division, AAM Division, TaaS Division, Ulsan/Asan/Jeonju Pant, Advanced Technology Institute, Manufacturing/Quality/

Purchasing/India Regional Headquarters, CDO, EV Division, Pilot Center, ICT Division

Classification

Unit

2020

2021

2022

Note

Employees

Labor Union

Membership

(Korea)

Number of people with labor

union membership

Person

48,933

47,538

45,751

Labor union membership

percentage

68.2

66.3

63.1

Strikes

Total number of strikes

Case

Number of days of work loss

due to strikes

Day

Employee

Training

(Korea)

Total training expenses

KRW billion

29.0

41.7

63.6

Training expenses per

employee

KRW 10,000

43.3

60.3

88.0

Total training expense / Total number

of employees

Training

expenses

per person

(by position)

Executive level

management

KRW 10,000

293.8

161.8

399.6

Middle level

management

KRW 10,000

49.7

98.3

314.5

New

employees

and non-

managers

KRW 10,000

41.0

56.7

59.2

Training

expenses

per person

(by gender)

Male

KRW 10,000

59.5

86.7

Female

KRW 10,000

72.9

107.6

Training

expenses

per person

(by age)

Under

30 years old

KRW 10,000

134.0

77.9

30-50 years

old

KRW 10,000

72.5

150.4

Over

50 years old

KRW 10,000

41.5

29.9

Training hours per employee

Hour

19.8

27.9

34.3

Total training hours provided

to employees / Total number of

employees

Training

hours per

person

(by position)

Executive level

management

Hour

108.5

29.3

32.4

Total training hours by position /

Number of employees by position

Middle level

management

Hour

42.5

35.9

23.5

New

employees and

non-managers

Hour

17.4

27.3

35.6

Training

hours per

person

(by gender)

Male

Hour

27.5

33.2

Female

Hour

34.4

50.9

Training

hours per

person

(by age)

Under

30 years old

Hour

75.6

62.8

30-50 years

old

Hour

30.7

38.8

Over

50 years old

Hour

20.5

21.7

Facts & Figures

Classification

Unit

2020

2021

2022

Note

Employees

Parental

Leave

(Korea)

Number of employees on

parental leave (Male)

Person

171

188

285

Number of employees on

parental leave (Female)

Person

162

234

Return-to-work rate after

parental leave (Male)

92.4

89.5

81.7

Return-to-work rate after

parental leave (Female)

98.6

92.6

75.0

Retention rate after parental

leave (Male)

97.3

97.6

93.7

Retention rate after parental

leave (Female)

91.7

98.6

95.3

New

Employee

Hires

Number of people hired

7,096

21,484

23,018

New employee hires in Korea and

abroad have been aggregated/

reported since 2021

(Only domestic data was aggregated/

reported in 2020)

By gender

Male

Person

6,529

18,979

20,344

Female

Person

567

2,505

2,674

By age

Under 30

years old

Person

3,820

13,883

13,939

30-50

years old

Person

1,983

5,603

6,624

Over

50 years old

Person

1,293

1,998

2,455

nationality

(Korea)

Korea

Person

7,076

7,490

8,110

The categorization of new hires into

different nationalities is reported with

regards to domestic data only

France

Korea

Canada

Person

China

Person

Austria

Person

U.K.

Person

Belgium

Person

U.S.

Person

Germany

Person

Republic of

South Africa

Person

Taiwan

Person

India

Person

Internal Recruitment Ratio

Person

99.3

99.0

92.0

Placement-to-vacancy ratio that

reflects internal recruit and transfer

Youth Interns

Hired

Total number of hired people

Person

132

213

120

Intern / Research intern / Recruitment-

type intern / Experience-based intern

Full-time conversion rate

30.3

53.1

30.0

Number of personnel converted to

regular employment: 36

Classification

Unit

2020

2021

2022

Note

Employees

Employee

Turnover

(Korea)

By gender

Male

4.21

5.72

5.26

Female

0.20

0.29

0.22

By age

Under 30

years old

0.58

0.95

0.23

30-50

years old

0.37

0.72

0.60

Over 50

years old

3.47

4.31

4.65

By position

Executive level

management

0.01

0.03

0.14

Middle level

management

0.01

0.11

0.15

Non-manager

3.83

5.04

5.18

Turnover rate

4.41

6.00

5.47

Voluntary turnover rate

12)

0.43

0.70

0.94

Employee

Turnover

(Overseas)

Turnover rate

17.19

18.97

Began to collect data for overseas

employee turnover in 2021

Voluntary turnover rate

11.00

14.00

Employee

Turnover

(Korea +

Overseas)

Turnover rate

10.6

11.4

Voluntary turnover rate

5.0

6.8

Wage by Gender

Male

executives

Average basic

salary

KRW

298,307,953

292,430,000

329,929,105

Average total

wage

KRW

308,729,036

330,950,106

429,225,256

Sum of basic salary and bonus

Female

executives

Average basic

salary

KRW

299,885,453

257,678,571

323,461,538

Average total

wage

KRW

315,797,291

325,828,057

417,714,941

Sum of basic salary and bonus

Male

managers

Average basic

salary

KRW

71,464,873

73,253,066

77,864,821

Average total

wage

KRW

89,036,905

99,688,405

114,997,449

Sum of basic salary and bonus

Female

managers

Average basic

salary

KRW

67,252,851

70,490,756

72,522,553

Average total

wage

KRW

82,802,044

95,522,021

108,073,603

Sum of basic salary and bonus

Male staff

Average basic

salary

KRW

72,661,301

79,293,050

88,283,218

Sum of basic salary and bonus

Female staff

Average total

wage

KRW

71,636,398

79,408,784

89,364,988

Sum of basic salary and bonus

Organizational

Culture Survey

Employee engagement rate

66.6

68.5

72.9

12)

Voluntary turnover: When employees voluntarily leave their positions for reasons other than retirement, dismissal, etc.

100

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Facts & Figures

Classification

Unit

2020

2021

2022

Note

Social

Contributions

Social

Contributions

Expenditures

by Type

Cash donations

KRW million

50,639

39,015

44,998

In-kind contributions

KRW million

2,739

2,123

2,925

Employee volunteer

KRW million

451

696

832

Monetary value conversion of employees’

volunteer hours

13)

Management overhead

KRW million

9,008

6,124

10,466

Social

Contributions

Expenditures

by Area

Local community

investment

KRW million

44,880

37,054

39,506

Simple donation

KRW million

8,498

3,658

6,632

For commercial use

KRW million

9,007

6,549

12,251

Social

Contributions

Expenditures

by Region

Korea

KRW million

62,386

47,262

58,389

Overseas

USD

34,111,984

16,288,622

22,394,209

Employees

Volunteering

(Korea)

Number of volunteer

activities

Case

859

375

627

Number of participants

Person

3,107

6,330

5,592

Number of hours

participated

Hour

10,420

14,034

15,016

Expenditure

by Donation/

Contribution

Type

Associations and

tax-free groups

KRW million

6,208

6,251

5,180

Associations

and groups related to the

industry

Lobbyist and interest

groups

KRW million

Political donations

KRW million

Others

KRW million

Total donations/

contributions

KRW million

6,208

6,251

5,180

Expenditure

by Major

Contributed

Association

14)

Foundation of Korea

Automotive Parts

Industry Promotion

KRW million

3,300

Korea Automobile

Manufacturers Association

KRW million

2,146

2,243

2,178

Korea Automotive

Technology Institute

KRW million

328

322

332

H2Korea

KRW million

237

200

Korea Traffic Disabled

Association

KRW million

110

100

13)

Employees’ annual volunteer hours x employees’ average hourly wage (average annual income / annual no. of work days / hour)

14)

When selecting associations and organizations, thorough internal review is conducted. In addition, when reviewing the associations and organizations, HMC evaluates whether they are aligned with the Paris

Agreements, and makes efforts not to make contributions or expenditures to those that do not align.

Classification

Unit

2020

2021

2022

Note

Quality &

Safety

Quality Index

(based on

the survey

conducted by

J.D. Power and

Associates)

U.S. Vehicle Dependability

Study (Hyundai)

Ranking

(Score)

Non-premium 7th

(132)

Non-premium 4th

(101)

Non-premium 3rd

(148)

U.S. Initial Quality Study

(Hyundai)

Ranking

(Score)

Non-premium 9th

(153)

Non-premium 6th

(149)

Non-premium 12th

(185)

U.S. Vehicle Dependability

Study (Genesis)

Ranking

(Score))

Premium 1st

(89)

Premium 4th

102)

Premium 1st

(155)

U.S. Initial Quality Study

(Genesis)

Ranking

(Score)

Premium 1st

(142)

Premium 2nd

(148)

Premium 1st

(156)

Quality

Management

System

Percentage of business sites

with quality management

system certification

100%

All business sites in Korea and overseas

are ISO 9001 certified

Customer

Satisfaction

Survey

Customer Satisfaction

Score - Hyundai Customer

Experience Index (HCXI)

Score

71.6

71.2

72.1

1:1 weight assigned to sales/maintenance

External evaluation –

National Customer

Satisfaction Index (NCSI)

Ranking

1st place at all

segments

1st place at all

segments

1st place at all

segments

Semi-medium, medium, semi-large,

large, RV

External evaluation –

Korean Standard-Quality

Excellence Index (KS-QEI)

Ranking

1st place at all

segments

1st place at all

segments

1st place at all

segments

Luxury sedan E-segment, medium,

medium SUV, electric vehicle, automobile

AS, and other seven segments

External evaluation –

Korean Customer Satisfaction

Index (KCSI)

Ranking

1st place at all

segments

1st place at all

segments

1st place at all

segments

Passenger vehicle, RV

Domestic Maintenance

Service Satisfaction (HCXI)

Score

(Rank)

69.7

(1st)

70.1

(1st)

71.8

(1st)

1:1 weight assigned to directly-run/

Bluehands

Overseas Sales Customer

Satisfaction (NPS)

Score

(Country of

Implemen-

tation)

90.3

(26 countries)

86.3

(31 countries)

87.7

(35 countries)

Changed management index in 2021

(SSi → Sales NPS)

Overseas Maintenance

Service Satisfaction (NPS)

Score

(Country of

Implemen-

tation)

90.3

(29 countries)

75.9

(31 countries)

77.5

(35 countries)

Changed management index in 2021

(HCXI → Service NPS)

101

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Facts & Figures

Classification

Unit

2020

2021

2022

Note

Safety and

Health

Number of work-related fatalities

for employees

Person

Number of work-related fatalities for

contractors

Person

Number of employees involved in

occupational accidents (Korea)

Person

351

424

478

Changed the aggregate method

starting in 2022

(Illness + accident → accident)

Number of employees involved in

occupational accidents (Overseas)

Person

Total number of employees involved in

occupational accidents

Person

368

435

508

108 cases of work-related illness,

and 1 work-related death

Accident rate (Korea)

0.85

0.73

0.81

Accident rate (Overseas)

0.05

0.04

0.07

Accident rate (Total)

0.50

0.49

0.55

Employee LTIFR

15)

1.72

1.76

1.94

Based on figures of the Ulsan, Asan,

and Jeonju plants in Korea, and

overseas manufacturing plants

Number of injuries that prevent

workers from recovering to the same

state before the accident within

six months: 125 cases

Supplier employee LTIFR

16)

0.93

1.43

1.53

15)

Lost-Time Injuries Frequency Rate (LTIFR): Number of lost-time injuries per million hours worked during an accounting period

16)

When investigating the number of in-house supplier workers at the Jeonju Plant in 2021, the total number of workers of suppliers was indicated, resulting in an overestimated

figure

Classification

Unit

2020

2021

2022

Note

Compliance/

Ethical

Training

Number of training sessions (Korea)

Case

Number of participants (Korea)

Person

22,928

21,567

8,651

Number of training sessions (Overseas)

Case

Number of participants (Overseas)

Person

816

Non-compliance

with

Regulations

and Voluntary

Codes

Number of

personal

Information

leakage

Incidents

Total number of personal

Information leakage

Incidents

Case

17)

Number of customers

affected by the Incidents

Person

Number of cyber asset damage incidents

Case

Number of labeling/advertising violations

Case

Penalty and

fine for

non-compliance

with

environmental

regulations

No. of cases of

environmental violations

18)

Case

17)

Penalty and fine

KRW million

Based on an environment-related fine

of at least $ 10,000

Environment-related

provisions

KRW million

17)

A public announcement was made regarding the case in 2022. The penalty was paid in 2023.

