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THE ROAD TO SUSTAINABILITYHYUNDAI MOTOR COMPANY 2005 Sustainability Report

In line with our corporate transparent management objectives, the Hyundai Motor Company (hereinafter, HMC)sustainability report is published annually to communicate HMC’s sustainability initiatives as a responsibleglobal corporate citizen to interested parties and associated stakeholders. Based on HMC’s intentions,activities and performance related to the sustainability aspects affecting our stakeholders and the company,HMC strives to support stakeholders in making sound decisions regarding their involvement with HMC.

The 2005 sustainability report is written in line with the 2002 Global Reporting Initiative’s (GRI) sustainabilityreporting guidelines. All information presented this year is reported in accordance with the principles of goodreporting practice (i.e. relevance, reliability and comparability), however, readers may recognize somelimitations as there exists a lack of generally accepted reporting standards. As a result, readers, may not beable to accurately compare HMC’s performance to that of other companies without further data, analysis andinterpretation.

The scope of this year’s report is expanded towards a more extensive global coverage of domestic andoverseas operations. Detailed information pertaining to the domestic operations, namely HMC Headquarters,domestic manufacturing plants (the Ulsan, Asan and Jeonju plants), the Namyang R&D center and domesticservice centers including quantitative and qualitative data sets from overseas manufacturing plants (the Turkeyplant-HAOS, India plant-HMI, and the China plant-BHMC) are presented throughout the report.Qualitative information on the environmental and social aspects of overseas R&D facilities located in the U.S.,Japan and Europe, overseas dealerships and the Alabama manufacturing plant (HMMA) completed in 2005 isalso referred to in the report.

The report includes HMC’s sustainability activities from January 1st, 2004 until June 30th, 2005.Performance related data in the report are retrieved from data sets gathered from the period encompassingJanuary 1st, 2004 to December 31st, 2004, HMC’s fiscal year. For the collection of environmental and socialdata sets, HMC utilized AUTOWAY, a corporate intranet database system used for data collection andclassification. In addition, HMC developed the 2005 HMC Sustainability Reporting Guidelines in February2005 to standardize internal data collection and reporting procedures. For the purpose of the report, HMChas adhered to the sustainability reporting guidelines indicated above. Contents from the report are based oninput from stakeholders as well as from HMC’s business performance. The report was written by an internalteam of the HMC Environmental Management Strategy Planning Team, Corporate Planning Office of it’sHeadquarters. The information presented follows HMC’s internal reporting guidelines and is based on officialHMC documents. Contents are reviewed by managers and employees of related departments and approvedby the executive upper management before finalization and publishing. As this is our third sustainability report, it focuses extensively on intents, business processes and structure,and performance, however, future reports will focus more heavily on performance analysis.

Before You ReadTable of Contents

2 Letter from Chairman & CEO

4 Letter from Vice Chairman & CEO

6 Hyundai Motor Company Profile

8 Corporate Philosophy

10 Interview of President

Management

13 Environment Management

14 Ethics Management

16 Global Management

32 Quality Management

34 Brand Management

Environmentally Friendly Product

39 Environmentally Friendly Vehicles

42 Fuel Economy & Emissions

48 Recycling

Cleaner Production

53 Energy / Greenhouse Gas

54 Raw Materials / Waste

56 VOCs / Air Emissions / Wastewater Discharge

59 Environmental Audits / Environmental Expenditure

Communication with Stakeholders

61 Customer

70 Employee

76 Supplier

80 Social Contribution

86 GRI Index

88 Internal Process Ensuring the Reliability of the Report

89 Independent Assurance

3 Hyundai Motor Company / 2005 Sustainability Report2

As a responsible corporate citizen, the sustainability management initiatives of HMC include efforts to protect

and sustain the current and future environment and to enhance the overall welfare of human life. We have

achieved lasting economic success by maintaining continued growth in profits and by providing employment

security thus becoming one of the leading economic engines driving the Republic of Korea’s development and

rise to prosperity. Perhaps the most visible proof of our success can be seen in the fulfillment of our social

responsibilities. We have established an Ethics Charter and have come full circle in realizing the social and

ecological responsibilities of our transparent management initiatives. This goes beyond monetary donations

to communities in need. We are also giving back to society through proactive efforts and our joint involvement

with stakeholders and employees to resolve social issues. As we are aware of the social ramifications of our

vehicles and activities, ensuring sustainable mobility through the provision of environmentally compatible

vehicles remains the cornerstone of our corporate social responsibility.

