Hyunday the Road to Sustainabylity

HYUNDAI MOTOR COMPANY SUSTAINABILITY REPORT 2007

00 Preface

02 Greetings from the Chairman

04 Greetings from Vice-President

06 2007 Highlights

08 Overview of HMC

12 Interview with the President

16 Corporate Philosophy

18 Environment Management

20 Ethics Management

22 Corporate Governance and Board

of Directors

Overview / Corporate Philosophy

Economy

25 Shareholder & Investor

25 General ShareholdersMeeting 26 Strengthened Communication

28 Main Business Activities

28 Status of Global Production

30 Improved Product Quality in

HMCs Cars

31 Brand Value Enhancement

37 Efforts to Minimize Climate Change

37 Regional Responses

40 Development of Alternative

Fuel Vehicles

44 Improving Vehicle Fuel Efficiency

47 Reduction of Gas Emissions

47 Regional Responses

48 Development of Environmentally

Friendly Engine Technology

50 Increased Recyclability

50 Improvement of Recyclability Rate

53 Minimizing Use of Harmful

Materials

55 Life Cycle Assessment

57 Green Procurement

57 Supporting Environmental

Management Systems of Partners

62 Expansion of Environmentally

Friendly Product Procurement

63 Clean Production

64 Coping with Climatic Changes at

the Production Fields

68 Resource Circulation

71 Reduction of Pollutant Emissions

76 Environmental Cost

80 Global Research Centers

120 Global Research Centers

122 GRI Index

126 Assurance Report

128 HMC 2007 Sustainability Report Review Opinion

132 Reference Material

Environment Management

People & Society

85 The Road to Growth, with All

Stakeholders

86 Core Growth Engine of Corporate

Vision-Employees

86 Employee Status

87 Human Rights Protection

88 Industrial Safety and Health

90 Human Resource Development

93 Building Trust

95 A United Family

98 Companion for Sustainable Growth-

Suppliers

98 Mutual Cooperation Program

101 Transparent Purchasing

102 Customer-First Management

102 Practicing Customer-First

Management

103 Customer Satisfaction

104 Customer Safety

106 Social Contribution, Center of the

Sustainable World

106 Philosophy of Social Contribution

108 Three Promises for a Sharing World

109 Volunteers - Promoting the Value of

Sharing

111 Field of Business-Sharing Big for

Marginalized People

116 Racing Towards the Happiness of

the Mankind - Contributions to

Global Society

THE ROAD TO SUSTAINABILITYHYUNDAI MOTOR COMPANY 2007 SUSTAINABILITY REPORT

The Way Ahead

Preface

To proactively and transparently disclose its sustainability-related activities to its stakeholders, including its own employees, sharehold-

ers, local communities, the government, and a wide array of NGOs, the Hyundai Motor Company(hereinafter HMC) published its Envi-

ronment Report in 2002, and has been publishing its Sustainability Report on a yearly basis since 2003.

This year is no exception. HMC is presenting its 5th Sustainability Report, bringing it one step closer to being a truly global company

with outstanding sustainability and leadership that is based on understanding and cooperating with interested parties all across the

globe.

In 2006 and 2007, HMC has strived to attain sustainability by promoting performance improvements in the economic, environmental,

and social aspects that relate to its business activities.

Economically, HMC has shown strong growth in the quantities and qualities of its production output. Since 2003, when HMCs export

value surpassed $10 billion for the first time, the figure has grown rapidly to exceed $15.3 billion last year. Moreover, the Grandeur,

Sonata, and Tucson models have been recognized by the mass media, such as J.D. Power and Consumer Reports, for excellence in

quality.

Care of the environment has always played an important role in HMCs strategy. HMC took first place, winning the President Award, in

the National Environmental Management Contest co-hosted by the Ministry of Commerce, Industry, and Energy and the Ministry of

Environment. In particular, Avante has gained a good reputation for its excellent fuel efficiency and is designed to reduce driving costs

amidst rocketing fuel prices.

Pursuing the betterment of society is of prime importance to HMC. HMC has demonstrated this commitment by developing a vehicle

called Easy Move for disabled drivers. Along with the first hybrid electric vehicles developed in Korea, Easy Moves were donated to

those in need. Also HMC employees have participated in voluntary activities including flood disaster restoration, farm workforce aug-

mentation during busy seasons, and raising funds to help the under privileged throughout the entire year.

By publishing this 2007 Sustainability Report, HMC is looking back at the past years sustainability management performance in order

to identify areas for improvement and convene action plans to become a true global leader in providing sustainable mobility to the

world.

Writing Guidelines

HMCs 2007 Sustainability Report is based on the most up-to-date G3 GRI(Global Reporting Initiative) guidelines.

The strategic objectives of our activities relating to the economic, environmental, and social aspects of HMCs business are shown in

the report in accordance with the guidelines given in the G3 version of the GRI report. In many areas, we have tried to add additional

content beyond what the guideline requires, and in some instances, have adopted the reporting formats of automotive industry leaders.

Collecting Relevant Data and Writing the Report

To achieve compliance with the G3 version of the GRI report, HMC in 2006, fully revised its internal guidelines for Sustainability Report

Framing. Furthermore, HMC has been collecting relevant data from domestic and overseas business operation points through its

intranet system, AUTOWAY, on a regular basis. Before publication, the Sustainability Report is thoroughly reviewed by relevant depart-

ments and top-level management.

The Scope of the Report

This report covers quantitative results from 2006 and qualitative events that occured between January 2006 and June 2007. For exam-

ple, the economy and the environment sections only consider activities and events that occured in 2006, while the social section cov-

ers activities that took place between January 2006 and June 2007.

The geographical reach of this report includes: HMCs headquarters; its domestic and overseas sales points; service center; distribu-

tion centers; training institutions, production factories, R&D centers, and other institutions owned and operated by HMC across the

globe.

Degree of Compliance with GRI(Global Reporting Initiative) Guidelines

HMC Motors self-declares that this report meets the requirements for GRI's Application Level A+, which has been independently

reviewed and agreed by Samjong KPMG.

Sustainability and Competitiveness

On the occasion of the publication of the fifth edition of our Road to Sustainability report, I would like to express

my deepest appreciation to all our stakeholders for their support and encouragement for this initiative which

promotes sustainable growth and development at all levels of our organization.

Since the launch of that initiative in 2002, HMC has made enormous strides both in quantitative and qualitative

terms through global management, quality management and brand management. In the course of creating

greater value, we have embraced our corporate social responsibilities by balancing our growth with expanded

contributions to society.

To address the problem of greenhouse gas emissions, the main environmental issue of our time, HMC has initi-

ated the implementation of a systematic and strategic plan at both the local and global level. At the heart of our

efforts is the development and commercialization of environmentally friendly vehicles and clean manufacturing

technologies. And, through these efforts, we will enhance our reputation as a sustainable enterprise of the very

first order.

We have also opened a dialogue with our stakeholders on ways and means to achieve greater coordination

and cooperation. In order to better support worthwhile social and cultural projects, we are gradually expanding

and strengthening the structure of our organization. To promote sustainability on a global level, we will partic-

ipate in more international events as well as host them. Such activities will also help stimulate economic growth,

which I believe is the key role of enterprise.

We still face numerous challenges, but through internal reform, innovation and your support, I am confident

these issues can be solved. Our achievements-both quantitative and qualitative-and the experience we gain

on the road to sustainability will strengthen HMCs competitive power and become our most precious asset.

As an enterprise which embraces sustainable values and whose vision of the future is shaped by environmental

concerns, HMC recognizes that sustainability management is the only way forward. By continually enhancing

our sustainability management system, we will transform our enterprise, putting theory into practice and mak-

ing sustainability a core factor in our operations and the driving force behind our growth. HMC will become a

leader in sustainable development and this is the pledge I make to you now.

2007. 11

Mong-koo ChungChairman & CEO

Greetings from the Chairman

Last years decrease in exchange rates and depressed domestic demand created a particularly difficult busi-

ness environment. However, HMC established local factories in North America and Europe to react faster to the

requests of its main customers worldwide and to enhance its global production and sales system. In 1976

HMC exported its first technology dependent model, the Pony, to Ecuador and has achieved 15 billion dollars

in exports in the 30 years since. These achievements have led HMC to be ranked among the Global 100

brands chosen by BusinessWeek for the past 3 years. In addition, its main vehicle models have been recog-

nized for the competitive power of their quality by leading vehicle rating agencies like J.D.Power, raising the

reputation of the company and the automobile industry of Korea.