18 )

The Ulsan Plant is in a single trial with the Ministry of Environment on whether it violated the law.

102

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Facts & Figures

ESG Certifications

Certification Status by Business Site (ISO Certification)

Classification

Term of Validity

Note

ISO 14001

(Environmental Management)

Business sites in Korea (Ulsan Plant, Asan Plant, Jeonju Plant, Namyang Technology Research

Center, Headquarters, Korea Business Division)

2020-2023

Integrated certification

Hyundai Motor Manufacturing Alabama (HMMA)

2021-2024

Beijing Hyundai Motor Company (BHMC)

2021-2024

Hyundai Motor India (HMI)

2020-2023

Hyundai Motor Manufacturing Russia (HMMR)

2022-2025

Hyundai Motor Brasil (HMB)

2021-2024

Hyundai Motor Manufacturing Czech (HMMC)

2021-2024

Hyundai Assan Otomotiv Sanayi (HAOS)

2021-2024

Hyundai Motor Manufacturing Indonesia (HMMI)

2022-2025

Hyundai Truck & Bus China (HTBC)

2020-2023

ISO 45001

(Health and Safety Management)

Business sites in Korea

2020-2023 (Jeonju Plant)

2021-2024 (Asan Plant)

2021-2024 (Namyang Technology Research Center)

2022-2025 (Ulsan Plant)

ISO 27001

(Information Security Management)

Business sites in Korea

2021-2024

ISO 9001

(Quality Management)

Business sites in Korea & Overseas

2021-2024

ISO 50001

(Energy Management)

Beijing Hyundai Motor Company (BHMC)

2022-2025 (Renhe/Yangzhen Plants)

2021-2024 (Changzhou Plant)

Hyundai Motor India (HMI)

2021-2024

Hyundai Assan Otomotiv Sanayi (HAOS)

2021-2024

103

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

104

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Universal Standards

GRI Standards

Page

Note

No.

Title

2-1

Organizational details

120

2-2

Entities included in the organization’s sustainability reporting

p.373-379 of Business Report

2-3

Reporting period, frequency and contact point

120

2-4

Restatements of information

32, 96

Energy consumption

2-5

External assurance

114-119

2-6

Activities, value chain and other business relationships

2-7

Employees

98-100

2-8

Workers who are not employees

2-9

Governance structure and composition

79-84

2-10

Nomination and selection of the highest governance body

2-11

Chair of the highest governance body

2-12

Role of the highest governance body in overseeing the management of

impacts

09, 82, 84

2-13

Delegation of responsibility for managing impacts

2-14

Role of the highest governance body in sustainability reporting

2-15

Conflicts of interest

79, 83, 86-88

2-16

Communication of critical concerns

2-17

Collective knowledge of the highest governance body

2-18

Evaluation of the performance of the highest governance body

2-19

Remuneration policies

2-20

Process to determine remuneration

2-21

Annual total compensation ratio

2-22

Statement on sustainable development strategy

2-23

Policy commitments

50, 53

2-24

Embedding policy commitments

50, 53

2-25

Processes to remediate negative impacts

17, 52, 55-56

2-26

Mechanisms for seeking advice and raising concerns

50, 87-88

2-27

Compliance with laws and regulations

102

Reason for non-disclosure: Confidentiality. We manage information on workers who are not employees but it is difficult to disclose information on workers who are not

Hyundai employees due to company regulations.

GRI Standards

Page

Note

No.

Title

2-28

Membership associations

101

2-29

Approach to stakeholder engagement

12-13

2-30

Collective bargaining agreements

3-1

Process to determine material topics

14-17

3-2

List of material topics

3-3

Management of material topics

16-17

Topic Specific Standards - Economic

GRI Standards

Page

Note

No.

Title

201-1

Direct economic value generated and distributed

201-2

Financial implications and other risks and opportunities due to climate

change

22-23

201-3

Defined benefit plan obligations and other retirement plans

201-4

Financial assistance received from government

202-1

Ratios of standard entry level wage by gender compared to local

minimum wage

100

202-2

Proportion of senior management hired from the local community

203-1

Infrastructure investments and services supported

101

203-2

Significant indirect economic impacts

101

205-1

Operations assessed for risks related to corruption

87-88

205-2

Communication and training about anti-corruption policies and

procedures

87-88

205-3

Confirmed incidents of corruption and actions taken

87-88

206-1

Legal actions for anti-competitive behavior, anti-trust, and monopoly

practices

207-1

Approach to tax

207-2

Tax governance, control, and risk management

GRI Index

105

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Topic Specific Standards - Environmental

GRI Standards

Page

Note

No.

Title

301-1

Materials used by weight or volume

38, 96

301-2

Recycled input materials used

301-3

Reclaimed products and their packaging materials

302-1

Energy consumption within the organization

302-2

Energy consumption outside of the organization

302-3

Energy intensity

302-4

Reduction of energy consumption

303-1

Interactions with water as a shared resource

303-3

Water withdrawal

303-4

Water discharge

303-5

Water consumption

38, 97

304-1

Operational sites owned, leased, managed in, or adjacent to, protected

areas and areas of high biodiversity value outside protected areas

41-43

304-2

Significant impacts of activities, products and services on biodiversity

41-43

304-3

Habitats protected or restored

41-43

304-4

IUCN Red List species and national conservation list species with

habitats in areas affected by operations

GRI Standards

Page

Note

No.

Title

305-1

Direct (Scope 1) GHG emissions

27, 96

305-2

Energy indirect (Scope 2) GHG emissions

27, 96

305-3

Other indirect (Scope 3) GHG emissions

27, 96

305-4

GHG emissions intensity

27, 96

305-5

Reduction of GHG emissions

25-34

305-7

Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air

emissions

306-1

Waste generation and significant waste-related impacts

306-2

Management of significant waste-related impacts

306-3

Waste generated

306-4

Waste diverted from disposal

38, 97

306-5

Waste directed to disposal

308-1

New suppliers that were screened using environmental criteria

308-2

Negative environmental impacts in the supply chain and actions taken

GRI Index

106

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

Topic Specific Standards - Social

GRI Standards

Page

Note

No.

Title

401-1

New employee hires and employee turnover

100

401-2

Benefits provided to full-time employees that are not provided to

temporary or part-time employees

48-49, 56

401-3

Parental leave

56, 100

403-1

Occupational health and safety management system

403-2

Hazard identification, risk assessment, and incident investigation

403-3

Occupational health services

403-4

Worker participation, consultation, and communication on occupational

health and safety

53-55

403-5

Worker training on occupational health and safety

53-55

403-6

Promotion of worker health

403-7

Prevention and mitigation of occupational health and safety impacts

directly linked by business relationships

403-8

Workers covered by an occupational health and safety management

system

403-9

Work-related injuries

102

403-10

Work-related ill health

102

404-1

Average hours of training per year per employee

404-2

Programs for upgrading employee skills and transition assistance

programs

404-3

Percentage of employees receiving regular performance and career

development reviews

GRI Standards

Page

Note

No.

Title

405-1

Diversity of governance bodies and employees

79, 98

405-2

Ratio of basic salary and remuneration of women to men

100

406-1

Incidents of discrimination and corrective actions taken

407-1

Operations and suppliers in which the right to freedom of association and

collective bargaining may be at risk

408-1

Operations and suppliers at significant risk for incidents of child labor

409-1

Operations and suppliers at significant risk for incidents of forced or

compulsory labor

411-1

Incidents of violations involving rights of indigenous peoples

No incidents of violations

occurred

413-1

Operations with local community engagement, impact assessments, and

development programs

12, 72-77, 101

414-1

New suppliers that were screened using social criteria

414-2

Negative social impacts in the supply chain and actions taken

415-1

Political contributions

101

No political contributions made

416-1

Assessment of the health and safety impacts of product and service

categories

416-2

Incidents of non-compliance concerning the health and safety impacts of

products and services

417-1

Requirements for product and service information and labeling

417-2

Incidents of non-compliance concerning product and service information

and labeling

102

No incidents of violations

occurred

417-3

Incidents of non-compliance concerning marketing communications

102

No incidents of violations

occurred

418-1

Substantiated complaints concerning breaches of customer privacy and

losses of customer data

102

GRI Index

107

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

ESRS Index

ESRS 2. General Disclosures

Indicator No.

Title

Page

ESRS 2 BP-1

General basis for preparation of the sustainability statements

120

ESRS 2 BP-2

Disclosures in relation to specific circumstances

114-119

ESRS 2 GOV-1

The role of the administrative, management and supervisory bodies

09, 79-84

ESRS 2 GOV-2

Information provided to and sustainability matters addressed by the undertaking’s administrative,

management and supervisory bodies

14-17, 84

ESRS 2 GOV-3

Integration of sustainability-related performance in incentive schemes

09, 20

ESRS 2 GOV-4

Statement on sustainability due diligence

50-51, 60-64

ESRS 2 GOV-5

Risk management and internal controls over sustainability reporting

ESRS 2 SBM-1

Market position, strategy, business model(s) and value chain

06-07, 28-29

ESRS 2 SBM-2

Interests and views of stakeholders

11-13

ESRS 2 SBM-3

Material impacts, risks and opportunities and their interaction with strategy and business model(s)

15-17

ESRS 2 IRO-1

Description of the processes to identify and assess material impacts, risks and opportunities

ESRS 2 IRO-2

Disclosure Requirements in ESRS covered by the undertaking’s sustainability statements

107-109

We have been operating an IT system-based “ESG platform” since 2022 to secure ESG data collection-inspection-disclosure efficiency and credibility of all business sites in

Korea and abroad

ESRS E1. Climate Change

Indicator No.

Title

Page

ESRS E1-1

Transition plan for climate change mitigation

ESRS E1-2

Policies related to climate change mitigation and adaptation

26, 28-29, 32-34

ESRS E1-3

Actions and resources in relation to climate change policies

21, 28

ESRS E1-4

Targets related to climate change mitigation and adaptation

25, 28-29, 32-33

ESRS E1-5

Energy consumption and mix

32, 96

ESRS E1-6

Gross Scopes 1, 2, 3 and Total GHG emissions

27, 96

ESRS E1-7

GHG removals and GHG mitigation projects financed through carbon credits

16, 20, 26-27

Avoided emissions of products and services

16, 29

ESRS E1-8

Internal carbon pricing

ESRS E1-9

Potential financial effects from material physical and transition risks and potential climate-related

opportunities

22-24

The internal carbon price is calculated in connection with the Emission Trading Scheme (ETS) price, and is used for improving energy efficiency, implementing low-carbon

strategies and investments, and discovering and harnessing low carbon business opportunities

ESRS E2. Pollution

Indicator No.

Title

Page

ESRS E2-1

Policies related to pollution

ESRS E2-2

Actions and resources related to pollution

20, 38-40

ESRS E2-3

Targets related to pollution

ESRS E2-4

Pollution of air, water and soil

38-39, 97

ESRS E2-5

Substances of concern and substances of very high concern

39, 97

ESRS E2-6

Potential financial effects from pollution-related impacts, risks and opportunities

European Sustainability Reporting Standards (ESRS) is a management tool for executing the Corporate Sustainability Reporting Directive (CSRD), which is a guideline that was enforced in March 2023 by the EU to make sustainability reports mandatory.

It specifies the scope and criteria of information that a company should disclose in relation to sustainability. The European Financial Reporting Advisory Group (EFRAG) announced the final ESRS in November 2022 which includes two common standards,

11 theme-level standards, 84 information disclosure requirements, and 1,144 quantitative and qualitative data. Hyundai has subsidiaries and branches in the EU and achieves considerable sales from them. As such, we are striving to make preparations by

developing thorough knowledge of CSRD and ESRS and establishing a system that manages information.

108

ESG Magazine

2. Environmental

3. Social

4. Governance

5. ESG Factbook

1. Introduction

ESRS S1. Own Workforce

Indicator No.

