Hyundai Motor Company 2008 Sustainability Report

THE ROAD TO SUSTAINABILITYHYUNDAI MOTOR COMPANY 2008 Sustainability Report

Before You Read

Writing Guidelines

Hyundai Motor Company’s 2008 Sustainability Report is based on the most up-to-date G3 GRI (Third Generation of the Global Reporting Initiative). In

selection of reporting items, we have embraced additional content beyond what the G3 GRI guideline requires. For more information on GRI guidelines

applied to this report, please refer to the G3 GRI Sustainability Reporting Guidelines on page 111~114.

Collecting Relevant Data and Writing the Report

We collected data from relevant departments in accordance with the HMC Sustainability Reporting Guidelines developed in 2003. In addition, we col-

lected sustainability report data of domestic and foreign plants through Autoway, the HMC’s intranet system. In particular, we reviewed and edited this

report in each phase of preparation including data collection, content preparation, and final review, in consultation with relevant departments on a regular

basis.

The Scope of the Report

This report covers quantitative results obtained from 2007 (the fiscal year of 2007) and qualitative events that occurred between January 2007 and April

2008. This report is prepared based on sustainability activities and performance reports made by the HMC headquarters, domestic plants, domestic sales

points, service centers, distribution centers, training institutions, overseas plants and dealerships, R&D centers, and regional headquarters.

Degree of Compliance with the GRI G3

We self-declare that the 2008 Sustainability Report meets the requirements of the GRI G3 Level A+, which has been independently reviewed and ap-

proved by Deloitte.

Overview

00 Before You Read

08 Letter from Chairman & CEO

10 Letter from Vice Chairman & CEO

12 Materiality Analysis and Stakeholder

Engagement

14 2008 Highlights

15 Overview of HMC

16 Stakeholder Discussion

Corporate Philosophy

20 Corporate Philosophy Management Philosophy Vision Management Policy Mid-and Long-term Strategies

22Environment Management Environment Management Philosophy &

Policy Environmental Management Strategy and

System Environmental Management Organization

24 Ethics Management Ethics Management Philosophy Establishment of Guidelines

26 Corporate Social Responsibility Overview of Corporate Social Responsibility Organizational Structure to Support Corporate Social Responsibility How to Fulfill the Social Responsibility

28 Corporate Governance and the Board of Directors Board of Directors 2007 Activities of the Board of Directors Committees under the Board of Directors Ethics Committee

Economy

34 Main Business Activities Global Production Global Sales Enhanced Global Competitiveness

38 Process Innovation Strategic Enterprise Management(SEM) Supply Chain Management & Order to

Delivery(SCM & OTD) Customer Relationship Management

(CRM) Plant Maintenance(PM)

Environmental Management

44 Efforts to Minimize the Impact of the Climate Change

Regional Responses Development of Alternative Fuel Vehicles Fuel Cell Electric Vehicle(FCEV) Improving Vehicle Fuel Efficiency

55 Reduction of Gas Emissions Regional Responses Development of New Engines

58 Increased Recyclability Resource Circulation Target Expansion of Recycling Technology Life Cycle Assessment (LCA) Minimizing Use of Harmful Substances

64 Clean Production Production Sites Fighting Against Climate

Change Resource Circulation Reduction of Pollutant Emissions

Environmental Expenditures

People & Society

78 Employees Employee Status Building Trust Respect for Human Rights Employee Education Employee Benefits Industrial Safety and Health

85 Suppliers Mutual Cooperation Support for Green Management of Suppliers

92 Shareholders and Investors Shareholders’ Meeting and Dividend Stock Dividend for Employees More Effective Communication with

Shareholders

95 Customers Customer Satisfaction Customer First Management Marketing

99 Social Contribution Social Contribution Philosophy and Vision Progress and Plans Social Contribution Activities in Korea Global Social Contribution

Appendix

111 GRI Index

115 Independent Assurance Statement

116Data Sheet117 Index (Sheet & Graph)

118Hyundai Motor Company Worldwide

120Reference Material

CONTENTS

이룸[irum]

Hyundai Motor Company has made continuous effort to realize dream come true.

We are now driving our effort to open up the new world where convenience and

happiness reside through development of new cars.

Irum means achievement.

An achievement is something which someone has succeeded in doing, especially by superior ability, special effort, and great courage.

Achievement: 1) An obtaining by exertion; successful performance; accomplishment 2) A great or heroic deed

푸르름

[pureureum]

From the research and development stage to recycling process,

HMC will endlessly strive to lessen detrimental effect on the environment.

Pureureum means evergreen.

An evergreen is a denoting plants that does not shed its leaves seasonally. Often used as a metaphor.

Evergreen: 1) Trees that bear leaves all the year around 2) Continually fresh or self-renewing; often used metaphorically

나눔[nanum]

Nanum means share.

Share means the full or proper portion allotted or contributed by an individual or group.

Share: 1) A part allotted, contributed, or owned by an individual or groups 2) Portion; section; division

We are well aware that love and trust from executives, employees, suppliers, shareholders, investors, customers, and

communities will be the basis for our aspiration to become the world’s leading automaker.

8 Letter from Chairman & CEO

9HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT

Sustainability and Competitiveness for the Future

We, at Hyundai Motor Company, believe our global success is founded on the support of

our stakeholders - customers, shareholders and suppliers. The strong and continuous support of all our

stakeholders is critical to realizing our aspirations of global leadership in the auto industry.

By fulfilling our environmental and social responsibilities we strive to be a model corporate citizen in every

community where we conduct our business. And we are making progress to achieve global integration and

alignment in our efforts to address key environmental issues such as climate change. Moreover, we are

actively engaged in a variety of social contribution initiatives to meet the highest standards of corporate

citizenship. We believe such efforts will set the course for our pursuit of sustainability.

In May 2008, we inaugurated the “Corporate Social Responsibility Committee” which promotes sustainable

management by seeking to balance qualitative and quantitative growth. Our sustainability management ini-

tiative encourages stakeholder participation to ensure a wide range of views and opinions are reflected in our

business and corporate activities.

In the pioneering spirit of challenge, we are actively taking the lead to promote change and innovation which

will generate a competitive edge. And we believe in the importance of pursuing harmony and co-existence

with all of our stakeholders for mutual benefit.

We genuinely value your comments and ideas on our efforts to uphold the values of sustainability. We would

like to thank all stakeholders and concerned parties for your continued interest and support.

July 2008

Mong-koo Chung Chairman & CEO

10 Letter from Vice Chairman & CEO

Our Efforts towards Sustainability

We would like to thank all our stakeholders for their continuous support and valuable contribution.

It is our pleasure to present this report as evidence of our determination to fulfill our social responsibilities.

Climate change and surging oil prices, which have precipitated a new energy crisis, have drawn global atten-

tion to sustainability issues. To reduce the industry’s dependence on fossil fuels, automotive manufacturers

have been seeking alternative solutions which incorporate sustainability principles into management while at

the same time facing intense competition.


It is our pledge to become a sustainable enterprise and a global automobile manufacturer responsive to the

expectations of our stakeholders. By embracing environmental and social values, we create added economic

value and promote growth while remaining attuned to changes in external and internal management condi-

tions.

We are continuously expanding and improving our sustainability management system and our achievements

have earned recognition from many independent organizations. We have won major sustainability awards in-

cluding the 2007 Presidential Grand Prize for National Environmental Management, the 2007 Grand Award for

Excellent Sustainability Management and the 2007 Korean Environment Award for the Automobile Industry.

Through the harmonious balance of qualitative and quantitative development goals, we will continuously con-

tribute to improving the quality of the lives of our stakeholders everywhere. Furthermore, we promise our best

efforts to become a global leader in preserving the earth’s ecosystem through the systematic implementation

of sustainability management.

Our efforts to address environmental issues are on the same page as our commercial success. We continue

to strengthen our strategies in global management through the quality of our products and in our brand build-

ing, with the goal of creating added economic values, while at the same time becoming proactively involved

in global environmental initiatives.

With the rising awareness of environmental issues around the globe, we aim for full compliance with local

and international environmental regulations. Moreover, the development and supply of environment-friendly

automobiles such as hybrid electric vehicles (HEV) and fuel cell electric vehicles (FCEV) are a strategically

important response to the depletion of petroleum resources and global warming.

We are striving to attain the highest standards in sustainability management and are continuously enhancing

our internal organizational structures and strategies. As this report is designed to form the basis of a more

comprehensive dialogue with our stakeholders, I am greatly thankful for the support of our stakeholders.

July 2008

Dong-jin Kim, Ph.D.Vice Chairman & CEO

12 Overview

Materiality Analysis

We have published our annual sustainability report for six consecutive years. However, we are

well aware that there is a gap between perceptions of HMC and readers over the quality and quantity

of information contained in the report. Therefore, in 2008, we conducted a materiality analysis on the

2008 Sustainability Report to identify information and issues that are essential to stakeholders. Also, we

included our sustainability management results and practices in the report. In order to become a leading

global automaker in sustainability management, we will continue to analyze and review the materiality

of reporting items to prepare a sustainability report that accommodates stakeholders’ perspectives and

needs.

● Materiality Analysis One of the main objectives of the sustainability report is to provide stakeholders with essential

information on the company. In order to ensure that readers and stakeholders trust and accept the sustain-

ability report, we conducted a materiality analysis on reporting items related to our sustainability manage-

ment outcomes and practices. We used the result of the materiality analysis in selecting reporting items

that might affect stakeholders’ decision-making process. Moreover, we have referred to sustainability

reports of domestic and foreign industry leaders. We reflected the feedbacks and comments of stakehold-

ers through the 2007 HMC Sustainability Report Review Committee and stakeholders’ meetings in 2008.

Materiality Analysis and Stakeholder Engagement

Key issues selected by materiality analysis

Current or potential impact on the company

Degr

ee o

f con

cern

to s

take

hold

ers

C A

B

• Issues of low impact and high concern• Global/local community contribution

strategies and initiatives • Reduction in hazardous wastes/emis-

sions reduction program • Respect for employee diversity • Industry-academia collaboration to

nurture talents • Support for cultural and sports events

• Social responsibility • Development of environment-friendly

vehicles• Response to the United Nations Frame-

work Convention on Climate Change the Climate Change (UNFCCC)

• Mutually beneficial labor relations • Improved corporate governance

• Environment-friendly procurement • Encouraging suppliers to adopt

environment-friendly management • Mutually beneficial cooperation

program • Customer-oriented management • Reinforced auto safety

A: Issues of high impact and high concern

B: Issues of high impact and low concern

C: Issues of low impact and high concern


Stakeholders Engagement

HMC interacts and builds relations with various stakeholders through cars as a medium. Our

management philosophy is to grow together with stakeholders based on mutual trust and cooperation.

● Our Stakeholders Stakeholders refer to individuals or groups who are affected by business activities or affect

business activities. Following is the list of stakeholders that HMC recognizes.

● Communication with Stakeholders In relations with stakeholders, our ultimate goal is to build effective communication on trust

based, and to grow and develop together. In this regard, we are in the process of identification of stake-

holders’ major concerns and expansion of communication channels. In 2008, we developed the 2007

Sustainability Report Review Committee into a consultative body with stakeholders in order to select

important sustainability issues, and our executive management held a meeting with stakeholders to reflect

their views in the management’s decision-making process.

CommunityEnvironment

Economy

Customers

Non-government organizations

Suppliers Local

communities

Executives and

employeesGlobal society

Shareholders and investors

Government

Identification of stakeholders

14

2008 Highlights

● National Environmental Management Grand Prize Winner The Ministry of Commerce, Industry, and Energy, and Ministry of

Environment promotes environmental management practices on yearly basis

by awarding the National Environmental Management Award to domestic

companies with outstanding environmental performance. Well-recognized for

our environment-friendly business activities, we won the 1st prize in this award.

We also won the 2007 Grand Awards for Excellence Sustainability manage-

ment and the 2007 Korea Environmental Award in automobile category. This

award recognizes that we have respected human values and dutifully fulfilled

the social responsibility by adopting environment-friendly business practices at

home and abroad.

We have developed and implemented environmental management strategy in

all areas of the automotive industry value chain by declaring our commitment

to preserve environment in our global business activities in 2003. Particularly,

we have focused on developing innovative technologies to mass-produce eco-

friendly cars, implement a clean production system, introduce a resource recy-

cling system, and build a green partnership with our suppliers.

We believe that proactive environment-friendly management can enhance

corporate values and contribute to making a better future of the earth and

promoting the happiness of mankind, and will strive to create an affluent and

sustainable society.

● The 40th Anniversary The year 2007 marked the 40th anniversary of HMC. Since the

foundation in 1967, we have contributed to Korea's economic growth as the

first auto manufacturer in Korea. In 1976, nine years after the foundation, we

exported our first proprietary model Pony to Ecuador. In 1986, we exported

Excel to the U.S. and laid the basis for global management. In the 2000s, we

built production bases in China and the U.S., constructed plants in Europe and

Russia, and exported our proprietary engine technology to many countries, be-

coming a leading global automaker. Particularly, in 2007, we sold a total of 2.6

million vehicles, the highest in our history.

In the process of rapid growth, we have recognized that we not only have to

create profits but also contribute to social development as a responsible cor-

porate citizen. Based on this recognition, we have pursued a balance between

interests of all stakeholders and sustainable development. In addition, we have

been a leader in providing sustainable mobility by developing eco-friendly ve-

hicles and building mutually beneficial labor relations.

● Sponsorship for the EXPO 2012 YEOSU KOREA We helped Yeosu win the bid to host the 2012 World Expo. Under

the theme of "The Living Ocean and Coast," the EXPO 2012 YEOSU KOREA aims

to propose and explore ways to address global environmental problems such

as ocean contamination and sea-level rise caused by climate change.

As a corporate citizen, we actively supported Yeosu to win the bid to host

the 2012 World Expo in collaboration with the Korean government, based on

the recognition that the theme of the Expo is relevant to our sustainability

management.

As the Honorary Chairman of the EXPO 2012 YEOSU KOREA Bid Committee,

Chairman Mong-koo Chung visited around the world to help Yeosu win the bid

to host the EXPO 2012 YEOSU KOREA. He organized a taskforce team, opened

a secretariat office in Paris, France, and used HMC offices and sales network

around the world to support the World Expo Bid Committee. When Yeosu finally

won the bid to host the 2012 World Expo, we felt a sense of accomplishment

as a private company contributing to the national and regional growth. In the

future, we will continue to support the national and regional development proj-

ects, based on the recognition that improved national image leads to higher

corporate values of HMC.

● Corporate Social Responsibility Committee In April 2008, the Hyundai Motor Group Corporate Social Responsi-

bility Committee was established to meet the global standards for responsible

corporate citizenship, fulfill the social responsibility, and respond to government

policy for the disadvantaged. In addition, each of HMC, Kia Motors, Hyundai

Mobis, Hyundai Steel, and Hyundai Hysco has established its own corporate

social responsibility committee to fulfill the social responsibility as a corporate

citizen.

The HMC Corporate Social Responsibility Committee aims to lay the basis for

socially responsible management, and help us gain trust from the government

and public. The committee further assists us to become a leader in sustainabil-

ity management, and grow in terms of both quality and quantity. To this end,

we have selected three major areas to focus on: trust-based management,

environmental management, and social contribution. Also, we plan to continue

our development of environmental management and ethical management.

Overview


Since the foundation in 1967, we have led the automobile industry in Korea. The year 2007 marked our 40th anniversary. When HMC was

founded, no one expected that Korea would have an auto manufacturer with a proprietary technology. However, we have grown into a

leading global automaker with the prominent initiatives and strenuous efforts.

With 40 years of technology leadership and potential acquired during the development of the Korean economy and its domestic automobile

industry, we fulfill our social responsibility by contributing to creating a society, where nature and humanity can peacefully co-exist, and

promoting sustainable development worldwide

Overview of HMC

Assets (As of December 31, 2007)/(unit: billion won)

year 2005 2006 2007

Total assets 26,661 26,430 29,587

Revenue 27,384 27,335 30,489

Net income 2,349 1,526 1,682

Total liabilities 11,608 10,379 11,384

Stockholders Equity 15,053 16,051 18,203

Production (As of December 31, 2007)/(unit: number of vehicles)

Category location 2006 2007

Domestic ▒Ulsan 1,289,313 1,352,812

▒Asan 279,760 296,600

▒Jeonju 49,195 57,315

▒Total 1,618,268 1,706,727

Overseas ▒HMI(India) 301,590 338,755

▒BHMC(China) 290,088 231,888

▒HMMA(USA) 236,773 250,519

▒HAOS(Turkey) 60,870 90,180

▒Total 889,321 911,342

Sales (As of December 31, 2007)/(unit: number of vehicles)

Category 2006 2007

Domestic ▒ Domestic demand 580,288 624,227

▒ Exports (Excluding CKD) 1,030,774 1,076,070

▒Total 1,611,062 1,700,297

Overseas ▒HMI(India) 298,980 326,899

▒BHMC(China) 290,011 231,137

▒HMMA(USA) 236,177 251,022

▒HAOS(Turkey) 60,660 91,270

▒Total 885,828 900,328

Production and Sales

1,706,727 911,342Domestic Overseas

624,227 1,976,398Domestic

marketExport and overseas

plants

16

Young-Woo Park (President of Business Institute of Sustainable Development) | HMC prepared

this discussion to reflect various stakeholders’ opinions on the new sustainabil-

ity report that will be published. In 2007, the Review committee of sustainabil-

ity report was established to serve as the only independent source of providing

opinions on the report. However, starting from this year, HMC extended its

scope to become inclusive of stakeholders’ opinions.

Jae Kook Choi (HMC, President) | Following the establishment of the Review Com-

mittee of sustainability report, increasing number of insiders asserted the im-

portance of embodying stakeholders’ opinions. In response, we are planning to

embrace their opinions both in preparation of our management plans as well as

in our-decision making process. Based on the quality management and global

management, we are now focusing on brand management and also trying to

enhance intangible values of our firm via fulfilling social responsibilities as well

as environmental management.

Young Jae Ryu (Sustinvest, CEO) | In the past, the value of corporation was mostly

determined by the value of tangible assets. Now the situation is reversed. Al-

most 80% of the firm’s value now consists of intangible assets such as brand

image, labor relation and others. In response to this new trend, rising number

of investors is showing interests in intangible assets.

Still, HMC could still be improved in three aspects. First aspect is regarding

corporate governance. Disclosing profiles and current status of Ethics Com-

mittee with respect to its neutrality and professionalism would be perceived

as an earnest effort to react to external stakeholders’ interest and would open

a ground for better communication. Secondly, most investors recognize prob-

lems of labor relation as a seasonal risk. In case of HMC’s labor issues, the

public perception of labor union as stubborn group is also considered as one

of the risk factors. Therefore, we encourage HMC to share long-term plans

with more open-minded. Thirdly, for mutual development with suppliers, HMC

should establish set of long term objectives and strive to extend the scope of

mutual cooperation program.

Jae Kook Choi | For betterment of the brand, corporate culture, employment

satisfaction level, supplier relations should all be taken into consideration. It

has been true that quality management and global management accounted for

HMC’s successful growth. Now, brand management will be our focus and we

will find exemplifying cases to benchmark. Last year, we successfully ended

wage negotiations without strikes and are currently working with unions to fin-

ish this year’s negotiation peacefully. HMC runs the Labor-management Com-

mittee that consists of independent experts recommended by both the labor

union and management. Labor relation is not only critical to public image of

HMC but also influential to the amount of supplies. The executives fully under-

stand the needs to enhance labor relation for HMC’s further growth. In addition,

HMC actively implements cooperative management in order to grow together

with its suppliers, building partnerships based on mutual trust.

Jong whan Noh (General Manager of Climate Change Mitigation Department of Korea Energy Manage-

ment Corporation) | As the climate change is becoming a major issue, there are

ongoing discussions on who should be responsible for such changes. Theoreti-

cally, the end consumer is regarded as the responsible member of the crisis.

However, it is practically impossible to hold all the end consumers accountable.

Overview

Stakeholder Discussion

The Chairperson

Young-Woo Park (President of Business Institute of Sustainable Development)

Stakeholders

Il-Chung Kim (Department of International Trade of Donguk University, Professor)

Jong whan Noh (General manager of Climate Change Mitigation Department of

Korea Energy Management Corporation)

Young Jae Ryu (Sustinvest, CEO)

Hyundai Motor Company

Jae Kook Choi (President of Hyundai Motor Company)

Jae Kook Choi (HMC, President)

“Raising both tangible and intangible value is essential to achieve sustainability”


Therefore, manufactures are starting to take more and more blames for the

climate change. In case of automobile industry, companies were not respon-

sible for behaviors of individual drivers. Nowadays, firms are expected to

inform the drivers of the severity of climate change.

Jae Kook Choi | HMC puts more and more emphasis on climate change.

Unlike the past, it is a fair statement to conclude that cars are one of the

major factors incurring climate change. Therefore, no HMC’s business ac-

tivities would persist unless careful consideration is given to climate change

issue. HMC also needs to prepare for possible taxation based on different

CO2 emission level. HMC’s R&D center is thus working on improving both

performance and CO2 emission of cars. It intends to produce hybrid cars

starting from next year. Such early response to climate change would be-

come a basis for our future success.

Il-Chung Kim (Department of International Trade of Donguk University, Professor) | Having more

conversation with citizens would certainly be beneficial, creating less con-

flicts in case the problem has risen. It would also be good idea to invite

representatives from labor unions to share opinions in stakeholder meet-

ings due to public’s negative perception on labor union. I have been driving

Hyundai Sonata for 9 years, but including the minute cost for repair, I am still

very satisfied with its features and performance. As a result, I have built a

trust that HMC is an excellent automaker. In spite of its excellence in quality

management, the under-performance of stock is perhaps the result of HMC’s

organizational structure. Ultimately, HMC needs to alter its organizational

structure to improve brand image. Also, through the use of CSR report, HMC

should be able to impress the readers by demonstrating its willingness for

innovation and changes.

Jae Kook Choi | Although HMC has strong tangible assets, the under-per-

formance of stock verifies that we still need more improvements especially

something intangible. We would give our full consideration to inviting stake-

holders from labor unions to our stakeholder meetings. Also, many external

directors give us the advice that we should improve both tangible and intan-

gible values that are essential to sustainability of corporation. HMC would

continue to maintain its transparent and ethical management via improving

the level of transparency, adhering to principles and establishing mutually

beneficial partnership with suppliers.

Young-Woo Park | The most important factor to be considered in preparation

of the report is communication. Still, we have not yet reached a desired level

of understanding with stakeholders from lack of conversation. Stakeholders

find themselves not being fully informed about HMC’s plans and objectives

to address their concerns. From now on, we hope that this discussion was

instructive to HMC reminding the importance of conversation with stake-

holders. Through active communication with stakeholders, HMC practice

customer impression management to become a respectable HMC.

Young-Woo Park(President of Business Institute of Sustain-

able Devleopment)

Young Jae Ryu(Sustinvest, CEO)

Jong whan Noh(General Manager of Climate Change

Mitigation Department of Korea Energy Management Corporation)

Il-Chung Kim(Department of International Trade of

Donguk University, Professor)

“Diverse efforts including accretion of transparency, observance of principal, environmental and ethics management, and maintenance of mutual cooperation with suppliers”

CORPORATE PhIlOSOPhy

As a company trusted by all interested parties, hyundai Motor Company strives to fulfill its social responsibility and translate its sustainability commitment into action.

Corporate Social Responsibility Committee and Ethics Committee The HMC Group Corporate Social Responsibility Committee and HMC Corporate Social Responsibility Committee were established in order to fulfill the social responsibility as a global

corporate citizen and meet the diverse needs of interested parties. In addition, the HMC Ethics Committee was established to improve internal transparency and explore ways to

promote ethical management.

page 26

20 Corporate PhilosophyManagement Philosophy Vision Management Policy Mid-and Long-term Strategies

22Environmental ManagementEnvironmental Management Philosophy & Policy Environmental Management Strategy and System Environmental Management Organization

24 Ethics Management Ethics Management Philosophy Establishment of Guidelines

26 Corporate Social Responsibility Overview of Corporate Social Responsibility Organizational Structure to Support Corporate Social Responsibility How to Fulfill the Social Responsibility

28 Corporate Governance and the Board of 28 DirectorsBoard of Directors2007 Activities of the Board of Directors Committees under the Board of Directors Ethics Committee

20 Corporate Philosophy


22 Environmental Management

24 Ethics Management

26 Corporate Social Responsibility

28 Corporate Governance and the Board of

Directors

We have developed and implemented our corporate philosophy including management phi-

losophy, vision, policy, and strategy to grow together with stakeholders and contribute to

improving the quality of life around the world. With "the Spirit of Creative Challenge," which

has so far guided HMC, we will strive to be a global leader in implementing sustainability

management.

Management Philosophy

With the spirit of creative challenge, we contribute to create a more affluent lifestyle for

humanity, and are contributing to the harmony and co-prosperity with shareholders,

customers, employees and other stakeholders in the automobile industry.

The spirit of creative challenge has been a driving force in leading HMC today. It is the perma-

nent key factor for HMC to actively respond to change in the management condition and seek creative and

self-innovative system. With the spirit of creative challenge, we create profits, the primary objective of a

private enterprise. Furthermore, we take the responsibility for the environment and society we belong to,

and offer sustainable mobility in order to implement our corporate philosophy and provide benefits to all

stakeholders including shareholders, customers, executives, employees, suppliers, and communities.

Vision

We announced "Innovation for Customers" as our mid-to long-term vision with five core strate-

gies: global orientation, respect for human values, customer satisfaction, technology innovation, and cul-

tural creation. We desire to create an automobile culture of putting customer first via developing human-

centered and environment-friendly technology innovation.


Global orientation

Growing as a leading global automobile maker, building trust

and respect with the global community

Cultural creation

Creating an automobileculture where people

are respected andvalued

Respect forhuman values

Becoming a leader indeveloping environment-friendly technology to

contribute to theprosperity of humanity

Customer satisfaction

Improving customer satisfaction by putting customers first

in all aspects

Technology innovation

Developing an innovativetechnology centered

on people

Innovation for humanity


Management Policy

Based on the respect for human dignity, we make efforts to meet the expectations of all stake-

holders including customers and business partners by building a constructive relationship amongst man-

agement, labor, executives and employees. Also, we focus on communicating our corporate values both

internally and externally, and gaining confidence from all stakeholders. Particularly, in 2007, management and

labor of HMC finished wage negotiations without strikes, based on mutual trust. In addition, all executives

and employees make efforts to acquire knowledge on auto industry fields to provide the highest quality and

service to customers. We endeavor to focus on on-site management by concentrating our business capacity

on production and sales bases. Our fields include not only Korean business sites but also overseas production

and sales bases. This on-site management played a significant role in supporting Yeosu to successfully win

the bid to host the 2012 World Expo. In 2006, some of HMC executives were charged for illegal financial

transaction. The case was closed with the court order of probation and community services in extenuation

of the facts; most of the funds were used inevitably for business management purposes and damages were

mostly recovered. In 2007, we established Ethics Committee in order to prevent the recurrence. And in

2008, we established Corporate Social Responsibility Committee for the further efforts on trust-based man-

agement, environmental management, and social contribution. We also developed the institutional frame-

work to make management more transparent since we established and announced the Ethics Charter and

Guidelines for Employees' Behavior in 2001. We will continue to focus on business transparency.

Mid-and long-term Strategies

We developed five mid-and long-term strategies: global management, higher brand values, busi-

ness innovation, environmental management, and strengthening product competitiveness. Especially, we

selected environmental management as one of our strategies to meet the needs of our stakeholders and the

society we belong to. We also intend to promote sustainability development and preservation of the environ-

ment.

Globalmanagement With global management, we strive to become

one of the top 5 automakers.

Trust-based management• Trustworthiness• Trust between management-labor, employer-employee,

company-customer relationship

Transparent management• Higher transparency in all areas of business• Transparency in transaction and fair trade • Promotion of ethics and enhancing ethics management

system

On-site management• Cultivation of on-site knowledge, and raising challenging

spirit of field staffs. • Concentration on management capacity on industrial sites• Management strategy based on the sites and promotion

of R&D • Establishment of the immediate response communication

system

With aggressive marketing and better product quality, we aim to create brand values as one of the top 5 global automakers.

We focus on strengthening product competitiveness to compete with world class automakers in the global market.

We seek to develop and implement environmental management strategy for the improvement of our corporate competitiveness.

We pursue business innovation to improve product quality and productivity.

higher brandvalues

Strengthening product

competitiveness

Environmental management

Businessinnovation

Trust-basedmanagement

On-sitemanagement

Transparentmanagement







Directors

In 2003, we announced environmental management philosophy and global environmental manage-

ment policy, and laid the foundation for environmental management. Also, we apply our environ-

mental management strategy across all areas of the value chain. We will adhere to environmental

management and sustainability development as a global automaker, promoting environment pres-

ervation and taking social responsibility for lessening environmental impacts from our business

activities.

Environmental Management Philosophy & Policy

In 1995, we became the first Korean automaker to introduce environmental management.

Since then, we have developed environmental management philosophy and global environmental man-

agement policy that embody our will to promote environmental management. In June 2003, we officially

declared the environmental management philosophy and global environmental management policy. Based

on these, we have improved our environmental management system, presented executives and employ-

ees with consistent principles for environmental management, and informed external stakeholders of our

intention to fulfill the social responsibility of promoting environmental management.

● Environmental Management Philosophy We respect human values by protecting the environment and creating a society, where humanity

and nature peacefully co-exist, and accomplish the social responsibility as a responsible corporate citizen.

● Global Environmental Management Policy As a responsible corporate citizen, we respect for human and strive to create a sustainable

society. We preserve the global environment by implementing the following global environmental manage-

ment policy.

• Recognize the environment as a core element of business and create corporate value by proactively pursuing

environmental management.

• Promote the development and distribution of environment-friendly products.