In addition to achieving these economic performance goals, HMC has enhanced each internal organization and

its strategies to become more sustainable and raise the value of the entire enterprise. We have continuously

strived to systematize all interested parties participation in these efforts.

Noteably, in 2007, HMC was placed first in the Korean National Environment Management Awards, demon-

strating its environmental leadership and national competitive power. We also implemented our specially devel-

oped management system to deal with global environment issues systematically and which is linked to HMCs

environment committee and enhanced environment management strategy.

In addition, to deliver mutual benefit, HMC has enhanced its contribution to society in a variety of areas as part

of its mid- to long-term planning. Also, we instituted the Review committee of sustainability reports to reflect

opinions of all interested parties for the development of our sustainability report. We intend to develop this fur-

ther and enhance the power of key stakeholders to contribute to the sustainability of HMC.

Even at this moment, about 75,000 employees of HMC all over the world are focusing their abilities and efforts

on the sustainable development of mankind through the intelligent coordination of concerns for the environ-

ment, individuals and society. In the future, HMC promises that we will give our best effort to become a leading

global enterprise in all aspects of sustainability. To do this we will utilize our rich 40 years of business experi-

ence and work in cooperation and with participation of all interested stakeholders worldwide.

2007. 11

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

Greetings from Vice-President

Continuous challenge to sustainability

HMC was established in 1967 as a representative enterprise of Korea and has been leading the economic

growth of the nation for 40 years.

In the early days, we could hardly imagine having our own technology amidst the challenges in Korea at the

time. Despite these odds, HMC continued to develop its unique drive and mentality that has allowed it to

become the worlds 6th largest automobile enterprise.

2007 Highlights

1st Place Winner of the National Environmental Management AwardAs a prerequisite for survival in the global business arena, environmental-management is of prime importance to every firm that strives

to remain competitive. Environmental management not only enhances enterprises competitiveness, but also provides a solid base for

the economic growth of the countries in which the firms operate. For these reasons, countries across the globe make every effort pos-

sible to support firms engaging in environmental management practices.

The Korean Government promotes environmental management practices on a yearly basis by awarding the National Environmental

Management Award to domestic companies with outstanding environmental performance. Well-recognized for its environmentally

friendly business activities throughout the entire value chain and taking proper care of not only its own product development and clean

production phases, but also supplier firms activities, HMC was honored to win the 1st prize in this award; the top award delivered in the

name of the President.

Ranked in the 100 Top Brands for 3 consecutive yearsOnce every year, Interbrand, a well-known brand consultancy, and BusinessWeek, a weekly American economic magazine, together

announce the 100 Top Brands. The selection of the 100 companies is based on the current status and the future prospects of the

firms financial and marketing performance. After becoming the first Korean automobile company to debut on the list by taking the 84th

place in 2005, HMC has been making steady progress and was ranked #75 in 2006, and #72 in 2007, with an estimated brand value

of $4.5billion.

Greater Customer Satisfaction in the global marketAn enterprises sales figures and brand value directly correlate with customer satisfaction. Like many other companies competing in the

market, HMC devotes sincere effort to enhancing customer satisfaction by paying close attention to consumer needs and allocating all

available resources to quality improvements, further solidifying its global presence.

Consequently, HMC has enhanced customer satisfaction levels in major markets (i.e. US, Europe, and China). Furthermore, passenger

cars by HMC took the 1st place in the Korean Customer Satisfaction Index over 13 consecutive years, while passenger cars and recre-

ational vehicles produced by HMC were ranked #1 in the National Customer Satisfaction Index for seven and two consecutive years,

respectively.

09THE ROAD TO SUSTAINABILITY

Production performance(units: number of vehicles)

In Korea In overseas countries

Ulsan 1,289,313 HMI( India) 301,590

Asan 279,760 BHMC(China) 290,088

Jeonju 49,195 HMMA(USA) 236,773

HAOS(Turkey) 60,870

Total 1,618,268 Total 889,321

Country Main Product Type

USA Sonata, Santa Fe

China Verna, Sonata, Avante XD, Tucson

India Santro, Click, Verna, Sonata

Turkey Verna, Starex, Lavita

Representative production vehicles per global facilities

Sales performance(units: number of vehicles)

In Korea In overseas countries

Passenger vehicle 1,381,256 HMI(India) 236,177

commercial vehicle 230,610 BHMC(China) 290,011

HMMA(USA) 298,980

HAOS(Turkey) 60,660

Total 1,611,866 Total 885,828

Reinforcing the basic for export Proprietary technology development

EnvironmentNov 1991 Developed HMCs first electric

automobileFeb 1992 Developed Koreas first domestic low

pollution, alcohol-based automobile Oct 1994 Developed HMCs first hydrogen fuel

cell automobileAug 1998 Developed the worlds second solar

energy automobile

EconomyApr 1991 Advanced into German marketNov 1994 Annual production reached

1,000,000 unitsMay 1995 Launched the Namyang technology

instituteSep 1995 Established joint venture plant in

TurkeyJul 1997 Established independent plant in

Turkey

Technology advancementDevelopment to become a global company

EnvironmentSep 1999 Developed first domestic automobile

fuel cell Jun 2000 Participant in the California fuel cell

partnership Mar 2001 Launched Santa Fe, the first domestic

fuel cell car Aug 2002 Launched 900 environmentally friendly

buses globallyJun 2003 Announced global environment

management officially automobile industry first

Jul 2003 Established Koreas first domestic environmental technology institute

Nov 2003 Santa Fe electric vehicle demonstrated exemplary operation

Nov 2005 Established environmentally friendly vehicle recycling center

Dec 2005 Tucson fuel cell vehicle began operation in America

EconomyJan 2000 Opened factory in China with vehicle

production capability of 300,000 units Sep 2002 Launched first automatic transmission

medium-sized truck in Korea Feb 2003 Completed design center in North

AmericaSep 2003 Established European technology instituteMay 2005 Opened US plant in Alabama Jul 2005 Ranked among Global 100 companiesOct 2005 Established Technology Institute in the USJan 2006 Selected as one of the best brands in ChinaMay 2006 Grandeur took 1st place in AutoPacifics

customer satisfaction inspection Jun 2006 Tucson ranked first in J.D. Powers

Initial Quality Index (IQS)Apr 2007 Opened plant in Czech Republic

SocietyFeb 1999 Selected as an official sponsor of the

FIFA WorldcupTM

Dec 1999 Official sponsor of the EURO 2000 soccer championship

Aug 2003 Became a supporter of the worlds largest wheelchair foundation

Dec 2003 Provided official automobile of the EURO 2004 soccer championship

Jan 2004 Donated ambulances to IranFeb 2004 Donated wheelchairs to disabled childrenOct 2004 Donated ambulance to Africa as

a part of health and medical business support Nov 2005 Established professional social

service group (specialized in disaster relief) Sep 2006 Developed Easy-Move car

Production & Sales (Date of 2006. 12. 31)


Overview of HMCSince its launch in 1967, HMC has led the automobile industry in Korea. In 1976, HMC exported Koreas first indepen-

dent technology domestic vehicle, the Pony, to Ecuador and 30 years later, HMC exports 2.5 million high quality

vehicles, RVs, and trucks, making it the worlds 6th leading automobile maker.

Right now, HMCs employees are investing their abilities and efforts to lead the sustainable growth of HMC to make it

the worlds best company. They represent the very spirit of true corporate citizenship and by coordinating concerns

for the environment, individuals and society, they are enabling the sustainable growth of HMC.

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

its domestic automobile industry, HMC is poised to become a truly global company that contributes to the better-

ment of the world by providing responsible, sustainable vehicles.