Despite the depressed economic state of the domestic market, vehicle exports increased 11.4 percent year-on-

year to 1.13 million units through our active expansion into new foreign markets. Since HMC’s first vehicle

export in 1976, it has taken an astonishingly short 28 years to surpass the 10 million cumulative total export

mark, a new record in the automotive industry. We have enhanced profitability and growth potential by

improving product quality and by raising overall brand image. Such achievements have enabled us to be a

significant contributor to the advancement of the Korean automobile industry.

The environmental ramifications of the automobile are of paramount importance when considering the future

of the automobile. In these changing economic times, HMC’s foremost sustainability issue revolves around the

dual issues of developing an automobile which is both profitable and environmentally sustainable. Today,

achieving sustainability incorporates the balancing of economic, social and environment issues not only for

HMC, but for the rest of the automotive industry. From this perspective, we have established effective policies

and strategies to actively tackle the environmental issues confronting us. At the same time, we are drawing on

the input of stakeholders in the overall management practice that we at HMC undertake.

Finally, HMC will not compromise the quality of the environment bequeathed to future generations merely for the

sake of increasing current consumption. The foundation for the future is linked inextricably to the sustainable

efforts of present stakeholders. As Korea’s most visible and best known multinational, we aim to perform future

oriented sustainability management practice that takes intergenerational equality into consideration; we look to

build upon existing trust-based relationships with stakeholders as a model automotive company; and we strive to

become a global company that sets world class standards to be followed. Through our continuing efforts, we

request your continuous participation and suggestions regarding our everyday activities.

October 2005

Mong-koo ChungChairman & CEO

Letter from Chairman & CEO

5 Hyundai Motor Company / 2005 Sustainability Report4Letter from Vice Chairman & CEO

cleaner forms of energy take center stage, HMC has concentrated its efforts on the development of

sustainable fuel technologies and on efforts to commercialize environmentally compatible vehicles based on

Hybrid Electric Vehicle technology and Fuel Cell Electric Vehicle technology which promise to help reduce

CO2 emissions.

If environment management, a practice which fulfills social responsibility through cleaner production and

environmentally friendly vehicles is action-oriented, then the implementation of ethics management

initiatives, which promotes ethical awareness and conduct among our employees provides a moral

foundation to overcome the difficulties in implementing sustainability management particularly when

confronting a harsh business environment or a dilemma in the course of decision making. Since the

implementation of its Ethics Charter in 2001, HMC has established a broad set of ethical policies and

organizations; ethics management practice guidelines, ethics charter for the procurement office, employee

ethics guidelines, ethics committee, cyber audit office and compliance program for fair trade.

One of our key goals is to provide a balance between economic growth, social responsibility and

environmental stewardship for the future. As a responsible corporate citizen that has always been at the

forefront of environmental protection and national economic growth, HMC is actively involved in various

philanthropic programs that contribute to social welfare. HMC's programs are designed to promote

education, academic research, the arts, sports, international exchanges, and environmental protection. In

addition, we actively support and encourage our employees to volunteer in the assistance of natural disaster

victims and the socially disadvantaged. Recognizing that long-term support is as important as one-time

donations or volunteer work, we are changing our volunteer programs so that they can provide more

practical assistance in helping people overcome hardships. As the monetary donations and provision of relief

supplies represent only one dimension of social contributions, HMC has undertaken a role to improve the

quality of life of all communities through the operation of wide ranging social partnership programs in

cooperation with NGOs.