• Promote sustainable use of energy and reduce emissions in all processes of product from development to

production, sales usage, and disposal

• Endeavor to provide all employees with environmental training programs, support suppliers in environmental

management, and contribute to public welfare

• Comply with all domestic and international environmental regulations and agreements. Continue to improve

our environmental management efforts and publicly disclose our performance.

Environmental Management Strategy and System

● Environmental Management Strategy We established five core tasks in order to effectively and consistently implement environmental

management with clear objectives and strengthen our capacity to respond to global environmental issues

and regulations.


Society

Environment human


● Environmental Management System Based on our environmental management principles, we develop and implement environmental

management objectives and strategies for the entire value chain of the auto industry including R&D, pro-

curement, production, logistics, sales, and customer service.

hMC Environmental Management Organization

We organized the Environmental Committee, which is the highest decision-making body with

regard to environmental management, to facilitate swift decision-making and systematically implement

environmental management. The Hyundai Motor Company's Environmental Committee is chaired by Vice

Chairman and CEO, and composed of three strands: the Environmental Product Committee, Environmen-

tal Production Committee, and Recycling Committee. Each committee has subcommittees, the total of

eleven, classified by various environmental issues to promote collaboration among organizational units.

Response to climate change

Reduction of hazardous substances

Adoption of resource recycling system

Reduction of air pollutants

Establishment of environmental

management system

· Reduction in automobile green house gas emissions

· Development and production of alternative fuel vehicles

· Diversification of vehicle fuel sources

· Reduction in green house gases emitted from the workplace

· Adoption of global standards to reduce four major heavy metals

· Reinforcement of hazardous chemical materials management

· Higher recycling rate

· Environment-friendly vehicle disposal a

· Zero wastes

· Establishment of environmental KPI/ environmental accounting system

· More effective communication with internal and external stakeholders

· Establishment of information system on global environment regulations

· Strengthening green partnership with suppliers

• Philosophy & Policy - Establishment of environmental philosophy & policy - Declaration of global environmental management

• Organization & Strategy - Establishment of environmental management strategy - Operation of environmental committee

• Management System - Environmental accounting - Establishment of communication channels with stakeholders - Sustainability training for all employees - Sustainability report publication

• R & D - Environment friendly design - Fuel economy & vehicle emissions - Expansion of Recycling - Environmental information system - Developing environmentally friendly vehicles

• Purchasing - Establishing green procurement system - Establishing SCEP - Logistics optimization

• Production - Development of cleaner production system - Expansion of ISO 14001 certification - Development of integrated environmental management system - Establishment of environmental management strategy

• Marketing & Sales - Green marketing - Green sales

• Customer Service - Green service - Supporting Customer Service Providers’ EMS

· Reduction in vehicle emissions

· Reduction of air pollutants from the workplace

Environmental Production Committee

(Chair: Ulsan Plant CEO, Head of Manufacturing Division)

- Green House Gases subcommittee- Wastes and Emissions subcommittee- Four Major Heavy Metals subcommittee- Hazardous Substances subcommittee

Recycling Committee(Chair: Domestic Sales Director)

- Compliance Strategy for Domestic policy and regulation (Strategy to respond to domestic laws

and regulations)

- Compliance Strategy for Overseas policy and regulation (Strategy to respond to overseas laws

and regulations)

Environmental Product Committee

(Chair: R&D Director)

- Fuel Efficiency subcommittee- Emissions subcommittee- Eco-friendly Vehicles subcommittee- Recycling, technology development subcom-

mittee (Strategy to develop recycling technology)

- Light-weight Car subcommittee

hMCEnvironmental Committee

Review and adjust enterprise-wide environment-friendly policy (Chair: Vice Chairman&CEO)

Philosophy & Policy

Organization & Strategy

Management System

R & D Purchasing Production Marketing & Sales

Customer Service







Directors

We implement ethics management to gain trust from stakeholders and fulfill our social respon-

sibility. We developed the Ethics Charter, Workplace Ethics, and Guidelines for Employees'

Behavior. Currently, we conduct Work Management Principles and Anti-bribery Policy.

In addition, we offer ethics education to executives and employees to help them make a right

decision in the face of an ethical dilemma. We conduct a cyber inspection and operated the

Ethics Committee to ensure compliance with ethics management principles.

Ethics Management Philosophy

Transparency and trust are important criteria to evaluate a business. We implement ethics

management to ensure that our executives and employees make an ethical decision in the face of an ethi-

cal dilemma. Based on ethics management, we rectify unethical elements of business activities to improve

corporate values and competitiveness.

Upon ethics management, we gain confidence from customers, and suppliers while reducing time and

cost for making transactions and improving sales figures. In addition, ethics management help our execu-

tives and employees feel a sense of fulfillment from their work, become more loyal to the company, and

voluntarily contribute to the growth of the company. From a long-term perspective, ethics management

supports HMC to improve our business performance.

Establishment of Guidelines

● Ethics Charter

Contribution to the nation and society | We contribute to the national economy through ongoing

creation of jobs and trustworthy payment of taxes. We strictly comply with all laws related to the environ-

ment, spearheading the effort to protect the environment and contributing to society through cultural and

welfare initiatives.

Enlargement of customers’ and shareholders’ rights | We protect customer rights and value by

optimizing products and services, safeguarding customer information, and fulfilling our promise made to

customers. We maximize management efficiency to ensure that our financial structure is viable, safe-

guarding and increasing shareholders’ assets.

Respect for human dignity and cultivation of competent human resources | We respect the indi-

vidual employee as an independent being and created a sophisticated corporate culture based on mutual

trust and understanding, while striving to prevent sexual harassment at work. We actively seek to increase

our employees’ sense of ethics and support them structurally with a long-term view to cultivate them into

independent, creative and effective individuals.

Ethics Management

Contributionto the nationand society

Enlargement of customers’ and shareholders’

rights

Respectfor human dignity and cultivation of competent human

resources

Establishment of partnership with

suppliers

Establishment of transparent

management EthicsCharter


Establishment of partnership with suppliers | We actively support our suppliers with technical

knowledge and management guidance to ensure co-prosperity in the long-term by securing competitive-

ness in the international market. We trade with the suppliers as on an equal footing and do not make any

unfair demands by leveraging our position.

Establishment of transparent management | We deal with all tasks in a transparent manner and es-

tablish an honest corporate culture that garners trust by maintaining fair trade relationships that guarantee

transparent transaction conditions with all business partners and customers.

We reject all types of requests from all stakeholders that may infringe upon fairness and objectively in our

operations and do not pursue unlawful profit.

● Regulation on Ethics at Work We established the Regulation on Ethics at Work related to relationships among employees,

customers, suppliers, and competitors. Moreover, we developed detailed procedures and guidelines re-

lated to the actual practice for the Regulation on Ethics at Work. We specified basic rules and penalties for

violations of the basic rules in the Regulation on Ethics at Work. We also established the Workplace Ethics

Committee to effectively apply the Regulation on Ethics at Work.

● Guidelines for Employees' Behavior HMC executives and employees recognize that ethics is the source of corporate competitive-

ness and pledge to comply with the Ethics Charter to gain trust from the public and stakeholders.

Accordingly, we promise the following:

• We always behave with dignity and reject unethical requests in our daily life and in the workplace based on

the pride and recognition that we are leading the Korean auto industry.

• We comply with applicable laws, regulations and corporate policies while fulfilling our duties to create a

corporate culture that abides by ethical rules and principles.

• We value and protect customer information, tell only the truth to customers, and fulfill our promise with

customers, without any exception.

• We do not accept shareholder requests that contravene the fairness, and reject any unfair requests from

executives or employees or via employees.

• We protect confidentiality of information obtained during business activities and do not conduct action or

make a relationship that interferes with the interest of the company and individuals.

• We diligently fulfill our duties as a responsible firm and continuously contribute to advancement of the nation,

society, and company.

* For more information on ethics management, please visit the website of the Cyber Audit Center for Ethics

Management at http://audit.hyundai-motor.com.







Directors


We established the Hyundai Group Corporate Social Responsibility Committee and HMC Cor-

porate Social Responsibility Committee in order to fulfill its duties as a global corporate citizen

and meet the various needs of stakeholders. Based on green and ethics management, we plan

to take the social responsibility more systematically and pursue sustainable and balanced

business growth.

Overview of Corporate Social Responsibility

Corporate social responsibility covers three areas: trust-based management, environmental

management, and social contribution. For trust-based management, we will focus on enhancement of

labor relations, mutually beneficial cooperation with suppliers, ethics management, and transparent man-

agement. As for environmental management, we will proactively respond to global trends and regulations

related to the environment, as Korea's leading auto manufacturer. For social contribution, we plan to en-

large our capacity and obtain expertise to effectively carry out global social welfare projects and participate

in volunteering programs to contribute to development of communities.

Organizational Structure to Support Corporate Social Responsibility

In April 2008, the Hyundai Motor Group Corporate Social Responsibility Committee was es-

tablished, which implicates that we are willing to fulfill the social responsibility in our business activities,

and shows strong commitments and developed interests. The Hyundai Motor Group Corporate Social

Responsibility Committee consists of 10 executives and is chaired by Chairman and CEO Mong-koo Chung.

We have regular meetings bi-annually and sub-committee meetings at each quarter to check the progress

of corporate social responsibility plans and projects. Furthermore, we plan to establish an independent

assessment group of external experts in order to objectively assess our corporate social responsibility

progress and improve our social responsibility strategy.

Corporate Social Responsibility

Social contribution

Environmental management

Trust-based management

hMCCorporate

Social Responsibility

Committee

• To gain trust from the

government and public

• To pursue growth both

in quality and quantity

terms

• To become an industry

leader in sustainability

management

• Improving corpo-rate competitive-ness

• Growing as a re-spected company

HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT 27

how to Fulfill the Social Responsibility

Our determination to accomplish the social responsibility management will be reflected on

detailed strategic objectives and action plans by sections in the latter half of 2008. To this end, we estab-

lished the HMC Corporate Social Responsibility Committee led by Vice Chairman Dong-jin Kim and other

executives to practice the social responsibility management cross the company.

In addition, we aim to organize an independent assessment group consisting of global social responsibil-

ity experts and opinion leaders by the end of 2008 and operate a CSR forum to objectively evaluate the

outcomes of our CSR activities. We will pursue sustainable growth and development by exercising the

social responsibility management and proactively meeting the needs of stakeholders in an environment-

friendly manner.

Chairman: Vice Chairman Dong-jin Kim

Secretary: Head of Business Strategy Planning

Group

Domestic Corporate Social Responsibility

Committee

Global Corporate Social Responsibility

Committee

Trust-based Management Manager

• Labor relations • Procurement • Finance • HR • Audit

Environmental Management Manager

• Green products • Green production• Resource recycling

Social Contribution Manager • The Headquarters • Plants

• Domestic sales

USA Plant Management Director

Czech Plant Management Director

China Plant Management Director

India Plant Management Director

Turkey Plant Management Director

Russia Plant Management Director

Vice Chairman: President

Jae-gook Choi

hyundai Motor Group Corporate Social Responsibility Committee


Under the Board of Directors, there are the Audit Committee and External Director Candidates

Recommendation Committee. We further established the Ethics Committee in 2007.

Board of Directors

The Board of Directors makes decisions on matters defined by the laws or articles of incorpora-

tion, matters delegated by the general shareholders’ meeting, and key matters related to the basic guide-

lines for company operations and work execution. Moreover, we have the authority to supervise duties of

directors and management, and consist of four internal directors and five external directors. The Board of

Directors holds regular meetings and special meetings, if necessary.






Directors

Corporate Governance and the Board of Directors

(As of December 31, 2007)

Name Remarks

Internal Mong-koo Chung Chairman and CEO Member of the External Director Candidates Recommendation

Committee Dong-jin Kim Vice Chairman and CEO Member of the External Director Candidates Recommendation Committee

Yeo-cheol Yoon President and CEO -

Jae-guk Choi President -

External Dong-gi Kim Professor Emeritus, Business School, Korea University Member of the External Director Candidates Recommendation Committee,

Committee Audit Committee Member

Gwang-nyeon Kim Samhan LLC Member of the External Director Candidates Recommendation Committee,

Audit Committee Member

Il-hyung Kang BAE, KIM & LEE LLC Audit Committee Member

Young-cheol Lim SHIN & KIM Audit Committee Member

Sun Lee Professor, Department of Law, Soongsil University -

Board of Directors

EthicsCommittee

Audit Committee External Director Candidates Recommendation Committee


Meeting Issues Approval

1st Regular Meeting January 25 39th annual financial statements Approved as drafted

39th annual report

2007 business and investment plans

Convening of 39th Shareholders' Meeting and matters to be submitted to the Shareholders' Meeting

- convening of the shareholders' meeting

- balance sheet statement of profit and loss, surplus appropriation statement

- revision of the articles of incorporation

- appointment of directors

- appointment of external directors who are members of the Audit Committee

- ceiling on compensation for directors

Limits on trading with the largest shareholder

Limits on the amount of corporate bonds to be issued

Payment guarantee for local financing for HMA (USD 200 million)

1st Special Meeting March 9 Appointment of a CEO (Director Dong-jin Kim) Approved as drafted

Appointment of members of the External Director Candidates Recommendation Committee

(Directors Dong-jin Kim and Dong-gi Kim)

Prevention of conflicts of interest of a director (Director Dong-jin Kim)

Establishment of an ethics committee

2nd Special Meeting March 30 Corporate bond issuance (total face value – 300 billion won) Approved as drafted

2nd Regular Meeting May 2 Establishment of an ethics committee Approved as drafted

Payment guarantee for local financing for HMFC (USD 400 million)

Overseas investment

3rd Regular Meeting July 26 Payment guarantee for local financing for HMMA (USD 100 million) Approved as drafted

Changes in provisions on the Board of Directors

Changes in matters delegated to the CEO

Changes in provisions on the Audit Committee

3rd Special Meeting September 20 Stock buy-back Approved as drafted

Stock disposal

Transactions with subsidiaries

4th Regular Meeting October 24 How to exercise stock options (issuing new stocks) Approved as drafted


Investment in the largest shareholder (Hyundai Powertech, paid in capital increase – 15 billion won)

Appointment of managers

2007 Activities of the Board of Directors


Committees under the Board of Directors

The Audit Committee under the Board of Directors consists of four external directors. It is re-

sponsible for auditing finance and management of HMC. It has the authority to review reports on business

management and financial status. The Audit Committee approves matters related to audit, the sharehold-

ers' meeting, directors, and the board of directors. It can access business and management information

for auditing.

The External Director Candidates Recommendation Committee consists of two internal directors and two

external directors. External directors should be recommended by the External Director Candidates Recom-

mendation Committee. The 2007 Shareholders' Meeting approved the directors' compensation ceiling of

10 billion won. From January 1 to December 31, 2007, total compensation paid to internal and external

directors was 7.737 billion won.






Directors

2007 Activities of the Audit Committee


1st Meeting January 25 39th financial statements and annual report Approved as drafted

Assessment of internal accounting control in 2006

Appointment of an independent auditor

2nd Meeting May 2 Business performance reporting on the 1st quarter of 2007 Approved as drafted

Agreement with the independent auditor on non-audit service

3rd Meeting July 26 Business performance reporting on the first half of 2007 Approved as drafted

Assessment of internal accounting control

4th Meeting October 24 Business performance reporting on the third-quarter Approved as drafted

(accumulated) of 2007


Ethics Committee

We established the Ethics Committee, which monitors internal transactions and supervises

transparency and ethics management. The Ethics Committee consists of five external directors, one ex-

ecutive, and two advisors (independent). It reviews matters related to the Anti-Trust and Fair Trading Act,

transactions between parties in special relations specified in the Securities Trading Act, voluntary compli-

ance with fair trading regulations, policies on ethics management and social contribution, and the Ethics

Charter.

2007 Activities of the Ethics Committee


1st Regular Meeting July 18 Appointment of the Chairman of the Ethics Approved as drafted

Committee

Payment guarantee for local financing for

overseas Hyundai Motor Companies

Reporting

- internal transaction

- compliance program on fair trading

- social contribution projects

- implementation of the Workplace Ethics in the

first half of 2007

1st Special Meeting September 20 Transactions with subsidiaries Approved as drafted

2nd Regular Meeting October 24 Guarantee for subsidiaries Approved as drafted


Investment in the largest shareholder

Reporting

- social contribution in the 3rd quarter of 2007

- internal transactions in the 3rd quarter of 2007

2nd Special Meeting November 29 Guarantee for subsidiaries Approved as drafted

ECONOMy

hMC aims to continuously improve corporate values as well as profitability based on the expansion and stabilization of the global production and sales system.

Quality Competitiveness and Brand ValuesIn 2007, HMC manufactured 2.6 million units of cars, the highest in history, in domestic and overseas plants, and sold the cars in the global market. Also, the accumulated number of

cars sold in the U.S. market exceeded 5 million in 2007. In addition, HMC has successfully improved its quality competitiveness and brand values. For example, the Azera, Santa Fe, and

Entrourage were named Best-in-Segment in Strategic Vision's Total Quality Index (TQS). HMC was ranked 72nd in the Interbrand Top 100 Global Brands.

page 36

34 Main Business ActivitiesGlobal Production Global Sales Enhanced Global Competitiveness

38 Process InnovationStrategic Enterprise Management(SEM) Supply Chain Management & Order to Delivery(SCM & OTD) Customer Relationship Management(CRM) Plant Maintenance(PM)

34 Economy

Main Business Activities34 Main Business Activities

38 Process Innovation

HMC currently operates a sales network of 6,000 dealerships, 19 overseas factories and sales

centers in 180 countries. Despite 2007 economic hardships due to the fluctuation of exchange

rates, increase in the prices of oil and raw materials, we have manufactured and sold 2.6 mil-

lion vehicles, the highest in HMC history, in many countries around the world.

Global Production

● Domestic Production In 2007, HMC started manufacturing a new model called i30 with sophisticated design and

stable handling that successfully entered into the European market. Also, i30 has been very popular among

younger generations in Korea. In addition, HMC opened a plant specialized in manufacturing luxury sedans

in Ulsan and launched Genesis, a premium sedan, in order to compete in the global luxury sedan market.

As for commercial vehicles, HMC increased the plant capacity to produce larger buses since supply fell

short in Korea.

● Overseas Production In 1997, HMC built the Turkey Plant as the basis for its global business expansion. In 2007, the

Turkey Plant increased its production capacity from 60,000 to 100,000 vehicles per year and started to

manufacture Lavita, a model strategically designed to enter the European market. In early October 2007,

HMC also opened the Second Indian Plant for i10 in order to take advantage of growing demands of auto-

mobiles in India. In addition, HMC used the Indian Plant as a global export outpost for strategic purposes.

Currently, i10 is manufactured only in India but it is also sold in Europe, Middle East, and Latin America.

In April 2007, HMC established Czech Republic Plant in Nosovice, a region close to the city of Ostrava,

in Czech that can manufacture 300,000 vehicles per year. The Czech Plant is scheduled to produce cars

from March 2009. In April 2007, HMC built the CKD Plant with an annual capacity of 50,000 vehicles to

establish a production base in Brazil, the largest automotive market in South America. In December 2007,

HMC signed the Letter of Intent with the State of Saint Petersburg in Russia to build a factory that can

manufacture 100,000 vehicles per year.

● 2008 Production Plan In 2008, HMC plans to stabilize its global production system and strengthen competitiveness

of factories. We expect overseas production will account for more than 45% of the total production based

on the establishment of the second Chinese plant, and stable production in the United States and India.

Particularly, second plant in China is a preparation to meet growing demand of vehicles after the Beijing

Olympics. In addition, we plan to expand our organization and workforce to support the global production

system. To this end, we will develop a localization plan to recruit and nurture competent local engineers to

provide better technical services and improve productivity at the local level.

1Completion ceremony in the Turkey Plant2Opening ceremony in the India Plant II3Ground-breaking ceremony in the Czech Plant

1

2

3


Global Sales

● Domestic Sales In 2007, HMC sold total of 624,227 units of vehicles, a 7.6% increase from previous year and

achieved our domestic sales target of 600,000 units, first time since 2003. The company has attained the

domestic market share, measured by units sold, of 50% for 4 consecutive years.

By model, Sonata, Elantra, and Azera ranked first, second, and third, respectively in sales figures. Espe-

cially, newly released Sonata Transform model with advanced functional technologies and convenient

functions, sold 119,133 units last year. It was the highest Sonata sales figure since 1999. In addition, i30

Hatchback, which was launched in July 2007, a model targeted for Europe, was sold an average of 2,000

units per month, acquiring stable customer base. Grand Starex released in May, 2007 sold 51,392 units

last year to facilitate mini bus market in Korea.

● Overseas Sales In 2007, HMC increased the sales by 3.1% from previous year and sold 1,986,070 units of

vehicles in overseas markets. We have analyzed and developed models for each region in strategic terms,

considering purchasing trends of consumers in each region. Through the strategic sales, we have exported

1,076,070 units to overseas markets, and sold 910,000 units manufactured from overseas factories.

Particularly, in 2007, HMC achieved aggregate sales of 5 million units in United States since we first ex-

ported Excel in 1986. Currently, Elantra (1.23 million units) and Sonata (1.02 million units) are best-selling

cars in the American market. Moreover, since 2000, we started to export premium cars such as Santa

Fe (580,000 units) and Azera (138,000 units) to enhance our brand value and profit. HMC now strives to

become a luxury brand by selling premium luxury cars such as Genesis and Veracruz.

1Dealership in China2Dealership in Russia

1

2

Accumulated number of cars sold in the u.S. market(unit: 10,000 vehicles)

2007 status of enlargement of overseas production sites

Plant Item Capacity (annual production)

Czech Plant Broke the ground in April 300,000 vehicles

CKD Plant, Brazil Completed in April 50,000 vehicles

Russia Plant Singed the Letter of Intent in December 100,000 vehicles

1 million

2 million

3 million

4 million

5 million

19901 million

19922 million 2002

3 million

20054 million

July 17, 20075 million

200720062005200420032002200120001999199819971996199519941993199219911990

36 Economy

34 Main Business Activities


● 2008 Sales Plan In 2008, HMC plans to sell 670,000 units of cars in the Korean market and export 1.13 million

units of cars. Also, we plan to manufacture a total of 3.11 million units of cars including 1.8 million units

in domestic plants and 1.31 units in overseas plants, which is a 20 percent increase year-on-year. To this

end, HMC will continue to focus on global and customer-oriented management, and make more efforts to

have the first-mover advantage in emerging markets including the post-BRICs economies.

Enhanced Global Competitiveness

In 2007, despite business difficulties such as the strong Korean currency and intensifying com-

petition in overseas markets, HMC has made a continuous effort to improve quality. Therefore, we gained

favorable comments from major auto magazines and quality assessment organizations overseas. More-

over, HMC ranked among the 2007 Top 100 Global Brands selected by Business Week and Interbrand, and

were valued at 4.5 billion dollars. HMC's ranking has increased, since it became the first Korean auto maker

to be one of the Top 100 Global Brands in 2005.

We plan to increase its quality competitiveness and brand power based on its global production line-up,

local production in major auto markets around the world, and strong sales network worldwide.

● Higher Quality Competitiveness HMC has taken advantage of research centers through the partnerships in the U.S., Europe,

and Japan along with the Nam-Yang R&D Center in Korea. Based on the R&D network, HMC successfully

developed and launched i30 and i10 for regional markets. Moreover, after four years of investment and

research process, we developed and launched Genesis, a highest technology luxury sedan.

We also succeeded in developing three mid-and large-sized commercial diesel engines using our propri-

etary technology, building a full diesel engine line-up ranging from passenger car diesel engines to small

commercial diesel engines and large commercial diesel engines.

In 2008, HMC plans to continuously promote quality-oriented management. By adopting innovative quality

management, we will help overseas factories independently improve quality, differentiate product quality

to compete with leading and emerging auto manufacturers, and improve quality to establish highest qual-

ity brand images.

Enhanced Quality Assessment | In 2007, HMC attained the highest quality scores through continu-

ous effort to improve product quality. In the Vehicle Dependability Study conducted by J.D. Power, HMC

received an award in Quality Satisfaction for three consecutive years. In 2007 Annual Car Reliability Survey

released by ConsumerReports, we ranked 7th, six steps above from previous year, becoming one of the

top auto brands with highest reliability in the United States.

The 2008 Annual Auto Issue of ConsumerReports presented Elantra and Santa Fe as one of the 2008 Top

Picks in the Annual Car Reliability Survey, and Elantra, Santa Fe, Sonata, Azera, and Tucson as Recom-

mended Cars. Azera was selected as both one of the Most Overlooked Cars and Most Satisfying Car in

Value in the Owner Satisfaction survey.

Ranked 7th in the 2007 Annual Car Reliability Survey (Consumer-

Reports, April 2007)


i30, a model for the European market, and Veracruz, a luxury utility vehicle released to the U.S. market,

have been well reviewed by major press and auto magazines in Europe and the U.S. Santa Fe received the

perfect score (★★★★★) in the vehicle crash test conducted by the National Highway Traffic Safety

Administration (NHTSA) and earned the 2007 Top Safety Pick award from the Insurance Institute for

Highway Safety (IIHS) in the U.S.

Strategic Vision, a San Diego-based research firm, selected Azera, Santa Fe, and Entourage as a highest

quality vehicles in its Total Quality Study, and Azera and Santa Fe as the winners of the 2007 Total Value

Index.

Furthermore, i-10 won the Indian Car of the Year (iCOTY) 2008 award, which was the highest honor

granted to a car model in India.

● Higher Brand Competitiveness Since HMC announced brand management policy and disclosed brand strategy and slogans

in 2005, we have reinforced brand management both in quantity and quality terms. As part of our brand

management, we published a new brand advertisement, "Think about it" in the U.S. market. In November

2007, HMC held the "Brand Day," where executives and employees learned how to apply brand strategy at

work, in order to enhance employees' awareness and understanding of the HMC brand.

In 2008, we are planning to focus on improving brand image and power via expanding sales of high-end

vehicles. We plan to promote Genesis, a full size sedan released in early 2008, and BK, a high-performance

sports car to be released in the second half of 2008, as leading luxury models to upgrade our brand values.

Moreover, we will strive to become one of the world class high-end automakers by providing high values

to customers in terms of sales strategy, service, and customer management.

Enhanced Brand Competitiveness | Our brand value continuously improved. HMC ranked 92nd in

2005, 80th in 2006, and 76th in 2007, in the Fortune 500 Companies. In the Top 100 Global Brands con-

ducted by Interbrand and BusinessWeek, we ranked 72nd, three steps above previous year, with brand

value of 4.5 billion dollars. Among the auto brands, HMC ranked 8th, following Audi. Our ranking in brand

value has been on the rise from 84th in 2005 and 75th in 2006 to 72nd in 2007, since we became the first

Korean auto manufacturer to be one of the Top 100 Global Brands in 2005. AutoPacific, a marketing re-

search and consultancy firm for the automobile industry, announced that HMC showed the largest opinion

improvement with 32% enhancement from previous year.

HMC ranked among the 2007 Top 100 Global Brands and valued at

4.5 billion dollars (Business Week, August 2007)

Economy


38 Process Innovation Process Innovation

In September 2004, HyundaiㆍKia Motor Company started to introduce PI (Process Innova-

tion). We planned to build new plants overseas and develop new cars to meet the sales and

production targets. However, in 2004, we focused only on the domestic market, and produced

and sold 1.67 million units per year. In order to make another leap forward as a global auto-

maker, we had to shift to global production and sales system to improve its management both

in quality and quantity terms. We also had to reinforce its capacity to minimize risks caused

by large-scale investments and rapid business expansion, and support the global production

and sales network. To this end, HMC selected 35 tasks to improve eight processes; Strategic

Enterprise Management (SEM), Supply Chain Management (SCM), Customer Relationship

Management (CRM), Plant Maintenance (PM), Quality Management (QM), Human Resources

(HR), Standardization, and Construction Management (CM).

Strategic Enterprise Management(SEM)

Auto manufacturers have to make an enormous amount of investment and spend at least two

to three years in developing new models and building new plants. Therefore, they are always exposed to

many risks. HMC introduced strategic enterprise management (SEM) to support the corporate decision-

making process and respond to business risks.

HMC identified seven major steps for decision-making in the process of new model development (from

research to mass production), and developed rules to make best decisions based on quantity, pricing, cost,

investment, and profit and loss simulation results. To improve the reliability of investment cost calculation

and assessment for building a new plant, we established standardized plant investment models (for an

annual capacity of 150,000 and 300,000 units) that helps the decision making of the management.

Revenue• Quantity

• Price

Cost • Cost of materials

Investment• Product develop-

ment• Plant investment

Development of new cars• Sales quantity estimation• Price estimation• Material cost estimation• Estimation of investment

amount of product development

Investment in factories • Selection of best plan for plant

investment

Target

Strategic alternative simulation

Alternative simulation

Gap analysis by factors

Support for decision-making by sector Performance analysis after mass-production

Quantity

Investment Contributionmargin

Material cost

Price

Strategic Enterprise Management Simulation Model

Actual

38

Quantity

Investment Contributionmargin

Material cost

Price

Supply Chain Management & Order to Delivery(SCM & OTD)

Supply Chain Management (SCM) and Order to Delivery (OTD) are designed to deliver vehicles

to customers in a timely manner by shifting the current supplier-oriented sales and operation system to a

market- and customer-oriented system, and closely liking sales requirements to the production area.

● Demand Management Innovation The demand management innovation increases the accuracy in demand forecast and makes

a profound plan based on consultation between the Headquarters and overseas bases. The management

system analyzes the local market conditions and forecasts sales figures for next five months. Subsequent-

ly, we establish the demand strategy and specify the demand management levels to verify its demand

planning.