Title

Page

ESRS S1-1

Policies related to own workforce

49-50

ESRS S1-2

Processes for engaging with own workers and workers’ representatives about impacts

48, 53

ESRS S1-3

Processes to remediate negative impacts and channels for own workers to raise concerns

48, 50, 87

ESRS S1-4

Taking action on material impacts on own workforce, and approaches to mitigating material risks and

pursuing material opportunities related to own workforce, and effectiveness of those actions

51-55

ESRS S1-5

Targets related to managing material negative impacts, advancing positive impacts, and managing

material risks and opportunities

52-53

ESRS S1-6

Characteristics of the undertaking’s employees

98-99

ESRS S1-7

Characteristics of non-employee workers in the undertaking’s own workforce

ESRS S1-8

Percentage of total employees covered by collective bargaining agreements

For employees not covered by collective bargaining agreements, a description of reasons and

countermeasures

48, 99

No. of strikes, no. of work loss days due to strikes, measures and discussions to resolve strikes, etc.

ESRS S1-9

Average hourly wage difference between genders, ratio of women’s hourly wage against men’s

hourly wage

100

Persons subject to family care leave (maternity leave, parental leave, etc.), no. of persons who went on

a leave, retention rate after returning to work after leave

100

ESRS S1-10

Adequate wages

46, 100

ESRS S1-11

Social protection

ESRS S1-12

Persons with disabilities

ESRS S1-13

Percentage of employees that participated in regular performance and career development reviews

Average number of training hours and expenses per person

ESRS S1-14

Percentage of own workers who are covered by the undertaking’s health and safety management

system based on legal requirements and/or recognized standards or guidelines

53, 103

Number and rate of work-related injuries and ill health, the number of days lost to work-related injuries,

accidents, and ill health

102, 113

ESRS S1-15

Work-life balance indicators

ESRS S1-16

Ratio of the annual total compensation ratio of the highest paid individual to the median annual total

compensation for all employees

ESRS S1-17

Number of work-related incidents and severe human rights impacts and incidents within its own

workforce and any related material fines or sanctions for the reporting period

51, 54

Number of complaints and severe human rights impacts and incidents within its own workforce and

any related countermeasures and plans to prevent reoccurrence

52, 54-55

We set a wage that is more than the minimum wage specified in local laws where our domestic and overseas business sites are located. An accurate wage that is calculated according to work hours is

regularly paid on a set date.

ESRS E3. Water and Marine Resources

Indicator No.

Title

Page

ESRS E3-1

Policies implemented to manage water and marine resources

19, 38

ESRS E3-2

Actions and resources related to water and marine resources

ESRS E3-3

Targets related to water and marine resources

26, 73

ESRS E3-4

Water consumption

38, 97

ESRS E3-5

Potential financial effects from water and marine resources-related impacts, risks and opportunities

ESRS E4. Biodiversity and Ecosystems

Indicator No.

Title

Page

ESRS E4-1

Transition plan on biodiversity and ecosystems

ESRS E4-2

Policies related to biodiversity and ecosystems

19, 41

ESRS E4-3

Actions and resources related to biodiversity and ecosystems

ESRS E4-4

Targets related to biodiversity and ecosystems

ESRS E4-5

Impact metrics related to biodiversity and ecosystems change

ESRS E4-6

Potential financial effects from biodiversity and ecosystem-related risks and opportunities

We present a mid- to long-term goal as well as activity and performance target through Hyundai Motor Company Biodiversity Protection Policy and Hyundai Motor Company

No Deforestation Policy

ESRS E5. Resource Use and Circular Economy

Indicator No.

Title

Page

ESRS E5-1

Policies related to resource use and circular economy

19, 35, 37

ESRS E5-2

Actions and resources related to resource use and circular economy

35-37

ESRS E5-3

Targets related to resource use and circular economy

36-37

ESRS E5-4

Resource inflows

38, 96

ESRS E5-5

Resource outflows

36, 97

ESRS E5-6

Potential financial effects from resource use and circular economy-related impacts, risks and opportunities

Biodiversity Protection Policy

No Deforestation Policy

ESRS Index

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3. Social

4. Governance

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1. Introduction

ESRS G1. Business Conduct

Indicator No.

Title

Page

ESRS G1-1

Top decision-making body’s declaration of ethical management and roles and responsibilities in relation

to management and supervision

Requirements in the Ethics Charter and Code of Conduct

ESRS G1-2

Operating the compliance program, conducting activities to make payment improvements, such as the

win-win payment system

59, 88

Diagnosing and conducting a due diligence on supplier ESG risks, reflecting diagnosis and due diligence

results in supplier selection criteria

58, 60

ESRS G1-3

Activities to prevent corruption or bribery, and a system to investigate and report outcomes to the

administrative, management and supervisory bodies

87-88

Activities to prevent unfair trading, and a system to investigate and report outcomes to the administrative,

management and supervisory bodies

87-88

ESRS G1-4

Number of confirmed incidents of corruption or bribery, details of public legal cases, the number of

confirmed incidents in which own workers were dismissed or disciplined

Number of confirmed incidents of unfair trading, details of public legal cases, the number of confirmed

incidents in which own workers were dismissed or disciplined

ESRS G1-5

Political influence and lobbying activities

101

ESRS G1-6

Payment practices

We operate the “5-star System,” which evaluates technology/quality/delivery levels to certify outstanding suppliers. We also reflect the results of evaluating ESG and safety/

environment/security in trade conditions.

In accordance with Anti-Corruption/Bribery Policy of Hyundai Motor Company, we handle charitable donations and sponsorships fairly according to internal execution

standards and processes. Donations and sponsorships for political purposes are prohibited.

ESRS S2. (Workers in the Value Chain

Indicator No.

Title

Page

ESRS S2-1

Policies related to value chain workers

55, 60

ESRS S2-2

Processes for engaging with value chain workers about impacts

60, 62

ESRS S2-3

Processes to remediate negative impacts and channels for value chain workers to raise concerns

ESRS S2-4

Taking action on material impacts on value chain workers, and approaches to mitigating material risks

and pursuing material opportunities related to value chain workers, and effectiveness of those actions

ESRS S2-5

Targets related to managing material negative impacts, advancing positive impacts, and managing

material risks and opportunities

Through Hyundai Motor Group’s Transparent Purchase Practices Center, we operate a “suggestion box for transparency and ethical practices” and “suggestion box for tier-2

and tier-3 suppliers”

ESRS S3. Affected Communities

Indicator No.

Title

Page

ESRS S3-1

Policies related to affected communities

ESRS S3-2

Processes for engaging with affected communities about impacts

ESRS S3-3

Processes to remediate negative impacts and channels for affected communities to raise concerns

ESRS S3-4

Taking action on material impacts on affected communities, and approaches to mitigating material

risks and pursuing material opportunities related to affected communities, and effectiveness of those

actions

73-77

ESRS S3-5

Targets related to managing material negative impacts, advancing positive impacts, and managing

material risks and opportunities

73-77

ESRS S4. Consumers and End Users

Indicator No.

Title

Page

ESRS S4-1

Policies related to consumers and end-users

68-69

ESRS S4-2

Processes for engaging with consumers and end-users about impacts

65, 68

ESRS S4-3

Processes to remediate negative impacts and channels for consumers and end-users to raise concerns

ESRS S4-4

Taking action on material impacts on consumers and end-users, and approaches to mitigating material

risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those

actions

64-67

ESRS S4-5

Targets related to managing material negative impacts, advancing positive impacts, and managing

material risks and opportunities

We are continually carrying out activities based on three major directions – “strengthen maintenance capabilities,” “secure outstanding personnel,” and “operate

maintenance regulations” – to enhance customer and consumer service quality

Anti-Corruption/Bribery Policy of Hyundai Motor Company

ESRS Index

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1. Introduction

Disclosure Focus Area

Title

Page

Note

Governance

Describe the board’s oversight of climate-related risks and opportunities.

9, 21

Report to Sustainability Management Committee of the BOD and review thereof (once/semi-annually)

CDP questions: C1.1b

Describe management’s role in assessing and managing climate-related risks and opportunities.

9, 21

Operation of the ESG Committee, a subcommittee under the Hyundai Business

Strategy Meeting

(hosted by the CEO)

CDP questions: C1.2

Strategy

Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.

21-24

CDP questions: C1.1a, C2.2a, C2.3, C2.3a, C2.4, C2.4a

Describe the impact of climate related risks and opportunities on the organization’s businesses, strategy, and financial planning.

22-24

CDP questions: C2.3a, C2.4a, C3.3, C3.4, C3.5, C3.5a, C3.5b, C3.5c

Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including

a 2°C or lower scenario.

21-24

CDP questions: C3.1, C3.2, C3.2a, C3.2b

Risk Management

Describe the organization’s processes for identifying and assessing climate-related risks.

21-24

CDP questions: C2.1 C2.1a, C2.1b, C2.2

Describe the organization’s processes for managing climate-related risks.

21, 23-24

CDP questions: C2.1b, C2.2

Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk

management.

9, 21, 89

CDP questions: C2.1 C2.1a, C2.1b, C2.2

Metrics and Targets

Disclose the metrics used by the organization to assess climate related risks and opportunities in line with its strategy and risk

management process.

6, 27-34, 95-97

Energy consumption, vehicle production and sales status, vehicle CO2 emissions, sales, etc.

CDP questions: C8.2, C8.2a, C8.2b, C8.2c, C8.2e, C11.3a

Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.

27, 96

CDP questions: C6.1, C6.3, C6.5, C7.1a, C7.2, C7.3b, C7.5, C7.6b, C7.7, C7.7a

Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

21, 25, 28-29, 32

CDP questions: C1.3, C1.3a, C4.1, C4.1a, C4.1c

TCFD Index

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1. Introduction

Accounting Metric

Page

Note

Product Safety

TR-AU-250a.1

Percentage of vehicle models rated by NCAP

programs with an overall 5-star safety rating,

by region

Korea: 100%, U.S.: 69.2%

Classification

Percentage

Vehicle models rated 5-star

Korea

100%

IONIQ 6, GV70

U.S.

69.2%

Kona, Santa Fe, Elantra, Sonata, Tucson Palisade Ioniq5, G80, GV80, etc.

TR-AU-250a.2

Number of safety-related defect complaints,

percentage investigated

64-65

Constant monitoring of customer complaints and 100% voluntary recall immediately when potential issues are recognized to customers of Ministry of Land, Infrastructure

and Transport (Korea), NHTSA (U.S. Department of Transportation’s National Highway Traffic Safety Administration)

TR-AU-250a.3

Number of vehicles recalled

2022: 3.89 million vehicles (voluntary recall)

Labor Practices

TR-AU-310a.1

Percentage of active workforce covered under

collective bargaining agreements

2022: 63.1% (domestic basis)

TR-AU-310a.2

(1) Number of work stoppages, and

(2) total days idle

2022: No strike history of more than 1,000 people taking a break from work (domestic and overseas)

Fuel Economy &

Use-phase Emissions

TR-AU-410a.1

Sales-weighted average passenger fleet fuel

economy, by region

EU average passenger fleet carbon emissions, China/U.S. average fleet fuel economy

2019

2020

2021

2022

Average fleet carbon emissions in EU (g/km)

123.5

94.7

107.1

106.0

Average fleet fuel economy in China (L/100km)

6.00

5.61

6.15

6.28

Average fleet fuel economy in U.S. (mpg)

Passenger car

38.5

40.0

42.8

44.8

Light truck

27.1

29.4

30.9

36.0

TR-AU-410a.2

Number of

(1) zero emission vehicles (ZEV),

(2) hybrid vehicles, and

(3) plug-in hybrid vehicles sold

Number of electrified vehicles sold in 2022 and percentage thereof

(Unit: 1,000)

Classification

HEV/PHEV

FCEV

Total

Global

285(7.2%)

209(5.3%)

11(0.3%)

505(12.8%)

TR-AU-410a.3

Discussion of strategy for managing fleet fuel

economy and emissions risks and opportunities

29-30

Increase sales of electrified vehicles and promote fuel efficiency improvement of internal combustion engines

Materials Sourcing

TR-AU-440a.1

Management of risks related to use of main

materials

37, 63, 90

Details are provided on the respective page of the report and

Hyundai’s conflict mineral management report

Materials Efficiency &

Recycling

TR-AU-440b.1

Total amount of waste from manufacturing,

percentage recycled

38, 97

90.8% of waste discharged at Hyundai business sites

was recycled.