As a global corporate citizen, one of our principle tasks is to create a sustainable balance in our activities

reflecting our economic, environmental and social responsibilities. With this third edition of the HMC

sustainability report, HMC has done its best to convey our intentions, expectations, achievements and

performance as transparently as possible. Finally, I would like to pledge once again that HMC will continue to

be a leading automaker that guides society toward a sustainable future by ensuring the prosperity lives of the

current and future generations to come.

October 2005

As the undisputed leader of the domestic automotive industry and the flagship corporation of Korea, HMC

has established manufacturing plants, research and development facilities and regional corporate offices in

key overseas markets. Perhaps the most visible proof of our success has been our rapid growth into a global

company exporting over 1.1 million vehicles annually to over 190 countries. But as a global corporate citizen,

we realize the need to fulfill social responsibilities. As a result, HMC has actively engaged in key areas of

sustainability management practice, such as environment management, ethics management and social

contribution initiatives.

Respecting human values and fulfilling social responsibilities are two aspects of our corporate environmental

philosophy. As a global automobile manufacturer, our activities span the entire value chain of industrial

activity from R&D and procurement to production, distribution, marketing and after-sales service. And with

growing environmental awareness centering largely on the emissions of greenhouse gases and more

specifically CO2 emissions, HMC is taking various proactive steps to provide environmentally compatible

solutions in step with our peers in the automotive industry. As an initial measure towards preventing global

warming, HMC is actively complying with domestic and international environmental regulations, voluntary

agreements and conventions. In addition, HMC has begun to aggressively participate in multilateral efforts to

curb greenhouse gases by working closely together with governmental offices, international agencies and

non-governmental organizations. As energy conservation measures and the expansion of the usage of

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


Established in 1967, HMC launched its “Pony” model in 1976, which was the first Korean-made automobile to beexported. Since the Pony, HMC has continued to expand its export volume and overseas market to NorthAmerica, Europe, China, Japan and other parts of the world. In 1984, HMC exported 500 thousand automobiles;last year we exported 1 million automobiles and received the “Ten Billion Dollar Export Award” from the Koreangovernment.In 1991, HMC built Korea’s first engine and transmission parts. By doing so, we greatly contributed to the Koreanauto industry by localizing the production of key components. HMC produces passenger vehicles, light trucks, dump trucks, commercial buses, vans and other specialty vehiclesincluding fire engines, petrol cars, ambulances and armored vehicles. HMC has long been a key player in Korea’s economic miracle and has become a symbolic leader in the Koreaneconomy. In order to assure our business competitiveness, we focus our efforts not only on quality andtechnological advancement, but also on the enhancement of our corporate image. As such, the preservation ofour natural environment is a critical issue for our business, leading us to make substantial investments in improving the environmental performance of our vehicles.

Hyundai Motor Company Profile

Corporate Profile Corporate History

1999 - Naming of Hyundai Motor as official sponsor of 2002 FIFA World CupTM

2000 - Official supporter of Euro 2000- Introduction of Hyundai HCD-V concept car- Introduction of Korea’s first passenger car diesel

engine- Participation in the California Fuel Cell Partnership- Launch of Korea’s first automobile business group- Development of Korea’s first heavy-duty truck engine- Development of Korea’s first fuel cell electric vehicle

2001 - Honoring of Chairman Mong-koo Chung with Automotive Hall of Fame’s DSC

- Introduction of Hyundai’s concept car HCD-VI- Introduction of prototype Hyundai Santa

Fe fuel cell vehicle- Honoring of Hyundai Motor America with

J.D. Power Chairman Award- Honoring of Hyundai Santa Fe with first place in

AutoPacific satisfaction survey2002 - Completion of the Hyundai-Kia California Design &

Technical center- Introduction of Hyundai HCD-7 concept car- Launch of joint venture between Hyundai Motor and