● Order and Delivery Management In the past, we only notified the domestic customers of the delivery schedule in two weeks

prior and often failed to provide a reliable delivery schedule to overseas dealerships. Recognizing the issue,

HMC introduced Advanced Planning & Scheduling (APS II) to offer a delivery schedule based on production

planning and inventory for the following two months. APS II can effectively manage the processes from

order to delivery. If there is no inventory, the system first checks production planning to divert production

capacity to the model that customers ordered. HMC can now swiftly respond to customer orders by the

visibility of demand and supply based on sophisticated production planning.

● Monitoring System We established an integrated system to monitor sales, production, and inventory status, pro-

viding 80 types of information needed for the decision-making process. Currently, HMA (Hyundai Motor

America) and Korean plants that produce commercial vehicles and transmissions have already introduced

the integrated monitoring system.


Dealership/corporation/

domesticmarket

Contract

ForecastDelivery

to promise

Monthly/weekly/daily capacity

7-week production demand

Mornitoring & Alert5-month demand planning

Demandmanagement

APS

APSAdvanced production planning

Order/Delivery managementSCM Monitoring

Material system

SAS

SCP

SCP

MS

MS

COP

DM

Demandforecast

Order placed

deliverymanagement

Weekly demand planning

Early demand planning

CKD/AS

Weekly demand planning

Engine and

transmission demand

4-weekdaily

planning

SCM operation information

Global logistics information

Monthlyplanning review

Engine and transmission integration

Monthly sales volume and option master planning

Monthly and weekly planning

Weekly production planning Material requirement

Engine production planning

Daily/sequenceplanning

KPImanagement

40 Economy



Customer Relationship Management(CRM)

Customer Relationship Management(CRM) aims to provide consistent customer services.

Moreover, CRM is designed to attract new customers by helping a business efficiently allocate internal

sales resources.

● Integrated Customer Information Management System HMC unified the disparate customer information management criteria of the multiple sales

and repair organizations. We selected 39 types of customer information as standard criteria. Based on

the criteria, we developed an information collection and renewal system, taking into account features

of each customer contact point. Relevant sales and repair departments share updated customer infor-

mation to provide personalized service to each consumer.

● Integrated Customer Information Management System We expanded our prospect collection channels to include repair service centers and various

events from the existing customer center and website quotation service. If a prospect shows intention

to purchase, the customer center contacts to ask purchasing period, preference of vehicle model, and

offer consulting service from a car master. For example, if a prospect wants to buy a model within three

months and receive consulting from a car master, a dealership in the region can directly contact the

prospect. To other prospects, the customer center provides useful information to prevent from defect-

ing to other automakers.

● Target Marketing HMC classified customers into 7 groups and 24 sub-groups according to age, gender, and

preference of vehicle model. For example, despite our customers choose the same model of vehicle,

we provide a differentiating service by customer group. Via this method, we can classify our target

customers for the campaign initiatives such as launching a new model in order to increase the sales.

In addition, HMC allowed multiple departments to share marketing event information to minimize cus-

tomer complaints and conduct an analysis on the event results.

● Integrated Voice of Customer(VOC) Management We diversified the data collection channels and standardized VOC classification into six

criteria to respond the customers’ expectation. As VOC effectively delivers the issues to the relevant

departments, customer complaints are swiftly addressed and we can increase customer satisfaction.

We plan to establish a global customer management system, taking into account features of each mar-

ket. The system will first implement into global management starting HMA (Hyundai Motor America)

and HMI (Hyundai Motor India). Currently, HMC is developing a global customer needs analysis process

and system to reflect global customers’ needs to product development.

Plant Maintenance(PM)

Auto manufacturing is considered as an assembly business or a process industry. Therefore, it

is important for an automaker to manage and maintain its plant facilities in best conditions from the mo-

ment of procurement to disposal. We improved plant facilities to support the production lines based on

effective plant maintenance, and maximize the value of assets. First of all, we established a collaboration

system, where production and maintenance departments discuss new facility procurement.

Secondly, HMC standardized the preventive inspection checklist and built a database to systematically

manage preventive maintenance activities and their implementation results. HMC introduced PDAs and

computerized drawings management system to help workers efficiently inspect facilities. This is designed

to shift from the existing event-oriented maintenance to prevention-oriented maintenance to minimize

facility failures and maintain plants in optimum conditions.

Lastly, HMC increased efficiency of maintenance materials procurement and management. Based on the

collaboration between maintenance and procurement (Value Advanced Automotive Trade Zone: VAATZ),

HMC provided maintenance activities in a timely manner and efficiently managed maintenance materials.

We first implemented VAATZ to the Asan Plant in January 2007 and then, Ulsan and Jeonju Plants later.

HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT

VOC collection channels VOC analysis VOC sharing/utilization

Customercenter

Sales public opinion on new cars, sales

promotion

Repaircustomer service

improvement

Quality quality improvement

Research new car develop-

ment, product improvement

The headquarters institutional

improvement

Branch/car master

Repair/service technicians

Auto prosumer

Test drive

Extranet

VOC management

system

Classification criteria

1. Sales 2. Repair 3. Quality 4. Marketing 5. After-market Loyalty Program6. Suggestion/comment

VOC system

41

ENVIRONMENTAl MANAGEMENT

page 50

As an environment-friendly company adopting green management, hMC plans to contribute to a sustainable future by developing cars that meet the needs of the environment, people, and society.

Technological Prowess Shaping the Future of the Environment-friendly Car Market In November 2007, HMC became the first Korean automaker to acquire the certificate of preliminary assessment of the Recyclability Assessment Information System for Homologation

from the EU. This was made possible thanks to HMC’s strenuous research on resource recycling and green management over the years. All processes of the car development at HMC

are proven environmentally friendly. In addition, the Tucson FCEV won the first place in the fuel cell vehicle category of the 2007 Michelin Challenge Bibendum, proving HMC’s advanced

fuel cell technology.

44 Efforts to Minimize the Impact of the Climate Change

Regional Responses Development of Alternative Fuel Vehicles Improving Vehicle Fuel Efficiency

55 Reduction of Gas EmissionsRegional Responses Development of New Engines

58 Increased RecyclabilityResource Circulation Target Expansion of Recycling TechnologyLife Cycle Assessment (LCA) Minimizing Use of Harmful Substances

64 Clean ProductionProduction Sites Fighting Against Climate ChangeResource Circulation Reduction of Pollutant Emissions Environmental Expenditures

44

Efforts to Minimize the Impact of the Climate Change


44 Efforts to Minimize the Impact of the

Climate Change

55 Reduction of Gas Emissions

58 Increased Recyclability

64 Clean Production

The 13th Conference of the Parties to the United Nations Framework Convention on Climate

Change resulted in the adoption of the Bali Roadmap.* The aim was to draw up a roadmap that

calls for advanced and developing nations to take strong measures against climate change.

The roadmap will be employed in 2013, following the Kyoto Protocol, which ends in 2012.

After a two-year discussion period, the UN is planning to finalize the “post-Kyoto regime,”

which involves strengthening the greenhouse gas reduction target for 38 advanced nations

after 2013 and assigning developing nations, such as Korea, China, and India, with manda-

tory reduction targets. This is substantially stronger than the Kyoto Protocol, under which 36

industrialized countries are reducing their collective emissions of greenhouse gases by 5.2%

below the 1990 level between 2008 and 2012.

Key advanced nations are re-establishing greenhouse gas reduction targets. The European

Union (EU), which is taking a leading role in implementing international regulations on reduc-

ing greenhouse gas emissions in the automobile industry, is engaging in discussions on a bill

that would place a 130g/km limit on vehicle CO2 emissions starting in 2012. The legislation is

expected to be finalized by end of 2008. EU member nations are adopting a CO2 tax system,

which gives incentives to low CO2 emission vehicles and levies a tax against high CO2 emis-

sion vehicles. In December 2007, the US government approved a regulation that imposes a

35 mpg(miles-per-gallon) average for cars and light trucks by model year 2020. The regulation

makes it mandatory for cars and light trucks to meet a fleet average of 31.6 miles per gallon by

model year 2015. China has also been further strengthening automobile fuel efficiency regu-

lations since 2008, and is implementing two-step regulations on fuel efficiency. We expect

these movements will gain even more momentum and spread in 2009, when the international

community will agree on a new goal to achieve substantial reductions in greenhouse gas

emissions by 2020.

As a global automobile manufacturer, we recognize the importance of alleviating impacts driv-

en by climate change and is doing its best to reduce greenhouse gas emissions. The best way

to reduce vehicle greenhouse gas emissions is to cut down the use of fossil fuel and to use al-

ternative, low-carbon energy sources instead. Starting from the automobile design phase, we

are performing research on car body design, application of new technologies, and production

of lightweight vehicles so as to improve fuel efficiency. We are also increasing investments in

research and development, with the goal of developing hybrid vehicles, which would cut fuel

use by more than 50%, as well as alternative fuel vehicles that do not need fossil fuel.

* The Bali Roadmap adopted at the 13th United Nations Climate Change

Conference in 2007 specifies the post-2012 framework, where develop-

ing countries as well as developed countries including the U.S. that has

not ratified the Kyoto Protocol should be committed to reduce Green

house Gas emissions.

unit conversion table

1gallon 3.785ℓ

1mile 1.609km

1mpg 2.36kpℓ(kilometer per liter)


Regional Responses

● EU The EU is moving forward with establishing mandatory regulations on vehicle CO2 emissions. In

December 2007, the Commission of the European Communities tabled a proposal to the EU Council to cut

CO2 emissions to 130g/km on average by 2012, and to soften CO2 regulations according to the weight of a

vehicle. The EU Council is currently engaging in discussions on this proposal. We expect this will cause a

serious burden, considering the five to six years of prior time is needed for an auto maker to develop a new

vehicle. Considerable efforts made by HMC to cut down CO2 emissions in the EU region have resulted in an

achievement of 161g/km in 2007, which is a reduction of 3g/km from 2006. We continuously strengthened

efforts to drive down CO2 emissions in 2008. We certainly ensure these strenuous efforts will lead to CO2

emission improvements in the near future. We are continuously reducing CO2 emissions by releasing the

i30 diesel model that emits 119g/km and i10, the sequence model of Santro, that emits 114g/km in 2008.

We will make strenuous efforts towards achieving its new CO2 emission target in the EU region which is

an annual fleet average of 130g/km for new vehicles.

Changes in average CO2 emissions of hMC cars sold in the Eu region(unit: g/km)

130

140

150

160

170

180

190

200

210

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

KAMA actual

HMC actual

HMC target

-24g/km

161g/km(HMC)

130g/km(New target)

-29%



Climate Change



64 Clean Production

● USA HMC has been continuously supplying vehicles with improved fuel efficiency to the US market.

By engaging in efforts to improve the average fuel efficiency level while expanding its product lineup to

include small- to medium-sized passenger vehicles and SUVs, We were able to improve the average fuel

efficiency level from 28.9mpg in model year 2006 to 29.2mpg in model year 2007. We are also actively

implementing fuel efficiency improvements so as to thoroughly prepare for the regulation that imposes a

35mpg average for cars and light trucks by model year 2020. Thanks to these efforts, HMC’s Accent and

Elantra were among the top 30 environment-friendly vehicles chosen in the 2007 Automotive Environmen-

tal Index (AEI), which combines the results of surveys by JD Power and Environmental Protection Agency

(EPA) on fuel efficiency, level of air pollution, and CO2 emissions.

● Korea Due to the increase of the oil barrel prices and the adoption of the Bali Roadmap, there are

movements in Korea to strengthen vehicle fuel efficiency regulations. In fact, the Ministry of Knowledge

Economy announced a new plan to adopt an average fuel efficiency scheme that is roughly 15% stronger

than the current level. The regulated average fuel efficiency target for domestic vehicles with a 1,600cc

or smaller engine has been strengthened from 12.4km/l to 14.9km/l, while the target for vehicles with

an engine larger than a 1,600cc engine has been strengthened from 9.6km/l to 11.5km/l. The Korean

government is promoting the spread of low CO2 emission vehicles by giving incentives to fuel efficient

automobiles. An example is the adoption of a five-grade fuel efficiency system that is applied to all domes-

tic models, regardless of the vehicle class. This fuel efficiency system involves giving vehicles that have

achieved a fuel efficiency level of at least 15km/l with the top grade (Grade 1).

The average fuel efficiency of HMC’s 2007 models with a 1,600cc or smaller engine was 14km/l, and

11.6km/l for the models with an engine larger than a 1,600cc, thereby contributing to improvements in

low CO2 emission models sold in the Eu region (As of February 2008)

(unit: g/km)

Model Engine CO2 Emissions

i10 Diesel 1.1 MT * 114

Getz Diesel 1.5 MT 116

i10 Gasoline 1.1 MT 119

i30 Diesel 1.6 MT 119

Accent Diesel 1.5 MT 120

Atoz Gasoline 1.1 MT 129

Getz Gasoline 1.1 MT 130



i10 Gasoline 1.1 AT * 139

Matrix Diesel 1.5 MT 139

Atoz Gasoline 1.1 AT 140

*MT: Manual Transmission, AT: Automatic Transmission

Changes in combined fuel efficiency (uS)

YEAR Fuel Efficiency

Model year 2004 27.7 mpg




The Accent and Elantra rated among top 30 environment-friendly

models by JD Power and Associates in 2007


the average fuel efficiency of domestic passenger vehicles. In domestic market, we are developing and

launching a large diesel-powered passenger vehicle with greenhouse gas reduction effects while supplying

the hybrid vehicles simultaneously to demonstrate our high level of concern for climate change.

● Other Countries

Canada | The Canadian government announced a plan to introduce fuel efficiency regulations similar to

the US after 2010 in order to further facilitate greenhouse gas emission reductions. In 2007, we improved

the fuel efficiency of our passenger vehicles from 13.0km/l to 14.9km/l, but the increase in sales of high-

class SUVs has caused the average fuel efficiency of the light trucks to slightly drop from 11.2km/l to

10.8km/l. We are increasing investments in research and development to further improve the average fuel

efficiency of our vehicles, especially in the field of light trucks.

China | All HMC vehicles sold in China satisfy the second step of fuel efficiency regulations that has been

enforced from the beginning of 2008. However, due to the rapid increase of greenhouse gas emissions

in China, we forecast the strengthened automobile fuel efficiency regulations. Thus, we will continuously

develop and supply eco-friendly products with improved fuel efficiency to contribute on reduction of the

greenhouse gas emissions.

9

11.6

14.0

12.4

Regulated value HMC

1,600cc and under Over 1,600cc

Average fuel efficiency of domestic passenger vehicles: 11.0km/l

9.6

11

10

13

12

14

15

2007 Status of response to fuel efficiency

regulations in Korea(unit: km/ℓ)

Fuel efficiency grade system(unit: km/ℓ)

Category Scope of application

Grade 1 15.0 or higher

Grade 2 14.9~12.8

Grade 3 12.7~10.6

Grade 4 10.5~8.4

Grade 5 18.3 or lower

9

8

Passenger cars Light Truck

11

10

13

12

14

15

yearly fuel efficiency achieved in Canada(unit: km/ℓ)

11.6 11.6 11.6

8.8 9.2 9.4

13.2

10.5

13.0

11.2

14.7

10.8

2005 20052006 20062007 2007

Regulated value HMC



Climate Change



64 Clean Production

Development of Alternative Fuel Vehicles

The development of alternative energy sources as well as the development and supply of

alternative fuel vehicles is important in responding to the depletion of oil and reducing greenhouse gas

emissions. The ultimate goal of developing new and renewable energy sources is developing and supply-

ing non-polluting vehicles that have zero gas emissions. At present, hybrid electric vehicles, which use

internal-combustion engines and electricity as their power source, are gaining attention as a powerful

alternative. HMC is doing more than simply developing new technologies. We are concentrating to develop

and supply practical and truly environment-friendly alternative fuel vehicles.

● Hybrid Electric Vehicle(HEV) The worldwide increase in oil use is leading to forecasts that the imbalance between supply

and demand for oil will substantially grow around 2015. It is therefore necessary to develop alternative

energy sources and ensure high efficiency in the transportation sector, which accounts for 30% of energy

use. Moreover, regulations on vehicle CO2 emissions are spreading all across the globe in order to mitigate

climate change. Against this backdrop, the high-efficiency and environment-friendliness of HEVs is highly

considered. An HEV combines the conventional power-train with an electric motor and a battery system

to improve fuel efficiency and reduce gas emissions. In addition, an HEV can be fueled through the existing

gas station infrastructure, predicting a bright future in terms of marketability.

START GO STOP

STARTING

During startupEngine startup is based on the motor. During cold startup and when battery is low, engine is used for startup.

CRuISING

During driving Engine operates at the optimal state; the car runs; surplus driving power is stored in the battery

ACCElERATION

During accelerationEngine and motor simultaneously operates the driving power to ac-celerate

DECElERATION

During decelerationSupplied fuel is discontinued and the vehicle’s kinetic energy is transformed into electric energy and stored in the battery

AT A STOP

At a StopAt full stops, the engine is au-tomatically turned off, resulting in improved fuel efficiency and lower emission

Conceptual diagram of hEV and how it works

Fuel tank

Gasoline/diesel

Exhaust gas Braking energy

Electricity (Direct current)

Air

Internal-combustion

engineMotor

Battery

Trans-mission


● Development and Supply Since 2004, We have been participating in pilot operation programs carried out by government

and public organizations as part of projects on supplying HEVs. We began test driving 50 Getz HEVs in

2004 and provided approximately 200 Accent HEVs to public organizations in the metropolitan area. In

2006, five major cities – Busan, Daegu, Gwangju, Ulsan, and Daejeon – received 220 HEVs. In 2007, we

expanded the scope of recipients of HEVs to include other public organizations (i.e. kindergartens, schools,

and welfare organizations). We have plans to supply roughly 1,010 vehicles for two years by the end of

2008. In 2009, we will commercialize the Elantra LPI (LPG Injection) HEV that will allow the reduction of car

maintenance costs, thus increasing the supply of HEVs to general consumers. We are planning to release

a hybrid version of a mid-sized model that features a hybrid system independently developed by HMC in

North America in 2010 as well.

Elantra lPI hEV | In 2009, we are planning to produce and release the Elantra LPI HEV that will become

the first to use an LPI engine in the world. For the successful development of the HEV, we are planning

for the domestic production of expensive part, such as the motor, battery, and inverter. The aim is to

minimize the price increase compared to existing vehicles, while ensuring environment-friendliness and

practical use. We are faithfully implementing a plan to ensure high efficiency of the hybrid system and cost

competitiveness through the development of domestic parts. The company is increasing investments into

research and development to commercialize plug-in hybrid vehicles after 2012 that allow for recharge of

the battery at homes and driving in electric drive mode in the neighborhood.

1 Accent Hybrid (2008) 2 LPI Hybrid Concept Car3 LPI Hybrid Car 1.6 Engine

1

2

3

Steps for hybrid car development

Step 1( ~2004)

Step 2(2005~2009)

Step 3(2010~ )

Acquire production technologies

[Pilot production]Establish a mass production system

[Domestic development of parts]Diversify models

[Increased exports]

2012Plug-in hybrid cars

2010Development and increased exports

of a proprietary system

2009Development of Korean parts and release of LPI

hybrid cars on the market

2005Contribution of the Accent HEVs to the public organization in the metro-

politan area(200 units)

2006Contribution of the Accent HEVs to the public organization at 5 major

cities(220 units)

2007Provide Accent HEVs to general public organizations(300 units)

2008Provide Accent HEVs to general public organizations(710

units)

2004Pilot driving of the Getz HEVs by the ministry of Environment(50 units)

2000 Pilot production of the Accent HEVs

1995Preliminary development(Concept-I)



Climate Change



64 Clean Production

● Fuel Cell Electric Vehicle(FCEV) Once hydrogen replaces fossil fuels using new and renewable energy, people all across the

global will become free from air pollution and global warming resulting from CO2. A Fuel Cell Electric Vehicle

(FCEV) is considered as the alternative non-polluting vehicle since it does not emit any hazardous sub-

stances. There are, however, various tasks that need to be addressed, such as high price tag, and the need

to establish hydrogen infrastructures and use an excessive amount of energy in the hydrogen production

process. As a globally-renowned auto manufacturer, we are very much concerned about the environment

and fully recognizes the essential need for environment-friendly vehicles. The company is continuously

making investments into developing technologies to overcome the various issues related to FCEVs.

● Technology Development We began developing fuel cell technologies in 1998, and is currently developing fuel cell sys-

tems that incorporate the unique philosophies of HMC. In order to improve the performance of fuel cell ve-

hicles and increase marketability, we successfully verified the freeze-start capability of fuel cell 20 degrees

below zero environments. We are focusing our efforts on technological development to resolve issues

related to fuel cell technologies, such as durability and high production costs.

In 1999, HMC became the first to develop a fuel cell stack with a maximum output of 2kW and a power

density of 0.2kW/l In September 2005, it succeeded in the development of an 80kW stack with a power

density of 1.0kW/l that can be installed on a vehicle. We achieved great technological growth – 40 times

greater stack output and 5 times higher power density. These technologies are being adopted for the

hydrogen fuel cell-powered Tucson and fuel cell buses that have been used for the “FCEV monitoring

project” since 2006.

With proprietary technologies of fuel cell systems, we ramped up development of more than 90% of local

parts. The hydrogen fuel cell-powered Tucson is equipped with 20kW-LiPB auxiliary power, a 40kW/80kW

driving motor system, and 35 MPa (Mega Pascal) hydrogen storage fuel tanks. It can accelerate from zero

to 100km/h in 16.2 seconds, and reach a maximum speed of 141km/h. In November 2006, we developed

a hydrogen storage fuel tank with a capacity of 70MPa so that more fuel can be stored, thereby extending

the cruising range.

In May 2007, we developed a 100kW stack that achieved a 25% and 20% improvement in the maximum

output and power density, offering the same performance as internal-combustion engine vehicles. The

stack was installed on the Tucson and testing is held on actual streets. The Tucson equipped with the

100kW stack is expected to accelerate from zero to 100km/h in 12 to 13 second range and reach a maxi-

mum speed of at least 160km/h.

hMC Fuel Cell Electric Vehicle | The excellent features offered by the Tucson have resulted in winning

first place in fuel efficiency in the environment-friendly vehicle category of the <2005 Monte Carlo Rally>,

and in the fuel cell vehicle category of the <2007 Michelin Challenge Bibendum>. The Michelin Challenge

Bibendum is a contest that was launched in 1998 with the aim of evaluating environment-friendly technolo-

gies and cars that would lead the future automobile market and promoting such technologies and cars by

relevant companies. A total of ten fuel cell vehicles from globally-renowned auto makers entered into the

contest. The Tucson was the only vehicle to receive an A in all categories - noise, exhaust, fuel efficiency, and

CO2 emissions. The outstanding fuel cell technologies of HMC were thus proven.

Fuel cell-powered Tucson

Item Specification

Fuel Cell Power 80 kW

Battery 20kW – LiPB

Motor System 80kW

H2 Tank 3.6 kg H2 @ 350 bar

Driving Range 384 km

Acceleration(0 ~100kph) 16.2 sec

Max. Speed 141 KPH

Fuel cell-powered bus

Item Specification

Fuel Cell Power 160 kW

Super Capacitor MAX. 240 kW

Motor System 240kW

H2 Tank 40kg H2 @ 350 bar

Driving Range 386 km

Acceleration(0~50kph) 14.2 sec

Max. Speed 74 KPH


The i-Blue, which was unveiled at the <2007 Frankfurt International Motor Show>, features a future image

of fuel cell vehicles that we are moving towards. An increase in the power density will result in a reduction in

the size of the 100kW stack by half. It will be installed on the vehicle’s underfloor resulting in an equal distribu-

tion of the car’s weight, for a dynamic driving experience and steering stability. The driver will be able to start

the engine even at 30 degrees below zero. By improving system efficiency to 60 % and employing a hydrogen

storage tank with 700 bar, the cruising range of the vehicle will be extended to 600km.

● Others

Biofuel Vehicles

▪Ethanol Vehicles| Bioethanol mostly derived from sugar canes in Brazil. There has recently been an in-

crease in the use of bioethanol derived from corn in the US. As a measure against the high oil prices and global

warming, nations are implementing policies on Flexible Fuel Vehicles (FFVs) which can use ethanol and gasoline

mixture, and E85 vehicles, which use a blend of 85% denatured ethanol and 15% gasoline. However, bioethanol

fuel has its limitations in reducing fuel costs since it is produced by using food resources. As a countermeasure,

the US is taking a lead in the development of bioethanol fuel that uses cellulose. To this end, we expect the

supply will increase after 2012. In response, we are engaging in research and development of a proprietary

vehicle that runs on bioethanol fuel.

▪Biodiesel Vehicle | Bio-diesel made from rapeseed, palm, and soybean replaces diesel. The EU, where die-

sel vehicles are prevalent, is promoting the use of BD5 (5% biodiesel blend) through fuel quality standardization.

All diesel models of HMC can use diesel fuel with a 5% biodiesel blend. In preparation for a substantial increase

in the supply of environment-friendly biodiesel, we are developing diesel engine technologies that allow the use

of biofuel blend of 20% to 30%. When developing biodiesel vehicles, HMC will sufficiently consider their positive

and negative impacts on society and cautiously make decisions based on the profound business judgment.

i-Blue(2007 Frankfurt International Motor Show)

Item Specification

Mileage 600 km [375 miles]

Maximum speed 170 kph[106 mph]

Fuel cell 100 kW [134 hp]

Super Capacitor 450V/100kW/13 Wh/L

Driving motor FR In-line 100 kW

RR In-whell 20 kW x 2

Fuel Compressed hydrogen

[700 bar]

history of fuel cell stack development by hMCStack output density(W/liter)

100 20 30 40 50 60 70 80 90 100 110

200

400

600

800

1000

1200

1400

Stack output(kW)

●

2kW(1999.10)

●

10kW(2000.10)

●

25kW(2002.10)

●

35kW(2003.8)

●

35kW(2003.10)

●

80kW(2005.9)

●

100kW(2007.5)

● 100kW (2010, plan)

System operation in air pressure

Minimization of electric power consumed by driving equipment

Achievement of the highest system efficiency in the industry

1 2007 Michelin Challenge Bibendum Awards2 Fuel cell-powered Tucson

1

2



Climate Change



64 Clean Production

Compressed Natural Gas (CNG) Bus

CNG has the effect of reducing gas and CO2 emissions, but the further infrastructures establishment is

needed for the use. This is why CNG has been mostly used for express and city buses that run in a specific

area. Since July 2004, we have been supplying CNG buses in major regional areas across the nation as

well as in Seoul. The CNG buses by HMC have been appreciated for excellence in quality and recognized

for technological competence. Consequently, our share of the domestic CNG bus market reached 68.4%

in 2005. Starting with the export of CNG buses to Peru in 2006, HMC has been exporting CNG buses to

Latin America and Southeast Asia, thereby contributing to the improvement of air quality in areas where

such vehicles are in operation. We stabilized CNG bus production in 2007 and has been smoothly supply-

ing a great number of CNG buses. The company is making strenuous efforts for the development of more

eco-friendly CNG buses.

Improving Vehicle Fuel Efficiency

Reducing greenhouse gas emissions and contributing to the mitigation of climate change by

making improvements to vehicle fuel efficiency is an important task. We have made considerable achieve-

ments in the development of new engines and new automatic transmissions as well as the application of

lightweight materials to vehicles, aiming to improve vehicle fuel efficiency. We are expanding investments

into research and development in this field.

● Improvement of Engine We made a roughly 10% improvement in maximum output and an approximately 12%

(13.8km/ℓ) improvement in fuel efficiency to the new Elantra HD, compared to the previous model. This

has been made possible by the adoption of a wide range of environment-friendly technologies and speci-

fications, including a new lightweight gamma-1.6VVT engine featuring an aluminum cylinder block, a new

small-sized transmission, a Motor Driven Power Steering (MDPS) system, and silica tires.

The new Santa Fe has achieved an improvement in fuel efficiency by 9.2% compared to the previous

model. This was enabled by the employment of a second generation 2.2 liter D engine, high-performance

Variable Geometry Turbocharger (VGT) technology, and the second generation common rail system with

high injection pressures of 1,600 bar. High pressure fuel is injected into air, which is optimally controlled by

the VGT through the common rail system, providing the best conditions for combustion.

The Grand Starex gained a 6% fuel efficiency enhancement over its predecessor while improving its maxi-

mum output by 20%. To this end, we applied the 2.5 liter VGT A engine, second generation common rail

system with high pressure injection of 1,600 bar, and 5-speed automatic transmission. Also, drag coef-

ficient (Cd) improvements were made.

● Improvements to the Transmission A well-designed transmission can improve fuel efficiency by more efficiently transferring the

power of the engine, thereby contributing to the mitigation of climate change. Improving the efficiency of

the automatic transmission has become an extremely important task for improving fuel efficiency and reduc-

ing CO2 emissions, in tandem with the increased use of automatic transmissions. Realizing miniaturization

1 1.6 VVT engine2 2.5 VGT A engine3 Next-generation small auto transmission

1

2

3


and applying multi-speed technologies are of prime importance to improving the efficiency of automatic

transmissions. Taking this into due consideration, We have been engaging in extensive research and de-

velopment. We succeeded in the independent development of the next-generation downsized automatic

transmission, which can be applied to compact vehicles, the 5-speed automatic transmission for use in

mid- and full size vehicles, and the lightweight automatic transmission that can be used for light vehicles.

After a development period of five years, we successfully developed the 4-speed automatic transmission

for use in light vehicles in 2007, thereby considerably contributing to fuel efficiency improvements.

● Lightweighting Reducing the weight of the vehicle is an important factor in improving fuel efficiency. In general,

a reduction of a vehicle’s weight by 100kg leads to a roughly 8g/km improvement in CO2 emissions for

every 1km driving. We are continuing research for the development of space frame type vehicle bodies,

high-strength steel plates with reduced weight, and environment-friendly compressors.