TR-AU-440b.2

Weight (ton) of end-of-life material recovered,

percentage recycled

Weight of materials reused/used after end-of-life in 2022 was around 199,000 tons.

End-of-life recycling rate in 2022 was 82.4% excluding heat recovery, 91% including heat recovery.

TR-AU-440b.3

Average recyclability of vehicles sold

Recyclability: 85% (95%, when including waste energy recovery)

Activity Metrics

TR-AU-000.A

Number of vehicles manufactured

TR-AU-000.B

Number of vehicles sold

Hyundai Motor Company Conﬂict Minerals Report

SASB Index

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4. Governance

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1. Introduction

WEF IBC Stakeholder Capitalism Metrics

Theme

Metrics

Page

Note

Governing Purpose

Setting purpose

3, 8

We are continuously making sincere efforts to pursue the creation of economic value by continually securing a competitive edge, realization of customer value

through quality management, and creation of social value through corporate citizenship.

Quality of

Governing Body

Governance body composition

79-82

The BOD consists of 6 directors and 7 independent directors (including 2 female directors). Among the members of the BOD, the independent director in charge of

protecting shareholder rights (Independent Director Chi-won Yoon) participates in meetings with domestic investors and corporate briefings for overseas investors

in aim of strengthening communications between the BOD and shareholders, and strives to improve our shareholder values. In order to faithfully perform the duties

of the independent director, taking concurrent positions as a director, executive officer, or auditor of two or more other companies is prohibited. In order to prevent

conflicts of interest, it is not allowed to engage in transactions in nature of the company's business activities without obtaining a prior approval from the BOD, or to

become a general partner or director of other companies in the same industry.

Stakeholder

Engagement

Material issues impacting stakeholders

14-17

In order to identify material sustainability management issues that impact Hyundai's stakeholders, we performed a materiality analysis in target of Hyundai employees

and outside sustainability management experts.

Ethical Behavior

Anti-corruption

87-88, 102

Reports on unfair and corrupted acts are submitted and processed through the Cyber Audit Office. Additionally, we provide compliance management and ethics

trainings to raise our members’ compliance awareness and to build an ethical compliance culture.

Protected ethics advice and reporting mechanisms

50-51, 87-88

Through a regular half-yearly audit and frequent audits every year, we examine the status of employees’ practice of the Code of Ethics, and report the results to the

BOD’s Sustainability Management Committee.

Risk and Opportunity

Oversight

Integrating risk and opportunity into business process

16, 23-24, 89-92

By identifying regional/organizational issues on climate change issues, we evaluate the impacts of each factor affecting the company in aim of establishing a decent,

company-wide response strategy. In addition, we carry out a materiality analysis to disclose the management directions for each major issue, key performance and

mid- to long-term plans.

Climate Change

Greenhouse gas (GHG) emissions

25, 27, 96, 116-119

We disclose the total greenhouse gas emissions occurring from all domestic business sites and 8 overseas subsidiaries.

Greenhouse gas emissions (Scope 1+2, tCO

-eq): 2,388,847

Emissions for a total of 11 categories (6 upstream and 5 downstream) are disclosed.

Greenhouse gas emissions (Scope 3, tCO

-eq): 105,790,785

TCFD implementation

110

Details of all recommendations in the TCFD Index can be found in the Sustainability Report and the Carbon Disclosure Project (CDP).

Nature Loss

Land use and ecological sensitivity

There is no business site located adjacent to the Biodiversity Area (KBA).

Freshwater Availability

Water consumption and withdrawal in water-stressed areas

38, 40, 97

Hyundai Motor India and Hyundai Assan Otomotive Sanayi (Turkey plant) locate in areas of extreme water stress in the WRI Aqueduct water risk atlas tool.

HMI & HAOS

Volume of water withdrawal (Ton)

Volume of water consumption (Ton)

Rate of water withdrawal

Rate of water consumption

1,549,769

1,246,046

7.8%

11.5%

Dignity and Equality

Diversity and Inclusion

49, 98-99

Data on employees by age, female employees, and employment status of the disabled is disclosed in the Sustainability Report.

Pay equality

82, 100

The average remuneration per person is disclosed in the Sustainability Report.

Wage level

82, 100

Risk for incidents of child, forced or compulsory labor

There are no business sites or suppliers with a high risk of child/forced labor.

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1. Introduction

Theme

Metrics

Page

Note

Health and Well-being

Health and safety

102

The number of industrial accident victims, industrial accident rate, work loss rate and occupational disease rate are disclosed in the Sustainability Report.

LTIFR & OIFR

Classification

Accident rate

OIFR

Employees (Korea)

0.81

0.89

Employees (Overseas)

0.07

0.01

Employees (Total)

0.50

0.53

Suppliers (Korea)

2.38

Suppliers (Overseas)

0.00

Suppliers (Total)

1.52

Skills for the Future

Training provided

The status of employee training (training hours by position, training expense) is disclosed in the Sustainability Report.

Employment and

Wealth Generation

Absolute number and rate of employment

100

The number of new employees in Korea and the turnover rate are disclosed in the Sustainability Report.

Economic contribution

95-96

Sales and financial information, R&D expenses (details of the company’s investments and government subsidies), information on economic values distributed are disclosed

in the Sustainability Report and the Business Report.

Financial investment contribution

Hyundai Motor Company is committed to improving the company’s successful investment and profitability.

Total capital expenditure - Depreciation expense: KRW (1,169) billion

Buyback of treasury stock + dividend payment: KRW 2,023 billion

Innovation of Better

Products and Services

Total R&D expense

Total R&D expense spent is as follows.

- Total R&D expenses in 2022: KRW 3.3 trillion

- 2022 government subsidy: KRW (4,016) million

Community and

Social Vitality

Total tax paid

Details of corporate income tax are disclosed in the Sustainability Report and business reports.

WEF IBC Stakeholder Capitalism Metrics

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1. Introduction

Hyundai Motor Co., Ltd. (“the Company” or “Hyundai Motor”) commissioned DNV Business Assurance Korea, Ltd. (“DNV”, “we” or “us”), part of DNV Group, to

undertake independent assurance of the Company’s 2023 Sustainability Report (the “Report”).

Our Opinion

On the basis of the work undertaken, nothing came to our attention to suggest that the Report does not properly describe Hyundai Motor’s adherence to the

Assurance Principles described below. In terms of reliability of the performance data, nothing came to our attention to suggest that these data have not been

properly collated from information reported at operational level, nor that the assumptions used were inappropriate. We believe that Hyundai Motor is reporting

in accordance with the GRI Standards.

We have reviewed that the topic-specific disclosures of GRI Sustainability Reporting Standards 2021 which are identified in the process for defining report

content;

No.

Material Topic

Topic Standard

Leading the transition to eco-friendly/electric vehicles

302-5, 305-5, 306-4

Efforts to reduce GHG emissions

305-1, 305-2, 305-3, 305-5

Enhancement of global corporate value

201-1

Diffusion of human rights management

407-1, 408-1, 409-1

Strategic management of supply chain ESG

414-1, 414-2

Without affecting our assurance opinion, we also provide the following observations:

•

The Principle of Inclusivity

Hyundai Motor defines customers, dealers, employees, suppliers, local communities, government and shareholders/investors are their major stakeholder

groups and reports on each group’s definitions, communication channels, and major interests. In particular major interests from them have been applied

in the materiality assessment process for promoting participation from stakeholders.

•

The Principle of Materiality

Hyundai Motor conducted double materiality assessment, taking into consideration the environmental and social (non-financial) impacts and financial

impacts. During the assessment process, the survey with employees and outside stakeholders was conducted to reflect their opinions appropriately. DNV

confirms that material topics chosen from this assessment were reflected in the Report.

•

The Principle of Responsiveness

Hyundai Motor has set an overarching objective of sustainable development, “The Right Move for the Right Future”, with three sub-set directions in

relation to planet, people, and community and 15 focus area. For realising this objective, the Company reports roles and responsibilities of Sustainable

Management Committee, ESG Committee, the dedicated sustainability team in a detailed manner.

DNV recommends that the Company exhibit material topics and their performances in relation to the Company’s mid/long-term ESG objectives in order

that stakeholders get to know performance of each material topic in the context of the Company’s core ESG objectives and keep track of records on an

annual basis.

•

The Principle of Impact

Hyundai Motor discloses background of choosing the material topics along with performance progress, whose interests and expectations of stakeholders

are reflected in. Hyundai Motor helps stakeholders understand the Company better by managing environmental and social impact effectively and

presenting related performance in a quantitative manner. DNV confirms that the material topics selected through the materiality assessment are not

missed in terms of the spatial and time boundaries.

•

Reliability of Specific Sustainability Performance Information

DNV conducted a review of compliance with the principles of AA1000AP(2018) of the Report with Type 1 verification (Type 2 for accident rate, weight of

disposal, and water consumption). The assurance team has sampled data and tested accuracy and reliability of the sustainability performance data of the

Company and interviewed responsible people and reviewed the data gathering process with the supporting documents and records. Based on the test,

the intentional error or misstatement was not noted. Data owners were able to demonstrate to trace the origin of the data and to interpret the processed

data in a reliable manner. The data was identifiable and traceable. The Company reports the sustainability performance of the last three years and can be

compared over time. Any errors or unclear expressions found during the verification process were corrected prior to the publication of the Report.

Independent Assurance Statement

115

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1. Introduction

Scope and Approach

We performed our work using AA1000AS v3, Assurance Standard set for by AccountAbility, and DNV’s assurance methodology VeriSustain™ (Ver. 5.0) which

is based on our professional experience, international assurance best practices including the International Standard on Assurance Engagements 3000 (“ISAE

3000”), and the Global Reporting Initiative Sustainability Reporting Standards (“GRI Standards”). DNV provides Type 1 and the moderate assurance. But

some part of performance data has been verified by Type 2 as described above.

The engagement excludes the sustainability management, performance and reporting practices of Hyundai Motor’s subsidiaries, associated companies,

suppliers, contractors and any third-parties mentioned in the Report. We did not interview external stakeholders as part of this assurance engagement.

Economic performance based on the financial data is cross-checked with internal documents, the audited consolidated financial statements and the

announcement disclosed at the website of Korea Financial Supervisory Service (http://dart.fss.or.kr) as well as Hyundai Motor’s website (https://www.

hyundai.com/worldwide/en/#utm_source=hmc-kr&utm_medium=referral&utm_campaign=top_util). The review of financial data taken from these sources

is not within the scope of our work.

We planned and performed our work to obtain the evidence we considered necessary to provide a basis for our assurance opinion. We are providing a ‘limited

level’ of assurance. Limited depth of evidence gathering including inquiry and analytical procedures and limited sampling at lower levels in the company

were applied. The baseline data for environmental and social performance are not verified, while the aggregated data at the corporate level are used for the

verification.

Basis of Our Opinion

The assurance was carried out from May to June 2023. We undertook the following activities as part of the assurance process:

•

Challenged the sustainability-related statements and claims made in the Report and assessed the robustness of the underlying data management

system, information flow and controls;

•

Site visits to Hyundai Motor HQ in to review process and system for preparing sustainability data and implementation of sustainability strategy.

•

Conducted interviews with representatives from the ESG team;

•

Conducted document reviews, data sampling and interrogation of supporting databases and associated reporting system as they relate to selected

content and performance data;

•

Reviewed the process and the result of materiality assessment.

For and on behalf of DNV Business Assurance Korea Ltd.

June 26, 2023

Responsibilities of the Directors of Hyundai Motor and DNV

The Directors of Hyundai Motor have sole responsibility for the preparation of the Report. Our statement represents our independent opinion and is intended to inform all stakeholders. DNV was not involved in the preparation of any statements or data included in the Report except for this Assurance Statement.

DNV’s assurance engagements are based on the assumption that the data and information provided by the client to us as part of our review have been provided in good faith. DNV expressly disclaims any liability or coresponsibility for any decision a person or an entity may make based on this Independent

Assurance Statement.

