Hyundai Motor Group and LG Electronics are teaming up as they shift from home appliances to automotive electronics.
LG Electronics is gradually making significant progress in "automotive electronics," which it considers a crucial future business field. With an expanded supply to clients such as Hyundai Motor Group, LG's operating profit for 2024 is expected to reach a new high. The future of LG's automotive electronics business may rival its current leading home appliance segment.
LG Group's automotive electronics business primarily centers around LG Electronics. This includes the Vehicle Component Solutions (VS) division, specializing in In-Vehicle Infotainment (IVI) systems, as well as its subsidiary LG Magna e-Powertrain, a key supplier of Electric Vehicle (EV) components. Additionally, the subsidiary ZKW focuses on automotive lighting. LG Innotek and LG Display (LGD), along with other affiliates, also contribute automotive products within their specialized areas of business.
According to the Maeil Business Newspaper, Kia, a subsidiary of Hyundai Motor Group, will feature LG's Magna e-Powertrain's "stator" component in its EV9 SUV. There are prospects for expanding their supply partnership in the future.
Industry analysts highlight the significance of Hyundai Motor Group using LG's automotive electronic components. Since these parts are directly related to driver and passenger safety, vehicle manufacturers rigorously select their suppliers. This demonstrates Hyundai Motor Group's trust in the performance and safety of LG Magna e-Powertrain products.
Despite a slowdown in demand for EVs, the demand for high-value automotive electronic components remains strong, suggesting a potential increase in sales.
LG's Magna e-Powertrain has recently opened new factories in Mexico and Hungary, following those in South Korea and China. This will strengthen supply chain reliability and support future growth.
Although LG's VS business unit saw a slight decline in operating profit in 2023, reaching 133.4 billion KRW (approximately 96.58 million USD), its revenue exceeded 10 trillion KRW for the first time. With new orders and clients, industry observers expect operating profit to reach 52 billion KRW in Q1 2024 and will double in the second quarter.
The subsidiary ZKW plans to actively secure next-gen technologies and enhance business structure efficiency. South Korea's KB Securities predicts that LG will comprehensively expand its supply of electric vehicle motors, Advanced Driver Assistance Systems (ADAS), and network operating systems to Hyundai Motor Group, focusing on IVI supply.
LG Electronics' operating profit has remained around KRW 3 trillion for the past 4 years. However, driven by its automotive business, it is expected to reach KRW 4.5 trillion and KRW 5.5 trillion in 2024 and 2025, respectively.