We developed and applied a high strength, light weight steel plate with reduced thickness. The strength

of the new plate is 1,180Mpa (strengthen that can withstand a weight of up to 120kg per 1mm2), twice

as much from the previous plates, whose strength was merely around 590Mpa (up to 60kg per 1mm2).

The new plate also improved in terms of thickness by about 33%. By applying the new high strength, light

weight steel plate to all models, HMC will enhance vehicle safety and contribute to a reduction in CO2

emissions and fuel costs through lighter weight.

Ki-sang Lee (Director, HMC Hybrid Design Team)

Although the development of alternative fuel is urgently needed in confronting environmental issues such as climate changes and depletion of recourses, develop-

ment of fuel efficient hybrid vehicles is underlined since there are currently no straight answers to the issues. We plan to launch Elantra LPI Hybrid in the domestic

market in 2009 by combining LPG fuel and electric motor. Moreover, we aim to introduce mid-sized gasoline hybrid car in 2010 in North American market. We are

strengthening research and development in preparation for deployment of plug-in hybrid vehicles in 2010, which can be charged with the electricity at home and

travel a short distance. Plug-in Electric Vehicle is a new concept car whose batter can be charged with the external power while it requires seven to twelve times

more battery power than before. For a battery technology is the key factor as well as a problem in implementing environment-friendly vehicles technology, we plan

to gear up to develop environment related technology and bring up suppliers. HMC is on the verge of strengthening the image of clean “BLUE” in order to develop

as an eco-friendly company and laying a basis for becoming a top automobile company. We will grow as a global automobile company by promoting development

and sales of products according to domestic and foreign environmental standards and environment preservation activities.

Growing into a Global Environment-friendly Company through The Development and Sales of Hybrid Vehicles

54

Establishment of a System to Manage Information on Global Environmental Regulations and Relevant Risks

HMC is making efforts to minimize management risks that are related to the environment by building

and operating an information system on environmental issues and regulations for the integrated man-

agement of global environmental regulations that are becoming stronger and diverse across the globe.

A greater number of countries are prohibiting the use of harmful chemicals that is leading to

impact on environmental issues such as climate change, depletion of resources, and water shortage.

Advanced nations, such as the US and EU, are continuously strengthening environmental regulations to

protect the global environment and the health of the people and to preserve the ecosystem. This trend

is spreading all over the world. In addition, environmental regulations are becoming non-tariff trade bar-

riers against the backdrop of free trade gaining momentum in the global market. As such, environmental

regulations have become a big risk to export-oriented companies.

We launched the Global Environmental Regulation Information System (g-ERI) in December 2007 in or-

der to improve each sector’s structure of responding to environmental regulations and to manage, in an

integrated manner, all sectors, including the research institute, sales, production, and service centers.

The overseas bases of HMC that are spread throughout the world send information on environmental

regulations and trends in different nations through the g-ERI in a timely fashion, allowing to share the

information with the research institute, production, sales, and service centers. The implementation of

a scheme enables early measures. We expect this system will contribute to minimizing potential risks

from the strengthening and diversifying global environmental regulations.

HMC has drawn up plans to expand the role of the g-ERI so that it can be used as a communication sys-

tem for a wide variety of environment-related matters such as government policies, market changes,

and consumer needs in various nations. By doing so, we will actively incorporate the steadily increasing

environmental demands of stakeholders into corporate management.



Climate Change



64 Clean Production

1 『Global Environmental Regulations』Brochure2 http://g-eri.hmc.co.kr/ERMS

1 2

Reducing tailpipe emissions in urban areas, where there is a concentrated population, is an

important task that needs to be tackled for the improvement of air quality. We strictly man-

ages its vehicles’ tailpipe emissions, such as NOx and PM, around the world to conform to the

relevant regional regulations, thereby improving air quality in urban areas. We are increasing

investments for the development of new technologies to create vehicles with ultimately zero

gas emissions.

Regional Responses

● EU Following the adoption of the Euro IV standard in 2005, the Euro V standard is expected to be

enforced in the EU in September 2009, which will call for an 80% stricter reduction of Particulate Matter

(PM) emissions and 30% reduction of NOx emissions from diesel vehicles in comparison to the Euro IV

standard. The EU is also engaging in discussions on enforcing Euro VI regulations which will mandate

an additional 60% reduction in NOx from diesel vehicles compared to Euro V standards. HMC has been

selling vehicles that are in compliance with the Euro IV requirements since 2006. In preparation for the

strengthening of regulations on PM emissions from diesel vehicles to 0.005mg/km, we plan to equip our

diesel models with Diesel Particulate Filters (DPFs). In case of the recently released i30 diesel model, the

NOx emissions level is 0.203g/km, which is roughly 80% of the regulated value. The PM emissions level

is 0.017g/km, which is around 70% of the regulated value. Some of the models currently sold satisfy Euro

V standards in terms of gas emissions performance. The Sonata 2.0 diesel model satisfies the PM stan-

dards (0.005g/km) of Euro V. The Getz 1.5 diesel model, among other models, satisfies the NOx standards

(0.18g/km) of Euro V.

● USA The US can be divided into states in which the federal Tier-2 regulations or California’s LEV

II regulations are in effect. California’s LEV II and Zero Emission Vehicle (ZEV) regulations are deemed

to be the strictest gas emission regulations in the world, and thus, the development of environment-

friendly vehicles that comply with these regulations is considered as a very important challenge for

auto manufacturers. The achievement of former ZEV regulations was next to impossible with cur-

rent automobile technologies. In March 2008, California partially softened ZEV regulations by add-

ing the improved Advanced Technology Partial ZEV (AT-PZEV) that allows for the preferential applica-

tion of plug-in hybrid vehicles in exchange for a reduction in the mandatory ratio of pure ZEV vehicles.

Currently, all HMC vehicles sold in the US are gasoline-powered vehicles that satisfy the regional

regulations. We developed and is selling Elantra 2.0 and Sonata 2.4 that boast gas emissions perfor-

mances equal to that of Super Ultra Low Emission Vehicles (SULEVs) in the US market. We intend to

produce a variety of vehicles with SULEV class emission performance to improve air quality and boost

consumer satisfaction. Moreover, we are making efforts to develop and mass-produce future-oriented

environment-friendly technologies, such as hybrid vehicles, plug-in hybrid vehicles, and fuel cell vehicles.

55

Reduction of Gas EmissionsEnvironmental Management


Climate Change



64 Clean Production

PM

0.025

0.020

0.015

0.010

0.005

0.05 0.10 0.15 0.20 0.25 0.30 NOx

Euro 4

Euro 5

Getz 1.5 diesel

Sonata diesel, DPF applied

Emission report of the Getz and Sonata

against Euro regulations(unit: g/km)


Category Model year Model year Model year Model year

’06 - ’08 ’09 - ’12 ’12 - ’14 ’15 - ’17

Mandatory ratio of ZEV 10% 11% 12% 14%

Previous Previous Previous After revision Previous After revision

Pure ZEV - 2.5% 3% 0.9~3.0% 4% 3~6.0%

Improved AT-ZEV - - - 0~2.1% - 0~3.0%

AT-ZEV 4% 2.5% 3% 3% 4% 4%

PZEV 6% 6% 6% 6% 6% 6%

● Korea Most passenger vehicles in the Korean automobile market run on gasoline, but most SUVs

have a diesel engine. In consideration of this fact, gasoline vehicles are governed by regulation as strict as

Low Emission Vehicle II (LEV II), which is enforced in California in the US for low emission vehicles, while

diesel vehicles are emission-controlled by the Euro IV standards. All our vehicles in the market comply with

the above mentioned regulations. In fact, most products achieved much more than what is regulated.

In 2007, the Ministry of Environment conducted evaluations on tailpipe emissions to classify vehicles. Ten

gasoline vehicles, five diesel vehicles, and two LPG vehicles of HMC received grade 1 certification, which

is presented when gas emissions are 45% or less than regulated levels. Nine gasoline and five diesel cars

achieved grade 2 certification, and six gasoline vehicles received grade 3 certification. We are making

efforts to make vehicles more environment-friendly by achieving gas emission levels that are less than

regulated levels.


Climate Change



64 Clean Production

Number of hMC models in each

gas emissions grade category in 2007(unit: number of vehicles)

Fuel Grade 1 Grade 2 Grade 3 Grades 4&5

Gasoline 10 9 6 -

Diesel 5 5 - -

LPG 2 - - -

California’s lEV II and Zero Emission Vehicle (ZEV) regulations

Com

posit

ion

ofve

hicl

e ty

pes


Development of New Engines

HMC is strengthening engine technologies aimed at reducing gas emissions. The diesel en-

gines of passenger cars have become equipped with the Catalyzed Particulate Filter (CPF). These engines

feature an exhaust gas purifying level of over 90%. The filter helps cut exhaust emissions dramatically.

In the case of the small and middle size I-4 gamma engine, which has a variety of environment-friendly

qualities, the Warm-up Catalytic Converter + Under-floor Catalytic Converter (WCC+UCC) is placed at the

back of the vehicle to shorten the catalyst activation time, thereby improving catalyst purifying efficiency.

We reduced gas emissions and improved fuel efficiency by employing the offset crankshaft to reduce fric-

tion of the piston and aluminum cylinder blocks to bring down the weight of the engine.

To improve gas emissions from mid- to large-sized commercial vehicles, we developed three commercial

diesel engines. The 3.9L F engine and 5.9L G engine employ the third generation common rail system with

high injection pressures of 1,800 bar, thereby satisfying the gas emission regulations of the Euro-IV and

achieving high performance and low fuel consumption. The 10L H engine applies a 2,500 bar high-pressure

unit injector for the variable control of the opening and injection pressure to realize optimal combustion

conditions. In addition, the multiple injection function has resulted in an improvement in noise and reduc-

tion in gas emissions. To cut down the level of particulate matters, HMC applies the Particulate Matters

Catalyst (PMC) after-treatment device, which lasts as long as the engine and removes the need for recircu-

lation and maintenance. In terms of NOx, the electronic Exhaust Gas Recirculation (EGR) cooler is applied

to allow for purification based on a low combustion temperature. Moving forward, we will continue to

develop new engines that are more environment-friendly to satisfy the gas emission regulations in North

America and Europe.

1

2

3

1 3.9L F engine2 5.9L G engine3 10L H engine


Automobile is the basic essential of human life. An important goal of HMC is to prevent envi-

ronmental pollution by recycling resources that are used for manufacturing of automobiles and

enhancing the value of end-of-life vehicles. We are prohibiting the use of hazardous substances

for the new vehicle development phase to prepare the recycling process of end-of-life automo-

biles. To verify the recyclability of all models, we are operating the Recyclability Assessment

Information System for Homologation (RAIS-H). The company is thus responding to recycling

laws and regulations that are being strengthened all across the globe. Moreover, HMC is re-

cycling scrap materials such as plastic parts and waste PET bottles that are generated during

the automobile parts manufacturing process. HMC is making efforts to boost research and

development through the Automobile Recycling Center in order to increase recyclability.

Resource Circulation Target

Based on recognition that automobiles are precious resources, HMC is making strenuous ef-

forts to improve the recyclability of end-of-life vehicles. The mid-term goal of HMC is the early achievement

of the recycling and energy recovery rate of 95% by 2015 targeted by the EU and Asia.

To this end, we are working on Design for Recycling(DfR) and making improvements to end-of-life vehicle

dismantling and handling technologies, and functional part manufacturing technologies along with the

development of polymer material recycling technologies. Through the partnership with the end-of-life vehi-

cles management companies, we are jointly developing vehicle dismantling technologies and transferring

the technologies to relevant industries. We are also making efforts to realize resource circulation through

the expansion of use of recycled materials.

Increased Recyclability44 Efforts to Minimize the Impact of the

Climate Change



64 Clean Production

Efforts to achieve the resource circulation target

Design for Recycling

(DfR)

Development of recycling technology

Development of dismantling

technology

Expanded use of recycled materials

Recycling rate monitoring

Resource circulation

95% recyclability/recoverability rate


Expansion of Recycling Technology

● Eco-Design We are carrying out digital design verifications for all models in the design phase to reduce the

development period by bringing down the number of design changes that are made after the design phase

and cut down relevant costs. At the same time, improvements on disassembly were made through digital

recyclability verifications in the design phase, thereby increasing the percentage of end-of-life automobile

parts being reused, recycled, and remanufactured. Dismantling of parts needs to be easy in order to boost

recyclability. By using 3D diagrams in the design phase, virtual vehicles are created to carry out disas-

sembly simulations, thereby assessing and improving disassembly. HMC is currently applying Design for

Environment (DfE) for all models.

● Calculation of the Recyclability Rate for Newly Developed Vehicles In order to respond to EU’s Certificate of Compliance and the recycling laws and regulations

of nations around the world, we are calculating and managing the recyclability rate before the release of

all new vehicles. For this purpose, we use a web-based internal system, the Recyclability Assessment

Information System for Homologation (RAIS-H). RAIS-H is a program used to determine the recyclabil-

ity and recoverability rate. Data is collected from relevant sectors, such as the design and certification

sectors as well as partner companies, to determine the recyclability rate, which is used to respond to

recycling regulations in various nations. Information on the recyclability rate is used as basic guidelines for

environment-friendly design.

In 2007, we used RAIS-H to complete assessments on the Grand Starex, i30, and Genesis. The results

indicate that the vehicles satisfy the recyclability rate of 85% and recoverability rate of 95%, which are

stipulated in end-of-life vehicle domestic and foreign regulations, including Europe.

● Development and Employment of a Wide Array of Recycling Technologies To reduce CO2 emissions, achieve a recyclability rate of at least 95%, and meet the 2015

energy recovery target stipulated in end-of-life vehicle recycling domestic and foreign regulations, we are

developing various recycling technologies by choosing parts targeted for disassembly in consideration of

environment-friendliness, cost, and work efficiency.

For the recycling of rubber material scrap, HMC independently developed a technology that transforms

materials into powder in high temperatures. In 2007, we completed the development of base technologies

for the recycling of rubber material scrap, such as pulverization using shear force at high temperatures,

optimization of desulphurization conditions, recycled rubber powder manufacturing and production-related

mix design, and manufacturing of pilot products. In 2008, we are working on developing technologies for

mass production and commercialization. By employing the developed technologies, rubber material scrap

will be used for the production of the overslam bumpers and gaskets of automobiles starting from early

2009.

We have set a goal to reduce ELV (End of Life Vehicle) waste to around 5% by 2015. The company devel-

oped a technology that extracts polyurethane and textiles from Automobile Shredder Residue (ASR) that

result from the ELV shredding process to absorbed sound materials for automobiles. Other efforts include

the development of technology that use components such as plastic, rubber, and inorganic materials as


fuel for cement production.

In addition, strenuous efforts are being made to minimize environmental load and enhance the recyclability

rate by developing technology that destroys, based on an environment-friendly approach, and stabilizes

automobile coolants, which have a considerable impact on global warming.

We aim to contribute to environment preservation by developing high value-added recycling technologies

for PET bottles. To this end, we have been conducting research on “Recompounding" technology since

2007 that allows for free control of the intensity and shape after a crushing and washing process. After

material development in 2008, we will use the recycled materials for window winding motor "Housing"

upon completion of a pilot product production and evaluation process. It is anticipated that the scope of

application will be expanded to include exterior parts, such as the "Step Assist" and "Fender" in 2009.

● Vehicle Recycling Center The Vehicle Recycling Center is a 4,950m2 building on a site spanning 10,890m2. This facility

can process 4,200 vehicles each year. Through a monitoring system that employs cutting-edge ubiquitous

technologies, a series of processes related to end-of-life vehicles can be checked in real time, including

the recycling of end-of-life vehicles and the waste treatment volume. Through the operation of the Vehicle

Recycling Center, we are recovering more than 90% of liquids and gases and have improved the ELV recy-

cling rate to at least 85%. Using the technology gained through the operation of the recycling center, we

plan to study recycling and environment-friendly treatment methods from the early design stage, and will

apply the results to the design stages of new vehicles. Also, HMC will form a partnership with the domes-

tic car-scrapping industry and provide them with operational technology and know-how, and contribute to

establishing a high standard for end-of-life vehicle management.

● Acquisition of EU’s Certificate of Compliance In November 2007, HMC became the first domestic automobile company to acquire EU’s Cer-

tificate of Compliance. This certificate was presented by RDW (the Center for Vehicle Technology and

Information of the Netherlands), an officially recognized certification organization by the EU, in recognition

for the prohibition of use of heavy metals and recycling strategies of all domestic plants as well as the

Indian and Turkish plants of HMC, and the process for calculating the recyclability rate. The results of many

years of research on environmental management and resource circulation thus gained objectivity. We have

drawn up plans to receive the certificate for the Czech plant, which will commence operations in 2009. The

acquisition of the Certificate of Compliance has enabled the application for the certificate for each model.


Climate Change



64 Clean Production

1 | 5 Certification for domestic plants2 | 5 Certification for the India Plant3 | 5 Certification for the Turkey Plant4 | 5 RAIS-H Certification for i30

1 2 3 4 5


In April 2008, i30 became the first in Korea to acquire the Certificate of Compliance from VCA (The United

Kingdom Vehicle Approval Authority), an officially recognized certification organization by the EU. i30 was

officially recognized for its eco-friendly system in all processes of vehicle development. The recyclability

rate satisfies legal requirements, by using recyclable materials and the application of a structure that al-

lows for easy disassembly and recycling. We are moving forward with receiving certifications for the i10,

New Elantra, and Grand Starex. Plans have been devised to acquire certifications for all new models that

are being developed.

life Cycle Assessment (lCA)

We conduct Life Cycle Assessment (LCA), which is a quantitative assessment on environmen-

tal impacts throughout the entire life cycle of acquisition of raw materials, production, use, and disposal.

HMC compares the newly developed vehicles through LCA process with the existing vehicles in the same

class and use the results as data for developing environment-friendly vehicles.

● Genesis An assessment of the Genesis result a reduction in gas emissions and improvement in fuel ef-

ficiency through engine performance improvements, which accounts for around 75% to 80% of the entire

life cycle of a vehicle in comparison to previous models. Overall environmental performance has been

improved in terms of global warming (17.5%), acidification (13.4%), eutrophication (13.5%), photochemi-

cal smog (18.6%), and resource depletion (14.8%). Assessment results also indicated that environmental

load substance (CO2) emissions were reduced by as much as 17.7%compared to its predecessors. Moving

forward, we will carry out environmental assessments on all newly developed vehicles and use the results

as a means for communication with stakeholders, including consumers, on environmental matters.

● Eco-efficiency* For sustainable development, we adopted eco-efficiency as the environmental performance

index. Eco-efficiency is an assessment technique that was mainly developed in Europe and Japan. System

involves comprehensively assessing sustainability in consideration of the environmental and financial per-

formance of a company or product.

A reduction in environmental burden meanwhile an increase in economic value needs to be achieved to

increase eco-efficiency. Activities performed to enhance eco-efficiency are closely related to the sustain-

ability of a company and product. We developed indexes on environmental load and economic values of

the company, plants, and vehicles, and is using the indexes to perform eco-efficiency assessments. The

eco-efficiency assessment indexes for the company include the sales volume (economic value), as well as

total CO2 emissions and resource usage (environmental burden). The eco-efficiency level of HMC improved

by 19.7% and 29.2%, respectively, in 2006 and 2007 compared to the year 2004. These results demon-

strate that HMC is steadily improving its efficiency in terms of CO2 emissions and resource usage against

the sales volume. This translates into improvements in the company’s sustainability. We have drawn up

plans to build an internal system that systematically manages eco-efficiency indexes on the company,

plants, and vehicles so that it can be used as an essential tool for sustainable development, which involves

pursuing a high level of environmental and financial performance.

100

90

70

Global warming

Photochemical smog

Eutrophication Acidification

Resource depletion

14.8%

17.5%

18.6%

13.4%13.5%

Previous modelGenesis

2004 2005 2006 2007

90

80

110

100

120

130

Eco-efficiency(unit: %)

100103.5

119.7

129.2

* Eco-efficiency =

Economic Value

Environmental Burden

80


Minimizing use of harmful Substances

An important task in corporate environmental management is maximizing the recyclability of

ELV (End of Life Vehicle) and strictly restricting the use of harmful substances from the vehicle design

phase, thereby minimizing their impact on the environment and mankind. Based on collaboration with part-

ners in the development and production phase, we are placing restrictions so that harmful substances are

not used in all vehicle parts. The company is also strengthening the development of alternative materials.

● Global Standardization of the Prohibition of Use of the Four Heavy Metals With the goal of satisfying EU’s end-of-life vehicle regulations, improving the environmental

performance of vehicles, and complying with regulations in the EU market, HMC developed substitutes for

four heavy metals (lead, mercury, cadmium, and hexavalent chromium) included in parts and raw materials

and have been using the substitutes since 2002. Moreover, HMC does not use the four heavy metals in all

materials, parts, and vehicles we globally sell. We established global standard guidelines of the four heavy

metals in November 2006 and implemented according to a three-phased roadmap. Since early 2008, the

company has been applying substitutes for the lead content of aluminum for machining purposes and lead

content in bearing shells and bushes. In preparation for the enforcement of domestic ELV laws in July

2008, we are completely prohibiting the use of the four heavy metals in all new domestic models (exclud-

ing deferment and exceptional clauses in relevant laws and regulations). We are implementing plans to

completely prohibit the use of the four heavy metals in the global market by 2010.


Climate Change



64 Clean Production

Global Standard Guidelines of the Four heavy Metals

In accordance with the environmental operation policy of HMC, no lead, mercury, hexavalent chromium, or cadmium will

be used in HMC automobiles or parts sold around the world, and we will conform to this voluntarily.

1. All employees will fulfill their responsibilities to ensure that none of the four heavy metals are used in any part of the

process of our operations in development, production, sales, use, and disassembly.

2. All domestic and foreign partners doing business with HMC will ensure that none of the four heavy metals are included

in any of the materials or parts delivered to HMC.

3. HMC and all partners – domestic and foreign – will reinforce the response process to regulation regarding the four

heavy metals and strengthen environmental training of our employees.

4. HMC and all partners – domestic and foreign – will do their best to cooperate with one another in promoting these

global standard guidelines of the four heavy metals.

November 15, 2006

Dong-jin Kim, Vice Chairman & CEO

2009.12 Plans to apply to entire vehicles and parts produced at BHMC, HMI, HMMA

2008.12 Plans to apply to entire vehicles and parts produced at HAOS, HMMC

2007.12 Applied to entire vehicles and parts produced in domestic plants

2007.12 Applied to entire vehicles and parts produced in domestic plants, HMI, HAOS, targeting EU market(deferred items: 2006.12)*

3rd Step

2nd Step

1st Step

* The EU regulation on scrapped vehicle that has been executed since

July 2003, exceptionally permitted 1~5 years of postponement period

towards the technically irreplaceable parts. On December 2006, all

models and parts of HMC export to Europe were prepared to meet the

regulation except for the lead content in bearing shells and bushes.

Roadmap to expand global standardization

of the four heavy metals


● Establishment of a Hazardous Chemical Material Management System Since 2004, we have been continuously monitoring and systematically managing all hazardous

materials for auto parts through the International Material Data System (IMDS). Currently IMDS is only

implemented at domestic and some overseas plants. However, plans have been established to implement

the system at all overseas plants, and include materials that are managed offline, allowing for integrated

management of hazardous chemical materials based on a system.

HMC is also developing the e-Chemical Management System (e-CMS), which is scheduled to be com-

pleted in June 2008, to actively use data on chemical materials in automobile parts that is accumulated in

IMDS. We expect that the development of this system will lead to the systematic management of chemi-

cal materials and weight of automobile parts, continuous reduction of environmentally harmful materials,

and enhancement of environment-friendliness. In addition, we are providing training on IMDS and new

environmental laws and regulations by region to all partner companies to manage harmful materials based

on joint efforts.

Sustainable Development of CO2 Reduction Technology in Response to Environment Regulations and Customer’s Need

Degen (Deputy General Manager, European Technology Center Legislation Assessment Team)

EU is continuously strengthening the environmental regulations. According the ‘European Consumer

Survey’, eco-friendly product is one of the main factors that affect customer’s decision-making. For the

sustainable growth of HMC in European market, we will have to respond actively in both environmental

regulations and the customer’s needs of environmental products. European technology research center

has to play a significant role in establishment of European environmental strategy. As a director of environ-

ment department, reduction of CO2 emissions is the key issue due to the increase of oil barrel prices and

the impact of climate change. Through discussion, EU is planning to reduce averaged CO2 emissions from

130g/km in 2013 to 95g/km in 2020. Advanced technologies such as light weighting, Hybrid and efficient

air condition will be used to accomplish the new objective. Moreover, HMC will have to quickly acquire

information from g-ERI and respond to the implementation of Euro 5 of Euro 6 and chemicals substance

regulation (REACH)

2004 2005 2006 2007229

229

32,498

63,830

100,830

32,269 31,332 37,000

Management of the four heavy

materialsprohibited from

use

Search forchemical

materials/build a database

Interface with IMDS data

Recyclability rate, Provision of

resulting data

Monitoring of environmental

laws and regulations

Chemicalmaterial statistics/

determine thelevel of use

e-CMS

e-CMS construction and operation

● Cumulative□Annual

Annually generated volume of IMDS data(unit: cases)


An important task that needs to be addressed by automobile companies is to minimize envi-

ronmental pollutant emissions and optimize the use of resources during the automobile manu-

facturing process. The use of raw materials, subsidiary materials, energy, water resources,

among others, in the process of manufacturing vehicles results in byproducts such as waste

heat, wastewater, gas, waste, and stench. It is thus essential to establish a clean production

system to effectively manage byproducts. The adoption of the Bali Roadmap during the 13th

Conference of the Parties to the United Nations Framework Convention on Climate Change is

leading to forecasts that domestic plants will also be forced to reduce greenhouse gas emis-

sions by a certain level after 2013. HMC is actively making efforts for the preparations. We are

standardizing the management of harmful materials so that they are not contained in raw ma-

terials and not used in the manufacturing process. By establishing a clean production system

that encompasses all partner companies, HMC is contributing to the preservation of the global

environment and enhance environment-friendliness of the automobile industry.

We are managing the material balance between inputs and outputs. In 2007, our domes-

tic business facilities used 308 thousand tons of raw materials, 30.88 million GJ of energy,

11.683 million tons of water resources, and 2,635 tons of chemical substances, in the pro-

cess of manufacturing 1.707 million automobiles and 2.376 million engines. During this pro-

cess, 1.526 million tons of CO2 were emitted. In addition, 639 tons of air pollutants, 192 tons

of water pollutants, and 198 thousand tons of waste were generated.

Clean Production44 Efforts to Minimize the Impact of the

Climate Change



64 Clean Production

Material balance in domestic business facilities and causes of environmental overload by process in 2007*

Air pollutants: 639 ton

Water pollutants: 192 ton

Greenhouse gas: 1,526,399 ton

Wastes: 197,812 ton(Recycled: 151,104 ton)

Energy: 30,881, 448 GJWater resources: 11,683,059 tonRaw materials: 308,001 tonChemical substances: 2,635 ton

No. of finished cars:

1,706,727

No. of engines:

2,375,737

Press

Scrap/Noise

Body

Scrap/Waste sealer

Molding Forging

Noise

Painting Decorative design

Packaging wastesVOC/Stench, Wastewater

Molding sand waste,

Dust/Stench

Waste oil/Wastewater

Engine manufacturing/

Assembly

* The scope of the domestic facilities to frame material

balance includes Ulsan plant, Jeonju plant, Asan plant, R&D

center, and customer service center.

HMC applies the Greenhouse Gas emission calculation

method by Korea Energy Management Corporation(KEMCO)

to calculate GHG emission amount.


Production Sites Fighting Against Climate Change

We are establishing a greenhouse gas emission reduction scheme at domestic business facilities.

In 2007, we presented measures to reduce greenhouse gas emissions as a key agenda item to the Environ-

ment Committee and established a strategic direction. Our objective is to maintain total greenhouse gas

emissions in 2012 to the level of 2005, then reduce emissions by 10% from the 2005 level in 2017. Thereby

we are making various efforts to accomplish it.

● Activities of the Greenhouse Gas Sub-committee In the second half of 2007, we established the Greenhouse Gas Sub-committee under the

Environmental Production Committee, chaired by the Ulsan Plant CEO, the Head of Manufacturing Division,

to effectively reduce greenhouse gas emissions at the production sites. A greenhouse gas inventory was

established for each energy source and manufacturing process, based on which a strategy was drawn up

to engage in reduction activities starting with areas with high potential for reduction. The key to green-

house gas reduction is the promotion of efficient use of energy and development of new and renewable

energy sources.

In the short term, we seek to maximize energy efficiency based on existing production facilities. Further-

more, we are looking into making considerable investments to adopt efficient production facilities and

making a shift to new and renewable energy sources in the long term.

Utility Team of the Ulsan Plant is the secretary of the sub-committee. The team supervises taskforce team

activities and makes efforts to implement integrated execution measures that include the production technol-

ogy sector, Asan Plant, and Jeonju Plant. Working-level taskforce team activities are regularly carried out ev-

ery month, and involve identifying and implementing fundamental improvements that can be made for energy

use reduction. In particular, the team is researching and looking into adopting facilities that ensure high energy

efficiency to make the plants a low energy consumption structure. The Greenhouse Gas Sub-committee

reports its activities to the Environment Committee every quarter. It is carrying out relevant activities at the

corporate level after a deliberation and resolution process of the Environment Committee.