Assets

Basis

Won Dollar Won Dollar Won Dollar

Total asset 24,420,522 23,395,787 26,661,326 26,319,177 26,429,958 28,431,538 Total annual assets

Net-sales 27,472,457 26,319,656 27,383,737 27,032,317 27,335,368 29,405,516 Annual net sales

Net-profit 1,745,441 1,672,199 2,348,721 2,318,579 1,526,063 1,641,634 Annual net profit

Liabilities 11,335,743 10,860,072 11,608,362 11,459,390 10,379,130 11,165,157 Total liabilities

Equity capital 13,084,778 12,535,714 15,052,964 14,859,787 16,050,828 17,266,381 Total capital

2005 2004

Exchange rate(1043.8 Won/$)



2006

Hyundai Motor Company Profile

Corporate History

Hyundai Motor Company

Headquarters: Seoul, Republic of Korea (231, Yangjae-Dong, Seocho-Gu)

Industrial Sector: Manufacturing

Main Product: Automobiles

Chairman & CEO: Mong-koo Chung

Date of Establishment: Dec. 29, 1967

HMCs employees

In Korea: 54,973

In foreign countries: 19,781

Establishment Advanced technology introduction

Dec 1967 Establishment of Hyundai Motor Company

Dec 1968 Began production of CotinaDec 1975 Established automobile factory

Development of HMCs own modelBuilding lineup

Jan 1976 Began sales of the Pony brandFeb 1984 Established Koreas first domestic

automobile road test center

Building technology independence Establishing a constituency for export

Feb 1985 Established Excel factory with 300,000 units production capability

Aug 1989 Total production reached 3,000,000 units

Nov 1990 Total sales in America reached 1,000,000 units

(units: number of employees)


Hyundai-Kia America Technical Center Hyundai America Technical Center Inc. is makinggreat strides to improve vehicle product quality andto develop products which suit the USA market.HATCI is based at the top quality comprehensiveresearch institute in California (including HMCsMohave road test center) and the design center anddesign improvement section of the Alabama plant.In addition, Hyundai America Technical Center Inc.,in cooperation with Hyundais Integrated R&DCenter, is developing technology specialized to theregion, including multi-media and pre-developmentof a supercharger engine. In addition it is working ontechnology that can respond to the local energy poli-cy which requires the substitution of 15% of thegasoline consumed with an environmentally prefer-able alternative fuel by 2017.

Hyundai-Kia California Design & TechnicalCenter Located in Irvine, California, Hyundai CaliforniaDesign & Technical Center develops the HCD con-cept car series. In addition to designing future vehi-cles, it also leads the world in trends for vehicledesign through graphic and clay modeling technolo-gy and is responsible for research and design fordeveloping ordinary vehicles for mass productionthat suit the region.

Hyundai Motor Europe Technical Center Located in Ruesselsheim, near Frankfurt, Germany,this is a state-of-the-art multifunctional compounddesigned to develop high quality vehicles catering tothe tastes and preferences of our European cus-tomers. This center was specially designed to meetenvironmental standards in Europe, and to createvehicles that meet these same standards.HMETC is also actively participating in the develop-ment of diesel engine performance in response to theobligations for environmental regulations by 2015.Moreover, it is leading the development of exhaustsystems, i.e.SCR(Selective Catalytic Reduction) thatreduce harmful gases (Hydrocarbons, PM, NOx).

Hyundai Motor Japan R&D CenterLocated in Chiba, on the outskirts of Tokyo, JapanR&D focuses on the development of advanced elec-tronic components and hybrid electrical vehicle tech-nologies such as motor and battery control.Japan R&D also focuses on the processes that dis-tribute the power of engines and motors to gain max-imum fuel efficiency. It focuses on development ofnext generation hybrid electrical vehicles and aims toachieve its performance targets by actively sharinginformation on advanced technologies with local sup-pliers.

Hyundai-Kia R&D CenterCorporate Research & Development, located inNamyang, Korea is the backbone of the company.Equipped with cutting edge facilities, HMCs integrat-ed R&D Division encompasses the whole designprocess from pre-design studies, prototyping andfull-scale aerodynamic testing, crash testing and finaltest driving to advanced technology research. Thetest circuit provides 60km of proving ground, with 70types of road surface. Namyang R&D serves as thehub of our global network and consolidates ourresearch efforts around the world. Moreover, in orderto attain global top R&D capabil it ies by 2010,Namyang R&D will concentrate more on design stud-ies, development of next generation powertrain andcore technologies, and development of vehicles withbest performance, quality and value in their class.

Eco Technology Research Institute The Environment Technology Study Center strives toachieve the environmental management goal of livingtogether with nature, by developing products whichmeet and exceed domestic and overseas environ-ment standards and key environment technologyobjectives. In particular, it takes the lead in develop-ing next-generation cars in an attempt to solve con-tinuing issues relating to the global environment byfollowing global environmental management prac-tices in order to meet our obligations as a world-class global corporate.

Global R&D Network


USA plant HMCs Alabama plant, which has been operating full-scale since May 2005, was recognized with its bestquality level ranking - 10th among 60 plants in theUSA. in its first year of operation. J.D. Power expressed surprise, stating that Alabamaplant of HMC would become a standard for newplants in the world automobile industry.

China plant As a joint corporation with a local company, HMCsChina plant not only has a symbolic meaning as theonly car manufacturer in Beijing, the capital city ofChina, but also has an advantageous head start inthe automobile market in China that will become theleading power after the Beijing Olympics in 2008.

India plantThe India plant of HMC is fully equipped, from pro-duction facilities to some research facilities, such asan efficiency test facility and road test center. It is anall-round automobile plant that can research anddevelop products suitable for the Indian market andindependently address test, production and sales. Inparticular, it has rapidly grown to have the secondhighest market share in India in just two years.

Turkey plantHMCs Turkey plant, which was established while thecompany was expanding overseas in earnest in1997, is a strategic point for advancing into Europe,the Middle East and Africa, as well as the foundationcornerstone of HMCs global management.

Global Production Network

Global Network

Korea plants Ulsan Plant is a key plant of HMC producing an average of 5,600 cars a day and is also a green plant, with about500,000 trees planted on site and up-to-date environment protection facilities.Asan Plant produces 300,000 motor cars for export a year. It pays special attention to considerations for work-ers and environmental protection. It has changed the atmosphere of the factory with bright colors and hasinstalled various work convenience facilities for an optimum working environment.Jeonju Plant produces medium- to large-size buses, trucks and special equipment vehicles over 2.5 tons. It isrecognized as the worlds largest commercial vehicle plant in terms of capacity and plant size. It also houses acommercial vehicle research center.


What does the publication of the 2007 Sustainability Report mean to you?

This is HMCs 5th Sustainability Report. In order to proactively and transparently disclose its sustainability-related activities to its

stakeholders, including its own employees, shareholders, local communities, the government, and a wide array of NGOs, HMC has

been publishing Sustainability Reports every year since 2003. By publishing Sustainability Reports, HMC looks back at its past per-

formance to identify areas in which further improvements can be made. Going through this process, HMC can focus on the causes

of any shortcomings and take necessary corrective actions to move one step closer to becoming a truly environmentally, socially,

and economically sound corporation.

Can you tell us what makes the 2007 Sustainability Report different from its predecessors?

This years report reflects comments from our stakeholders. It not only features a list of the sustainable management performance,

but also delineates the underlying reasons, implications, and future plans in detail. Moreover, the reporting scope of the 2007

Sustainability Report has been expanded to include standards stipulated in the GRI G3 guidelines, which allows us to engage closer

with our stakeholders. Moreover, by providing details of the activities that pertain to hot issues, such as climate change and social

responsibilities, the new report makes it easier for our stakeholders to precisely understand what we are doing. By making compar-

isons between our goals and performance, we plan to close any gaps in our sustainability performance, and by doing this, we hope

to further enhance the trustworthiness of our sustainability reports and our company.

Can you tell us about the Sustainability Report Review Committee that came into effect this year?

HMC recognizes its stakeholders opinions as the most solid basis and starting point for sustainable management. For this reason,

we strategically collaborate with our stakeholders by continuously reflecting their ideas and opinions in the solution building process.

As a part of this strategy, we formulated a Sustainability Report Review Committee, consisting of domestic and overseas experts in

the field of sustainable management and sustainability reporting. The committee has evaluated this years report and has given

invaluable advice on ways to make further improvements. We are considering turning to this committee if we face any sustainability-

related questions in the future.