Competence and Independence

DNV’s established policies and procedures are designed to ensure that DNV, its personnel and, where applicable, others are subject to independence requirements (including personnel of other entities of DNV) and maintain independence where required by relevant ethical requirements. This engagement work

was carried out by an independent team of sustainability assurance professionals. This engagement work was carried out by an independent team of sustainability assurance professionals.

DNV - Business Assurance

DNV Business Assurance Korea Ltd. is part of DNV Group, a global provider of certification, verification, assessment and training services, helping customers to build sustainable business performance.

Chang Rok Yun

Senior Auditor and Lead Auditor

Yu Lee Jang

Senior Auditor

Sang Yeon Park

Technical Reviewer

Independent Assurance Statement

Relating to Hyundai Motor Company’s Scope 1 & 2 GHG emissions in domestic sites for the 2022 calendar year

This Assurance Statement has been prepared for Hyundai Motor Company.

Terms of Engagement

LRQA was commissioned by Hyundai Motor Company (HMC) to provide independent assurance on its Greenhouse Gas (GHG) Inventory Report for

the calendar year 2022 (the report) against “the guidelines on emission reporting and certification under the GHG emissions trading system” and the

monitoring plan for the calendar year 2022 using “the verification guidelines for GHG emissions trading system”.

The report relates to direct GHG emissions and energy indirect GHG emissions. HMC’s geographical boundary includes its domestic operations at Ulsan

Plant, Asan Plant, Jeonju Plant, R&D Centers, HQ and owned buildings, Service Centers, Sales Branches (including car delivery centers), and Genesis Sales

Branches. GHG emissions have been consolidated using operational control approach.

Management Responsibility

LRQA’s responsibility is only to HMC.

LRQA disclaims any liability or responsibility to others as explained in the end footnote. The management of HMC.

is responsible for preparing the report and for maintaining effective internal controls over all the data and information within the report. Ultimately, the

report has been approved by, and remains the responsibility of HMC.

LRQA’s Approach

LRQA’s assurance engagement has been carried out in accordance with our verification procedure using “the verification guidelines for GHG emissions

trading system” to reasonable level of assurance.

The following tasks were undertaken as part of the evidence gathering process for this assurance engagement:

•

Visiting sites and auditing management system to control the data and records regarding GHG emissions and energy uses

• Interviewing the relevant persons responsible for managing and maintaining data and associated records

•

Reviewing the historical data and information back to source for the calendar year 2022.

Level of Assurance & Materiality

The opinion expressed in this Assurance Statement has been formed on the basis of a reasonable level of assurance, and at the materiality of the professional

judgement of the verifier and at the materiality level of 2.5%.

LRQA’s Opinion

Based on LRQA’s approach, we believe that the report is prepared in accordance with “the guidelines on emission reporting and certification under the

GHG emissions trading system” and the monitoring plan for the calendar year 2022 using “the verification guidelines for GHG emissions trading system”

and the GHG emissions data in the Table 1 is materially correct.

Dated: 16 March 2023

Il-Hyoung Lee

LRQA

17th Floor, Singsong Building, 67 Yeouinaru-ro, Yeongdeungpo-gu, Seoul, 07327, Korea

LRQA Reference: SEO6012382

Table1. Summary of GHG emissions

Unit: tCO

Scope of GHG emissions

2022

Direct GHG Emissions

483,376

Energy Indirect GHG Emissions

1,057,126

Total GHG Emissions

1,540,502

Note: The total GHG emissions may differ from the sum of GHG emissions disclosed by the Ministry of Environment due to the decimal value processing of GHG emissions at

each site.

LRQA Group Limited, its affiliates and subsidiaries, and their respective officers, employees or agents are, individually and collectively, referred to in this clause as 'LRQA'.

LRQA assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document

or howsoever provided, unless that person has signed a contract with the relevant LRQA entity for the provision of this information or advice and in that case any

responsibility or liability is exclusively on the terms and conditions set out in that contract.

The Korean version of this Assurance Statement is the only valid version. LRQA assumes no responsibility for versions translated into other languages.

This Assurance Statement is only valid when published with the report to which it refers. It may only be reproduced in its entirety.

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3. Social

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1. Introduction

GHG Assurance Statement

Relating to Hyundai Motor Company’s Scope 1 & 2 GHG emissions in overseas sites and Scope 3 emissions for the calendar year 2022

This Assurance Statement has been prepared for Hyundai Motor Company in accordance with our contract.

Terms of engagement

LRQA was commissioned by Hyundai Motor Company to provide independent assurance on its GHG emissions inventory and energy consumption

for the calendar year 2022 (here after referred to as “the report”) against the assurance criteria below to a limited level of assurance and materiality of

professional judgement using LRQA’s verification procedure, which is in accordance with ISAE 3000 and ISAE 3410.

Our assurance engagement covered Hyundai Motor Company’s domestic and overseas operations and activities, and specifically the following requirements:

• Evaluating conformance with World Resources Institute / World Business Council for Sustainable Development Greenhouse Gas Protocol:

A Corporate Accounting and Reporting Standard, revised edition

• Evaluating the accuracy and reliability of data and information for direct GHG emissions (Scope 1), energy indirect GHG emissions (Scope 2) and energy

consumption in operations of overseas factories

• Evaluating the accuracy and reliability of data and information for other indirect GHG emissions (Scope 3) in domestic and overseas sites.

LRQA’s responsibility is only to Hyundai Motor Company. LRQA disclaims any liability or responsibility to others as explained in the end footnote. Hyundai Motor

Company’s responsibility is for collecting, aggregating, analysing and presenting all the data and information within the report and for maintaining effective

internal controls over the systems from which the report is derived. Ultimately, the report has been approved by, and remains the responsibility of Hyundai

Motor Company.

LRQA’s Opinion

Based on LRQA’s approach nothing has come to our attention that would cause us to believe that Hyundai Motor Company has not,

in all material respects:

• Met the requirements above; and

• Disclosed accurate and reliable data and information as summarized in Tables 1, 2-1, 2-2 and 3 below.

The opinion expressed is formed on the basis of a limited level of assurance and at the materiality of the professional judgement of the verifier.

Note: The extent of evidence-gathering for a limited assurance engagement is less than for a reasonable assurance engagement. Limited assurance engagements focus on aggregated data rather

than physically checking source data at sites. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been

obtained had a reasonable assurance engagement been performed.

https://www.ghgprotocol.org

This engagement excludes veriﬁcation of Scope 1 and 2 emissions for domestic operations in accordance with our contract with Hyundai Motor. Scope 1 and Scope 2 GHG emissions for

domestic operations of Hyundai Motor Company have been veriﬁed for the same reporting period by LRQA in accordance with the GHG emissions trading system of Korea.

LRQA’s approach

LRQA’s assurance engagements are carried out in accordance with our verification procedure. The following tasks though were undertaken as part of the

evidence gathering process for this assurance engagement:

•

interviewing key people of the organization responsible for managing GHG emissions and energy consumption data and records;

•

sampling specific overseas factories and reviewing processes related to the control of GHG emissions and energy consumption data and records;

• reviewing whether GHG emissions have been calculated with parameters from recognized sources;

•

checking whether direct GHG emissions and non-renewable energy consumption of HMMC in Czech were transposed correctly from the GHG

inventory which was verified by the third-party assurance provider other than LRQA;

•

verifying historical GHG emissions and energy consumption data and records at an aggregated level for the calendar year 2022; and

•

visiting Hyundai Motor Company’s head office and reviewed additional evidence made available by Hyundai Motor Company.

LRQA’s standards, competence and independence

LRQA implements and maintains a comprehensive management system that meets accreditation requirements for ISO 14065 Greenhouse gases –

Requirements for greenhouse gas validation and verification bodies for use in accreditation or other forms of recognition and ISO/IEC 17021 Conformity

assessment – Requirements for bodies providing audit and certification of management systems that are at least as demanding as the requirements

of the International Standard on Quality Control 1 and comply with the Code of Ethics for Professional Accountants issued by the International Ethics

Standards Board for Accountants.

LRQA ensures the selection of appropriately qualified individuals based on their qualifications, training and experience. The outcome of all verification

and certification assessments is then internally reviewed by senior management to ensure that the approach applied is rigorous and transparent.

LRQA is Hyundai Motor Company’s verification body for its GHG emissions under the GHG emissions trading system of Korea. The verification is the only

work undertaken by LRQA for Hyundai Motor Company and as such does not compromise our independence or impartiality.

Dated: 14 May 2023

Tae-Kyoung Kim

LRQA Lead Verifier

On behalf of LRQA

2nd Floor, T Tower, 30, Sowol-ro 2-gil, Jung-gu, Seoul, Republic of Korea

LRQA reference: SEO00001260

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3. Social

4. Governance

5. ESG Factbook

1. Introduction

GHG Assurance Statement

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3. Social

4. Governance

5. ESG Factbook

1. Introduction

Table 1. Summary of Hyundai Motor Company’s Overseas Factories, Scope 1 and Scope 2 GHG Emissions 2022

Scope of GHG emissions

Tonnes CO

HMMA

BHMC

HMI

HAOS

HMMC

HMMR

HMB

HTBC

HTMV

HMMI

HYMEX

Direct GHG emissions (Scope 1)

33,821

59,526

27,574

30,741

32,205

13,396

6,936

868

3,953

5,733

6,597

Energy indirect GHG emissions (Scope 2, Location-based)

170,690

129,901

266,987

22,825

49,272

10,119

10,427

6,780

23,201

47,824

58,660

Energy indirect GHG emissions (Scope 2, Market-based)

170,690

129,901

158,357

11,035

10,119

10,427

6,780

23,201

47,824

58,660

Note 1: Scope 2, Location-based and market-based are deﬁned in the GHG Protocol Scope 2 Guidance, 2015

Table 2-1. Summary of Hyundai Motor Company’s Overseas Factories, Energy Consumption (TJ) 2022

Energy

HMMA

BHMC

HMI

HAOS

HMMC

HMMR

HMB

HTBC

HTMV

HMMI

HYMEX

Non-renewable energy

1,830

1,970

1,101

699

581

367

433

160

376

460

Renewable energy

452

108

435

Table 2-2. Summary of Hyundai Motor Company’s Overseas Factories, Energy Consumption (MWh) 2022

Energy

MWh

HMMA

BHMC

HMI

HAOS

HMMC

HMMR

HMB

HTBC

HTMV

HMMI

HYMEX

Non-renewable energy

508,239

547,173

305,763

194,201

161,314

101,818

120,203

16,344

44,490

104,513

127,670

Renewable energy

125,506

30,000

120,766

3,622

GHG Assurance Statement

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3. Social

4. Governance

5. ESG Factbook

1. Introduction

Table 3. Summary of Hyundai Motor Company, Scope 3 GHG Emissions 2022

Scope of GHG emissions

tCO

Other indirect GHG emissions (Scope 3)

Purchased goods & services – raw materials for parts used in vehicles manufactured in domestic and overseas factories

19,852,763

Capital goods – computers & monitors purchased in domestic sites

326

Fuel- and energy-related activities – upstream emissions of fuels consumed in domestic sites and overseas factories (excluding electricity and steam purchased)

(Overseas factories only include HMMA, BHMC, HMI, HAOS, HMMC, HMMR, HMB, HTBC, HTMV, HMMI and HYMEX)

145,177

Waste generated in operations – treatment of waste generated from operations in domestic sites (Ulsan/Jeonju/Asan factories, research centres and service centres)

1,978

Business travel – emissions of personal cars, buses, trains and domestic & international flights by employees working in domestic sites

21,370

Employee commuting – commuting by buses in domestic operations

6,617

Downstream transportation and distribution – vehicles manufactured in domestic factories (This includes shipping and land transportation by Hyundai Glovis)

964,206

Use of sold products - internal combustion engine vehicles sold domestically and overseas (This is based on mileage of 150,000 km for 10 years, and excludes electric vehicles and hydrogen vehicles)

81,959,096

End-of-life treatment of sold products – vehicles sold domestically and overseas

2,133,743

Downstream leased assets – lessee companies in the headquarters building

539

Investments – Scope 1 and Scope 2 GHG emissions of six investee companies, in which Hyundai Motor Company owns 20% or more shares and which are listed on the stock market of Korea.