PlantNo. 1

PlantNo. 2

PlantNo. 3

PlantNo. 4

PlantNo. 5

Transmis-sion

Engine Material Seat Asan Production Technology

Jeonju Environmental

Safety Team

Early Production Technology Planning Team

Asan Environmental

Safety Team

Tooling Planning Team

Seat Production Technology Departm

ent

PT Production Technology Planning Team

Material M

anagement

Department

Hyundai Production Technology Planning Team

Engine Managem

ent Departm

ent

Transmission M

anagement

Department

Facility Managem

ent 5

Facility Managem

ent 4

Facility Managem

ent 3

Facility Managem

ent 2

Facility Managem

ent 1

Environmental Production CommitteeChairperson: Ulsan Plant CEO, the Head of Manufacturing Division

Vice Chairperson: Vice manager of the Ulsan Plant

SecretaryUtility Team manager | Production Technology

Planning and Coordination Team manager

Greenhouse Gas Sub-committeeChairperson: General affairs manager in Ulsan

Jeonju


● Greenhouse Gas Reduction Target Management System In 2005, Ulsan plant established the Total Energy Management System (TEMS) that man-

ages the cost and quantity of energy consumed, including electricity and LNG (Liquefied Natural Gas) to

enhance efficiency in energy use. We are also building a new computer system that identifies potential

reductions, sets reduction targets, and comprehensively manages the targets at the corporate level to ef-

ficiently manage greenhouse gas emissions of each manufacturing process and business facility. The new

computer system will determine annual targets every year, based on the long-term roadmap for corporate-

level greenhouse gas reductions. Afterwards, execution methods will be established and implemented

to achieve the target assigned to each business facility. The system will be implemented to all domestic

facilities, including the Ulsan Plant, Asan Plant, Jeonju Plant, Namyang R&D Center and A/S Center from

the second half of 2008. The new system will interface data on each department’s energy consumption

level and cost to the accounting system, and create a database of basic information to be used for envi-

ronmental accounting. Moreover, we will identify potential greenhouse gas reductions in detail by building

a system that monitors the characteristics of production processes and energy use (Utility Monitoring

Management System or UMMS). We are taking necessary action to receive certification for the Energy

Management System (EMS KS A 4000) as well, to save energy even more and further improve the reduc-

tion system.

● Establishment of an Inventory on Greenhouse Gas Emissions of Domestic Business Facilities We are moving forward through establishing a greenhouse gas inventory to identify the status

of greenhouse gas emissions and potential reductions at all business facilities in Korea (Ulsan Plant, Asan

Plant, Jeonju Plant, research institute, service centers, distribution centers, and Headquarters). The total

greenhouse gas inventory for domestic business facilities in 2007 was 1.526 million tons of CO2. The total

greenhouse gas inventory in terms of direct emissions accounted for 34.4% at 525 thousand tons of CO2;

and that in terms of indirect emissions accounted for 65.6% at 1.002 million tons of CO2. We are making

improvements to the processes of minimizing hydrofluorocarbon and sulfur hexafluoride, although they are

used in small quantities. We are planning to strengthen the establishment of the greenhouse gas inventory

to cover all business facilities across the globe.

● Activities to Reduce Greenhouse Gas Emissions We installed heat recovery devices that recycle high-temperature waste heat that is generated

during the painting process, resulting in a considerable reduction in energy use. Around 50% of the heat

that has a temperature of 220 degrees Celsius is recovered, after which the temperature is lowered to 125

degrees Celsius. The recovered heat is used to produce steam, resulting in a 50% reduction in the energy

usage for steam production. Moreover, efforts are being made to improve facilities that effectively prevent

energy waste during non-working hours by optimizing the energy usage hours of production facilities. At

material plants, we changed its “parallel resonance” smelting furnaces to “serial resonance” ones, thereby

substantially improving efficiency in energy use. We became the first Korean company to introduce a sys-

tem that uses waste heat from cooling towers to supply heating at plants and manufacturing processes.

We expect to reduce 4,000 tons of CO2 emissions. We are carrying out a national greenhouse gas reduc-

tion registration project to acquire official certification. Through these activities, we intend to cut down

greenhouse gas emissions and achieve greenhouse gas emission-related targets.


Climate Change



64 Clean Production

2007 Greenhouse gas inventory of

domestic business facilities(unit: ton)

Category Emissions

Direct LNG 500,635

emissions LPG 4,820

Kerosene 3,381

Gasoline 579

Light oil 6,715

CO2 for welding 576

HFC 7,799

SF6 41

Indirect emissions 1,001,853

(electricity)

Total 1,526,399


● Greenhouse Gas Emissions by Energy Source Greenhouse gases emitted from two energy sources-electricity and LNG-consist of most of

the greenhouse gas emissions at domestic business facilities. Electricity 65.8%) and LNG (32.6%) use

accounted for 98.4% of total energy consumption in 2007. The figure for other energy sources was merely

1.6%. This demonstrates that the automobile production plants of HMC are mostly using more environ-

ment-friendly energy sources.

Meanwhile, HMC’s total greenhouse gas emission for all facilities were 1.827 million tons, 1.778 million

tons, and 1.903 million tons, respectively from 2005 to 2007, while total vehicle production volume was

2.314 million units, 2.508 million units, and 2.618 million units, respectively. Interesting characteristics

reveal when we compare GHG emissions to total production volume.

Although our production level increased by 8.4%, 2006 greenhouse gas emission declined by 2.7% com-

pared to the previous tear. This is primarily due to our investment in RTO heat recovery system resulted in

enhancement of energy efficiency. Also, our response to global warming such as cutting energy consump-

tion for painting procedure led to the LNG use reduction.

There are three main reasons that explain the 7.1% GHG emissions increase when the amount of produc-

tion increased by 4.4% compared to the previous year, higher level of plant operations in the US and China,

trial operation of completed vehicles and material plants at Ulsan Plant; higher energy consumption for air

conditioning due to global warming. In order to overcome such difficulties, HMC plans to put more efforts

that would decrease GHG emissions.

Reduction of greenhouse gas emissions through the recycling of waste heat at paint plants

Changes in greenhouse gas emissions at

domestic and overseas business facilities

of hMC

□CO2 emissions●CO2 emissions per sales

2003 2004 2005 2006 2007

1,000 2

500 1

2,000 4

1,500 3

2,500 5

3,000 6

(1,000 ton CO2) (ton CO2/100 million won)

5.48

1,4571,616

1,827 1,7781,903

5.06 5.304.82 4.67

Annual greenhouse gas emissions

heat with a temperature of 220℃

heat with a temperature of 125℃

RTO RTO

BoilerBoiler

Supply of steam Supply of steam(for standby)

Heat exchange

Increased temperature of pre-treated water

Painting Painting

Increased temperature of pre-treated water

Beforeimprovement

Afterimprovement

Greenhouse gas emissions by energy

source at domestic business facilities

(2007)

□LNG

□ Electricity

□Others65.6%

32.8%

1.6%

* RTO: Regenerative Thermal Oxidizer

Hot water


● Participation in External Activitieslong-term Project Established by the Ministry of Knowledge Economy to Analyze Greenhouse Gas

Emission Reduction | The Korea Energy Economics Institute, Korea Automobile Manufacturers Association,

and auto makers are jointly participating in a project operated by the Ministry of Knowledge Economy that

involves analyzing potential greenhouse gas reduction capabilities of the automobile industry. The objective of

this project is to carry out comparative analyses on various scenarios such as maintaining the current energy

sources at automobile facilities and making a shift into new and renewable energy sources so as to deter-

mine the most cost-effective approach. This project, which started in the first half of 2007, is planned to be

completed in the first half of 2008. The results are expected to be used to establish a long-term roadmap for

greenhouse gas emissions reductions in the automobile industry.

Conclusion of an Agreement for Voluntary Reduction of Greenhouse Gas Emissions | We are taking

part in a program that involves the Federation of Korean Industries and automobile-related groups concluding an

agreement for voluntary reduction of greenhouse gas emissions. Tangible results will be achieved in 2008.

Resource Circulation

HMC is continuously engaging in improvement activities that minimize the volume of waste and

increase efficiency in resource use for resource circulation at production plants. For example, we developed

recycling technology for paint waste sludge, VOCs fuel technology, and technology to re-use molding sand

waste at production plants.

● Waste Reduction We are estimating the quantity of waste generated by making a classification into designated waste

that are harmful to the environment and human body such as paint waste, waste oil, and battery waste gener-

ated from painting plants; and general waste such as molding sand waste used for the production of engines,

other plastic waste, dust, and sludge generated from molding plants. We have been recycling metal scrap and

paper waste by managing them separately since 2004. In 2007, the waste produced at domestic and overseas

business facilities was 337,000 tons and roughly 76.9% was recycled. The remaining 23.1% was disposed

(incineration: 10.8%; landfill: 8.2%; waste into the sea: 4.1%). To send less waste to the sea and landfills, we

are continuously engaging in a wide array of improvement activities such as the development of molding sand

waste recycling technology and technology to reduce water content in waste paint.


Climate Change



64 Clean Production

Status of waste disposal

(domestic and overseas)

□Recycled

□Incineration

□Landfill

□Waste into sea76.9%

8.2%

10.8%

4.1%

Quantity of waste recycled


2005 2006 2007

50,000

100,000

150,000

200,000

250,000

300,000

(ton)

166,505 175,432204,020

Quantity of waste generated


□Quantity of general waste generated□Quantity of designated waste generated● Quantity of waste generated per sales

2005 2006 2007

200,000 0.4

400,000 0.6

600,000 0.8

800,000 1.0

(ton) (ton/100 million won)

223,155 223,242337,224

0.650.60

0.83


● Conservation of Water Resources The global water usage will increase by 40% in 2025 in comparison to 1995. UN has desig-

nated Korea as a water-shortage nation. Thereby, we are making efforts to minimize the use of water

resources during the automobile manufacturing process in order to preserve water resources that are

becoming scarce resulting from an increase in the population and industrialization. In 2007, water usage

by HMC was 14.79 million tons and usage per sales was roughly 360,000 tons. Recycled water in 2007

was 855,000 tons, accounting for 5.8% of total water usage. We are strengthening improvement activities

and increasing facility investments for the efficient use of water resources.

In cleaning procedures, to reduce the water resource usage and waste water production, we are investing

significant effort. The second painting factory of Ulsan established a rinse water recycling facility to reduce

amount of electro-coating rinse water used in cleaning procedures. These efforts led to lower concentra-

tion of waste water and higher recovery of electro-coat paints. Moreover, waste water generation reduced

by 33%.

Reduction of Pollutant Emissions

We set company management standards that are much more stringent than legal standards on air

and water pollutants generated during the automobile manufacturing process, and is operating a monitoring

system on pollutant emissions. By so doing, we are focusing on the thorough management of pollutant emission

sources and activities related to reducing pollutants. To process high-concentration refractory waste that may

be too difficult to process in the existing disposal facilities, we are using efficiency and toxicity assessments of

microbe treatments and making efforts in pollutant reduction through waste paint and sludge reduction.

● Air Pollutants Air pollutants consist mainly of Volatile Organic Compounds (VOCs) that are generated when

painting the car body exterior including paint particles and dust. We set internal standards much more

Management standard of air pollutants (unit: Sox, HCl, CO, NOx: ppm, PM: mg/sm³)

Changes in quantity of water resources

recycled(domestic and overseas)

2005 2007 2007

800

900

1,000

1,100

1,200

1,300

(1,000 ton)

1,2541,177

855

Total quantity of air pollutants discharged

(domestic)

2003 2004 2005 2006 2007

300

600

900

1,200

1,500

(ton)

1,363 1,262 1,151

844639

Changes in water resource utilization


□Quantity of water resources used●Quantity of water resources used per sales

2005 2006 2007

18,000 40

20,000 45

16,000 35

14,000 30

12,000 25

10,000 20

8,000 15

(1,000 ton) (ton/100 million won)

14,79816,852

14,793

43 46

36

Sox HCl CO NOx PM

Domestic

legal standards

Companystandards

Actual range of emissions

500

150

50~600.3~0.6 9~11 2~3 12~15 12~15

40~45

315

30

1.250

50

120 120 1206.0

Induction melting furnace|Cupola|Other facilities

Smelting furnaces Incinerator Cupola

600 100


stringent than legal standards and is minimizing the production of air pollution material.

In 2007, amount of air pollutants decreased 24.3% compared to the previous year and recorded 639 tons.

Compared to the previous year, there was a reduction of 100% in terms of CO and NOx, 91.2% in SOx, and

11.2% in PM. This has been made possible by Ulsan Plant changing its cast iron procedure to a light alloy

procedure, resulting in the shutdown of the cupola. In addition, The material plant substantially reduced air

pollutant emissions by improving the dust collector that collects and purifies dissolved dust and harmful

gases discharged from the aluminum smelting furnace. We established more stringent company standards

on smelting furnaces so that the quantity of PM is maintained at 30mg/Sm2 or lower and that of HCl is

maintained at 1.2ppm or lower. The previous pall ring-based dust collection method involved spraying

water to create a water curtain on the pall ring, which then collected dust. This approach had its negative

aspects, such as low efficiency in collecting dust and the generation of secondary waste – pall ring. The

improved method, which is the immersion-based dust collection method, places polluted materials into

the water located at the bottom of the dust collector to collect spores. There are no pall rings inside the

dust collector and therefore no clogs. The new approach also ensures a high level of efficiency in dust col-

lection and does not discharge secondary waste. We adopted this new approach in 2007, and is planning

to employ it at other business facilities as a measure against air pollution.

We also improved the work environment, enhanced work efficiency, and reduced odor in nearby areas by

installing dust collectors for casting machines and the removal of gate dust at the fourth cast iron plant and

light alloy plant in Ulsan and also changed the dust collector at the forging plant.


Climate Change



64 Clean Production

Improvement to the dissolved dust collection method

Previous dust collection method[pall ring-based]

Improved method[immersion]

Clean air discharge

Clean air discharge

Clean air discharge

WaterNozzle

Demister

Spray

Pall Ring

Spray

Pall Ring

Incoming dust

Incoming dust

Incoming dust

Incoming dust

Separation of moisture

Dust micro filter

Sinkingof dustSeparation of water

1 Dust collectors for casting machines of LP I and II at the first light

alloy plant2 New dust collector with a capacity of 6000, 6500 tones at the

forging plant to improve working conditions

1

2


● Water Pollutants A considerable quantity of water resources is used during the automobile manufacturing pro-

cess such as coolants and hot water for heating. HMC deems it an important task to efficiently manage

the resulting wastewater. We manage with our own water pollutant regulation that is more severe than

the legal regulations. Contaminants are divided into several classifications for management: Biochemical

Oxygen Demand (BOD), Chemical Oxygen Demand (COD), Suspended Solids (SS), and mineral oil (n-H).

We are continuously engaging in improvement activities to reduce the volume of wastewater which is

mainly produced from vehicle cleaning, paint dust collection procedures in paint plants, and engine gear

parts manufacturing, as well as sewage from facilities. The Ulsan Plant runs seven disposal units that pro-

cess wastewater, two unified sewage/wastewater disposal units, and one wastewater disposal system.

The Asan and Indian Plant adopted a zero wastewater discharge system, and are thus being operated as

clean production plants that do not discharge any wastewater.

In particular, the Ulsan Plant is engaging in a wide array of activities, such as planting water hyacinth,

which are free-floating perennial aquatic plants that are known to be effective in removing nitrogen and

phosphorus from water, in the sedimentation and transfer tanks at the unified sewage/wastewater dis-

posal units to ensure ecological-friendly wastewater treatment.

According to the policies of the Ministry of Environment, We have been sending water treated at the

Ulsan Plant to the Bangeojin Sewage Treatment Plant since 2007. The density of the discharge has been

increased so as to maintain the operational load of the sewage treatment plant of Ulsan Metropolitan

City. In 2007, the quantity of water pollutants generated by domestic business facilities was 187 tons,

recording a year-on-year increase of roughly 33%. This resulted from softening water pollutant manage-

ment standards to the level of legal standards – 80ppm BOD, 90ppm COD, 80ppm SS - in tandem with

the abovementioned changes.

1 Transfer tank at the unified sewage/wastewater disposal units in

Area I2 Sedimentation tank at the unified sewage/wastewater disposal

units in Area II1 2

Water pollutants generated by

domestic business facilities

□Total quantity of water pollutants generated●Generated quantity by vehicle (kg/vehicle)

2005 2006 2007

300 0.11

250 0.10

2000.09

150

0.08

100

0.07

50

0.06

(ton) (kg/vehicle)

193

129

187

0.11

0.08

0.11

Water pollutant management standard

□Company standards●Legal standards

COD BOD SS n-H

100

90

80

70

60

50

40

30

20

10

(mg/ℓ)

4030 30

2

9080 80

5


● Volatile Organic Compounds(VOCs) Many companies have recently been minimizing VOCs in consideration of their negative impact

on the environment and human body. In 2007, the domestic production of VOCs was 10,019 tons and the

recovery rate of organic solvent was 43%. VOCs are used for diluting paint and cleaning coating machines

for effective vehicle painting. We are continuously performing improvement activities to reduce their use.

use of Waterborne Paints | To lessen the use of VOCs, we are replacing oil based paints with

waterborne paints. Paints for vehicles consist of four materials (resin, pigment, solvent, and additives).

Depending on the solvent, there are two types of paint; oil based paint and waterborne. Waterborne

paints use pure water as a solvent and are environment-friendly paints. In 2002, EU and US strengthened

the environmental regulations on imported automobiles with high amount of VOCs emissions. To qualify

the regulations, we replaced the organic paints we previously used with waterborne paints. We greatly

decreased the amount of organic solvent(g) used per electro deposition area (m2) of an automobile and

the amount of VOCs discharged into the atmosphere during the coating process by utilizing booths.

Regenerative Thermal Oxidizers (RTOs) | To remove VOCs emitted from painting plants, we are operat-

ing Regenerative Thermal Oxidizers (RTOs). An RTO is a device used to incinerate (around 800℃) VOCs.

By storing heat that is generated during the incineration process in a ceramic material, it maximizes heat

efficiency during the waste gas treatment process. With RTOs, we are reducing the VOCs and stench

emission density at painting plants, thereby contributing to environmental improvements at the business

facilities and neighboring areas.

● Hazardous Substances Hazardous substances refer to chemical substances harmful to the human body and the glob-

al environment and include toxic and other chemical substances. Throughout many advanced nations,

chemical substance-related regulations are currently being reinforced and becoming a pressing issue in

corporate exports and international trading. The EU enacted the Registration, Evaluation, and Authoriza-

tion of Chemicals (REACH) regulation in June 2007. With the enforcement of the REACH ordinance, those

enterprises exporting chemical substances and products that contain chemical substances to EU nations

must make a pre-registration during the pre-registration period (June 1 – November 30, 2008).

We are fully aware of what tasks need to be addressed in relation to the REACH ordinance, including

pre-registration and formal registration, and is taking measures accordingly. We are separately managing

poisonous substances, such as sodium hydroxide, sulphuric acid, nitric acid, and hydrochloric acid, and

making efforts to reduce their use. In 2007, the quantity of hazardous materials used domestically by HMC

was 2,635 tons, posting a 6% increase from the previous year, but the quantity per vehicle increased by

0.85%. This is because the casting plant in Ulsan used more sodium hydroxide (NaOH) to control odor. The

amount of chemicals used per vehicle went down in case of H2SO4, HNO3, and HCl.

We are developing a computer system that can comprehensively manage hazardous substances by inter-

facing with the VAATZ (Value Advanced Automotive Trade Zone) system, which is a purchasing system, to

effectively manage hazardous substances that are used in the manufacturing process. The plan is to fully

launch the system in the second half of 2008.


Climate Change



64 Clean Production

Changes in the quantity of VOCs gener-

ated at domestic business facilities

Changes in the recovery of VOCs at domestic

business facilities

□Quantity of VOCs generated (Domestic) ●Quantity of VOCs generated per manufactured vehicle (Domestic)

□Quantity of VOCs recovery●Ratio of VOCs recovery

2005

2005

2006

2006

2007

2007

25,000

6,000 50

5,000 40

4,000 30

3,000 20

2,000 10

1,000 1,000

20,000

15,000

10,000

5,000

7

6

5

4

3

2

(ton)

(1,000ton)

(kg/vehicle)

(kg/100 million won)

10,289

3,705

8,077

3,439

10,019

3,225

6.1

37%

5.3

37%

5.9

43%

Installation and operation of RTOs(Ulsan Plant)


Moreover, we established a strict internal management scheme for ozone depleting substances and

implemented a corporate-level policy that prohibits the use of ozone depleting substances throughout all

manufacturing processes and our partner companies. We are making efforts to preserve the global envi-

ronment. We are also implementing various research initiatives to establish an atmosphere management

process inside and outside its manufacturing processes by building reduction technology for hazardous

substances generated during the manufacturing processes, developing a model of pollutants in the atmo-

sphere, and constructing a design support system for ventilation equipment.

Environmental Expenditures

We calculate the environmental expenditures of three domestic plants (Ulsan, Asan, and Jeon-

ju) and break them down into five items stated in the table below every year. A classification is made into

the direct expenditures of environmental pollution reduction that is associated directly with environmental

facilities and equipment, the indirect expenditures of environmental pollution reduction that is spent for

environmental education for employees and environmental activities, the environment risk management

expenditures for legal compliance, disposal and recycling for consigned waste treatment and waste re-

cycling, and lastly, the social environmental activity expenditures for local environmental campaigns and

green area management. In 2007, the environmental expenditures of the three domestic plants were 54.1

billion won, and the recycling profit derived from selling wastes totaled around 28 billion won. We are plan-

ning to more systematically manage environmental expenditures by adopting an environmental accounting

system.

Total environmental expenditure of the three domestic plants in 2007

(unit: one million won)

Category Main items Total amount

Environmental expenditures Direct expenditures of environment pollution reduction 26,655

Indirect expenditures of environment pollution reduction 14,129

Environmental risk management expenditures 120

Disposal and recycling expenditures 8,884

Social environmental activity expenditures 4,314

Sub-total 54,102

Environmental profit Profit from recycling (Proceeds from selling waste) 27,994

Total consumption of hazardous chemical

substances by domestic business facilities

□Total consumption of poisonous substances (Domestic)●Consumption per source (kg/vehicle)

2005 2006 2007

3,500

3,000

2,500

2,000

1,500

1.6

1.4

1.2

1.0

0.8

0.6

(ton) (kg/vehicle)

2,1902,478

2,6351.30

1.53 1.54



Climate Change



64 Clean Production

Acquisition of the ISO14001 Certification

To actively respond to environmental regulations of countries around the world and strength-

ened monitoring by environmental NGOs, we have been acquiring the ISO14001 certification which is an

international standard on environmental management system established by the International Organiza-

tion for Standardization. All production plants in Korea acquired the certification. The Chinese plant also

acquired the ISO14001 certification in August 2006, followed by the acquisition of the certificate by the US

plant in December 2007. This is a part of efforts made by the company to provide cooperation for environ-

mental management at the respective nations and achieve early stabilization of the new overseas plants

by building an internal environmental management system. We will continuously improve the environmen-

tal management system in line with the follow-up audits conducted every three years. The company plans

to have more newly created overseas plants and partner companies acquire the ISO14001 certification.

ISO 14001 certification status

Business facility Date of certification Certification body

Ulsan Plant (including Headquarters, Dec, 1995 TUV-KOREA

Namyang Research Center, and A/S Center)

Asan Plant Apr, 1998 TUV-KOREA

Jeonju Plant May, 1999 TUV-KOREA

India Plant Mar, 2003 TUV-INDIA

Turkey Plant Jul, 2003 TSE

China Plant Aug, 2006 China Certification Center, Inc.

US Plant Dec, 2007 VCA

1 US plant certified to ISO 14001(2007.12)2 China plant certified to ISO 14001(2006.8)

1 2


HMMA, Settlement of Environmental Management via Acquisition of the ISO 14001 Certification

John Applegate (Senior Manager, Plant engineering, in charge of implementation ISO 14001 for HMMA)

HMC promoted ISO 14001 certification of HMMA for environment-friendly operation. Since ISO certifi-

cation is the process that necessitates involvement of the whole plant, almost a year was spent prepar-

ing HMMA for the certification process. First and foremost, all relevant team members established spe-

cific action plans to adjust internal processes in accordance with ISO 14001 and documented them.

These documentations were later used as guidelines for internal evaluation assessing the level of

compliance with ISO 14001 and discovering shortfalls that were later fixed. Active participation of

general managers and team members from all the departments helped their level of understanding on

environmental management and ISO 14001 certification. Through these efforts, HMMA also prepared

for external audit.

As a result, HMMA met all the requirements of ISO 14001. Also, any minute problems discovered in

the process of implementing ISO 14001 were fixed immediately, which smoothened the certification

process. More importantly, through the process of the ISO certification, employees increased the per-

spective of saving resources and obtained the effect of the reduction in energy consumption. We will

continuously practice environment-friendly management by analyzing internal success factors to obtain

renewal of ISO certification and environmental achievement.

PEOPlE & SOCIETy

hMC strives to fulfill sustainability commitments as well as to promote corporate growth based on the partnership and coopera-tion with the stakeholders.

Building Mutually Beneficial labor RelationsHMC labor and management have pursued mutually beneficial relations and promoted mutual trust by holding a regular meeting on business performance and labor-management events. As a

result, in 2007, HMC labor and management reached a wage agreement without labor strikes. In addition, labor union members re-elected the union leader who successfully made the 2007

wage agreement as the leader for 2008, further stabilizing the labor relations.

page 79

78 EmployeesEmployee Status Building Trust Respect for Human Rights Employee Education Employee Benefits Industrial Safety and Health

85 SuppliersMutual Cooperation Support for Green Management of Suppliers

92 Shareholders and InvestorsShareholders' Meeting and DividendStock Dividend for Employees More Effective Communication with Shareholders

95 CustomersCustomer SatisfactionCustomer First ManagementMarketing

99 Social ContributionSocial Contribution Philosophy and VisionProgress and PlansSocial Contribution Activities in Korea Global Social Contribution

78 People & Society

78 Employees

85 Suppliers

92 Shareholders and Investors

95 Customers

99 Social Contribution

Employee Status

● Number of Employees As of December 2007, the number of our employees was 76,704, a 1.76% increase com-

pared to the previous year. 55,939 employees work in domestic offices and plants, while 20,765 work in

overseas Hyundai Motor Companies. We are striving to create employment every year and contribute to

stabilizing employment in Korea and overseas.

● Respect for Employee Diversity

local Recruitment | Through the global management initiative, we have aggressively entered the over-

seas markets and recruited employees from the local community. In 2007, the number of local employees

increased by 4.97% from previous year to 20,765, accounting for 27.07% of the total HMC employees. We

contributed to the local economy by hiring employees from the local community and treated all employees

equally, regardless of their nationality, culture, ethnicity, language, and religion.

Equal Opportunity | HMC is stepping up its effort to hire more female employees and allow to work

along with male employees on an equal footing. The proportion of female employees to the total workforce

at HMC is at 4.06%. In 2007, the number of domestic female employees increased by 1.52% compared

to the previous year with 2,270 employees. We offer a daily leave every month and a 90-day maternity

leave to female employees to improve their working conditions. Some of our offices and plants operate a

workplace childcare center.

Employees78

In accordance with the principles of Trust-based Management, Environmental Management,

and Transparent Management, we pursue to create the prosperity of company along with the

development of job satisfaction. We make efforts to recruit competent workforce, develop

global human resources, and help employees realize their potential.

Moreover, we provide various employee benefits to improve employees’ quality of life. Our

employees are committed to the growth of HMC, while pursuing a balance between work

and life.

54,440

0.98%increase

1.76%increase

54,97355,939

2005 2006 2007

52,000

50,000

56,000

54,000

60,000

58,000

Number of employees in Korea(As of December 31, 2007)/(unit: number of employees)

Employees on overseas(As of December 31, 2007)/(unit: number of employees)

□North America

□China

□India

□Europe

□Other

20,765

3,184

6,961

5,074

232

5,314

Domestic employees by job category

(executives included)(As of December 31, 2007)/(unit: number of employees)

55,939

11,118

5,931

32,227

6,365 298

□Administration

□R&D

□Production and

maintenance

□Sales

□Other


Building Trust

● Mutually Beneficial Labor Relations

labor-Management Expert Committee | In 2007, we established the Labor-Management Expert Com-

mittee to develop mid-and long-term vision for building trust between labor and management and to lay

the basis for constructive labor relations. The Labor-Management Committee consists of ten members,

five experts each recommended by the labor union and the management. The committee conducts a study

on labor issues and holds meetings where working-level managers and labor experts discuss labor issues

to build effective labor relations.

Wage Negotiations without Strikes in 2007 | We respect three labor rights protected under the Con-

stitution and guarantee labor union activities within the scope of applicable laws. In addition, we have held

meetings of the Central Labor-Management and Working-level Labor-Management Committee in each

quarter by plant or business department in order to address labor issues in a timely manner and promote

mutual trust and understanding between labor and management.

Some uncertainties exist, as the HMC Labor Union is one of the largest labor unions in Korea and repre-

sents the auto industry. However, our labor and management have pursued mutually beneficial relations

and promoted mutual trust by holding a regular meeting on business performance and labor-management

events, and dutifully participating in wage negotiations. As a result, in 2007, our labor and management

reached a wage agreement without labor strikes, which occurred first time over the past few years.

Additionally, labor union members re-elected the union leader who made the wage agreement with the

company in 2007 as the leader for 2008.

● Employee Idea Proposal

Idea Competition | Holding the 2007 Idea Competition, held between March to October, helped em-

ployees share ideas and knowledge to reduce costs and improve profitability. Ideas selected from the

competition and proposals from group discussions helped us save 95.8 billion won and 19.7 billion won,

respectively. In sum, in 2007, we were able to cut costs worth 115.5 billion won, which exceeded the

2007 cost reduction target by more than 20%. In 2007, the number of ideas proposed by one employee

increased by 1.1 to 9.9, and the rate of ideas selected increased by 6.1% to 97.1%. In addition, the number

of proposals made in a group discussion and adopted by company increased by 15.2% to 2,408.