Beijing Automotive Industry Holding Company in China

- Consumer Report chooses Hyundai as number 2 along with Honda in a reliability study

- Hyundai Motor Company’s Sonata receives highlyfavorable reviews from J.D. Power for its performanceand design

- Hyundai Motor Company receives gold level PBECEnvironmental Award

2003 - Announcement of OLV, concept car- First development of ultra high-pressure hydrogen

tank system for fuel cell electric vehicles- Commencement of construction of design center

and proving ground in North America- Official partner of EURO 2004- Formally proclaimed the first auto company to

implement Global Environment Management - Supply of environment-friendly Santa Fe Electric

vehicle to Athens Olympic Games- Testing of Fuel Cell Electric Vehicles for commercial

use in partnership with UTC Fuel Cells begins- Begins construction of the Auto industry’s first

Environmental Technology Research Center- Sponsorship to Wheelchairs Funds of

Hyundai Motor Group- First-rate in consumer’s satisfaction survey

of Korea Industry for 10 successive years- Commencement of construction of R&D

Center Europe - Sonata and Sante Fe chosen as number 1 and 2 in

J.D. Power’s consumer satisfaction study- Introduction of Hyundai NEOS II concept car- Announcement of new environmentally friendly

diesel engine technology- Official sponsor of 2004 FIFA World Youth

Championship (UAE)- Yearly exports break 1 million units barrier

2004 - Launch of new concept car HCD-8- Sponsorship with Wheelchairs Funds(donates

wheelchairs)- Hyundai unveils the concept car E3(E-Cubed) at 2004

Geneva Motor Show- Hyundai Elantra & XG receive good marks(FSST)

from safety programs (NCAP)- Hyundai opens R&D center for next generation

vehicles at Seoul National University- ‘Hyundai Football World Championship’ 40 countries

participate- Hyundai Motor passes major milestone with export

of 10 millionth vehicle- HMC establishes joint venture commercial vehicle

production facility in China- Hyundai (Tucson) wins ‘Good Design’ Award in Japan- Hyundai ranks high in ‘Strategic Vision's’ 2004 Total

Value- Development of the Tucson Fuel Cell Electric Vehicle- BusinessWeek names Chairman Mong-koo

Chung among the best CEOs of 2004 2005 - Unveiling of Grandeur(Azera) and HED-1 concept car

at Geneva Motor Show- Launching of new global brand management strategy- $60 million US California based proving ground opened- HND-1 (Portico), the new concept unveiled at

Chicago Auto Show- Hyundai unveils first Hydrogen-Powered Tucson SUV

at Los Angeles Auto Show- Car book 2005 names five Hyundai models a ‘Best Bet’- Chairman Mong-koo Chung declares vision

‘Innovation for Humanity’- Completion of Alabama Plant

1967 - Establishment of Hyundai Motor Company1976 - First export of Hyundai Pony to Guatemala

and El Salvador1983 - Establishment of Hyundai Auto Canada Inc.1984 - Completion of the first Korean proving ground

in Ulsan Plant1985 - Establishment of the Hyundai Motor America1991 - Hyundai becomes the first in Korea to develop

the engine (Alpha Engine) independently- Development of Electric Vehicles

1992 - The first in Korea to develop a concept car HCD-11993 - Development of the HCD-II 1994 - Development of Hydrogen Powered

Fuel Cell Electric Vehicles- Development of solar car - Breaking of the 1 million units production mark

for the year1995 - Development of the HCD-III

- Unveiling of the energy efficient Gas Beta Engine - Completion of the commercial vehicle factory

1996 - Completion of the NamYang Research & Development Center

- Breaking of the 10 million total units mark for production1997 - Development of the Epsilon Engine

- Completion of the Turkey plant1998 - Development of aluminum-block V-6 Delta engine

- Development of European concept car Hyundai Euro-I- Development of Hyundai’s second generation solar car- Completion of Indian plant- Acquisition of Kia Motors