What major sustainable management-related accomplishments has HMC made in 2006?

We have won the 1st prize in the National Environmental Management Award in 2007 for exhibiting outstanding sustainable manage-

ment-related performance in 2006. We have reinforced our company-wide system that responds to climate change issues and have

made significant technological progress in developing environmentally preferable vehicles. Furthermore, in collaboration with our

stakeholders, we have taken part in a wide array of social activities. Finally, cars made by HMC, such as the Grandeur, Sonata,

Tucson, and Santa Fe, have been acknowledged as quality leaders by independent quality-rating organizations such as J.D. Power

and Consumer Reports.

Enhancing employees awareness and economic growth are considered to be critical preconditions for sustainable growth.

What activities are being done in support of these objectives at HMC?

HMC has identified 5 major issues that need to be addressed in order to remain competitive in the dynamic business environment:

First, process innovation through eliminating inefficiencies; Second, cost reduction through cooperation with supplier firms; Third,

productivity enhancement through building mutually beneficial relationships with the labor union; Fourth, sales innovation through

enhancing customer satisfaction; Finally, establishing constructive relationships between labor and management based on mutual

trust. Successfully coping with these issues will greatly underpin our sustainability and enhance our competitiveness, allowing HMC

to become a world-class auto manufacturer.


Interview

The key feature of 2007 Sustainability Report is that itincorporates stakeholder feedback generated from previoussustainability communications and engagements.

Interview with President

CorporatePhilosophy

HMC promises to become a corporation that understands the value of sustainability and offers afuture vision built on cooperation and harmony with all stakeholders concerned.


Transparent Management

In 2001, HMC drafted and announced a charter of ethics and

principles for their implementation. Based on the companys

approach to corporate citizenship efforts continue to build a cor-

porate mentality for delivering transparent management. In 2005,

the company drafted and distributed guidelines for employees

ethical behavior so that individual employees can improve their

understanding of ethical dilemmas and make ethical decisions in

the course of their work.

Decisions on main management issues are made by board of

directors and approved by shareholders in the general meeting of

stockholders. Also, the companys accounting affairs and entire

operations are monitored independently by an outside auditor. In

2006, an internal accounting management system was built and

upgraded the level of accounting transparency. HMC has contin-

ued to develop structural measures to ensure transparent man-

agement in keeping with best practice in business management

and will continue to strengthen its transparent management sys-

tems going forward. Reviews and decisions on key management

matters are discussed by the Board of Directors and approved by

the shareholders at the general shareholders meeting. With the

checks and balances afforded by the Board of Directors, share-

holders and outside auditor, HMC will make more transparent and

ethical decisions. In 2006, HMC gained unwanted public attention

due to lawsuits related to the past financial transactions of some

of its executives. Extensive checks have been made to its internal

decision-making procedures and where action was needed,

these have been revised in order to avoid those problems going

forward.

In particular, we will take advantage of this opportunity to practice

more concrete and material social contributions to realize social

harmony and coexistence. Also, we will do our best to make it a

positive opportunity in the companys future for sustainability.

Trust-Based TrustworthinessManagement Trust-based management-labor, superior subordinates,

company-customer relationship

Field Cultivation of field knowledge, raise challenging Management spirits of field staffs

Focus management capacity on the field

Management strategy based on the field and

promotion of R&D

Establishment of the immediate response

communication system

Transparent Transparent job specificationsManagement Transparency in transaction and fair trade

Enhancing the ethics management system

Trust-BasedManagement

FieldManagement

TransparentManagement

Management Policy

Global management Develop effective and stable global stabilization production and sales system

Raise customer satisfaction with strengthening of global sales and service network

Strengthen risk Strengthen ability to counter rapidly changing management business environment

Promote Sustainable growth through systemic risk management

Customer first Consider the customer first when it comes to all management management activities

Increase value for customer by increasing brand image

Innovate profit Optimize customer value by increasing structure competence in production cost

Increase profitability by expanding sales of high value-added vehicles

Internal management Strengthen company-wide support system for culture overseas sales

Build overseas production capacityStrengthen R&D capabilityEstablishing systematic and efficient operation

support system and encouraging cooperationEstablish support Implement advanced, state of the art system for global technologiesmanagement Continually improve quality improvement

Obtain outstanding design capabilityCultivate global human resourcesExpand sales

Strengthen emergency Strengthen emergency management capabilitymanagement capability Establish retrench management system,

Establish advanced level of labor and management relationship

Develop system to counter emergency management

Continual pursuit of Pursue transparent and ethical managementtransparent and Handle all work according to transparent ethical management standard

Maintain mutually fair relationships with business partners

2006 Management Objectives

2007 Management Objectives

Corporate Philosophy


Ethics management

Corporate governance and Board of

Directors


This spirit of creative challenge, which has paved the way for its

growth, is the core value at HMC. HMC looks to creativity and

innovation to actively respond to changes in the business envi-

ronment.

Based on this philosophy, HMC aims to provide automobiles and

related support services to enrich the overall quality of life for

both domestic and overseas customers. In addition, HMC has

taken steps with shareholders, customers, employees, suppliers,

and local communities to build mutual trust.

VisionHMC announced innovation for customers as its 2005 mid-to

long-term vision with five core strategies:

Management PolicySince 2000, HMC has prescribed to Trust-Based Management,

Field Management and Transparent Management as its three

fundamental management policies.

These policies serve as the strategic base for the core manage-

ment activities pursued by HMC, such as global management,

quality management and brand management.

Trust-Based Management

Starting in 2002, HMC has published its sustainability report

every year to provide information on economic, environmental

and social performance to all interested parties in Korea and

overseas.

Also, HMC launched its Investor Relations website in 2004, pro-

viding business information, such as, financial data, current stock

price and sales records in real time.

Through such efforts, HMC is communicating with all interested

parties including, shareholders, customers, employees, suppliers

and the local community about a variety of issues related to the

automobile industry to establish trust and reliability.

Field Management

HMC is enhancing its field management to ensure a fast commu-

nication process that facilitates decisions on countermeasures

and implementation of effective working process.

To that end, HMC has ensured that employees can report pro-

duction problems or suggestions without hesitation and these

issues are then reflected in changes to R&D and planning. The

top management of HMC regularly visits the field directly and

shares knowledge gained with other employees.

In particular, top managements global field management to the

world sales and production offices is building closer relationships

with the countries that HMC has advanced into and other new

markets.

Through this global field management, HMC has established an

effective international network, which it is leveraging to improve

the competitive power of Korea and raise the position of the

nation in international society through various activities, like the

2012 Yeosu World Expo host campaign.

Management Philosophy

With the spirit of creative challenge, HMC is doing its part to

create a more affluent lifestyle for humanity, and is contribut-

ing to the harmony and co-prosperity with its shareholders,

customers, employees and other stakeholders in the automo-

bile industry.

Global

Custom

er

Cultu

re

InnovationTechnical

Growing as a leading global automobile

maker, building trust andrespect

with the global comm

unity

needs and desires

technology centred on people

sInnovating for advanc

ed

Putting

custom

ersfirstto

create

ab

usin

essculture

andto

furth

erm

ove

customers

Cre

atin

gan

auto

mob

ilecul

turein wh

ich pe-

ople

are

value

dan

d reco

gnized as

being

cent

ral t

oth

eCom

panys

success

Grow

inglea

ding

envi

ronm

enta

llypre

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tec

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ologi

esw

hich

cont

ribut

eto

the

de-

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tand

wel

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ofth

ew

orld

OrientationM

oving

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Corporate Philosophy Based on its creative, progressive and challenging spirit, HMC seeks to implement Trust-Based Management, Field

Management and Transparent Management, share economic, environmental and social values with all stakehold-

ers, and become a leading global sustainable enterprise which prioritizes the improvement of mankinds quality of

life.



Ethics management


Directors


Environment Management OrganizationHMC has established environmental management strategies for

the entire value-chain of the automobile industry including R&D,

purchasing, production, logistics, and sales and service. These

strategies are based on HMCs global environmental manage-

ment principles announced in 2003 and the implementation of

them. It also has systematized its environment management

organization for effective accomplishment of these strategies.