2002

2,178

2,229

2,193

2,230 2,236

2,270

2003 2004 2005 2006 2007

2,220

2,200

2,180

2,160

2,260

2,240

2,300

2,280

Number of female employees in Korea(As of December 31, 2007)/(unit: number of employees)

yearly female employees recruitment status(unit: number of employees)

Male Female Total Recruitment Female Proportion (%)

2005 1,019 88 1,107 7.9%

2006 862 91 953 9.5%

2007 635 95 730 13.0%

Average 2,903 317 3,220 9.8%

80 People & Society

78 Employees

85 Suppliers


95 Customers


In addition, we have kept "Employee Proposal Log" in many corners of each plant to accept any ideas and

complaints about production from employees. In particular, the Asan Plant held "the Idea Competition for

a Better Workplace" to encourage employees to present innovative ideas to improve the workplace. This

on-site event contributed to promoting communication, mutual trust, and respect among employees, and

creating a better workplace.

CAP Meeting in the Hyundai-Kia R&D Center | The Hyundai-Kia R&D Center has held a Communication,

Action, and Performance (CAP) meeting to encourage employees by proposing creative ideas. In a CAP meeting,

employees discuss organizational problems and present solutions to the problems. Through the CAP meeting,

employees voluntarily suggest a creative proposal to improve business performance. The Hyundai-Kia R&D Center

built the CAP e-Lounge, a system designed to help employees share and manage ideas and proposals presented

in a CAP meeting. In January 2007, the Hyundai-Kia R&D Center hosted "Thanks Cap 2007," which promoted shar-

ing information on CAP activities and celebrated the best ideas adopted by the company.

Respect for human Rights

● Declaration of Respect for Human Rights of Employees In 2001, we prepared and announced the Ethics Charter, which states our company respects of

legislations on human rights protection in each country and global human rights protection standards. Fur-

thermore, we opened the Office of Ombudsman and Employee Complaints Center to deal with difficulties

employees facing and have operated various programs to protect human rights of employees by country,

region, and culture.

● Employees' Right to Association We respect employees' right to establish a labor union and other representative bodies cor-

responding with domestic and foreign labor laws. Currently, the HMC Labor Union has been established

in Korea, and the Labor-Management Consultation Committee is operated in Hyundai Motor India(HMI),

and the Public Assembly is established in Beijing Hyundai Motor Company(BHMC). As of December 2007,

43,659 out of 55,914 employees are members of our labor union. We provide our employees with job se-

curity and employees make a concerted effort to improve the quality of vehicles and vehicle sales in order

to contribute to the growth of HMC, creating mutually beneficial labor relations.

Idea Competition and group discussions (Cost saved, unit: 100 million won)

Year Idea Competition Group discussions Total cost saved

Number of Cost Number of Cost

ideas saved proposals adopted saved

2005 432,141 598 2,027 179 777

2006 426,204 730 2,090 180 9010

2007 452,199 958 2,408 197 1,155


● Promotion of Local Employee's Participation in the Decision-making Process and Respect for Opinions of Local Employees Overseas R&D centers mostly consist of engineers and researchers from local residents. In

conformity with the local recruitment principle, we allow local employees to actively participate in the

management. Particularly, the highest decision-making body at BHMC appointed a local resident as a

director. We respect and reflect opinions of local employees in the decision-making process.

● Prevention of Child and Forced Labor HMC does not hire children under the minimum age for employment and support strictly re-

inforced relevant laws in each country. Our workforce only consists of people who are willing to work for

HMC. We provide fair compensation for labor to our employees, adhering to pre-defined work hours and

wage policy of each office or plant and labor laws in each country.

● Prevention of Sexual Harassment at Workplace We completely prohibit physical, verbal, and visual sexual harassment and stalking. Our com-

pany complies with provisions on prohibiting workplace sexual harassment specified in the Equal Employ-

ment Opportunity Act and operates the Sexual Harassment Center in order to create a workplace with

no sexual harassment. Every sexual harassment case is investigated and escalated to the Disciplinary

Committee. We strive to disclose any disciplinary actions against the harassers to prevent recurrence.

Moreover, we provide all employees with education twice a year on prevention of workplace sexual ha-

rassment, according to the Equal Employment Opportunity Act. We also offer education on prevention of

workplace sexual harassment to employees in overseas plants and offices following laws and regulations

in each country.

Employee Education

● Education Programs Our education program has been expanded to employees' families, stakeholders, and retirees.

Also, education areas have been expanded to include culture and art in addition to on the work related

training.

In 2007, HMC provided various education programs to all employees including new employees to promote

common values and employee morale. In order to increase global competitiveness, we also developed ed-

ucation courses for employees in overseas plants and offices, and created education programs like foreign

language courses to nurture regional experts. We developed education programs closely linked to business

performance and differentiated education courses by job category to nurture competent workforce.

Domestic Employee Education | We provided all employees with both internal and external training

courses. In 2007, the average number of training hours per employee was 50 hours receiving education

on capacity building, foreign languages, and business management via on-line. In providing education,

we expanded the areas to include not only OJT(On the Job Training) such as technical skill, sales, and

maintenance but also life design, child education, and seminar to provide differentiating education courses

Education status for domestic

hMC employees

Category Number Total Average hours

of hours of of education

employees education per employees

Administration 11,122 1,306,694 117

Production 29,080 582,776 20

Sales 6,414 212,606 33

Engineering 2,408 100,807 42

R&D 5,680 550,590 97

Total(Average) 54,704 2,753,473 50

* Education participation: full-time employees(As of September 2007)

* Total hours of education = (number of employees) X (hours of education)

* Average hours of education per employees = (total hours of education) X (number of employees)

2

1

1 | 2 Education of new employees in 2007

Spread organizational cultureshare the core value of corporation,

conduct education program to all employees

Strengthen global capabilitysystematize the support of education program toward

overseas business operations(Establish global standardized education program), train local exports,develop language

education programs linked to business performance

Build basis of education focusing on capabilitystrengthen the structure of the education programs to enhance work performance, classify education courses

by job category

Aim for innovative performanceshare the core value of corporation,

conduct education program to all employees

2007 Education Framework andDirection of the Main Objectives

82 People & Society

78 Employees

85 Suppliers


95 Customers


to each employee by job category.

Additionally, we have partially implemented the Individual Development Plan (IDP). With the IDP, employ-

ees attend education courses to complement their weaknesses, after making a self-development plan and

receiving a capacity diagnosis.

● Continuous Education The Hyundai-Kia Learning Center manage and provide information on education courses for

HMC employees. It is designed to provide continuous education to HMC employees. The Hyundai-Kia

Learning Center offer on-line courses on foreign languages, OJT, and business management to help em-

ployees receive education regardless of time or location.

● Education for Retirees Those who plan to retire can receive education to prepare for life after retirement. We pro-

vide education courses on change management after retirement, opening a business, preparation for

re-employment, wealth management, health management, and exchanges of information among retirees.

In 2005 and 2006, 65 out of 77 employees and 32 out of 131 employees, respectively, attended education

courses. However, in 2007, we did not open education courses as the retirement age was extended.

Employee Benefits

● Employee Benefits Various and flexible employee benefits are being offered to meet the needs of employees.

Currently, we provide employees with National Health Insurance, Industrial Accident Insurance, National

Pension, Employment Insurance, and regular medical examinations, in accordance with laws.

HMC also voluntarily offers employees with other benefits. Benefits include living expenses assistance

such as financial aids, housing assistance including a free company house or dormitory, and health and

hygiene benefits. Additionally, we operate cultural and motivational activity assistance program. Overseas

Hyundai Motor Companies also provide various benefits to their employees, depending on local culture

and laws and regulations.

● Support for Cultural Activities HMC encourages employees to participate in various club activities. In 2007, the Asan Plant

encouraged every employee to join at least one club, and the Ulsan Plant hosted a club festival. In June

2007, we hosted ‘Power for Passion and Happiness,’ an in-house club festival, to celebrate employee club

activities.

We have supported employees to participate in various cultural events where they can recharge and

increase morale. In 2007, we hosted ‘Happiness Engine Concert’ touring plants and offices across the

nation, and became the first Korean company to provide employees with literature contents on-line. By

opening the ‘Yangjae Atrium’, an art gallery, we offered our employees an opportunity to appreciate art.

1 HMC Marathon Club participating in the Kyungju Cherry Blossom

Marathon in April 20072 Happiness Engine Concert, a concert tour for HMC plants in

Korea

2

1


● Living and Housing Expenses Assistance We offer company houses, dormitories, or long-term loans with lower interest rates to em-

ployees who do not own a house in order to help employees work in stable living conditions. Moreover,

we operate a non-profit mutual savings system, where fund deposit by employees is used as loans for

employees and interest is provided to depositors as a dividend.

HMC operates the Administrative Service Center and Legal Advice Center to help employees easily get ad-

ministrative documents and legal advice. The Counseling Center in the Hyundai-Kia R&D Center particularly

provides employees with expert counseling service for personal matters. In January 2007, the Asan Plant

invited legal law advisers to provide free law consulting to employees on the production floor.

Industrial Safety and health

● Industrial Safety and Health Systemi-ESh, an Integrated System for Environmental Safety and health | We operate i-ESH, which is ac-

cessed via the HMC Intranet and efficiently supports the ISO 14001 standard for green management. i-ESH

contains vast information on environmental safety and sanitation regarding each domestic plant.

The recorded information is organized into statistical data of diverse formats and used by the employees

Clubs at hMC in 2007 (Unit: number of employees)

Category Headquarters Ulsan Plant Asan Plant Jeonju Plant Hyundai-Kia R&D Center

Sports 329 4,636 829 1,322 1,038

Hobby 483 2,303 454 688 734

Volunteering - 5,032 254 226 35

Religion 36 551 253 292 65

Learning - - 27 - -

Total 848 12,522 1,817 2,528 1,872

i-EShSystem

Safetymanagement

Statisticaldata

Healthmanagement

Environmentmanagement

Website for hMC employees

Gym for HMC employees

http://health.hmc.co.kr

Happy World

http://wellbeing.hmc.co.kr

Cultural events for employees of the HKMC Group

http://culture.hyundai-kiamotors.com

Social Contribution Festival of the HKMC Group

http://festival.hyundai-kiamotors.com

84 People & Society

78 Employees

85 Suppliers


95 Customers


working in related areas. To allow our employees easily access information on safety, health, and the en-

vironment, i-ESH further offers information and education materials on safety, health, and the environment

as well as relevant laws and regulations, and technological standards. iesh.hmc.co.kr

Industrial Safety and health Committee | The Industrial Safety and Health Committee consists of

seven managers recommended by labor and another seven managers recommended by management to

deal with matters related to industrial safety and health. The committee has a regular meeting in each

quarter and special meetings whenever an industrial safety and health issue is raised.

● Prevention of Industrial Accidents and Medical Assistance

Preliminary Assessment and Safety Campaigns | HMC provides education and conducts a preliminary

assessment through the safety inspection to protect employees’ safety at a workplace. The Ulsan Plant

operates a 24-hour emergency center to reduce damage caused by industrial accidents. Employees can

contact the center by calling 119. The Asan Plant also conducts safety inspection twice a year and mea-

sures the working environmental quality to detect elements harmful to employees on the production floor.

We conduct a safety check on a specific area every month and allow the Ministry of Labor to conduct an

inspection on the compliance with plant safety guidelines once a year. Each HMC plant adopts various

preliminary assessments to prevent traffic accidents and fires.

Industrial Medical Centers and Medical Examinations | Industrial medical centers and dispensaries in

domestic plants continue to provide medical cares in preparation for sudden accidents and occupational

health. In accordance with the Industrial Safety and Health Act and collective agreements with the labor

union, HMC provides all employees with medical check-ups once a year and comprehensive medical

examinations to employees and their families who are over 35 years old. We pay the full costs for general

medical check-ups and tests, and half costs for comprehensive medical examinations. Moreover, we offer

medical expenses aids for employees and their families for other medical reasons. The Industrial Medical

Center in the Asan Plant operates a 24-hour emergency room and hires medical specialists to provide qual-

ity medical service to employees. When the Ministry of Labor inspected occupational medical centers run

by private companies in Korea in January 2007, the Industrial Medical Center in the Asan Plant received

the highest score in the quality of medical specialists, equipment, sampling methodology, and medical

examinations.

Industrial Accidents | Since 2004, the industrial accident rate at HMC has been on the decrease because

of preliminary assessments, preventive measures, medical check-ups, and the industrial medical centers.

In 2007, the industrial accident rate of HMC was 1.68%, compared to 1.74% in 2006. Nonetheless, it was

still higher than the average industrial accident rate of 1.10% in the Korean manufacturing industry due to

the aging population of employees and long period of working time. In order to decrease the accident rate,

we provide the information of i-ESH system and conduct surveys to reflect the employees’ expectations.

2005 2006 2007

1.40

1.30

1.20

1.10

1.00

1.60

1.50

1.80

1.70

Annual industrial accident rate(unit: %)

□Korea's manufacturing 1.28 1.18 1.10

industry average

□HMC 1.64 1.74 1.68

85People & Society

78 Employees

85 Suppliers


95 Customers


Suppliers

Mutual Cooperation

● Overview of Mutual Cooperation We develop and implement strategies to promote collaboration with suppliers. The areas that

HMC focuses on to promote mutual cooperation include core competency, stable business management,

global competitiveness, and support for suppliers of suppliers. We established the Mutual Cooperation

Team within the company, the Foundation of Korean Automotive Parts Industry Promotion outside the

company, and the Working Group on Mutual Cooperation, which serves an arbitrator. We have promoted

mutual cooperation since 2003, and reinforced mutual cooperation since 2005. HMC plans to further

increase mutual cooperation with suppliers by 2008, and develop effective mutual cooperation programs

by 2009.

Maintaining cooperative relationship with the suppliers based on mutual trust is the most

important factor in producing a vehicle which constitutes about 20,000 auto parts. As we

acknowledge the high correlation between the quality of the parts and competitiveness of ve-

hicle, we operate a system where suppliers can construct safe management conditions with

an excellent technology, high quality, and responses to various regulations.

Global competitiveness

· Nurturing global human resources· Advance into overseas markets

· Response to global environmental regulations

Core competency

· 5-Star Club· Guest Engineer System· Support for technology development assistance

· Foundation of Korean Automotive Parts Industry Promotion

Programs to promote mutual

cooperation

Support forsuppliers of suppliers

· SQ Certification · Quality Service VolunteerGroup(Foundation of Korean

Automotive Parts Industry Promotion)· Vocational training consortiumand expanded joint procurement

· Management innovation seminars

Stable management

· Cash payment· Capital assistance

· Shared cost reduction · Support for information

system and joint procurement

Completion of mutuallybeneficial relations

Development of mutuallybeneficial relations

Foundation for mutuallybeneficial relations

2009

2006~

2008

2003~

2005

86 People & Society

78 Employees

85 Suppliers


95 Customers


● Strengthening Suppliers’ Core Competency

5 Star System | By operating 5-Star System, we help suppliers enhance the quality of vehicle parts

and improve their competitiveness. The 5 Star System selects member suppliers based on an objective

quality assessment. Suppliers who acquire 5 stars in the quality assessment can join the 5-Star System

to receive various benefits. It was proved that the 5-Star System actually helped suppliers improve their

product quality, as the average rate among suppliers increased from 3 stars (63.6 points) in 2002 to 4

stars (79.4 points) in 2007.

Guest Engineer System | The Guest Engineer System is designed to nurture competent engineers by

inviting engineers of HMC suppliers to HMC to conduct a joint research. In 2007, a monthly average of 232

engineers from 48 suppliers were invited to HMC to participate in developing and revising parts designs

to improve products manufactured by suppliers. With the Guest Engineer System, we aim to nurture en-

gineering workforce of suppliers, transfer design expertise to suppliers, reduce the product development

cycle, and minimize design failures.

Support for Technology Development | We are grasping the trends in the latest technology developed

by competitors in collaboration with suppliers. In 2007, we conducted a benchmarking study on 16 car

models, and provided 1,477 tear down parts of 11 models to suppliers free of charge. By 2008, we plan to

conduct a benchmarking study on 21 car models.

Additionally, HMC hosted 12 new technology exhibitions and 183 new technology seminars to help sup-

pliers develop parts technology. In November 2007, we hosted the 2007 R&D Supplier Tech Day to offer

HMC suppliers in Korea an opportunity to promote their new technology and share technology information,

and reinforce trust between HMC and suppliers.

Foundation of Korean Automotive Parts Industry Promotion | In July 2002, HMC, Hyundai Mobis,

and 164 suppliers co-founded the Foundation of Korean Automotive Parts Industry Promotion (FKAPIP). In

the first year, we donated 5.1 billion won to the FKAPIP, and have contributed about 5 billion won to the

FKAPIP every year. The FKAPIP help suppliers improve competitiveness and business management as an

organization designed to develop the auto parts industry.

In 2007, "the Quality Technology Volunteer Group" under the FKAPIP guided 112 suppliers to develop

new technology. Also, "the Supplier Supporters," which consists of former HMC executives, have been

dispatched to 28 suppliers to provide voluntary management advice. The FKAPIP provided 216 secondary

suppliers with on the job training, access to parts database, and used equipments without any charge.

Moreover, it hosted technology seminars and conferences for suppliers of suppliers.

Suppliers that have joined the 5-Star quality club

Category Supplier

Existing members BorgWarner Transmission Systems Korea, Heesung Catalysts,

(12 companies) Namyang Industry, Sejong Industrial, Hanil E-Hwa, Kyunshin Industrial,

Sewon ECS, Yura, Sejung, Seojin Industrial, Sungwoo Hightech, KEFICO

New members First half of 2007 Halla Climate Control

(3 companies) Second half of 2007 THN Corporation, Korea Autoglass

5-Star quality club Symbol

86

Benchmarking studies on advanced

technology

Year Number of Number of Number of

models participated participated

suppliers engineers

2005 19 657 1,634

2006 22 679 1,861

2007 16 415 1,071

Total 57 1,751 4,566

Management Innovation Seminar for CEOs of suppliers


● Support for Management Stabilization of Suppliers

Cash Payment | As a means to help small and medium-sized companies facing difficulties caused by high

oil price and other market challenges, we are disbursing cash to such companies for goods supplied and

shortened the period for promissory note payment from 120 to 60 days. In addition to continuing this policy

next year, we plan to introduce further improvements to payment conditions for the secondary and tertiary

suppliers as well. In 2007, we paid 8.2 trillion won to small and medium enterprises (SMEs) in cash.

Capital Assistance | In order to help suppliers stabilize business management, we offered suppliers

grants worth 2.3 trillion won including raw materials procurement aids, R&D grants, investment assis-

tance, and emergency operating capital aids, in 2007. In addition, we provided the Network Loan worth

296.1 billion won to suppliers facing a shortage of capital. HMC made an agreement with the Korea Credit

Guarantee Fund and Industrial Bank of Korea to develop the Network Loan and provided loans with lower

interest rates to suppliers based on recommendations by HMC.

Support for Information System and Joint Procurement | Our Vaatz (Value Advanced Automotive Trade

Zone) system, an information sharing system, help suppliers improve their information system and share

information on production planning and drawings with suppliers in real-time. The system uses its purchas-

ing power to support suppliers to adopt joint procurement with an aim of reducing costs. Joint procure-

ment amounted to 67.6 billion won in 2007 and is expected to reach 100 billion won in 2008. Also, joint

procurement is expanded to include raw materials such as stainless steel as well as general supplies.

● Strengthening Global Competitiveness

Advance into Overseas Markets | We help our suppliers enter overseas markets based on HMC over-

seas plants. As of 2007, a total of 220 HMC suppliers operate in China, India, the U.S.A., and other

countries. This is a win-win strategy, as we can procure parts from the global market in collaboration with

suppliers, while our suppliers experience continuous growth and increase global competitiveness.

Payment

Category Payment means Term

Parts for export Cash Once a month

Parts for domestic use SMEs* Cash Once a week

Big enterprises Bill

Joint procurement by year (unit: 100 million won)

Year 2006 2007 2008

(expected)

Suppliers 593 542 800

Secondary suppliers 25 134 200

Amount 618 676 1,000

* Small and Medium Enterprises

88 People & Society

78 Employees

85 Suppliers


95 Customers


Nurturing Global human Resources | Our education programs continue to help employees of suppliers

enhance competency and increase global competitiveness. In 2007, we built a vocational training consor-

tium with suppliers to provide 32,000 employees of HMC suppliers with training courses on engineering

and expertise on quality, technology, labor relations, security, and ethical management. In addition to

educating 78 would-be CEOs of suppliers, we provided education courses to 58 employees of 37 suppliers

working in overseas plants, and foreign language courses to 18 employees of 11 suppliers.

In 2008, we plan to educate 32,000 employees of suppliers and provide training courses to suppliers of

overseas plants and suppliers of suppliers.

● Support for Secondary Suppliers

Management Support | Participating in joint procurement to help ease difficulties secondary suppliers

face, HMC has induced suppliers to improve payment conditions for secondary suppliers. As a result,

joint procurement increased from 2.5 billion won in 2006 to 13.4 billion won 2007, and 20 billion won is

expected in 2008.

Nurturing human Resources | It is not easy for secondary suppliers to improve their competitiveness

because they lack the capacity to develop proprietary technology. For this reason, we have operated the

Vocation Training Consortium to support secondary suppliers since 2006 and hosted the Management

Innovation Seminar every two years. In 2008, we will encourage 1,000 secondary suppliers to participate

in the seminar.

Quality Improvement | The SQ Certification is introduced to help secondary suppliers improve the qual-

ity of auto parts manufactured. In 2007, up to 3,054 secondary suppliers successfully obtained the SQ

Certification. For a fair and objective assessment, we established the SQ Certification Assessment Center,

which provided 24 education courses for a total of 521 SQ Certification evaluators. Starting from 2008, we

plan to introduce a grading system to the SQ Certification. In 2007, the Quality Technology Volunteer Group

guided 216 secondary suppliers to improve product quality and technology competitiveness.

Education programs to nurture global human resources

Category Program

Business management Educational courses for local suppliers of overseas plants (180 trainees)

Quality Seminars by sector (for 3,500 trainees in 9 sectors, employees of suppliers of

suppliers included)

Managers of suppliers of suppliers

Technology Professional engineering courses (expanded to include suppliers of suppliers)

Increase in the number of cyber training programs (from 9 to 12 programs)

89

Ulsan Plant's Safety Programs for Suppliers

The Ulsan Plant recognized that safety accidents occurring in suppliers have affected the

Ulsan Plant either directly or indirectly. We learned that the number of safety accidents

increases, as the relative importance of suppliers increases. Moreover, the awareness has

been raised that safety accidents among suppliers might be the source of labor disputes. In

response to this, the Ulsan Plant has introduced the following programs to address safety

and health issues of suppliers in advance.

1. Regular Safety Management Meeting

HMC safety managers hold a monthly meeting with 138 suppliers from 13 regions for dealing with

suppliers’ safety and health concerns. The Ulsan Plant has hosted not only regular meetings but also

special meetings from time to time to improve safety and health, and develop measures to prevent

safety accidents. We also has provided special safety education to presidents of suppliers.

2. Education on Safety and health

As part of our efforts to improve the quality of safety and health education, the Ulsan Plant developed

an intranet system (iesh.hmc.co.kr) to provide 526 safety education courses and safety and health

information to suppliers in real-time. The plant published and distributed a weekly magazine featur-

ing safety management guidelines, safety common sense, and safety case studies. In addition to the

publication, it produced videos and booklets on safety issues for suppliers.

3. Safety Promotion Events and Campaigns

The Ulsan Plant designates the first Wednesday as Safety Day and the third Wednesday as Fire Safety

Day in every month. The plant operates an emergency call center categorized into safety, health, fire

safety, and the environment that receives any difficulties or safety concerns of the site. The Ulsan Plant

has hosted the Safety Competition and operated outdoor electrical billboards to increase awareness of

safety issues among suppliers.

1 Accident picture outdoor exhibition2 Safety Promotion Competition3 Outdoor electronic billboard for safety promotion

1 2 3

HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT

90 People & Society

Support for Green Management of Suppliers

As a result of domestic and foreign environmental regulations’ rigidity, collaboration between

HMC and our suppliers for sustainable development becomes more important. Green management and

sustainable growth are also significant business issues for our suppliers. As an automobile requires more

than 20,000 parts, it is not easy for the auto industry to form a single network that consists of auto manu-

facturers and parts suppliers to promote mutual collaboration and communication for sustainable growth.

However, we recognize that a sustainable growth is only attainable when we collaborate with our sup-

pliers. Based on the recognition that cooperation with suppliers is essential for sustainable growth, we

introduced the Supply Chain Eco-Partnership (SCEP) to support suppliers to adopt green management

practices.

● Supply Chain Eco-Partnership(SCEP) Pilot Projects The SCEP project launched in April 2006 is designed to transfer HMC green management prac-

tices to suppliers. It is categorized into four areas of green management system introduction, hazardous

materials management, process improvement, and energy consumption management, providing suppliers

with the basis for environmental management. In addition, HMC has used the Supply Chain Environmental

Management (SCEM) system to promote communication among suppliers and induce them to increase

operational efficiency of green management practices. By introducing a self-diagnosis for hazardous mate-

rials management, we further improved the SCEM system to help suppliers to benefit from the system.

● Green Management Transfer Model The SCEP project focuses on the Green Management Transfer Model. Based on the expertise obtained

from the SCEM project launched in 2003, we have developed the Green Management Transfer Model, which clas-

sifies suppliers into 18 categories, and transfer different green management practices to suppliers in each category.

This model enables our company to classify suppliers by sector (parts and materials), size (large, medium, and

small), and green management level (high, mid, low), and transfer customized green management practices to

each supplier. The model helps suppliers improve green management practices themselves as it provides guidelines

on green management. Now, we plan to expand the Green Management Transfer Model to all suppliers.

78 Employees

85 Suppliers


95 Customers


SCEP schedule and participating suppliers

1st year April 2006 ~ March 2007

2nd year April 2007 ~ March 2008

Participating Suppliers Secondary Suppliers

suppliers Doowon Climate Control GE Sensing Korea, Youngbo Chemical, Lotte Aluminum,

Sam-A Aluminum

Sejong Industrial Chungwoo, Hyuunwoo MC, Hanyoung Industrial

BorgWarner Transmission Dongwoo Heat Treating, Precision

Systems Korea

Daesung Electric Jungwoo Plastic, IPL

Hanil E-Hwa Sunil LOESS, Bumyang Industrial

Donghee Industrial Seojin Precision IND., Shindo Engineering

Denso PS Wooju Tech, Yu Shin Industrial

SCEM training for suppliers

SCEP

Primarysuppliers

Establishinggreen

partnerships

Expanding environmental management

Expandingnetwork

Secondary, tertiary

suppliers


● Benchmarking Study on Japanese Companies In the SCEP project, we supported suppliers to conduct a benchmarking study on Japanese

companies to help suppliers access to green management practices of advanced companies. The bench-

marking study was conducted by 7 suppliers participating in the SCEP project and green management

officers of HMC, who visited environmental organizations including the Eco Town in Kyushu, Japan.

● Support for Green Procurement* In September 2005, we voluntarily made an agreement on green procurement with the Min-

istry of Environment. After declaring to purchase environment friendly products to promote sustainable

consumption, in 2007, we spent 1.5723 trillion won in green procurement. This figure amounts to 8.2% of

HMC's total procurement of 29.1 trillion won.

Examples of green management practices transfer

Category Supplier Area Outcome

Suppliers BorgWarner Transmission Hazardous materials Replaced hazardous solvents with

Systems Korea management water-soluble detergents

Secondary Youngbo Chemical Waste recycling Increased waste recycling

Suppliers Reduced incineration wastes

Tertiary Sam-A Aluminum Energy saving Reduced CO2 emissions and electricity

Supplier consumption thanks to improved

operation of the heating system

Green procurement by plant in Korea (unit: 100 million won)

Category 2006 2007

Number of items Amount Number of items Amount

Products with the Certified Green Mark 58 111 87 113

Products with recycling marks (GR Mark) 10 277 9 440

Products with reduced hazardous materials 32 11,451 35 15,170

(lead/mercury/cadmium/chrome)

Total 100 11,840 131 15,723

* Green procurement starts from purchasing goods that are necessary.

It is about buying not only products of good price and quality but also

environment-friendly goods that are less harmful to the environment and

people. Green products include goods with the certified green marks,

recycling marks (GR Mark), less hazardous materials, energy saving

marks, and less wastes.

92 People & Society

On behalf of shareholders and investors, we make efforts to increase profitability with proac-

tive and effective IR activities. We hold the Shareholders' Meeting and quarterly performance

presentation in order to build trust and increase the level of shareholders and investors’ un-

derstanding of our activities. Participating in domestic and foreign investment conferences

allowed us to offer investors information on HMC and discuss potential investment opportuni-

ties. Moreover, IR website provides investors with real-time investment information including

financial statements.

Shareholders' Meeting and Dividend

We held the 40th Shareholders' Meeting on March 14, 2008 to receive an approval of the 2007

business performance, appointment of internal and external directors, and compensation ceiling for direc-

tors from the shareholders. Shareholders approved the re-appointment of Mong-koo Chung as the CEO in

the 2008 Shareholders' Meeting, and our management plans to focus more on transparency and corporate

social responsibility in 2008.

An auto manufacturer has to make continuous capital investment. Therefore, we determine the dividend,

taking into account both investments for continuous growth and shareholder values. In 2007, the dividend

rate was 20%, the same as that of in 2006. The dividend payout ratio decreased a little, compared to the

ratio in 2006. However, in 2007, the dividend yield of common stocks maintained while the dividend yield

of preferred stocks was higher than the yield in 2006.