704,970

LRQA Group Limited, its affiliates and subsidiaries, and their respective officers, employees or agents are, individually and collectively, referred to in this clause as 'LRQA'. LRQA assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document or howsoever

provided, unless that person has signed a contract with the relevant LRQA entity for the provision of this information or advice and in that case any responsibility or liability is exclusively on the terms and conditions set out in that contract.

The English version of this Assurance Statement is the only valid version. LRQA assumes no responsibility for versions translated into other languages.

This Assurance Statement is only valid when published with the Report to which it refers. It may only be reproduced in its entirety.

GHG Assurance Statement

Hyundai Motor Company has been publishing a sustainability report every year since 2003 in order to disclose both financial and non-financial performance, including its efforts to promote sustainable management, in an integrated manner and to

communicate with stakeholders. This 2023 Sustainability Report elaborates on its key performances achieved in the areas of ESG management strategy, environment, society and governance, and the issues associated therewith. Through this, we will

actively communicate with stakeholders to realize social value as a global leading company.

This report is in accordance with the Global Reporting

Initiative (GRI) Standards. In addition, this report satisfies

the four principles – Inclusivity, Materiality, Responsiveness,

and Impact – of the AA1000APS (Accountability Principles

Standard) that includes the obligation to explain sustainability

management.

In addition, this report was prepared to align with the

information disclosure guidelines of the Task Force on

Climate-related Financial Disclosures (TCFD), Sustainability

Accounting Standards Board (SASB), WEF IBC Stakeholder

Capitalism Metrics, and European Sustainability Reporting

Standards (ESRS).

Publisher

Hyundai Motor Company

Headquarters: 12, Heolleung-ro, Seocho-gu,

Seoul, 06797, Korea

Publication

Date

July 2023

Production

(Contact

Information)

Sustainability Management Team,

Hyundai Motor Company

Tel: +82-2-3464-8886

E-mail: ESG@hyundai.com

Reporting

Principle

GRIStandards, TCFD, SASB,

WEF IBC Stakeholder Capitalism Metrics, ESRS

Reporting

Boundary

Hyundai Motor Company (also include some

data and information of Hyundai Motor Group)

Reporting

Scope

Economic (based on Korean International

Financial Reporting Standards), social and

environmental area

Reporting

Period

January 1st, 2022 - December 31st, 2022

(also include some data and information from

the first half of 2023)

Reporting

Cycle

Annual (last report was published in July 2022)

Reporting Principles and Standards

This report covers activities undertaken from January 1st,

2022 to December 31st, 2022, including some key activities

conducted until the first half of 2023. As for quantitative

performance, if the results need to be tracked continuously,

we have used data for the past three years.

The reporting cycle for this report is one year. The previous

report was published in July 2022.

Reporting Period

This report covers the activities of the headquarters as well

as manufacturing plants, R&D centers, design centers, and

sales corporations operated by Hyundai Motor Company in

Korea and overseas.

Financial information is based on the consolidated financial

statements in accordance with the Korean International

Financial Reporting Standards (K-IFRS). Nonfinancial data

regarding environmental and social performance is based

on the separate figures of Hyundai Motor Company, and

some performances include those of Hyundai Motor Group.

In case the reporting scope differs, the reporting scope of

the information is indicated separately in the annotation.

Scope and Boundary of Report

This report has been assured by an independent assurance

corporation (DNV) to ensure the accuracy, objectivity and

credibility of the report preparation process and all the

information created. The financial information provided in

this report has been audited by an independent auditor,

and assurance on greenhouse gas emissions and energy

usage was carried out by LRQA, an independent assurance

corporation. Detailed assurance results can be found in

the third-party assurance statement and greenhouse gas

assurance statement.

Third Party Assurance

The UN Global Compact (UNGC) is an international

agreement that former UN Secretary-General Kofi Annan

suggested in 2000 to emphasize corporate execution of

social responsibilities, and consists of ten major principles

in the four areas of human rights, labor, environment, and

anti-corruption. Hyundai supports the ten principles of the

UNGC and strives to observe them in overall management.

UN Global Compact

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3. Social

4. Governance

5. ESG Factbook

1. Introduction

About This Report

Aaron Lee

Anna Jo

Bit-Na Yoo

Bokyung Choi

Bora Han

Byung Chul Im

Byungil Jo

Byungmun Choi

Byungwook Park

Chaeyun Lee

Chanah Jung

Changho Yoo

Changje Kim

Chanhee Jang

Cheolwoong Seo

Daehwan Kim

Dalsu Park

Dongbin Seo

Donghun Kim

Dongsoo Kim

Dongsung Kim

Doyoung Hwang

Euihyun Seo

Eunhye Kim

Eunjee Seo

Eunjin Seok

Eunyeong Park

Gilhoon Kim

Guanhee Park

Gunhee Cho

Gwanghyun Hahn

Gwangkyu Cho

Gyeol Han

Hajoo Han

Hanseok Kim

Hanseong Cho

Heeook Lee

Huiyeol Lee

Hwikyu Choi

Hyein Kim

Hyeje Lim

Hyejin Kim

Hyejung Noh

Hyoik An

Hyosu Namgung

Hyungju Choi

Hyungsuk Yeo

Hyunho Seo

Hyunjae Huh

Hyunjoon Lee

Hyunsik Baik

Hyunsoo Park

Hyunwoo Kim

Hyuyeon Jang

Ian Kim

Inchang Seong

Jaebok Lee

Jaehyeok Ahn

Jaehyun Jung

Jaesik Shim

Jaewoon Hwang

Jaeyun Shin

Jangho Kuk

Jayoung Song

Jee-eun Chung

Jeein Kim

Jeonbeom Kang

Jeongeun Kwon

Jieun Jeong

Jihoon Go

Jihwan Yoon

Jiman Lee

Jimin Kwon

Jinhoon Chang

Jinhwa Lee

Jinhyuk Park

Jinhyung Lee

Jinkyung Noh

Jinsoo Shin

Jinwon Bae

Jinwook Song

Jiyun Shin

Jongmoon Choi

Jongok Kim

Jongyul Park

Jooheung Park

Joonho Shin

Joosuk Park

Ju Hyun Han

Jun Hyungchul

Juneho Park

Jungchi Kim

Jungchul Lim

Jungho Kim

Jungmin Park

Jungwoo Lee

Junho Kim

Juseok Kang

Kihan Shin

Kiseok Kim

Kiyoung Jung

Kwangil Lee

Kwonhyoung Choi

Kyeongmin Do

Kyusang Choi

Kyuyeon Han

Merza Chung

Minsoo Chae

Minchang Cha

Minho Choi

Minhyoung Jo

Minjae Kwon

Minok Park

Minseok Kim

Minwoo Kim

Minyoung Kim

Moonsang Yoon

Moonsue Park

Naehwan Hyun

Naeun Lee

Naeun Yoo

Namsu Han

Nari Park

Sanga Choi

Sangbum Kim

Sangtan Kwak

Sangyun Ahn

Sean Hwang

Sejun Kim

Seokho Kim

Seongjae Lee

Seri Kim

Seulki Yang

Seung Su Kang

Seungbum Kim

Seungji Kang

Seungkyum Ra

Seungyeub Lee

Sewan Park

Shindong Yun

Shinwon Lee

Simon Kim

Soohyun Bae

Soonbok Kim

Soonsang Hong

Suksan Yoon

Sungeun Kang

Sunggeun Park

Sungsam Kim

Sungwhan Kim

Suwon Choi

Suyeon Kim

Taejung Lee

Wonbae Lee

Wonchan Lee

Woosup Kim

Yejin Yoon

Yelin Ko

Yeonju Ryu

Yeri Kim

Yongbeom Jo

Yonghee Park

Yoonjae Lee

Yoonseok Sohn

Youngjin Song

Youngpyoe Hong

Youngsu Kim

Yujeong Lee

Yunryeong Song

Yushin Kim

Contribution

(In alphabetical order)

121

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3. Social

4. Governance

5. ESG Factbook

1. Introduction

Planning & Design

Hyundai Motor Company

Sustainability Management Team

Dongwoon Jung

Jaekyoung An

Jihyeong Ha

Minkyung Kim

Wonjun Choi

Yooseong Choi

Youngmin Kang

Yunjae Lee

Hyundai Motor Company

Brand Design Team

Seohee Park

Sukgyu Choi

Sungwoo Suh

Korea Productivity Center

Hyungyun Jeong

Junyoung Lee

Kwangho Jeong

Sangwoo Han

Talantone Creative Group

Ahreum Min

Younhee Park

What moves us

ESG Magazine

Humanity.

Robotics for Everyone

Advanced Air Mobility for Everyday

Mobility Experiments for Humanity

Progress for Humanity –

Journey to future mobility, to move everyone.

Hyundai pursues a better future for humanity through innovation.

If we had only talked the talk but not walked the walk regarding

mobility solutions for all, we wouldn’t have been able to develop

ideas of creating a better tomorrow.

To bring about changes in all our lives through future mobility

technology and to enable an innovative ecosystem where

all objects have mobility, Hyundai offers smart mobility solutions

that transcend the limitations of time and space, thereby ushering

in a new future where people’s dreams do come true.

Contents

Robotics for

Everyone

Wearable Robot

Human and robot moving as one to help

people overcome physical limitations

Service Robot

Humanity’s new helper and

friendly companion

Agile Mobile Robot

New future rising from the fusion of

robotics and mobility technology

Advanced

Air Mobility for

Everyday

Redefining AAM

Designing a new concept of

future air mobility

Realizing AAM

Creating a new way to move

no one had imagined

Mobility

Experiments for

Humanity

Mobility Becomes Space

Vision of a new living space

completed by future mobility

Mobility Becomes Shelter

Vision of a new living environment

for future generations

Future Mobility

We Envision

Meet the Future, Today.

Robotics for Everyone –

a significant leap toward

‘Progress for Humanity’

“Progress for Humanity”, Hyundai’s vision of future mobility

has emerged from a sincere heart for humanity. We have

been thinking long and hard about what people need

and what they want from Hyundai, and finding answers

in mobility solutions that provide freedom of mobility to

everyone. As there are no limits to what we can achieve

in our desires to see all humanity share a better future,

we are expanding the sphere of our influence beyond

automotive innovation. While creating value that benefits

people through mobility, we are taking meaningful steps

of progress for humanity by introducing robots that are

embodied with affection and care for people.

FUTURE MOBILITY

WE ENVISION

Mobility for You

Wearable Robot

• CEX: Chair-type wearable robot supporting the legs

•

VEX: Vest-type wearable robot assisting the worker with

overhead tasks

•

HMEX: Medical wearable robot enabling patients with

waist-down paralysis to walk

Service Robot

• DAL-e: Customer service robot

• DAL-e Delivery: Indoor and outdoor delivery robot

• ACR: Automatic electric vehicle-charging robot

Mobile Platform

•

PnD: An open mobile module that combines driving, steering,

braking and sensing

•

MobED: 12 degrees of freedom mobile robot platform that can

maintain its horizontal body posture even on inclined roads

and uneven ground

Boston Dynamics

•

Spot: Four-legged robot dog for industrial inspection

applications

•

Atlas: Two-legged humanoid robot for advanced research

• Stretch: Logistics-specialized robot

MEET THE FUTURE,

TODAY.

Hyundai Motor Company Robotics

Mobility for humanity, towards the world

Human-centered

Technology

Hyundai sees robots as a new partner to a better life. Robots are already a familiar part of our daily

lives – wearable robots help people walk again; service robots charge electric vehicles in a parking lot

without human interactions; cute delivery robots effortlessly weave through the crowd; and a four-legged

walking robot “Spot” dances at a BTS concert and serves as a member of “Team Century”, promoting the

2022 FIFA World Cup™. Taking a step further, Hyundai is redefining robotics as a new mobility concept that

will expand the realm of the human reach and help humanity realize ultimate freedoms of mobility,

and leading the lifestyle innovation that will be brought about by robots.