First, it organized an Environmental Management Strategy

Planning Team at the chief executive level in 2003 in order to

promptly respond to global environmental issues with consisten-

cy and in keeping with related decision making, established envi-

ronment management strategy by area, and suggested direction

for implementation.

In addition, it organized the Environment Committee, with the

CEO as its Chairman, providing a clear link to the top decision-

making organization. In addition, it established an organic, coop-

erative system for systematic implementation of environmental

management strategies by organizing the committee into three

strands representing product, production and management.

Five Core Tasks for EnvironmentManagement

HMC selected five core tasks for environment management in

order to reinforce its ability to comprehensively respond to global

environment issues and regulations. Each strand of environmen-

tal management will execute existing strategies effectively by

establishing its own processes, including setting clear goals and

objectives.

Environmental Committee



Ethics management


Directors

Response to climate change

Reduction of automotive greenhouse gas

Development and supply of alternative fuel vehicles

Responses of variety of automotive fuel

Reduction of greenhouse gas in workplace

Establishment of circulation system for resources

Increase recycling rate

Environmental preferable handling of scrapped vehicles

Zero waste target

Reduction of air pollutants

Reduction of automotive gas emission

Reduction of air pollutants from workplace

Establishment of environmental management system

Establishment of environment KPI / environment accounting system

Reinforcement of communication among stakeholders concerned both

inside and outside the company

Establishment of information system on global environment regulations

Strengthening green partnerships with suppliers

Reduction of harmful materials

Establishment of global standard on 4 major toxic heavy metals

Strengthening management for toxic chemical materials

Chairman of the Committee : Chairman

Secretariat : EnvironmentalManagement Strategy

Planning Team

Environmental Product Committee

Environmental Production Committee

Environmental Management Committee

Fuel efficiency subcommitteeEmission subcommitteeRecycling subcommitteeNext generation vehicle

subcommittee

Production plant subcommittee

Production technologysubcommittee

Environmental purchasingsubcommittee

Environmental logisticssubcommittee

MarketingSales subcommittee

Customer service subcommittee

Environmental accountingsubcommittee

Environmental communication subcommittee

Response to climate change

Establishment of environmental

management system

Establishment of circulation system for resources

Reduction of harmful materials

Reduction of air pollutants


Environment ManagementIn 2003, HMC prepared its ideological base on global environment management. It then set its environmental man-

agement strategy within the context of the auto industrys value chain and established and implemented an environ-

mental management system.

With these global environmental management activities, HMC is taking a leading role as the one of the most progres-

sive companies in Korea. Furthermore, HMC will continue its commitment to environmental responsibility as a global

company to achieve sustainability and environmental protection.

Global Environmental Policy

Based on a commitment to corporate citizenship, HMC is dedicated to

respecting human value and preserving the global environment. We,

thereby proclaim this Global Environmental Policy for a sustainable

society.

Recognize the environment as a core element of business and create

corporate value by proactively pursuing environmental management.

Promote the development and distribution of environmentally preferable

products.

Dedicate to reducing pollutants and to preserving resources and energy

for sustainable use at all stages of our products life cycle, from

development to production, sales, use and disposal.

Endeavor to provide all employees with environmental training programs,

support suppliers in environment management and contribute to public

welfare.

Comply with all international and national environmental regulations and

agreements. Continue to improve environmental management and

publicly disclose our performance.

Environmental Philosophy

For the harmony of mankind, the environment and society, HMC

respects human value and fulfills its corporate social responsibility

through environmental preservation.

Environmental Philosophy & PolicyAs a first in the local automobile industry, HMC introduced an

environment management system in 1995, developing a struc-

tured operating system.

This commitment and its implementation demonstrated HMCs

desire to fulfill its corporate social responsibilities and is expected

to enhance the overall confidence of stakeholders.

Environment Management Strategy

Human

EnvironmentSociety



Ethics management


Directors

Philosophy & Establishing environmental philosophy & policy

Policy Declaration of global environment management

Organization & Establishing environment management strategy

Strategy Operation of environmental committee

Management Environmental accounting

System Establishing communication channels with stakeholders

Sustainability training of all employees

Sustainability report publication

R & D Environmentally friendly design

Fuel economy & vehicle emissions

Expand Recycling

Environmental information system

Developing environmentally friendly vehicles

Purchasing Establishing green purchasing system

Technical assistance for suppliers

Establishing SCEP Logistics optimization

Production Development of cleaner production system

Expending ISO 14001 certification

Development of integrated environmental

management system

Establishment of environment management strategy

Marketing & Sales Green marketing Green sales

Customer Service Green service

Supporting Customer Service provider for EMS

R & D Purchasing Production Marketing& Sales CustomerService

Management System

Organization &Strategy

Philosophy& Policy


Chapter 1 general provisions Clause 1 Purpose

Clause 2 Application scope

Clause 3 Organization

Clause 4 Supervising team

Clause 5 Definition of guidelines

for ethics at work

Clause 6 Application of related

regulations

Chapter 2 guideline for ethics Clause 7 Basic guideline for ethics

at work at work

Clause 8 Compliance with ethics

guideline

Chapter 3 actions for regulation Clause 9 Reporting violation of

infringement ethics guideline

Clause 10 Actions for ethics guideline

violator

Clause 11 Punishment for the

violation of ethics guideline

Chapter 4 Workplace Ethics Clause 12 Ethics Committee

Committee formation formation

and operation Clause 13 Ethics Committee opening

Clause 14 Ethics Committee

operation

Clause 15 follow-up management

HMC Regulation on Ethics at Work

Regulation on Ethics at Work

HMC has established detailed procedures and guidelines related

to work ethics and the relationships among employees, cus-

tomers, suppliers and competitors and has supported employ-

ees in developing transparent and fair relations in terms of job

performance.

Ethical Charter for Employees

HMcs employees realize that acting in an ethical manner is the

foundation of company competitiveness and promise to actively

join in the effort to realize the spirit of the Ethical Charter so that

HMC can become a company that is trusted by the public and

wider stakeholders.

Its employees promise the following:

1) We will behave with a sense of pride and the knowledge that

we are responsible for the Korean car industry, and will cast

away all types of unethical behaviors in our everyday life and

during job execution.

2) We will spearhead the effort to form a viable corporate culture

that abides by the basic principles of compliance to all related

laws and guidelines for company management when it comes

to executing our work.

3) We protect customer information, tell only the truth to cus-

tomers, and keep our promise to our customers, without

exception.

4) We do not accept any profit from interested parties in relation

to our work that may violate our principle of fairness, and

strictly reject unfair requests made to employees and by

leveraging employees.

5) We protect the sales and operation-related confidential

information learned through work, and strictly cast away

behaviors and relationships that conflict with the companys

interest.

6) We increase our sense of pride and fulfillment by striving to

work with a strong sense of responsibility and make every

attempt to contribute to the nation, society and the companys

advancement based on infinite self development.

Cyber Training

HMC conducts cyber training so that all of its employees can

understand the specific details of the Ethical Charter and respon-

sive measures. Through this mechanism, the company enables

continuous, repetitive training as well as data sharing and collec-

tion on ethics management, encouraging and helping employees

to increase their sense of ethics and comply with the regulations.

Cyber Audit Center Operation and Publica-tion of Guidelines for Employees Behavior

Cyber Audit Center

HMCs Auditor Center executes cyber auditing in conjunction with

field auditing with a goal of realizing transparent management.

In 2006, seven cases were registered, including three cases of

corruption or corporate misdeeds, and in keeping with HMCs

internal regulations, three employees were fired or subject to a

severe disciplinary measure. The other cases were handled with

a discussion with the relative department and the employees in

question were required to adjust their behavior. HMC sent an

internal notice to the employees about these issues and institut-

ed follow-up training to prevent recurrence.

Distribution of Guidelines for Employees Ethical

Behavior

HMCs Ethical Charter and the Regulation on Ethics at Work are

drafted for practical use in the company, but the contents are

rather high level, and thus difficult to use in practical situations for

making detailed decisions on ethical and moral behaviors.

To this end, HMC has distributed guidelines for employees ethi-

cal behavior that present specific guidance on what to do and

not do, centered on common cases that may occur during work

and in everyday life, so that employees can use the guideline for

making ethical decisions.