Shareholders and Investors78 Employees

85 Suppliers


95 Customers


Matters submitted to the 2008 Shareholders' Meeting

Category Item

Matters submitted to the 1. Approval of the 40th (January 1, 2007 to December 31, 2007) Balance Sheet,

Shareholders' Meeting Statement of Profit and Loss, and Surplus Appropriation Statement (draft)

2. Appointment of a director (internal)

3. Appointment of an external director who is to be a member of the Audit Committee

4. Ceiling on the compensation for directors

Approval Approved as drafted

Dividend by year (common stocks)

Category 2005 2006 2007

Net profit (100 million won) 23,487 15,261 16,824

Dividend rate (%) 25.0 20.0 20.0

Total dividend (100 million won) 3,423 2,754 2,760

Dividend payout ratio (%) 14.6 18.0 16.4

Dividend yield (%) Common Stock 1.3 1.5 1.4

Preferred Stock 2.1 2.9 3.2


Stock Dividend for Employees

The Board of Directors of HMC approved to issue stock dividends to employees in September

2007, and offered 30 stock dividends to every employee in positions below the manager level in October

2007. The decision was made to celebrate the 40th anniversary and the 2007 collective wage agreement

reached without a strike. As employees become shareholders, they have a common interest with inves-

tors.

More Effective Communication with Shareholders

Having published various reports including the Annual Report, Accounting and Audit Report,

and Sustainability Report, we have been able to provide accurate information to shareholders and inves-

tors. Since 2004, we have opened the IR website to offer information on the company, finance, stocks, and

sales in real-time and posted disclosure and investment conference information on the website.

IR website (Korean) http://ir.hyundai-motor.com

IR website (English) http://ir.hyundai-motor.com/eng

● Overseas IR Activities We seek diversification of our investors and attract new investors by demonstrating our efforts

for global management and growth potential through overseas IR activities. As part of our IR activities,

we participated in major international auto conferences and investment conferences around the world. In

2007, we participated in an IR event held in the Middle East for the first time and attempted to diversify

investors.

2007 Overseas IR activities

Date Location Event

January Detroit 2007 Detroit Auto Show Conference

USA Overseas NDR* on earnings and business plans

February Asia, Europe Overseas NDR on earnings and business plans

March New York Woori Investment and Securities New York Investment Conference

London Capital Research Conference

Hong Kong Credit Suisse AIC Conference

May Korea Conference call on the 1st quarter earnings (Headquarters)

Hong Kong, Singapore KRX* Conference

June Boston, New York, London 2007 UBS Best of Asia Conference

August Korea 1:1 conference calls with overseas institutional investors (Headquarters)

September Hong Kong CLSA Conference

December Dubai DIC* Arab-Asian Investment Conference

* NDR: Non-Deal Road Show

* KRX: Korea Exchange

* DIC: Dubai International Capital

94 People & Society

● Domestic IR Activities We engage in continuous IR activities to notify Korean institutional investors our earnings, strat-

egies, and new products in order to increase investor confidence in HMC. We announce business plans

and earnings forecast in the beginning of each year, and disclose earnings result in every quarter. After the

announcement of earnings, we have Non Deal Road show (NDR) on a regular basis to clarify any inquires

from investors and, and improve credibility of our earnings reports.

In response to increasing popularity of fund investment among Korean investors and their rising influence

on the Korean stock market, we occasionally hold other investment conferences for Korean institutional

investors in the beginning of each year.

We hosted seminars on major economic issues to meet the information needs of the market and to

encourage the management’s participation in IR events to present HMC business plans. Moreover, we

hosted exhibitions for our new cars to help investors experience the excellent quality and marketability of

new products, and comparative test ride events to allow investors to check our efforts in cutting costs and

develop environment-friendly vehicles.

78 Employees

85 Suppliers


95 Customers


2007 Domestic IR activities

Date Venue Event

January Korea Exchange Reporting on the 2006 earnings and 2007 business plans

Seoul NDR for Korean institutional investors

May Korea Exchange Reporting on the 1st quarter earnings

Seoul NDR for Korean institutional investors

Seoul Woori Investment and Securities IR event

July Korea Exchange Reporting on the earnings in the first half of 2007

Seoul NDR for Korean Headquarters

Headquarters New car releases (i30, Grand Starex)

August Seoul Presentation on HMC's initiatives to cut costs

October Korea Exchange Reporting on the 3rd quarter earnings

November Seoul NDR for Korean institutional investors

The Shilla Hotel UBS Korea Investment Conference

COEX KRX IR EXPO

December Namyang Hyundai-Kia Green Technology Seminar and Genesis Comparative Test Ride

R&D Center

95

We advanced our mid- and long-term growth strategy from "Innovation for Customers" to

"Customer First Management," which embodies our willingness to increase customer value in

quality as well as in quantity terms by improving our brand image and product quality. "Cus-

tomer First Management" has been applied in all business areas including R&D, production,

sales, and maintenance.

Customer Satisfaction

● Customer Satisfaction in Korea We ranked first in both passenger cars and recreational vehicles (RVs) categories of the 2007

National Customer Satisfaction Index (NCSI) survey conducted by the Korea Productivity Center. The fact

that we have maintained as the top in both categories for seven consecutive years implies that our cus-

tomers recognize the high quality of our products and services.

Meanwhile, our passenger cars ranked first for 14 consecutive years in the Korean Customer Satisfac-

tion Index (KCSI) survey conducted by the Korea Management Association Consulting (KMAC). Our RVs

remained as the top for four consecutive years, since when the RVs category was newly introduced to

KCSI in 2004.

● Customer Satisfaction Overseas Our products are well acknowledged even in overseas markets. For example, Azera ranked first

for two consecutive years in the midsize and large car segments in the 2007 Automotive Performance,

Execution and Layout (APEAL) Study conducted by the J.D. Power and Associates in the U.S., and won the

AutoPacific Vehicle Satisfaction Award. We will develop products that maximize customer value, improve

product quality and services, and enhance brand images, according to its mid- and long-term strategy of

"Customer First Management."

Customer First Management

● Protection of Customer Information As personal data privacy becomes increasingly important and violations of privacy frequently

occur, we make efforts to protect customer data and increase customer confidence. Especially, in ac-

cordance with the Regulations on Spam under the Information and Communications Act, we do not send

advertising messages to customers, unless customers agree to receive such messages from HMC in

advance. We also ensure that "opt-out" customers do not receive any marketing messages via DM(Direct

Mail), e-mail, or text messages.

People & Society

78 Employees

85 Suppliers


95 Customers


Customers

Ranked first in both passenger cars and RVs categories of the 2007

National Customer Satisfaction Index.

96 People & Society

● Customer-Value Partnership We developed "Customer-Value Partnership" to become closer to customers and provide cus-

tomers with advisory service of highest quality. While operating a cyber advisory service page on its

website at (www.hyundai-motor.com), HMC provides one-stop service to address customer complaints

in real-time using the integrated customer complaint call number of 080-600-6000. We improved the

complex Interactive Voice Response (IVR) system to increase user convenience. HMC particularly adopted

"Helper," an advisory service system, to help customers easily access information on vehicles.

In the beginning of this year, we ranked first in the auto industry category of the 2008 Korean Service Qual-

ity Index survey conducted by the Korea Management Association Consulting.

● Voice of Customers A cutting-edge Computer Telephony Integration (CTI) system has been introduced to swiftly

respond to Voice of Customers (VOC). We designate Voice of Customer (VOC) Day every week to help

employees share information on customer satisfaction and complaint cases to improve customer relation-

ship management. With VOC Day, we swiftly address customer complaints and send a thank-you letter to

customers who propose ways to improve customer service.

● One-Stop Service In 2007, we introduced multi-purpose service centers in Korea, where customers receive vari-

ous auto-related services including maintenance, insurance, and vehicle purchasing. This attempt helped

improve customer service, enhancing our brand images.

● BLU Service We implemented BLU Service in April 2007, a premium membership service for HMC domestic

customers. BLU Service members use their membership cards to receive comprehensive customer ser-

vice including auto maintenance, integrated point service, lifestyle service, and personalized information.

● Before Service We introduced "Before Service" to provide proactive service to customers. With Before Ser-

vice, HMC service engineers visit customers to offer car maintenance service before customers request

it. In October 2006, we became the first Korean automaker to provide Before Service and introduced 13

additional Before Service Cars.

Especially, we provided free preventive auto inspection to customers during traditional holidays and va-

cation seasons. A customer survey found that the auto inspection demand increased during traditional

holidays. In addition, six HMC service centers in remote areas offered local customers free auto inspection

and consumable parts replacement. We notify “Before Service” schedules on our web page every week.

78 Employees

85 Suppliers


95 Customers


http://www.hyundai-motor.com(domestic only)


● Special Free Inspection Service We offered special inspection service to customers in the regions affected by Typhoon Nari.

We sent emergency maintenance service engineers to those affected regions, provided special inspection

service using the network of the service after the sale, and discounted maintenance fee by 50% for cars

submerged. HMC has dispatched emergency maintenance service engineers to regions affected by heavy

rains and provided customers with free inspection service every year to ensure that customers suffering

from natural disasters use vehicles safely. HMC also plans to continue to offer auto maintenance service

and conduct auto safety campaigns.

Marketing

● Marketing Events Celebrating the 40th Anniversary In 2007, we hosted the ‘Big Love and Big Thanks’ Festival and various marketing and promotion

events to celebrate the 40th anniversary, and conscientiously complied with marketing-related laws and

regulations, making no marketing law violations.

● Auto-Prosumer Initiative HMC became the first Korean automaker to introduce the Auto-Prosumer Initiative, which re-

flects customer opinions in the product or service development phases. When we developed i30 and

selected the model name, we actively sought ideas from Auto-Prosumers in their 20s and 30s, who would

be the main customers of i30.

● Marketing for Overseas Customers We invited 50 overseas customers to the Seoul Motor Show in April 2007 to introduce HMC

models to overseas customers and expand the export market for our commercial vehicles. In October

2007, we invited buyers of Universe (a new bus model) around the world to the Asan Plant, and conducted

various sales promotion activities to achieve the 2007 sales target. The HMC Commercial Vehicle Division

has conducted constructive marketing campaigns by inviting overseas buyers to Korea once or twice a

year.

1 Emergency service2 Customer Invitation event for the 40th anniversary of HMC

2

1

98 People & Society

HMC's Efforts to Ensure Customer Safety

As collision safety laws and regulations are becoming more intense, the role of the steering

column is increasingly important. The steering column controls the direction of the rotation

axis of the wheel and absorbs impacts of a collision, reducing shock transferred to the driver

and passengers. Moreover, power steering contributes to lower emissions and higher fuel

efficiency. Therefore, we began to develop the Motor Driven Power Steering (MDPS) unit

in 2005.

The existing steering column causes many quality problems especially when motor weight

over 5.5kg was installed. Steering column could not absorb the impacts of a collision. Thus, the existing

steering column has limitations in protecting the driver.

The MDPS unit offers more space for a motor since the overall length is 490mm, 150mm less than the

exiting steering column. Also, it has an integrated mounting structure to efficiently withstand impacts

of a collision.

Furthermore, we changed the existing shaft and tube connection for absorbing impacts of a collision

into a sliding structure using spline, and inserted Telesco for driver convenience.

The MDPS unit is different from the existing steering columns in structure and functions. It turns the

existing support structure into a mounting structure, increasing the strength of the steering column. In

particular, it decreases bending of the steering column, improving collision safety. The MDPS unit itself

also absorbs the impacts of a collision and prevents car theft.

Since May 2007, we have applied the MDPS unit into i30 and plan to apply the MDPS unit to other

compact cars, As the MDPS unit is expected to be mandatory for hybrid cars, we expect our MDPS

units to replace imported items and prove our technological prowess in the global market.

In April 2007, our MDPS unit was designated as the New Excellent Technology (NET) by the Ministry of

Science and Technology and Korea Industrial Technology Association.

78 Employees

85 Suppliers


95 Customers


99

Under the slogan of "Moving the World Together," we contributed to make the world a better

place. In order to provide social welfare benefits to the disadvantaged, we have implemented

Selected Social Welfare Projects for three years. As an automaker, we conducted the Easy

Move campaign to improve mobility of physically disabled people, and the Safe Move cam-

paign to promote safer traffic culture by leveraging the scale of our corporation in order to

contribute to the society. Based on the recognition that social contribution can be more mean-

ingful when all employees are involved, we have encouraged our employees to participate in

various volunteer programs. We opened the global CSR website and established the Global

CSR Network in 2007 to increase social contribution and fulfill its social responsibility.

Social Contribution Philosophy and Vision

● Social Contribution Philosophy With the management philosophy "Pursuing the Happiness of Humanity through Vehicles," we

firmly believe in realizing the social contribution towards ‘happiness of humanity and a sustainable society’

by promoting environment-friendly practices and fulfilling our social responsibility as a leading automaker.

● Social Contribution Vision • Contribute to environment-friendly economic activities and preserves the environment.

• Contribute to corporate citizen and assumption of social responsibilities

• Contribute to the realization of a sustainable society, working with citizens.

• Contribute to the realization of social values that achieve human dignity and happiness.

• Contribute to immediate response to global social demands.

Progress and Plans

● 2007 Achievements

Global CSR Website | We opened the Global CSR Website to communicate HMC's global CRS activities

and facilitate exchanges of information among CSR managers. The website is the first infrastructure for

HMC's global CSR activities. The website offers information on various CSR activities conducted by HMC

all around the world.

Global CSR Network | Since 2007, we have made a social contribution and fulfilled our social responsibil-

ity in earnest. Based on major overseas production and sales bases, we have established the Global CSR

Network and plan to expand the network to include all HMC offices and plants around the world.

People & Society

78 Employees

85 Suppliers


95 Customers


Social Contribution

HMC Global CSR Website

http://csr.hyundai-motor.com

100 People & Society

Deepening of Domestic Social Contribution Programs | In 2007, we reinforced our existing public cam-

paigns, community volunteer programs, and social contribution activities in Korea. We especially focused

on volunteer programs at the community level including "the One Company Sponsor for One Rural Village

Initiative," HMC volunteer groups, and House Maintenance Volunteer Group.

● 2008 Plans

Global CSR Programs | All HMC offices and plants across the world support CSR activities under the

Global CRS Programs. Each office and plant focuses on CSR programs at the community level under the

Global CSR Programs with Regional Focus.

Global CSR Network Expansion | We plan to expand the Global CSR Network from our eight domestic

and overseas Hyundai Motor Companies to include all major production and sales bases and regional

headquarters by 2009. The Global CSR Network will promote internal communication at the company level

and help us effectively develop CSR policies and programs for the company.

Advanced Volunteer Programs | We recognized company should not only make donations but also

participate in various volunteer programs in order to become a responsible corporate citizen. Over the

past few years, we have continuously improved our volunteer programs in Korea. Now we are planning

to conduct global CSR activities in earnest starting 2008. To this end, we will grant awards and prizes to

employees who contribute to CSR programs, develop education courses for CSR managers, and create

volunteer programs that can be universally applied to all offices and plants of HMC across the world. We

plan to effectively link volunteer programs at the community level to its global CSR programs.

78 Employees

85 Suppliers


95 Customers


hME

hMA

hMMA

hMI

BhMChAOS

hMGC

headquarters hMC

Korea-domestic

sales

Korea-domestic

Global CSR Network

JeonjuPlant

NamyangHyundai-Kia R&D Center

AsanPlant

Service after

the sale

UlsanPlant


Social Contribution Activities in Korea

● Focus Projects

Selected Social Welfare Projects | Since 2005, we have carried out Selected Social Welfare Projects to

increase our expertise and knowledge on social welfare projects. Through the projects, HMC has not only

donated money but also provided social welfare benefits to the disadvantaged. In 2007, we have selected

a total of 26 social welfare organizations and donated 300 million won (approximately $300,000) to them.

The social welfare projects selected in 2007 were "the Family No.1 Project" for families with children with

serious disabilities and "the Small Library Project" for children without access to a library.

Safe Move | As a leading automaker and responsible corporate citizen, HMC has conducted the Safe

Move Campaign to create a world, where children play outside without any safety concern. Since 2005,

we started to operate the “Search for a Three-leaf Clover” program to grant the wish of children from

families affected by car accidents. In 2007, HMC provided grants to 77 children whose family suffered from

car accident. In January 2008, we invited 52 children with the same reason to the Three-leaf Clover Camp

that offered various cultural events for children.

Since 2003, we conducted a traffic safety campaign for children in collaboration with the Citizen's Coalition

for Safety. Particularly in 2007, HMC introduced "No No Story," a musical for children, to help children learn

about traffic safety in easy words.

Easy Move | With the Easy Move Campaign, we helped the disadvantaged including people with dis-

abilities, elderly, and pregnant women easily move using its vehicles. In July 2007, we disclosed the Grand

Starex Easy Move Vehicle, which was equipped with an electric wheelchair lift and manual wheelchair

slope to help people with disabilities get on the vehicle without getting off their wheelchair.

Projects by beneficiary

Year People with The elderly Children and Others Total Amount

disabilities adolescents

2005 6 6 6 4 22 projects 300 million won

2006 7 6 6 - 19 projects 300 million won

2007 11 7 8 - 26 projects 300 million won

Total 24 19 20 4 67 projects 900 million won

1 | 4 Traffic safety campaign for children2 | 3 Grand Starex for Easy Move

1

2

3


In August 2007, HMC donated 500 million won (approximately $500,000) to the Korea Differently Disabled

Federation to help the federation build facilities for safe movement in 84 organizations for people with dis-

abilities across the country. From May to December 2007, HMC supported five social welfare facilities for

people with disabilities to open Ai Maru, a playground, where children with disabilities can play without

safety concerns. In addition, in April 2007, HMC provided prosthetic legs and special shoes to people with

disabilities, and invited 300 members of the Amputee Coalition of Seoul to plant tours. The Ulsan Plant in-

vited the blind to "Beautiful Journey with People with Disabilities," and 1,004 employees and their families

volunteered to help guide the blind.

● Volunteer Groups There are 115 volunteer groups at the HMC headquarters, plants, and R&D centers. Each of

115 HMC volunteer groups has alliance relations with a social welfare organization and makes a social

contribution with regular volunteering activities. They provide the disadvantaged with car maintenance

service and field trips to a HMC plant or R&D center.

78 Employees

85 Suppliers


95 Customers


Progress in the development of Easy Move Vehicles

Year Description

April 2005 Disclosed the Easy Move Vehicles at the Seoul Motor Show

August 2005 Provided a test ride of the Easy Move Vehicles in collaboration with the National Assembly Spe-

cial Commission on People with Disabilities

July 2006 Conducted a quality test on the Easy Move Vehicles by people with disabilities

September 2006 Released and operated the Starex, Lotze, and Grand Carnival Easy Move Vehicles

July 2007 Released the Grand Starex Easy Move Vehicle

1 Ai Maru, an indoor playground for children with disabilities2 Balloon event on the beach for the Beautiful Journey with People

with Disabilities

1

2

Monthly volunteering activities based on sister relations with social welfare organizations and regions

Led by the General Affairs Team at the Headquarters

16 groups at the

Headquarters

Structure of hMC volunteer groups

hMC volunteer groups

22 groups in the

Ulsan Plant

3 groups in the

Asan Plant

4 groups in the

Jeonju Plant

14 groups in the Hyundai-Kia

R&D Center

31 groups in domestic

sales

25 groups in service after

the sale


hMC Volunteer Program | HMC volunteer groups visit social welfare organizations in alliance relations

more than once a month. They have made a social contribution by not only serving service to the disadvan-

taged but also identifying what the disadvantaged needs most.

house Maintenance | HMC employees and their families have replaced wallpaper, floor paper, and old

facilities in houses for the disadvantaged. From September to December 2007, a total of 1,777 volunteers

participated in the house maintenance service to repair 102 houses. In 2008, HMC expects the number of

repaired houses to reach 776.

One Company Sponsor for One Rural Village Initiative | HMC has promoted the One Company Sponsor

for One Rural Village Initiative. Since 2007, our volunteers helped farmers in 69 rural villages in alliance

relations during the farming season, and inspected vehicles and farm machines in those villages more than

twice a year. Also, in order to help farmers increase income, we encouraged employees to buy agricultural

produce directly from farmers, and operated farmers' markets both on-line and off-line. In 2007, we spent 3

billion won (approximately $3 million) in aiding rural villages directly or indirectly. HMC won the Presidential

Award for Urban-Rural Exchanges for its efforts to promote urban-rural exchanges.

Volunteering activities

Year Number of Number of Number of Time

volunteers volunteer groups visits

2005 12,755 106 1,017 51,620 hours

2006 15,136 112 1,372 60,556 hours

2007 18,442 115 1,314 92,210 hours

1

3

One Company Sponsor for

One Rural Village Initiative

Housemaintenance

HMCvolunteer program

Three major volunteering activities

Volunteering activities by division

Division Villages in Number of Activities

sister relations villages

Headquarters Wulwun-ri, Hongcheon-gun, 1 Helping farmers and building village

Kangwon-do lavatories, etc.

Ulsan 11 villages including the Yangam Village 12 Purchasing Korean agricultural produce

Asan Sare-1-gu, Yeosan, Chungnam 1 Maintenance of the community center

and the senior center, etc.

Jeonju 3 villages including the Surak Village 4 Farmers' market celebrating the 40th anniversary

Hyundai-Kia Onseok-2-dong, Whasung-si, 1 Volume food purchasing, etc.

R&D Center Gyunggi-do

Domestic sales 24 villages including Ogum-ri, Paju-si 25 Helping farmers for two days and one night

Service after 24 villages including Juwul-ri, Paju-si 25 Car inspection, on-line farmers' market, etc.

the sale

Total 69

1 Helping farmers plant rice in rural villages in sister relations2 Quality Division’s volunteering to help distribute meals at the Silver

Nursing Home


Volunteering Activities to Help TaeAn Recover from the Worst Oil Spill in Korean History

On December 7, 2007, a crane barge collided with an anchored crude carrier on the Yellow Sea

of Korea, resulting in the worst oil spill in Korean history. The amount of oil leaked was 12,547kℓ,

which was more than the combined amount of oil spilt from ships over the past decade in Korea.

Also, it was the largest oil spill in the world in 2007.

The catastrophic oil spill destroyed the fishing ground and seriously affected the livelihood

of fishers and residents in TaeAn. The incident also destroyed the TaeAn National Sea Park, which has

beautiful natural landscape including the foreshore, coastal land dunes, and sunset, and is a rich fishing

ground and home to 2,500 species of fauna and flora.

More than 1 million volunteers visited TaeAn to help local fishers recover from the oil spill and prevent

further environment destruction. HMC employees also volunteered to help the region recover from the

worst oil spill and minimize the environmental damage. HMC built the base camp on the beach named

Yoihang-ri in TaeAn, and invited volunteers to remove oil from the beach. We purchased all tools needed

for oil removal including absorbing cloth, oil-proof suits, masks, water, and food in advance in order to

minimize the burden on local residents. We also collected used clothes that could be used as alterna-

tives to non-woven fabric or absorbing cloth during oil removal. Volunteers did their best to remove oil

from the beach, as they recognized that oil removal in the early phases was critical.

HMC has hosted the Green Art Competition for Children and engaged in environment clean-up activities

at the community level. After the worst oil spill disaster in TaeAn, HMC has re-examined its corporate

social responsibility to protect the environment. HMC plans to do its best to create a world, where

humanity and nature peacefully coexist, by encouraging its employees to participate in volunteering

activities as well as increasing corporate donations.

78 Employees

85 Suppliers


95 Customers


1 | 2 Employees in the Asan Plant volunteered to help remove oil in

TaeAn3 Employees in the Jeonju Plant sent used clothes to help remove oil

from the beach in TaeAn

1 2 3


Global Social Contribution

● HMI's Social Contribution Since HMC first entered the Indian market, HMI (Hyundai Motor India) has continued to grow.

HMI became the second largest automaker in India in terms of market share, the largest auto exporter in

India, and became the largest investor in Tamil Nadu. HMI has decided to contribute to the Indian society

based on its success. Therefore, on April 10, 2006, HMI founded the Hyundai Motor India Foundation

(HMIF).

Whenever HMI sells a car in India, we donate 100 rupees to the HMIF. The donation fund is used for new

social contribution projects and activities in India.

Contribution at the Community level | Since March 2007, HMI has selected students in need of financial

aids as Traffic Safety Campaigners and granted them scholarships. The Traffic Safety Campaigners serve as

safety campaigners in congested areas of Chennai and Deli to help pedestrians and motorists recognize the

importance of traffic safety.

The HMIF also held the Medical Camp to provide free medical service to local residents. Medical profession-

als of the Saveetha Medical College participated in three rounds of the Medical Camp to provide free medical

service to 1,600 residents in villages close to HMI including Irrungattukottai, Thandalam, and Poonamali. In

June 2007, HMI provided road maintenance, facilities repair, and medical device grants to the State Hospital in

Kanchipuram, where HMI site is located. In January 2008, HMI donated a Tucson to an environment campaign

with a theme of prevention of global climate change held on the Marina Beach.

Scholarships | The HMIF has donated desks, chairs, and education tools manufactured by HMI to primary,

middle, and high schools in Thandalam on a regular basis. In 2007, we granted 3,000 sets of desks and chairs

to six schools in the region. We are planning the number of desk-chair sets to reach 10,000 by early 2008.

The donation helped HMI get closer to local residents. It is also environment-friendly, as wood from auto parts

packaging is re-used to make desks and chairs.

In June 2007, HMI provided education materials, facilities maintenance, scholarships, and employment oppor-

tunities to the Department of Automotive Engineering of the Assam Technical High School.

Since February 5, 2008, HMI has invited students in need of financial aids to the plant nine times. We invited

a total of 1,570 students to the plant to provide them with breakfast at the plant cafeteria, a plant tour, and

excursion to a nearby park.

KOREAN ENGLISH CHINESE

Social contribution symbols and slogans by language

1 Desks and chairs donated to schools in Thandalam by the Hyundai

Motor Foundation(HMI)2 Invitation of students from the disadvantaged families in the com-

munity where the India Plant is located(HMI)3 Volunteering to enhance traffic safety in congested downtown

areas(HMI)

3

2

1


● HMA's Social Contribution

hope on Wheels (hOW) | Since 1998, Hyundai Motor America (HMA) and the dealers have donated

to medical studies on pediatric cancers. Since 2004, we have donated more than 9 million dollars to 70

pediatric cancer research centers in the name of the Hope on Wheels (HOW), and have cooperated with

community organizations to increase public awareness about pediatric cancers. All HMA dealers in the

U.S. have agreed to donate four dollars to HOW, whenever they sell a Hyundai car.

In 2007, HOW visited 30 organizations in 29 cities, and donated 1.35 million dollars and six Santa Fes (pro-

duced in 2007). HMA is the largest donator in the American auto industry for pediatric cancer research,

improving the image of Hyundai Motor in the American market.

Dana-Farber Boston Marathon Jimmy Fund Walk | The Dana-Farber Cancer Institute is one of the

leading pediatric cancer research institutes in the U.S. Since 1998, HMA has cooperated with the Dana-

Farber Cancer Institute to support the Jimmy Fund Walk. Every year, more than 7,000 people participate in

the Jimmy Fund Walk and walk 26.2 miles to raise fund for pediatric cancer research and increase public

awareness of pediatric cancers. HMC and dealers in the U.K. have also donated more than 6.30 million

dollars to the Dana-Farber Jimmy Fund over the past six years. In 2007, they donated 400,000 dollars to

the Dana-Farber Cancer Institute.

DARE Program– long Beach Police Department | HMA donated two vehicles to the DARE Program of

the Long Beach Police Department in the U.S. The Drug Abuse Resistance Education (DARE) Program is a

drug prevention program, where policemen teach children how to reject drugs, delinquency, and violence.

The vehicles donated by HMA are now used for various education programs on Long Beach Island.

● BHMC's Social Contribution

Vehicle Donation to the Olympics Volunteers Group in Shunyi District, Beijing | In July 2007, BHMC

had a vehicle donation ceremony in the Shunyi Hotel to contribute vehicles to the Olympics Volunteers

Group in Shunyi District, Beijing. Shunyi District is the very center of the manufacturing industry and auto

industry in Beijing. BHMC has played a leading role in developing the manufacturing industry in Beijing and

contributed to growth of the Shunyi economy. In addition, BHMC has actively participated in social contri-

bution projects, setting an example as a model company that grows together with the local community.

Social Contribution at the Community level | In September 2007, Beijing-Hyundai Motor Company

(BHMC) donated 110 PCs to the Sun Village Children Center, a non-profit organization to take care of chil-

dren of prisoners currently serving sentences, and contributed 11 finished cars, 180 engines, 50 transmis-

sions, and other 1,000 auto parts to education facilities in order to help students from the disadvantaged

families and remote areas receive better education. This was the largest social contribution event since

the foundation of BHMC.

78 Employees

85 Suppliers


95 Customers


2

1 Events in the Sun Village, a childcare center for children of inmates

on death row2 Donation of vehicles to the Olympics Volunteers Group in Shunyi

District, Beijing

1

2


● Global Social Contribution Activities

Assistance for Disaster Recovery in Greece and Peru | HMC has provided various aids to countries

hit by natural disasters such as a tsunami or earthquake to help affected people recover from the disaster,

with an aim of contributing to the wellbeing of humanity. For example, we donated 200,000 euros to the

Greek government, when Greece had a series of wild fires in 2007. We also provided Peru with special free

maintenance service worth 100,000 dollars for cars affected by an earthquake. We inspected vehicles and

replaced parts in the affected regions, regardless of car models or brands.

Aids for the lower Classes in India | HMC has conducted social contribution activities at the community

level in India. In particular, we helped the untouchable caste get education to be economically indepen-

dent, and aided the operation of the Sujata Academy, a school for the untouchable caste in Dhaneshari

in northern India. In January 2008, HMC had a groundbreaking ceremony in collaboration with the Com-

munity Chest of Korea and Joint Together Society Korea to build additional classrooms and a dormitory in

the Sujata Academy.