Goal

Expanding

Human Reach –

HMC Robotics Lab

Execution

Metamobility

New dimension of mobility experience enabled by using

smart devices

Mobility of Things

Ecosystem where all objects move freely by themselves based

on robotics technology

Boston Dynamics

PRODUCTS

In the Fourth Industrial Revolution era where excitements

of advancing technologies and concerns over technological

inequality prevail, Hyundai is focused on R&D of robots that

truly benefit humanity. Our robotics R&D has begun with a

desire to augment the progress of humanity, and our robots

are at work in all sectors, small and big, of industry and daily

life, creating a more humane world.

Wearable Robot

Human and robot moving as one to help people overcome physical limitations

We transgress the boundaries of means of transportation to overcome limitations

in mobility. Even people with physical disabilities gain new strength through robotics solutions Hyundai offers.

We abide by the basics of mobility and always present bigger goals regarding humanity’s movement so that

all walks of life can freely move from starting point to destination.

Journey to Move Everyone

Exploring new horizons of

future mobility, free of limits

The goal of Hyundai’s R&D of robotics is to create a better

future for humanity. Wearable robots complement the

movements of the human body by becoming a part of

the body, thus extending freedom of mobility beyond

physical limitations.

Hyundai’s brand campaign film, released in January

2020, shows a Korean National Team para-archer walking

steady with the help of Hyundai’s medical exoskeleton

“MEX”. With the feet placed on MEX’s footholds and the

legs and back fastened by a belt, even people paralyzed

from the waist down can walk by pushing the button

on the walking poles. In its early 2023 presentation of

the video titled “Journey to Move Everyone”, Hyundai

reaffirmed its commitment to innovating robotics

technology for anyone with freedom of mobility.

Moreover, Hyundai commenced the pilot operation

of its indoor and outdoor delivery robots in early 2023,

demonstrating that delivery robots, which was regarded

as something of the future, are on our doorsteps. Our

delivery robot made its debut at a multi-purpose building

located in Gwanggyo near Seoul, efficiently performing

its task of delivering food to various destinations in the

congested area. The robot moves at 5.4 km/h, slightly

faster than people walking. The robot can move faster but

maintains the speed for safety reason. It uses elevators

in apartment buildings and, upon completion of its task,

finds its way back to the charging station using Hyundai’s

Plug & Drive (PnD) module platform. The PnD module

can be attached to any objects and enables mobility

of traditionally inanimate things, from small objects

to large community spaces. It is an all-in-one mobility

solution that combines intelligent steering, braking, in-

wheel electric drive and suspension hardware. The four

PnD modules attached to the delivery robot constitute

the secret behind the robot’s ability to freely and quickly

move in all directions.

As robots evolve with a higher degree of precision, people

can enjoy their lives more. Hyundai’s robotics technologies

will bring about delightful changes in people’s daily lives.

Drawing on our fast-advancing robotics knowhow, we will

continue to create a more inspiring future where robots

help improve the quality of people’s lives in a genial way

as an integral part of daily life.

Communicating and communing with

people and evolving for humanity

Equipped with AI technology, robots are evolving in the

direction of communing with people. Drawing on the

technological capabilities it has accumulated as a global

automotive company, Hyundai has been developing service

robots that move as quietly and reliably as non-vibration

vehicles, provide as much information and entertainment

as vehicle infotainment systems, and navigate the

surrounding area using LiDAR and camera sensors as well

as autonomous driving vehicles. What’s more, we have

added AI technology to robots to improve them so that

they can readily respo

nd to changes in people’s emotions,

thereby getting closer to developing robots that can

communicate and even commune with people.

A leading example is service robot “DAL-e” developed for

serving customers. As implied in its full name, “Drive you,

Assist you, Link with you – experience”, DAL-e can avoid

moving obstacles that can appear in its paths toward

customers. In addition to using words, it communicates

with customers using non-linguistic elements, such as

postures, facial expressions and intonations. It also can

take pictures of customers, dance to music, and perform

other entertainment functions upon request. Since

2021 following its pilot operation in June 2019 at the

Hyundai Motor Studio Seoul, DAL-e has been welcoming

customers at Hyundai showrooms. In addition, it made

appearance at the 2022 general shareholders’ meeting to

the delight of many attendees and showed off some of its

many talents at BTS’ concert in Busan.

AI Robot “DAL-e” | Hyundai Motor Group Robotics Lab

AI-based Self-Driving Hotel Delivery Robot

Service Robot

Humanity’s new helper and friendly companion

Anticipations and concerns are multiplying over the rapid

development of AI technologies and robots as they increasingly become a part of our lives.

Hyundai bridges the gap with people-centric technologies. Just like automobiles that have

evolved for hundreds of years for the benefit of humanity, robots that have come together with

AI assist our daily lives with their measured and reassuring motions.

MobED is a new concept of

mobility, traveling anywhere as reliably as a quadruped.

Simple yet agile and dynamic yet stable, MobED brings

its infinite possibilities into our daily lives.

Mobility for You –

MobED Action Cam

Hyundai Motor Group’s New Mobility Platform – MobED

Creating new opportunities of

movement with a new-concept

mobile platform

Hyundai is going beyond producing robots and advancing

robotics technology and humanizing it in the coat of new

services that generate unprecedented value. A leading

example is “MobED”, which is replacing existing service

robots. MobED, which stands for “Mobile Eccentric

Droid”, is a small mobility platform that is superior in

maneuverability even in a complex urban environment.

Robots have become a part of our daily lives as people

enjoy the convenience and benefits of using such mobile

robots as robot vacuums. A robot vacuum is a smart home

appliance that moves by itself and cleans or vacuums

floors, but its maneuverability is somewhat limited that

it often gets stuck in a corner or stopped by an obstacle.

Not only robot vacuums but most other mobile platforms

can be used only in certain environments, which also

restricts the extent of their usage. To overcome these

limitations, we have looked beyond the concept of a

simple wheeled mode of transportation and started

commencing the development of a new mobile robot

with dynamic, stable driving capabilities, and as a result,

unveiled MobED in December 2021, thus creating new

opportunities of movement.

Contrary to its simple appearance, MobED is extremely

agile and dynamic and can stably travel even on rough

surfaces. Thanks to the “Eccentric Wheel” technology

that enables each wheel to operate independently,

MobED can travel over bumpy surfaces with less lateral

movements. Also, the four-wheel steering function

allows it to stop and turn 360 degrees as well as to avoid

obstacles by moving diagonally, which minimizes the

distance to travel.

Another distinctive feature of MobED is that it expresses

diverse types of information to the user using its flexible

joint movements. Such human-robot interactions not

only give people pleasure and a sense of closeness, but

also make people see robots as a trusty partner to their

daily lives. What’s more, user experiences of such diverse

interactions can lead to the creation of new mobile robot-

based services.

MobED is a universal platform that enables producers

and users to freely expand functions to their needs. It can

therefore vastly extend the limits of existing mobile robots,

easily change the roles of service robots, and has unlimited

potential to provide diverse services unimagined before.

A MobED of the future will be creating new experiences

in our daily lives. To realize such a future today, Hyundai is

expediting its development of mobility services that can

satisfy both users and consumers.

Agile Mobile Robot

New future rising from the fusion of robotics and mobility technology

It has been two years since Boston Dynamics became a member of Hyundai Motor Group.

Since then, it has been conducting bold ventures in close collaboration with Hyundai. As a result, meaningful outcomes

have been produced that will lead the infinite movement and progress of humanity. Our dynamic and innovative

mobility drive, spearheaded by Spot, presents a new path of exploration to the robot industry.

Future of Robotics for Humanity

Adding to the value of humanity

from the closest place to people

Boston Dynamics, a global robot company joined Hyundai

Motor Group in June 2021, has been working closely with

Hyundai to develop robotics technologies that will enable

humanity’s ever-expanding movements and progress. At

the center of the collaboration stands 4-legged walking

robot “Spot” that performs diverse roles in various areas.

Spot’s potential is infinite, and so is the potential of robots

to create new value for humans through their interactions

with humans. Through robotics technology, Hyundai

seeks to enrich the lives of people, and our robots are

created to provide people with values that are meaningful

and beneficial. Robots will be soon serving as a reliable

helper, freeing people of repetitive work and dangerous

tasks so that people can focus more on cultivating their

creative potential to the fullest extent. They also will be an

integral part of our lives, interacting and sharing fun with

people, just like a dear friend. The journey has already

begun towards a future where people will be together

with robots as a new mobility partner. Through mobility

innovation, we will make daily life more dynamic, help

build a better world, and lead the journey towards a more

sustainable future.

Spot had an especially busy year in 2022. At Consumer

Electronics Show (CES) 2022 held in Las Vegas in January,

Spot went on the main stage together with Hyundai Motor

Group Executive Chair Euisun Chung. During the 2022 FIFA

World Cup™, of which Hyundai was an official sponsor,

Spot, sporting jersey number 1, played an outstanding part

in the Goal of the Century campaign as a member of Team

Century, the campaign leaders. Spot also took part in an

art project, contributing to creating an arena for discussion

on diverse subjects, including robotics, art and climate

change. At BTS’ concert in Busan, Spot escorted BTS

members to the main stage to the surprise and delight of

fans in attendance.

Spot can do many other things. It can go anywhere people

can and also explore areas inaccessible to humans. It can be

used in a wide range of industry, including manufacturing,

construction, research, mining and public safety. By

autonomously handling various forms of work, it changes

and upgrades the way of working. Spot is actually used at

Hyundai’s worksites. It performs vehicle quality inspections

at the production line and patrols the worksite at night to

detect fires or leakages of harmful substances. By playing an

exclusive role in ensuring the safety of hard-to-reach areas,

Spot is proactively responding to changes expected in the

future industrial environment.

FUTURE MOBILITY

WE ENVISION

Advanced Air Mobility for Everyday –

ready for take-off toward sustainable

future mobility

The future Hyundai envisions is a smart city where people

are at the center, as we look beyond automotive business to

emerge as a “Smart Mobility Solution Provider”. Then what

would be most important to the realization of such a future?

Our answer is freedom of mobility in everyone’s daily life. To

bring the tomorrow we all dream of into reality today, we are

transcending vehicle innovation to focus our resources and

energy on mobility technologies that can establish the smart

city’s identity.

Hyundai Enables the New Economy

MEET THE FUTURE,

TODAY.

To expand the human reach to include the sky for the convenience of humanity, Hyundai is focusing on researching and

developing Advanced Air Mobility (AAM), which will extend freedom of mobility to the skies above major cities. In a future city

where AAM will have become an integral part of daily life, people can free themselves from the chaos of ground transportation and

devote their precious time to something more worthwhile. Air mobility, free of traffic congestions as well as carbon emissions,

will present a better way for humanity to co-exist with nature. Although an unexplored course, it is the direction we must be

headed for the sake of a sustainable future as well as a destination Hyundai can reach for sure. This is why we are speeding up

our innovation, expanding the scope of collaboration, and flying high towards a human-centric, smart future city.

Human-centered

Technology

KEY MILESTONES OF

AAM DEVELOPMENT

CTOL: Conventional Take Off & Landing

STOL: Short Take Off & Landing

eVTOL: electric Vertical Take Off & Landing

A new concept of mobility to

change our daily lives

Developing the

“Zero Carbon Fixed-Wing”,

a new alternative for intercity/

regional movements

•

Applying hydrogen fuel cell-based CTOL

STOL

and autonomous flying technologies

•

Developing a vehicle concept optimal for

point-to-point transport

•

Production costs minimized through

design and manufacturing innovation

(design for manufacturability)

RAM

UAM

•

Applying eVTOL

and autonomous flying

technologies

•

Developing lithium metal-based battery

pack technology

•

Vehicle designed for mass production from

the early development stage

Developing an eVTOL vehicle,

a new mobility that will

redefine urban passenger

transport

Quarter-Scale Tech Demo

2022-2023

Full-Scale Tech Demo

2024-2025

Entry-Into-Service

2028

UAM

Tech Demo

Entry-Into-Service

RAM

2022-2025

2030

Designing a new concept of

future air mobility

A human-centric smart city should present visions and

opportunities to all people and invigorate their relationships.

Essential to this end is infrastructure and services that

enable people’s efficient and smart movements, which is

why Hyundai is creating a platform for future cities through

Advanced Air Mobility (AAM).