Ethics management


Directors


Ethics ManagementHMC committed to clean environment activities and enhanced ethical management to ensure mutual benefit based on

the mutual trust of all stakeholders, including employees, suppliers, customers, shareholders and the nation.

To this end, HMC is supporting various kinds of ethical management programs, including cyber audits, to help

employees to make ethical decisions in their work. There is also a committee which participates in the decision mak-

ing process on main issues.

Ethics Management History

1996 Regulation on gift management drafted

2001 Declaration of HMC charter of ethics

Charter on the implementation of ethics management

enacted and committed to by HMCs employees

Regulation on ethics at work drafted

Purchasing Divisions charter on ethics declared

2002 Cyber Audit Center established

2003 Declaration on HMC ethics management / transparent

management

Online training for managers on ethics management

Ethics program for purchasing

Launch of Vaatz*, online purchasing system

2004 Cyber Audit Center revamping

2005 Publication and distribution of guidelines for

employees on ethical behavior

2006 Announcement on measures for co-prosperity

with partners

Ethics management training for new managers

*Vaatz : Value Advanced Automotive Trade Zone

Ethics Management Structure Ethics Management Structure

Charter HMCs charter on ethics

Regulation on ethics at work

Charter for employees to act on ethics

Cyber Audit Center Operation of cyber reporting center

operation Distribution of guidelines for employees

ethical behavior

Bulletin of ethics management materials

and cyber training

Ethics Charter

1) Contribute to the nation and the society

We contribute to the national economy through the continual creation

of jobs and trustworthy payment of taxes.

We strictly comply with all laws related to the environment,

spearheading the effort to protect the environment, and contributing to

society through cultural and welfare initiatives.

2) Increase customers and shareholders rights

We increase customer rights and value by optimizing products and

services, safeguarding customer information, and fulfilling our promise

made to customers.

We increase management efficiency to ensure that our financial

structure is viable, safeguarding and increasing shareholders assets.

3) We respect human rights and cultivation of competent human resources

We respect the individual employee as an independent being and have

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 competent individuals.

4) 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 competitiveness in the international arena.

We deal with the suppliers as equal partners and do not make

any unfair demands by leveraging our position.

5) Establishment of transparent management

We deal with all tasks in a transparent manner and have established

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 objectivity in our operations and do not pursue

unlawful profit.



Ethics management


Directors

Our company formed and operates an Ethics Committee with the goal of reviewing transparency of internal

transactions and for the pursuit of ethics management. The Ethics Committee consists of five external direc-

tors, one member of the executive management team, and two advisors (persons from outside the compa-

ny) (as of June 30, 2007)

The Ethics Committee, a sub-committee of the Board of Directors, reviews transactions between entities as

defined by the Laws on Monopoly and Fair Trade and Securities Trading Law, checks execution of fair

trade, enacts and revises key policies related to ethics management and contributions to society, and evalu-

ates execution of these issues.

Ethics Committee

Status on the shareholders with at least 5% of the company shares (As of June 30, 2007)

Rank Shareholder Shareholding(number of shares) Percentage shareholding(%)

1 Hyundai Mobis 32,927,828 15.00

2 Hyundai Steel 12,854,195 5.86

3 Chung, Mong-koo 11,395,859 5.19

Total 57,177,882 26.05

Status on the Composition of the HMC Board of Directors


Board of Directors

External DirectorCandidates

RecommendationCommittee

Audit Committee

Ethics Committee

Corporate Governance and Board of Directors

HMC formed and operates a Board of Directors and Audit Committee and an outside Director Candidate

Recommendations Committee, which is under the supervision of the Board of Directors.

As of June 30, 2007, the Board of Directors is comprised of four internal and five external directors. The

Board of Directors makes decisions on matters defined by the laws or articles of incorporation, matters dele-

gated by the general shareholders meeting, and key matters related to the basic guidelines for company

operations and work execution. Moreover, it has the authority to supervise matters related to the general

shareholders meeting and wider issues on company management and financial affairs. General meetings of

the board of directors are held regularly and also when necessary, extraordinary meetings are held.

Under the supervision of the Board of Directors the Audit Committee, comprises four external directors, was

instigated on June 30, 2007. The Audit Committee is responsible for company finances and audits. It also

reviews reports on sales from the executive directors and monitors the companys assets. Matters

addressed by the Audit Committee include those related to the general shareholders meeting, to the direc-

tors and the Board of Directors, and to audit issues. Also there are internal measures to access manage-

ment information needed for audit.

From June 30, 2007, all candidates for external directorships are recommended by and are under the super-

vision of the External Director Candidate Recommendations Committee, which includes two internal and two

external directors.

The limit on remuneration of directors approved in the 2006 general shareholders meeting is 10 Billion Won,

and remuneration for internal and external directors for the period between January 1 and December 31,

2006 was 7.249 Billion Won.

Board of

Directors &

Committee of

the Board of

Directors

Composition of the Board of Directors (As of June 30, 2007)

Name Outside Director Remarks

Chung, Mong-koo No Member of the External Director Candidates Recommendation Committee

Kim, Dong-jin No Member of the External Director Candidates Recommendation Committee

Choi, Jae-guk No -

Yoon, Yeo-cheol No -

Kim, Dong-gi Yes Member of the External Director Candidates Recommendation and,

Audit Committees

Kim, Gwang-nyeon Yes Member of the External Director Candidates Recommendation and,

Audit Committees

Kang, Il-hyung Yes Audit Committee Member

Lim, Young-cheol Yes Audit Committee Member

Lee, Sun Yes -



General Shareholders Meeting On March 9, 2007, HMC held its 39th annual general sharehold-

ers meeting at which it shared the results of operations and

other major developments. Five resolutions on the agenda were

approved and passed by the shareholders.

Number of Outstanding Shares as of December 31, 2006

Classification Number of shares

Total number of shares issued 284,668,401

Shares on which dividend is paid 270,429,971

Shares with no dividend 14,238,430

Shareholder & Investor

Main Business Activities

Shareholder & Investor HMC is improving its efforts to enable shareholders to better understand the Companys operations and earn their

trust by providing timely and accurate information. The Company is participating in investor forums as well as holding

general shareholders meetings to furnish information in person and to provide an opportunity for discussion between

the Company and shareholders. HMC also operates an Investor Relations (IR) website, providing the information in

real time.

Dividend Payout as of December 31, 2006

Type of stock Number of shares Dividend per share in Korean won Dividend paid-out

Common 208,178,785 1,000 208,178,785,000

Preferred A 23,159,022 1,050 24,316,973,100

Preferred B 36,613,865 1,100 40,275,251,500

Preferred C 2,478,299 1,050 2,602,213,950

Total 275,373,223,550

Annual General Shareholders Meeting for 2007

Classification Resolutions

Shareholder resolutions To ratify the balance sheet, income statement, and statement of retained earnings for

the calendar year ended December 31, 2006

Change in the bylaws

Election of directors

Election of outside directors who become members of audit committee

Ratification of the compensation of directors

Results of voting All resolutions on the agenda were approved and ratified.

Major Financial Data in 2007 Annual Report

2006 2005 2004 unit

Sales revenue 27,335 27,384 27,472 Billion won

Net income 1,526 2,349 1,745 Billion won

Assets 26,430 26,661 24,421 Billion won

Liabilities 10,379 11,608 11,336 Billion won

Shareholders equity 16,051 15,053 13,085 Billion won

Net income per share 7,021 10,815 7,668 won

Dividend per common share 1,000 1,250 1,150 won

Economy

Economic growth & continuous creation of profit by extending global production and sales based onsustainable development




Supply of Real Time Information

HMC provides various communications for shareholders and

investors, including financial statements and the sustainability

report.

Since 2004, HMC has been operating an IR website, providing

real time information on corporate matters, financial data, com-

pany share and sales. The Company is also making other infor-

mation publicly available, including data filed with securities

supervisory boards and conference records.

Domestic IR Activities

HMC is undertaking various IR activities to build long-term trust

by explaining the Companys sustainability initiatives to investors.