To Become an Automaker that Contributes to the Public Interest

Sridar K, Deputy Manager, Hyundai Motor Foundation, HMI

Since the foundation, HMI has made a success in the Indian market. HMI has the second largest market

share, and becomes the largest auto exporter in India and largest investor in the State of Tamil Nadu.

HMI attributes its success to longstanding trust and support from the Indian public. Therefore, HMI has

made efforts to give what it has earned back to the society based on the recognition that a business is

sustainable only when it gives back its profits to the society, HMI aims not only to raise fund for public

welfare but also to promote the development of civil society in its real meaning. To this end, HMI has

encouraged employees to use their time, knowledge, experience, and energy for the public interest.

I believe that the greatest happiness comes from giving what I have to others, not from possessing

money or wealth. The most memorable contribution of HMI was to donate desks and chairs to nearby

schools. Students in nearby schools had to sit down on the floor because they had no desks and

chairs. However, 1,300 students now sit on the chair and before the desk with HMI logos. I was deeply

touched by the students who had a big smile and studying hard. In order to help students who will lead

India in the future focus on learning, HMI plans to donate a total of 7,000 pieces of chairs and desks

to local schools.

Donation of 200,000 euros for the recovery from the wild fire in

Greece


78 Employees

85 Suppliers


95 Customers


1 Traffic Safety Campaigners of HMI2 Habitat for Humanity program of HMMA

1 2

2007 Global Social Contribution Activities

Subsidiary Country Program Content

Hyundai Motor America(HMA) United States Hope On Wheels ㆍsupported child cancer movement

Hyundai Scholars Pediatric Cancer Fellowship Program ㆍprovided financial support for children who survived through cancer

Dana-Farber Boston Marathon Jimmy Fund Walk ㆍdonated vehicles and fund to Dana-Farber Boston Marathon sponsor

(fund& vehicles donation)

National Association for the Advancement of Colored ㆍsupported National Association for the Advancement of Colored

People (NAACP) ㆍPeople (NAACP)

Louis Barajas Hispanic Book Tour ㆍsupported Hispanic society through partnerships and activities of celebrities

Habitat for Humanity ㆍvolunteered in building "Love House" for low-income family

DARE Program – Long Beach Police Department ㆍdonated vehicles for the prevention of children's drugs taking and violence

Fountain Valley Educational Foundation ㆍprovided scholarship for the implementation of culture and art

Mother’s Against Drunk Drivers (MADD) ㆍaided Mother Against Drunk Driving (MADD) in the United States

Soccer for Hope ㆍdonated soccer supplies to African children

Hyundai Motor Europe(HME) Greece Greece forest fires relief support project ㆍfunded 20,000 euro for the fire rescue

Hyundai Motor India(HMI) India Sujata Academy support project ㆍprovided financial support for low-income schools in India

Local school support project ㆍdesks&chairs to local schools - expect a total of 10,000 sets

ㆍsupported field trips of local school students

ㆍgave gifts to students in memory of Independence Day

ㆍrenovated Thandalam school

ㆍprovided equipments for ITI automobile technology at Assam institute

Korean culture exchange & cultural art area support ㆍopened Chennai InKo Centre and helped its operations

ㆍsupported various cultural art festivals


2007 Global Social Contribution Activities

Subsidiary Country Program Content

Hyundai Assan Otomotive Turkey Hyundai Torches ㆍscholarship program

Sanayi(HAOS)

Beijing Hyundai Motor Company China Computer donation to “Sun Town” ㆍdonated 110 computers to rescue research center

(BHMC) & Vehicles & spare parts donations to educational institutes ㆍdonated11 vehicles, 180 engines, 50 transmissions, and 1,000 other parts

Hyundai Motor Group China ㆍto Beijing University of Technology, Beijing Union University, and etc.

(HMGC) Vehicles donation to Shunyi District Olympic Volunteer ㆍdonated 5 Tucsons

Council

Donation of equipments for educational purposes at Iljo ㆍdonated 343 parts in 64 categories including 2 vehicles

City Hyundai Motors Technology Institute ㆍdonated 40 Hyundai/Kia vehicles

Hee Ah Lee's piano recital support ㆍdonated 50,000 yuan for social events

China snowfall damage support ㆍdonated Tucson for restoring damages of snowfall and 1,000,000 yuan

Central & Eastern. Europe Ukraine Orphans Drawing Competition

Regional Headquarters Azerbaijan Traffic safety campaign

Orphanage support

Safe driving campaign

Cultural activities sponsorship

Middle East Regional Oman Hyundai’s Al Mostaqbal Al Moshirique Awards ㆍgranted yearly awards such as computers for students with

Headquarters ㆍacademic excellence

Hyundai Motor Deutschland South Africa Harry Gwala Secondary School support project ㆍconstructed school facilities and provided security services

GMBH ㆍplan to construct a student Gym in 2008

Africa Regional Headquarters South Africa Sports sponsorship ㆍagreed on the management of Soweto (residency densely populated with

ㆍnatives) soccer stadium with Saudi Arabia Football Association

Hyundai Motors Latin America Chile "SanHak Network" support ㆍdonated technology materials to support local schools

Peru Peru earthquake restoration-related support ㆍconducted restoration activities in cities with earthquake damages

ㆍ(for 2 weeks starting October 22nd)

ㆍdonated supplies : water, food (2000 units), blanket (3000), automobile

ㆍparts (windshield wiper, oil, etc.)

Peru local educational institutes support ㆍsupporting organization: National Educational Organization that operates

ㆍ45 industrial schools

ㆍspecification of donation: engine & 13 T/Ms

Asia & Pacific Regional New Zealand Child Cancer Foundation ㆍdonated vehicles to organization fund-raising for child cancer

Headquarters Pinnacle Program ㆍprovided sponsor program to nurture child with athletic talents

Singapore Fund-raising of Singapore Agency owned professional

football club for disabled/ heart disease children

110 Appendix

APPENDIx

111GRI Index

115Independent Assurance Statement

116Data Sheet

117Index(Sheet & Graph)

118Hyundai Motor Company Worldwide

120Reference Material


GRI Index

Profile Reference

Strategy and 1.1 Statement from senior decisionmaker about the relevance of sustainability to the organization 9

1.2 Description of key impacts, risks, and opportunities 10, 12, 13, 16, 17

Organizational 2.1 Name of the organization 119

Profile 2.2 Primary brands, products, and services 119

2.3 Operational structure of the organization 118, 119

2.4 Location of organization’s headquarters 119

2.5 Number and names of countries where the organization operates 118, 119

2.6 Nature of ownership and legal form 27, 28

2.7 Markets served 15, 34, 35

2.8 Scale of the reporting organization 15

2.9 Significant changes during the reporting period 14, 26, 35

2.10 Awards received in the reporting period 14, 103

Report Report Profile 3.1 Reporting period for information provided 0

Parameters 3.2 Date of most recent previous report 0

3.3 Reporting cycle 0

3.4 Contact point for questions regarding the report or its contents 121

Report Scope 3.5 Process for defining report content 0

and Boundary 3.6 Boundary of the report 0

3.7 State any specific limitations on the scope or boundary of the report 0

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities

3.9 Data measurement techniques and the bases of calculations

3.10 Explanation of any re-statements of information provided in earlier reports

3.11 Significant changes from previous reporting periods

GRI Content 3.12 Table identifying the location of the Standard Disclosures in the report 111-114

Index

Assurance 3.13 Policy and current practice with regard to seeking external assurance

Governance, Governance 4.1 Governance structure of the organization 28

Commitments, 4.2 Whether the Chair of the highest governance body is also an executive 28

and Engagement 4.3 State the number of members of the highest governance body 28

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest 24, 25

governance body

4.5 Linkage between compensation for members of the upper management

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided

4.7 Process for determining the qualifications and expertise of the members of the highest governance body

112 Appendix

Profile Reference

4.8 Internally developed statements of mission and principles 20, 21

4.9 Procedures of the highest governance body for overseeing the management of economic, environmental, and

social performance

4.10 Processes for evaluating the highest governance body’s own performance

Commitments 4.11 Explanation of whether and how principle is addressed to external 20, 21, 84

to external 4.12 Externally developed charters to which the organization subscribes 0

initiatives 4.13 Memberships in associations or International/international advocacy organizations 44

Stakeholder 4.14 List of stakeholder groups engaged by the organization 13

Engagement 4.15 Basis for identification and selection of stakeholders with whom to engage 13

4.16 Approaches to stakeholder engagement, including frequency of engagement 78-83, 86-88, 92-94, 95-97,

102-103

4.17 Key concerns that have been raised through stakeholder engagement 16, 17, 78-106

Economy Management 5.1 Management Approach and Performance Indicators 20, 21

Approach

Economic EC1 Core Direct economic value generated and distributed 92, 102, 103, 119

Performance EC2 Core Financial implications for the organization’s activities due to climate change 44-57

EC3 Core Coverage of the organization’s defined benefit plan obligations

EC4 Core Significant financial assistance received from government

Market Presence EC5 Add Range of ratios of standard entry level wage compared to local minimum wage

EC6 Core Policy, practices, and proportion of spending on locally-based suppliers 34, 35, 88

EC7 Core Procedures for local hiring and proportion of local senior management 78-81

Indirect Economic EC8 Core Development and impact of infrastructure investments and services provided 99-109

Impacts EC9 Add Understanding and describing significant indirect economic impacts 78, 88-91, 101-104

Environmental Management 5.2 Management Approach and Performance Indicators 22, 23

Approach

Materials EN1 Core Materials used by weight or volume 64

EN2 Core Percentage of materials used that are recycled input materials 58-62

Energy EN3 Core Direct energy consumption by primary energy source 66

EN4 Core Indirect energy consumption by primary source 66

EN5 Add Energy saved due to conservation and efficiency improvements 67

EN6 Add Reductions in energy requirement as a result of energy-efficient or renewable energy initiatives 44-53

EN7 Add Initiatives to reduce indirect energy consumption and reductions achieved 65-68

Water EN8 Core Total water withdrawal by source 69

EN9 Add Water sources significantly affected by withdrawal of water 69

EN10 Add Percentage and total volume of water recycled and reused 69


Profile Reference

Biodiversity EN11 Core Location and size of areas of high biodiversity value

EN12 Core Description of significant impacts of activities on biodiversity

EN13 Add Habitats protected or restored

EN14 Add Strategies, current actions, and future plans for managing impacts on biodiversity

EN15 Add Number of IUCN Red List species and national conservation list species 67

Emissions, EN16 Core Total direct and indirect greenhouse gas emissions by weight 67

Effluents EN17 Core Other relevant indirect greenhouse gas emissions by weight 44-46, 55-57, 65-68

and Waste EN18 Add Initiatives to reduce greenhouse gas emissions and reductions achieved 72, 73

EN19 Core Emissions of ozone-depleting substances by weight 69, 70

EN20 Core NOx, SOx, and other significant air emissions by type and weight 71

EN21 Core Total water discharge by quality and destination 68

EN22 Core Total weight of waste by type and disposal method

EN23 Core Total number and volume of significant spills

EN24 Add Weight of exported, imported, transported, or treated hazardous under the terms of Basel Convention Annex

EN25 Add Identity, size, and protected status of water bodies and related habitats 44-59

Products and EN26 Core Initiatives to mitigate environmental impacts of products and services 58-60

Services EN27 Core Percentage of products sold and their packaging materials

Compliance EN28 Core Monetary value of significant fines noncompliance with environmental regulations

Transport EN29 Add Significant environmental impacts of transporting products and other goods

Overall EN30 Add Total environmental protection expenditures and investments 73

Society Management 5.3 Management Approach and Performance Indicators 20, 21, 24, 26, 27, 99, 100,

Approach 105

Labor Employment LA1 Core Total workforce by employment type, employment contract, and region 78, 79

Practices LA2 Core Total number and rate of employee turnover by age group, gender, and region

and Decent LA3 Add Benefits provided to full-time employees

Work Labor/ LA4 Core Percentage of employees covered by collective bargaining agreements 79

Management LA5 Core Minimum notice period(s) regarding operational changes

Relations

Occupational LA6 Add Percentage of total workforce represented in formal joint management-worker health and safety committees 84

Health and LA7 Core Rates of injury, occupational diseases, lost days, absenteeism, and fatalities 84

Safety LA8 Core Programs to assist workforce members, their families, or community members regarding serious diseases 82-84

LA9 Add Health and safety topics covered in formal agreements with trade unions 83, 84

Training and LA10 Core Average hours of training per year per employee 81

Education LA11 Add Programs for skills management and lifelong learning 81, 82

LA12 Add Percentage of employees receiving regular performance and career development reviews 81

114 Appendix

Profile Reference

Diversity and LA13 Core Composition of governance bodies and breakdown of employees per category 28, 29, 78, 79

Equal Opportunity LA14 Core Ratio of basic salary of men to women by employee category

Human Investment and HR1 Core Percentage and total number of significant investment agreements that include human rights clauses

Rights Procurement HR2 Core Percentage of significant stakeholders that have undergone screening on human rights and actions taken

Practices HR3 Add Total hours of employee training on policies/procedures in aspects of human rights 80, 81

Non- HR4 Core Total number of incidents of discrimination and actions taken 80

Discrimination

Freedom of HR5 Core Operations identified in which the right to exercise freedom of association and collective bargaining 80

Association and

collective bargaining

Child Labor HR6 Core Operations identified as having risk for incidents of child labor and actions taken 81

Forced and HR7 Core Operations identified as having risk for incidents of forced or labor and actions taken 81

Compulsory Labor

Security Practices HR8 Add Percentage of security personnel trained in the organization’s policies or procedures

Indigenous Rights HR9 Add Total number of violations involving rights of indigenous people and actions taken

Society Community SO1 Core Effectiveness of any programs/practices that manage the impacts of operations 99-109

Corruption SO2 Core Total number of business units analyzed for risks related to corruption 24, 25

SO3 Core Percentage of employees trained in organization’s anti-corruption policies 25

SO4 Core Actions taken in response to incidents of corruption 25

Public Policy SO5 Core Public policy positions and participation in public policy development and lobbying 68, 90, 91

SO6 Add Total value of financial and in-kind contributions to political parties or related institutions

Anti-Competitive SO7 Add Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly

Behavior

Compliance SO8 Core Monetary value of significant fines for noncompliance with regulations

Product Customer Health PR1 Core Public or voluntary policies for customer health and safety 95-98

Responsibility and Safety PR2 Add Total number of non-compliance incidents with regulations concerning health and safety 25

Product and PR3 Core Type of product and service information required by procedures 95-98

Service Labeling PR4 Add Total number of non-compliance incidents with regulations concerning products and services 25

PR5 Add Practices related to customer satisfaction including survey results on satisfaction 35, 36, 37, 95, 96

Marketing PR6 Core Programs for adherence to standards and voluntary codes related to marketing communications 25

Communications PR7 Add Total number of non-compliance with regulations concerning marketing communications 25, 97

Customer Privacy PR8 Add Total number of substantiated complaints regarding customer privacy and data losses 25

Compliance PR9 Core Monetary value of significant fines for non-compliance with laws concerning the provision and use of products

and services


Independent Assurance Statement

Independent Assurance Statement to hyundai Motor Company Management

We have reviewed environment and social aspects of the Hyundai Motor Company 2008 Sustainability Report (hereinafter, ‘the Report’). The Report is the responsibility of and has been approved by the management of the Company. Our responsibility is to draw a conclusion based on our review.

We have based our work on emerging best practices and standards for independent assurance on sustainability reporting, including the interna-tional standard ISAE 3000 “Assurance Engagements other than Audits and Reviews of Historical Financial Information”, issued by the Interna-tional Auditing and Assurance Standards Board. The objective and scope of the engagement were agreed with the management of the Company and included those subject matters on which we have concluded below.

Based on an assessment of materiality and risks, our work included analytical procedures and interviews as well as a review on a sample basis of evidence supporting the subject matters. We have performed interviews with management responsible for environment, health & safety and social responsibility at corporate level, as well as at the three domestic manufacturing plants.

We believe that our work provides an appropriate basis for us to conclude with a limited level of assurance on the subject matters. In such an engagement, less assurance is obtained than would be the case had an audit-level engagement been performed.

Conclusions

In conclusion, in all material respects, nothing has come to our attention that causes us not to believe that:

1. Hyundai Motor Company has applied detailed and systematic methodologies and processes for the preparation of the Report, as described in the section ‘Before you read’, in order to achieve its reporting objective. 2. Hyundai Motor Company at Headquarters level has applied detailed procedures to identify, collect, compile and validate data for 2007. Data for 2007 on Environment Management (page 42-75), Industrial Safety and Health (pages 83-84) and Social Responsibility (pages 76-109) is consistent with data accumulated as a result of these procedures and appropriately reflected the Report.3. Data for 2007 for Hyundai Motor Company domestic production plants has reported according to the procedures noted in item 2 above and is consistent with source documentation presented to us.

Copenhagen, July 30, 2008

DElOITTE Statsautoriseret Revisionsaktieselskab

Preben J. Soerensen

Danish State Authorized Public Accountant

Environment & Sustainability Services

Seoul, July 30, 2008

DElOITTE Korea

Jae Sool lee

Managing Partner

116 Appendix

Data Sheet

Quantity of air pollutants discharged(domestic)

□Quantity of air pollutant discharged (SOx)

50

100

150

200

(ton)

99

68

6

□Quantity of air pollutant discharged (PM)

200

400

600

800

1,000

1,200

(ton)

940

712633

-

□Quantity of air pollutant discharged (NOx)

40

60

80

100

(ton)

45

36-

□Quantity of air pollutant discharged (CO)

50

100

150

200

(ton)

67

28-

Water pollutants generated(domestic)

□Quantity of water pollutants generated (COD)●Generated quantity by vehicle (g/vehicle)

□Quantity of water pollutants generated (SS)●Generated quantity by vehicle (g/vehicle)

□Consumption of a poisonous substance (NaOH)●Generated quantity by vehicle (g/vehicle)

□Consumption of a poisonous substance(HNO3)●Generated quantity by vehicle (g/vehicle)

□Consumption of a poisonous substance(HCl)●Generated quantity by vehicle (g/vehicle)

□Consumption of a poisonous substance(H2SO4)●Generated quantity by vehicle (g/vehicle)

□Quantity of water pollutants generated (n-H)●Generated quantity by vehicle (g/vehicle)

□Quantity of water pollutants generated(BOD)●Generated quantity by vehicle (g/vehicle)

2005 2006 2007

150 55

120 50

90 45

60 40

30 35

(ton) (kg/vehicle)

97

76

99

57.67

47.26

58.28

2005

2005

2005

2006

2006

2006

2007

2007

2007

120 30

100 25

80 20

60 15

40 10

20 5

(ton) (kg/vehicle)

53

2739

31.59

16.57

23.09

2005 2006 2007

120 30

100 25

80 20

60 15

40 10

20 5

(ton) (kg/vehicle)

3824

51

22.29

15.06

29.80

2005 2006 2007

12.0 3

10.0 2.5

8.0 2

6.0 1.5

4.0 1

2.0 0.5

(ton) (kg/vehicle)

5.0

1.41.8

3.00

0.84 1.08

Consumption of hazardous chemical substances(domestic)

2005 2006 2007

50

40

30

20

0.025

0.020

0.015

0.010

(ton) (kg/vehicle)

3136 36

0.0180.022 0.021

2005 2006 2007

400

350

300

250

0.20

0.18

0.16

0.14

(ton) (kg/vehicle)

286305 300

0.170.19

0.18

2005 2006 2007

300

250

200

150

0.14

0.12

0.10

0.04

0.06

(ton) (kg/vehicle)

186215

170

0.11

0.13

0.10

2005 2006 2007

3,500

3,000

2,500

2,000

1.6

1.4

1.2

1.0

0.8

(ton) (kg/vehicle)

1,6871,922

2,1281.00

1.19 1.25

2005

2005

2006

2006

2007

2007


Index(Sheet & Graph)


Management Philosophy 20

Vision 20

Management Policy 21

Mid-and Long-term Strategies 21

Global Environmental Management Policy 22

Environmental Management Strategy 22

HMC Environmental Management Organization 23

Ethics Charter 24

Guidelines for Employees' Behavior 25

Hyundai Motor Group Corporate Social Responsibility

Committee 27

Board of Directors 28

2007 Activities of the Board of Directors 29

2007 Activities of the Audit Committee 30

2007 Activities of the Ethics Committee 31

Economy

2007 status of enlargement of overseas production sites 35

Accumulated number of cars sold in the U.S. market 35

Strategic Enterprise Management Simulation Model 38

VOC management system 41


Changes in average CO2 emissions of HMC cars

sold in the EU region 45

Low CO2 emission models sold in the EU region 46

Changes in combined fuel efficiency(US) 46

2007 Status of response to fuel efficiency

regulations in Korea 47

Yearly fuel efficiency achieved in Canada 47

Conceptual diagram of HEV and how it works 48

Steps for hybrid car development 49

Fuel cell-powered Tucson 50

Fuel cell-powered bus 50

History of fuel cell stack development by HMC 51

i-Blue (2007 Frankfurt International Motor Show) 51

Emission report of the Getz and Sonata against

Euro regulations 55

California’s LEV II and Zero Emission Vehicle(ZEV)

regulations 56

Number of HMC models in each gas emissions

grade category in 2007 56

Efforts to achieve the resource circulation target 58

Eco-efficiency 61

Annually generated volume of IMDS data 63

e-CMS construction and operation 63

Material balance in domestic business facilities and

causes of environmental overload by process in 2007 64

Greenhouse Gas Sub-committee 65

2007 Greenhouse gas inventory of domestic

business facilities 66

Reduction of greenhouse gas emissions through

the recycling of waste heat at paint plants 67

Greenhouse gas emissions by energy source

at domestic business facilities(2007) 67

Changes in greenhouse gas emissions at domestic

and overseas business facilities of hMC 67

Status of waste disposal(domestic and overseas) 68

Quantity of waste generated(domestic and overseas) 68

Quantity of waste recycled(domestic and overseas) 68

Changes in water resource utilization

(domestic and overseas) 69

Changes in quantity of water resources recycled

(domestic and overseas) 69

Total quantity of air pollutants discharged(domestic) 69

Management standard of air pollutants 69

Improvement to the dissolved dust collection method 70

Water pollutants generated by domestic

business facilities 71

Water pollutant management standard 71

Changes in the quantity of VOCs generated

at domestic business facilities 72

Changes in the recovery of VOCs

at domestic business facilities 72

Total consumption of hazardous chemical substances

by domestic business facilities 73

Total environmental expenditure of the three domestic

plants in 2007 73

ISO 14001 certification status 74

People & Society

Number of employees in Korea 78

Domestic employees by job category

(executives included) 78

Employees on overseas 78

Number of female employees in Korea 79

Yearly female employees recruitment status 79

Idea Competition and group discussions 80

Education for HMC employees in Korea in 2007 81

2007 Education Framework and Direction of

the Main Objectives 81

Clubs at HMC in 2007 83

Website for hMC employees 83

i-ESH System 83

Annual industrial accident rate 84

Programs to promote mutual cooperation 85

Suppliers that have joined the 5-Star quality club 86

Benchmarking studies on advanced technology 86

Payment 87

Joint procurement by year 87

Education programs to nurture global human

resources 88

SCEP schedule and participating suppliers 90

Examples of green management practices transfer 91

Green procurement by plant in Korea 91

Matters submitted to the 2008 Shareholders'

Meeting 92

Dividend by year(common stocks) 92

2007 Overseas IR activities 93

2007 Domestic IR activities 94

Global CSR Network 100

Projects by beneficiary 101

Progress in the development of Easy Move Vehicles 102

Structure of HMC volunteer groups 102

Three major volunteering activities 103

Volunteering activities by division 103

Social contribution symbols and slogans by language 105

2007 Global Social Contribution Activities 108

118 Appendix

Hyundai Motor Company Worldwide

Hyundai Motor Japan(HMJ)

Hyundai Motor Beijing Office

Sanyang Industry Co.,Ltd.

Vietnam Motors Industry Corporation

Hyundai Motor Company Hanoi Office Hyundai Motor India(HMI)

Huatai Automobile Co., Ltd

Auhui Jianghuai Automotive Co., Ltd

Hyundai Motor China

Beijing Jingxian Motor Safeguard Service Co., Ltd.

Dewan Farooque Motors Ltd.Prima Engineering Industries S.A.E

Hyundai Assan Otomotive Sanayi Ve Ticaret A.S

Hyundai Motor Europe GmbH.

Hyundai Motor Company Poland(HMP)

Hyundai Central Europe Regional Headquarters

Hyundai Motor Manufacturing Czech(HMMC)

Hyundai Motor CIS(HMCIS)

Hyundai Motor Norway AS(HMN)

Hyundai Motor United Kingdom Ltd.(HMUK)

Hyundai Motor Europe Technical Center GmbH(HME R&D)

Hyundai Motor Company(Eastern Europe Regional Headquarters)

Taganrog Automobile Plant(TagAZ)

Reyan Vehicle Manufacturing Co.(RVMCO)

Hyundai Motor India Engineering Pvt. Ltd(HMIE)

Oriental-Hyundai Sdn Bhd

Inokom Corporation Sdn Hbd

PT. Hyundai Indonesia Motor

GIAD Motor Co,. Ltd

Hyundai Motor Company(Africa Regional Headquarters)

Hyundai Motor Company(Middle East Regional Headquarters)

Hyundai Motor Company(Asia & Pacific Regional Headquarters)

Hyundai Motor Company Australia(HMCA)

Beijing Hyundai Motor Company(BHMC)

Hyundai Motor Japan R&D Center(HMJ R&D)

headquarters (Ulsan Plant, Asan Plant, Jeonju Plant, Hyundai & Kia Corporate R&D Division, Hyundai & Kia Eco Technology Research Institute, Commercial Vehicle

Development Center)

●Overseas Production Facilities●Overseas CKD Assembly Facilities●Overseas Sales Subsidiaries

●Regional Headquarters●Regional Offices●R&D Center ●Other Subsidiaries


hyundai Motor Company Profile

Name Hyundai Motor Company

Headquarters 231, Yangjae-Dong, Seocho-Gu, Seoul, ROK

Foundation December 29, 1967

Chairman & CEO Mong-koo Chung

Business area Manufacturing and sales of vehicles and vehicle parts

Main Models by Country (As of December 31, 2007)

Category Location Main models

Domestic Ulsan 12 models including Genesis

Asan Sonata NF, Grandeur

Jeonju 4 models including Universe,

cargo 4 models including Trago, Special vehicles

Overseas HMI (India) Santro, Click, Verna, Avante, Sonata NF, i30

BHMC (China) Verna, Sonata EF, Sonata NF, Avante XD, Tucson

HMMA(USA) Sonata NF, Santa Fe

HAOS (Turkey) Verna, Lavita

Hyundai Motor America(HMA)

Hyundai Motor Manufacturing Alabama(HMMA)

MMC Automotriz S.A.

Hyundai Motor Finance Co.

Hyundai Auto Canada(HAC)

Hyundai- Kia America Technical Center Inc. (HATCI)Hyundai Detroit Office

Hyundai Washington Office

Caoa Montadora de Veiculos S.A.

Hyundai Motor Company(Central & South America Regional Headquarters)

World Marketing GroupHyundai California Design Center(HCDC)

Hyundai Motor Japan(HMJ)

Hyundai Motor Japan R&D Center(HMJ R&D)

120 Appendix

Published Report

2001 Environment Report

2002 Environment Report

2002/2003 Sustainability Report

2003/2004 Sustainability Report

2005 Sustainability Report



Others

2006 Business Report

2007 Business Report

2007 PR Report

2008 PR Report

2006 Hyundai Motor Group Society Contribution White Paper

2005 Hyundai·Kia Motor Group Society Contribution White Paper

2006 Hyundai·Kia Motor Group Society Contribution White Paper

2007 Ulsan Plant Society Contribution White Paper

Domestic and Foreign Public Website

Category Site Domain

homepage KOREAN www.hyundai-motor.com

INTERNATIONAL world.hyundai-motor.com

HYUNDAI IN

YOUR COUNTRY/REGION global.hyundai-motor.com

Ethical audit.hyundai-motor.com

management 　

Representative ad.hyundai-motor.com/catalog

vehicle Others tuscon2009.hyundai-motor.com

newsantafe.hyundai-motor.com

www.hyundai-i10.com

Society HMC Society contribution csr.hyundai-motor.com

contribution HKMG Society contribution www.hyundai-kiamotors.com

Service blu-members www.blumembers.co.kr　

global service way www.globalserviceway.com

Motor show 2008 Motor show 2008motorshow.hyundai-motor.com

2007 Motor show 2007motorshow.hyundai-motor.com

공개웹사이트

Category Site Domain공개웹사이트

Club Main club.hyundai-motor.com

Grandeur club.hyundai-motor.com/club/gog

Sonata club.hyundai-motor.com/club/soc

Tuscani club.hyundai-motor.com/club/tog

Avante club.hyundai-motor.com/club/j2

Verna club.hyundai-motor.com/club/vinside

Atoz club.hyundai-motor.com/club/amg

Santa Fe club.hyundai-motor.com/club/santafe

Terracan club.hyundai-motor.com/club/khan

Sports Soccer team www.hyundai-motorsfc.com

Euro 2008 euro2008.hyundai-motor.com

Snow festival ski.hyundai-motor.com

ETC Marketing forum www.marketing-forum.co.kr

Young Hyundai www.young-hyundai.com

Woman Hyundai www.woman-hyundai.com

Venture plaza www.hkventure.co.kr

Reference Material

2007200620052003/20042002/2003

CONTACT INFORMATIONEnvironmental Management Strategy Planning Team

Mail: 231 Yangjae-Dong, Seocho-Gu

Seoul, Republic of Korea (137-938)

TEL: 82-2-3464-2015

FAX: 82-2-3464-8796

e-mail: [email protected]

Website: www.hyundai-motor.com

CorporateRegister.com 05/08/2008

Documents

Hyundai Motor Company 2008 Sustainability Report