AAM is a rising sector in the air mobility market. National

Aeronautics and Space Administration (NASA) defines

AAM as an air transportation system that moves people

and cargo between places previously not served or

underserved by aviation. In other words, AAM covers both

Urban Air Mobility (UAM), which provides transportation

within cities, and Regional Air Mobility (RAM), which

interconnects cities. By adding the concept of eco-

friendliness to this definition of AAM, Hyundai is focusing

on developing a safe and innovative AAM system that

anyone can use as well as eco-friendly air-mobile vehicles.

Although AAM has yet to materialize, it has huge growth

potential. According to the global investment bank Morgan

Stanley, the global UAM-related market, estimated at

USD 8 billion in 2020, is forecast to reach USD 9,042

billion in 2050. The market size will be even bigger with

the inclusion of the AAM market that will cover the entire

global aviation industry, which has pledged to become

carbon neutral by 2050. Such an inspiring forecast is

based mainly on popular expectation that air mobility

will resolve many issues assailing over-crowded cities.

For example, UAM causes no road traffic congestions like

automobiles do.

Hyundai creates new paths to enable people to enjoy mobility

freedom, and we now are blazing new paths in the skies.

AAM can lessen the environmental impact of automobiles and

other existing transportation measures, while also expanding

people’s time and space. AAM is the next-generation mobility

solution for the sky roads Hyundai is creating.

Redefining AAM

Smart Mobility Solution Provider for

Human-Centered Cities

Also, its vertical take-off and landing ability enables relatively

freer and more efficient movements of people within cities

than conventional airplanes which require long and costly

runways. Saving travel time can also lead to an increase in

the quality of people’s lives while reducing negative impact

on the environment.

As a way to preoccupy the soon-to-be AAM market, widely

expected to boom as a result of satisfying the unmet needs

of automobiles and conventional air transport, Hyundai

elevated the status of UAM Sub-Division to AAM Division

in January 2022 and is expediting its development of

Advanced Air Mobility solutions. A business decision has

been made public to service UAMs from 2028 through

Supernal, a US entity dedicated to UAM, along with the

Entry-Into-Service (EIS) plan of RAM vehicles after 2030.

In an effort to realize such goals, Hyundai has established

partnerships with global players including Rolls-Royce and

Microsoft, and is working together to cultivate the AAM

market and the ecosystem as a whole.

Hyundai has been offering customers reliable, high-

performance vehicles, and in turn, earning due recognition

for its top-tier products and services. We now are looking

beyond automobile innovation in search of ways to open up

sky roads for AAM and thus help resolve traffic congestion,

housing shortage, and various other issues besetting cities.

We are ready to make the future people dream of into reality.

Hyundai will focus all of its technologies and competencies

on enabling everyone to enjoy freedom of mobility more

comfortably and more efficiently at reasonable costs.

Estimates of Urban Air Mobility Market Size

(Unit: USD billion)

9,042

2050

2035

1,001

2030

2020

* Source: Estimates by Morgan Stanley

Creating a new way to

move no one had imagined

Hyundai’s vision of innovative future mobility is entailing

concerted efforts and promising outcomes. At “AAM

Tech Day 2022” held at the Hyundai Motor Studio Goyang

in May 2022, Hyundai revealed its AAM business vision

as well as related technology development plans and

status. Also revealed was the actual vehicle of “Project

N”, in the shape of a multi-copter drone. Project N is the

first R&D outcome unveiled by AAM Division, the heart

of Hyundai’s AAM innovation. The project name was a

befitting choice in that the first letter of Hyundai’s FCEV

“Nexo” was used, as the application of hydrogen fuel cell

as the energy source was one of its main characteristics.

Developed as a flight vehicle with a maximum payload

of 700 kg measuring 6-meters in diameter, Project N

features a hybrid propulsion system of hydrogen fuel cell

and battery. The prototype of Project N obtained a special

airworthiness certification

from the Korean government

in February 2022, resulting in Hyundai Motor Group

becoming Korea’s first automobile maker to obtain a

tail number for hydrogen fuel cell-based aircraft. Having

successfully completed flight test, Hyundai has clearly set

the direction for its development of RAM vehicles that use

hydrogen as an energy source.

The global aviation industry is paying attention to

Hyundai’s AAM innovations as well. Supernal attracted

keen attention when it revealed the concept cabin design

for its eVTOL vehicle in July 2022 at the UK’s Farnborough

International Airshow. Supernal aims to commercialize the

vehicle in 2028. One of the most unique characteristics

of this model, which effectively reflects keywords of the

AAM innovation Hyundai pursues, is the intuitive, simple

yet refined interior design, an outcome of its adoption

of interior design elements from automobiles, without

following conventional aircraft design norms. The

seat design in particular, an inspiration burrowed from

butterflies, emanates both safety and comfort, a clear

contrast to seat designs common among conventional

aircraft. Another leading keyword is eco-friendliness. The

propulsion system, which consists of multiple rotors, is

pursuit of sustainability is reflected in its use of eco-

friendly materials, including cutting-edge recyclable

carbon fiber and other fiber materials made out of either

recycled plastics or plant extracts.

To make air mobility a part of our daily lives, it is important

to have relevant infrastructure built in where it is best suited.

Accordingly, Hyundai Motor Company, in cooperation

with Hyundai E&C, has signed a number of MOUs and

collaboration agreements for realization and successful

demonstration of pilot operation of K-UAM in 2020;

realization and establishment of lasting ecosystems for

UAM in 2021; and realization and successful operation

of UAM vertiports in 2022. In accordance with these

agreements, Hyundai is actively participating in Korea’s

UAM ecosystem development, together with Incheon

International Airport Corporation, KT, Korean Air and other

leaders in the industry. The vertiport is a new mobility

hub crucial to smart cities as well a space that can easily

accommodate the growth of nearby residential and

business communities. It is one of the top key infrastructure

facilities for sustainable UAM ecosystems.

Future cities require a new means of transportation that

can fly at low altitude, emit less noise, and uses eco-

friendly energy sources. Hyundai creates new modes

of movement to enable people to enjoy their freedom

of mobility with as few restrictions as possible. Hyundai

will continue to develop AAM business and establish

AAM ecosystems through cooperation among Hyundai

Motor Group affiliates and business partners. Taking

a step further, by embracing hydrogen fuel cell and

electrification technologies, we will do our best to realize

a future where no emissions are produced in the skies as

well as on the ground.

Government-issued certification verifying the safety standards of

aircraft for test-ﬂying purposes

Future air mobility is an inevitable future, and Hyundai is

realizing the future with its accumulated technologies and

capabilities. A global automotive company with products

and services infused with its innovation DNA, Hyundai is

stepping up its progress for humanity towards a world where

imagination is a competitive edge.

Realizing AAM

Mobility Experiments

for Humanity

If Hyundai had limited its innovation to making better auto-

mobiles, we would not have challenged ourselves to pioneer

future mobility. If we had regarded mobility only as a means

of transformation, the scope of the challenges we have taken

on would have been also limited. We are connecting mobility

to various spheres of human life, in the hope of seeing daily

movements become more seamless and daily lives more

comfortable. Children playing at home turning a newly

delivered mobility into another sphere of play, and mobility

creating a spacious sphere in a building packed with people.

To make technologies long thought of a distant future into a

part of daily life, we have recently applied for patents on some

10 future mobility technologies under the brand name of

“Mobile Living Space”. Drawing on the mobility experiments

for whole new mobility, Hyundai will transcend all mobility

limitations and expand the sphere of human lives.

FUTURE MOBILITY

WE ENVISION

Mobility

Becomes Space

Mobile Living Space –

Vision of a new living space completed by future mobility

Hyundai has recently unveiled a vision in which mobility space is redefined through a

video titled “Mobile Living Space”, which shows scenarios of organic connection between

mobility and a building. In the video, mobility support infrastructure is attached to a

residential building to enable passengers to seamlessly move between the two without

any exposure to the elements. Also shown is the possibility of residents using not only the

mobility space but also the vehicle’s features, such as air-conditioning and entertainment

systems, just like the electronic devices of their own home or office. The video visibly

illustrates our commitment to offering higher value and richer life experiences to customers

through diverse new technologies that can transform mobility into not only an innovative

means of transportation but also into a futuristic living space

Hyundai Motor Group in 2020 introduced the concept of connecting living/working

spaces with mobility in a future technology video titled “Active House”, and has since been

conducting R&D in relevant fields. The unveiled vision is particularly significant in that

it is based on detailed technologies and patents that can readily be applied to daily life.

We have made patent applications on 10 technologies that enable connection between

mobility and buildings in Korea and major overseas markets.

Hyundai is redefining and expanding the boundary of mobility into new fields, including

robotics, AAM and smart city, as well as in electrification, autonomous driving, and

connectivity. Keeping up with the fast-evolving definition of mobility, we will conduct R&D

in various areas for the progress of human wellbeing.

Mobile Living Space |

What If Mobility And Buildings Were Combined?

Mobility

Becomes Shelter

Habitat One –

Vision of a new living environment for future generations

In 2021, Hyundai declared “2045 Carbon Neutrality”, an ambitious pledge to achieve zero

net carbon emissions across all of its business activity, from production to operation and

disposal of automobiles. The declaration was followed by the presentation of a video with

a message for “Generation One”, the first generation to live in a carbon neutral world. The

name Generation One is coined by Hyundai to identify the first future generation that will

be breathing in and feeling the positive changes that will take place with the realization of

carbon neutrality.

In 2022, we more defined the future in which Generation One will live than ever before. We

introduced “Shelter”, a housing solution of a new form for future generations, in addition to

making company-wide efforts to devise an integrated climate change solution that stands

on three legs of clean mobility, next-generation platforms and green energy.

The “Habitat One” exhibition is a result of collaboration with famous artist groups in Korea

and abroad, highlighting the creative ideas about a living environment where people

can enjoy more sustainable lives. Held at the Hyundai Motorstudio Busan from July 2022

through January 2023, the exhibition focused on enabling visitors to imagine daily lives in

future cities and experience new possibilities of sustainable lives.

Hyundai hopes that the Habitat One exhibition has served as a journey through which

people could get a taste of what sustainable lives of the future would be like and to share

how such lives can be possible. Based on the vision, “Progress for Humanity”, Hyundai

will continue efforts to realize carbon neutrality by 2045 and take compassionate and

considerate actions for the future generations to come.

Habitat One Exhibition at Hyundai Motorstudio Busan

Expecting Generation One

BARE,

Air of Blooms

, 2022, Assembly of customized

robot units–Air(e), lidar sensor, multi-channel

video, customized LED displays, air-inflated blobs,

OPV panel mock-ups, kinetic control system, app.

1,500×600×500cm

ecoLogicStudio,

H.O.R.T.U.S. XL Astaxanthin.g,

2019,

3D printed substratum, living cultures of Chlorella SP

in bio-gel medium, 320x272x114cm

BARE,

Inhabiting Air

, 2022, Assembly of customized

robot units–Air(e), pneumatic control system, OPV

panel mock-ups, kinetic control system, LED lights,

app. 460×510×400cm

ecoLogicStudio,

Tree One

, 2022, robotically 3D

printed algal bio polymers, lab grade borosilicate

glass, living cultures of Cyanid-ium Caldarium in

liquid medium, 300x400x1,000cm

Online Tour

Online space for experiencing the Habitat

One exhibition site without time or movement constraints

United and guided

by humanity.

Hyundai’s journey of progress for humanity has always been a bold attempt to overcome

challenges. Even when we are faced with many difficulties lying in the course of numerable

challenges, the objectives and directions we set and follow always point toward people and

our stride of innovation stay mindful of people.

To transform mobility into not only an individual means of transportation

but also a path leading to a sustainable future, we will continue to take on challenges for,

and grow together with, humanity.

The story of the journey is transparently presented to all stakeholders through several

communication channels, including this ESG Magazine.

Hyundai’s journey of progress for humanity has always been a bold attempt to overcome

challenges. Even when we are faced with many difficulties lying in the course of numerable

challenges, the objectives and directions we set and follow always point toward people and

our stride of innovation stay mindful of people.

To transform mobility into not only an individual means of transportation

but also a path leading to a sustainable future, we will continue to take on challenges for,

and grow together with, humanity.

The story of the journey is transparently presented to all stakeholders through several

communication channels, including this ESG Magazine.