In addition, the Company is holding an investor forum each quar-

ter at which the results of operations are presented for the pre-

ceding quarter and investors questions are answered. The

Company also holds non-deal roadshows to enhance investor

satisfaction with the information furnished on the results of oper-

ations.

HMC holds test-drives of new models for investors to experience

enhanced competitiveness and improved qualities and also

offers tours of production facilities to showcase the Companys

outstanding quality and efficiency.

Major IR activities in Korea from January 2006 to June 2007

Date Place Major business affairs

2006 January Korea Stock and Futures Exchange (KRX) Business Plan for 2006 is presented

IR Conference Room Telephone conference presenting the business plan

KRX Meeting in which the results of operations for 2005 were presented

February Seoul Non-deal roadshow for domestic institutional investors

June Seoul UBS Korea Conference

July Headquarters at Yangjae HD Presentation

August Seoul Non-deal roadshow for domestic institutional investors

October IR Conference Room Telephone conference presenting the results of operations for the

third quarter

November Seoul Non-deal roadshow for domestic institutional investors

Seoul IR Expo of listed companies hosted by the KRX

Seosan Power-tech test track Test drive of Veracruz

December Seoul The 2006 yearend gathering

2007 January Korea Exchange Meeting presenting the results of operations for 2006 and

business plan for 2007

Seoul Non-deal roadshow for domestic institutional investors

May Korea Exchange Meeting presenting the results of operations for 1Q 2007

Seoul Non-deal roadshow for domestic institutional investors

IR Conference Room Telephone conference presenting the results of operations for the

first quarter

Seoul Woori Securities sponsored IR event

HMC IR Homepage (http://ir.hyundai-motor.com/eng)




Major overseas IR activities from January 2006 to June 2007

Date Place Major business affairs

2006 January USA Detroit Auto Conference

USA/ EU/ Asia Non-deal roadshow to present the results of operations for FY2005

March London Capital Research Conference

London Morgan Stanley Korea Corporate Day

Hong Kong Credit Suisses AIC Conference

April China Tour of overseas manufacturing plant -BHMC

June Germany IR activity in Europe

September Hong Kong 2006 CLSA Investors' Forum

USA/EU Non-deal roadshow to present the results of operations for the first half

of the year

New York JP Morgan Asia Equity Conference

Paris JP Morgan Paris Auto Conference

November Singapore 2006 Morgan Stanley AP Summit Conference

December Tokyo Nomura Conference

2007 January Detroit 2007 Detroit Auto Show Conference

USA Non-deal roadshow to present operational performance for FY2006 &

Business plan for FY2007

February Asia/EU Non-deal roadshow to present operational performance for FY2006 &

Business plan for FY2007

March New York Woori Securities New York Conference

London Capital Research Conference

Hong Kong Credit Suisses AIC Conference

May IR Conference Room Telephone conference giving the results of operations for the first quarter

Hong Kong/ Singapore Korea Stock and Futures Exchange (KRX) Conference

June Boston / New York / London 2007 UBS Best of Asia Conference

Strengthened CommunicationIn 2006, HMC instituted a program whereby shareholders and

prospective investors can meet with management in person,

thereby obtaining accurate information on company operations,

as part of the Companys efforts to improve IR. Under the pro-

gram, the Company provided information on its overseas opera-

tions to meet the needs of its shareholders. All of these initiatives

were launched to earn greater long-term trust from shareholders.

Overseas IR Activities

Through overseas IR activities, HMC is presenting its efforts on

global management stability and capability of future growth to

foreign investors and also exploring new investors for investor

diversification.

To attain these objectives, the Company is selecting prospective

investors, making routine visits to investors, and regularly attend-

ing international automobile conferences. In addition to holding

investor forums in Korea presenting the results of operations,

HMC is sponsoring non-deal roadshows for foreign investors on

a regular basis.

HMCs major overseas corporations are also holding IR meet-

ings, whereby foreign investors are provided with an opportunity

to tour the factory and are informed of the Companys goals in

global management.

In 2006, the Company held an IR meeting while sponsoring the

2006 FIFA World Cup in Germany, creating an opportunity to

present HMCs strategies in the European market and to inform

foreign investors of its efforts to realize sustainability.




ting edge technologies and production methods at the Alabama

plant. HMC plans to continue to expand the plant, eventually

making it a global production base with high productivity and

flexibility.

Commencement of production of 600,000 cars- Beijing

plant in China and Chennai plant in India _ The Beijing

joint venture plant producing the Verna, Avante XD, EF Sonata,

Sonata, and Tucson models, is the only one in that city with the

capacity to produce the volumes and diverse range offered by

HMC.

Beijing HMC is expecting unprecedented growth in Chinas auto-

mobile market with the upcoming 2008 Beijing Olympics and

2010 Shanghai Expo. The company has started construction on

a second plant and an R&D center to localize production and

attain the capacity to produce up to sixty thousand units in an

effort to meet growing demand in China.

As in China, HMC is building a second plant in India capable of

producing up to thirty thousand units. Since its entry into the

Indian market, HMC has ranked number two in market share.

The HMC plant in India is equipped not only with an assembly

line, but also performance testing and test-drive facilities.

The Indian plant is expected to grow to become a comprehen-

sive vehicle manufacturing base capable of undertaking its own

R&D, testing, manufacturing and sales in the Indian market,

which has great prospects of becoming a market in which

demand for small cars will rapidly increase as a result of the

increase in purchasing power of the middle class.

Core global base for the EU market- Assan plant in

Turkey, Czech Republics Ostrava Plant _ In March

2007, HMC built a high-speed test drive track, the longest in

Turkey. The Turkey plant also is adding additional facilities capa-

ble of producing up to ten thousand units.

In April 2007, HMC broke ground on a plant in Czech Republic

which will be capable of producing thirty thousand units per year

by 2009.

The Turkey and Czech Republic plants will become the core

bases from which the company will capture the European auto-

mobile market, where the consumer is increasingly demanding

upscale products. Additionally, there is growing demand for cars

in the Eastern European market as a result of the unification of

European countries.

Production goals and strategies for 2007

Optimizing capacity for second plant in India,

second plant in China and the Czech Republic plant

Development and application of innovative

production technology

Technical group operation

Industry-academia cooperation and platform

fostering production technicians

Expansion of production and development of

environment-friendly production technology

Continuous advancement of cleaner production

systems

Extended application of digital engineering

Preparation for production through the application

of a standard production system

Global production

capabilities and

efficient operations




Status of Global ProductionHMC is implementing a new global policy whereby all processes

are localized. This includes product development, design, sales,

marketing and customer service to satisfy local customers

tastes as well as that of the global market. The Company has

vowed to become the world leader by infusing quality in manage-

ment and pursuing production of the highest quality vehicles.

With these objectives, HMC is offering great value to customers

and enhancing its brand profile.

In 1976, HMC first entered the global market by exporting Pony

cars to Ecuador in South America. After creating the Excel sen-

sation in the US in 1980, HMC moved from merely exporting

cars produced in Korea to setting up plants overseas. With the

building of the Assan plant in Turkey in 1997, HMC commenced

global production of cars. In 1998, the company opened the

Chennai plant in India, followed by the establishment of the

Beijing plant in China in 2002, developing a full-fledged global

production base.

Expanding the Global Production Base

Reaching Top 10 in North America after only a year of

operation is a testament to HMCs capabilities-

Alabama Plant in the US _ J.D. Powers initial quality study

conducted at factories in North America revealed that HMC cars

produced at the Alabama plant, which entered full production

beginning in May 2005, were rated among the top 10 in attracting

US consumers interest. The Alabama plant, known for produc-

tion of Sonatas, expanded its production line, adding the Santa

Fe model in 2006.

Furthermore, HMC has developed local R&D, design, and testing

facilities in the US; the technology R&D center, design and tech-

nical Center; and the Mojave navigation testing site. With the

completion of the Alabama plant, HMC has localized all process-

es in the US market including product development, design, pro-

duction, sales, marketing and customer service. The company is

producing medium and large size cars characterized by high per-

formance, high quality, and high profitability by applying new cut-

Main Business ActivitiesThe year 2006 saw greater uncertainty in the world marketplace than perhaps any previous year, with high oil prices

and a marked drop in the exchange rate. Nevertheless, all employees came together and believed in the company

they were working for, and HMC was able to pull its resources together and continue its growth.

2006 was a year in which HMC continued its growth, both qualitative and quantitative, thanks to improved operating

capabilities. In automobile manufacturing, of the sixty plants in North America producing cars, the Alabama plant in the

U.S was rated among the top ten for initial quality within only a year of going into full production. Plants in China, India,

and Turkey expanded their manufacturing capacity and construction for a new plant in the Czech Republic started.

As a result of the quality improvements pursued by HMC, the Grandeur, Sonata, Tucson, and Avante models has

received awards and high praise from auto research firms from around the world. HMC continued on a strong growth

path with global sales (vehicle units) up 7% from 2005. In 2003. HMC exports reached 10 billion dollars. In the suc-

ceeding three years, the company has grown one and one-half times, winning the 15 billion dollar export award from

the Korean government and reaching a milestone in export growth.

HMC was named one of BusinessWeeks top 100 global companies in 2005. The company continues to make

improvements in quality and has moved up the ranks in 2006 and 2007.

US Alabama Plant US Alabama Plant production facility Construction starting ceremony of the 2nd plant and R&D center of

HMC Beijing

Production line of Turkey plant




Brand Value Enhancement HMC has moved up the ranks of Interbrand and BusinessWeeks

100 global brands for three consecutive years. The brand recog-

nition tests by AutoPacific and Consumer Reports indicate that

HMC is taking a firm hold in establishing itself as a global brand.

HMC made a declaration in 2005 to attain the stature of a lead-

ing global brand and increase its capabilities to enhance brand

competitiveness. This has led to the new brand identity Refined

& Confident and Drive Your Way brand slogan. The brand is

uniformly applied from development of product design to market-

ing, sales, and service.

HMC is poised to lead Koreas industrial competitiveness

through brand value enhancement and will be making relentless

efforts to attain the stature of a premier brand in the world mar-

ket, particularly in the US, Europe, and China.

(unit : 100 million dollars)

50

40

30

20

10

0

2005 2006 2007

Value 35 41 45

Rank 84 75 72

64

68

72

76

80

84

Growth in HMCs Global Brand Value

Avante (expert name : Elantra) - Strengthening its presence as a steady seller

66

70

74

78

82

86




Sales Targets and Strategies for 2006 and 2007

Achieved the target of selling 2.1million units in 2006 Aggressive sales through innovation in all areas in 2007

Improvement in profitability Increase prices in line with improved Strengthen capability to Increase promotions targeting key customers

quality and brand power counter competition Launch of strategic products

Increase the proportion of sales to EU nations Operation of regional marketing centers

Strengthen sales capability Strengthen dealer development program Increase sales of high end carsIncrease high end image

(Based on mid- to long-term sales targets) High end culture/sports/alliance marketing

Strengthen capabilities to compete and increase Increase advertising of luxury cars

sales by close customer management

Pursuit of regional strategy Increase PR for launching new models in Using automobile Structuring of customer management program

overseas markets maintenance service to Sales promotion by inviting existing customers

Strengthen dealers sales capabilities increase repeat purchase

Attain sales targets by pursuing regional

strategies

Strengthen capability of Vitalization of the organization and increase in

sales organization morale

Nurturing future-oriented sales personnel

Strengthen competitiveness Make the showrooms luxurious and improve

in sales base customer satisfaction

Strengthen distributors capabilities to

compete

Improved Product Quality in HMCs CarsIn 2006, HMC introduced the Veracruz model in the United

States, the largest market in the world. It received rave reviews

from the Washington Post, Motorland, and many other review-

ers. In the collision test administered by US National Highway

Traffic Safety Administration, Veracruz received a five-star rating,

attesting to its exceptional safety.

The i30 model, which was developed to enter the European mar-

ket, received high ratings from Autobilt and other leading car

magazines in Europe for offering functions and design surpassing

other cars in the same class.

Sonata was selected as the best family sedan in the 2006

Drivers Choice Awards sponsored by PBS Broadcasting in the

United States. Consumer Reports also selected Sonata as the

best car in its customer satisfaction survey.

Grandeur (Azera in the US) won the AutoPacif ic Vehicle

Satisfaction Award for Large Cars, while the Santa Fe took first

place in the groups rating of customer satisfaction in the inter-

mediate SUV category. Consumer Reports ranked Entourage top

in its class for product reliability.

HMC earned two Total Value wins from Strategic Vision with the

Grandeur, Santa Fe, and Entourage. Three models, Grandeur,

Santa Fe, and Entourage, were rated best in their classes in the

Strategic Visions total quality study.

Grandeur and Tucson were rated best in their classes in the total

value index of Strategic Vision and have now held the number

one position for two consecutive years.

In the collision test administered by US National Highway Traffic

Safety Administration, Grandeur received a rating of Good,

while Sonata received the top rating in the rear end collision test.

In the safety test, Santa Fe won the Top Safety Pick. As a world

leader in quality, HMC is continuously pursuing new product

development innovation and quality improvement.

Status of Global Sales HMC is leading the economic growth of Korea through increased

exports to the expanding global market and employment stabili-

ty. As a recognized global enterprise in the world market, the

company is currently pursuing various avenues to leap into the

world market as a recognized global enterprise.

Accelerating Worldwide Sales

HMC is spurring sales in major markets, including the US and

Europe. In Central and South America, the Middle East,

Southeast Asia, and other emerging markets, the company has

successfully won orders for taxis and government vehicles,

enhancing the companys image.

2006 was a monumental year for HMC marked by the sale of

two million units, including the CKD* quantity. In the domestic

market, Sonata has held the number one position in sales for

eight consecutive years, and the number two and three positions

have been acquired by Avante and Grandeur, respectively. The

company has attained a market share, measured by the number

of units sold, of 50% for three consecutive years.

*CKD : Complete Knock Down




Brand Value in Domestic Markets

Date of Presentation Presentation Institution Results of the Announcement Remarks

June 2006 Ministry of Commerce, Industry and Energy / Award of Excellence in Industry Sector

The Institute for Industrial Policy Studies

July 2007 Ministry of Commerce, Industry and Energy / 1st in the National Customer Satisfaction Index Six consecutive years

Korea Productivity Center/

Chosun Ilbo/

University of Michigan/

National Quality Research Center

November 2007 Ministry of Commerce, Industry and Energy Won the 15 Billion dollar Export Award Awarded the Seoktap

Industry Medal

December 2007 Ministry of Commerce, Industry and Energy / Selected among the top 10 new technologies

Agency for Technology and Standards in Korea in 2006

June 2007 Korea Productivity Center 1st in the National Customer Satisfaction Index (NCSI) 1st in the passenger cars

category for seven

consecutive years

1st in the RV category,

two consecutive years

June 2007 Ministry of Commerce, Industry and Energy/ Won the Grand Prize in the Presidents

Ministry of Environment Award for National Environment Management




Brand Value in Overseas Markets

Date of Presentation Presentation Institution Results of the Presentation Remarks

June 2006 Automotive News 6th in the world in vehicle production

AutoPacific The most ideal automobile brand

Market Watch HMC surpassed Toyota and Honda

July 2006 J.D. Power and Associates 3rd in the initial quality study (IQS) / No. 1 general brand

Business Week 75th among the top 100 global brands

J.D. Power and Associates 22nd on the Customer Satisfaction Index (CSI)

August 2006 NADA 6th in dealer satisfaction in the US. The National Automotive Dealers

Association

US. Consumer Satisfaction Index 7th among the 20 automobile brands

J.D. Power and Associates Ranked 6th in environmental friendliness

October 2006 Sobre Ruedas The 2006 Maker of the Year

March 2007 Consumer Reports 7th in the 2007 annual report for durability Sixth climbed up from the

preceding year

Consumer Reports 11 defects for every 100 cars

Consumer Reports Narrower gap between evaluations of each model

for durability

April 2007 AutoPacific 1st in brand image improvement

June 2007 AP News Korean cars outperform Japanese, European,

and US cars this year

Strategic Vision 2nd in company performance

AutoPacific 1st in the large passenger cars category

1st in the SUV category and medi

Documents

Hyunday the Road to Sustainabylity