Hyundai Motor Company

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

Industry Sector: Manufacturing

Major Product: Automobiles

Production: 1,677,818 units per year (CKD Excluded)

Sales: 27,472 billion Korean Won

Assets: 24,700 billion Korean Won

Net Income: 1,804 billion Korean Won

Chairman & CEO: Mong-koo Chung

Date of Establishment: Dec. 29, 1967* Production: production total from domestic (Ulsan/Asan/Jeonju) and overseas manufacturing plants

(India/Turkey/China) in 2004

* Sales, Assets and Net income: Hyundai Motor’s Independent Financial Standard for fiscal year 2004


Corporate Philosophy The spirit of creative challenge, which has paved the way for its growth, is the core value at HMC. HMC aims forcreativity and innovation to actively respond to changes in the business environment. Based on this philosophy,HMC aims to provide automobiles and related support services to enrich the overall quality of life for bothdomestic and overseas stakeholders. In addition, HMC has taken the necessary steps forward along withshareholders, customers, employees, suppliers, dealers and local communities, all on the basis of mutual trust.

11 Hyundai Motor Company / 2005 Sustainability Report10Interview of President

Q: In order for a corporation to attain higher sustainability management standards and to keep

the process moving forward, it must see continual improvement in its bottom line. From a

financial growth standpoint, how did HMC perform in 2004?

A: HMC recorded total sales of 27.5 trillion Korean won based on worldwide sales of 1.67 million units, which

resulted in 1.8 trillion Korean Won in net-income. Although the domestic market experienced a contraction in

sales to 550 thousand units, down 12.6 percent year-on-year, HMC’s market share rose by 2.6 percent from the

previous year to maintain a 50.3 percent total market share on the back of strong new vehicle sales most

notably the all-new Sonata and Tucson, vehicle exports totaled 1.12 million units for 2004, an 11.1 percent increase

year-on-year on the strength of improved quality and brand value. Despite the unfavorable market conditions of

2004, HMC posted financial gains across the board supported by strong employee effort and on the heels of

customer-based management designed to elevate customer satisfaction levels, social partnerships and

charitable initiatives.

Q: With regard to environment management, what were the most important issues confronting

HMC in 2004?

A: HMC has been continuing the development of environmentally friendly vehicle technologies and on

establishing a more environmentally benign manufacturing system. Working in partnership with the Ministry of

Environment, HMC has been participating in a long-term fleet field testing 50 Getz Hybrid Electric Vehicles in the

Seoul metropolitan area. The data obtained from the project will be applied to improve reliability and

performance in the preparation for mass-production of HEVs. Furthermore, with the outstanding performance

improvements in the Tuscon Fuel Cell Electric Vehicle over the first generation SanteFe FCEV, HMC is presently

participating in the U.S. Department of Energy demonstration project on FCEVs and hydrogen re-fueling

infrastructure in partnership with other leading automotive and energy companies. And in the pursuit of cleaner

manufacturing standards, HMC has been extending environment management support to its suppliers through

active participation alongside the Korea National Cleaner Production Center, which operates under the auspices

of the Korea Institute of Industrial Technology. since June 2003.

Q: Would you please inform us in greater detail of HMC’s role in expanding social partnerships and

charitable donations?

A: HMC has supported a wide variety of charitable causes donating more than 7 billion Korean Won in 2004 to

domestic social welfare organizations which serve the underprivileged and by providing volunteer services and

one billion Korean Won worth of supplies to underprivileged groups. Aside from these donations, HMC

employees initiated and actively participated in blood donation campaigns, fund-raising bazaars and rice-sharing

events. Starting in 2005, HMC has been placing greater emphasis on social contributions and partnership

activities through its 107 employee based social-service voluntary groups and has been working together with

stakeholders to support 22 external social-welfare organizations. HMC aims to continue widening the avenues of

communication to strengthen trust and promote interactive partnerships encompassing all members of society.

As a requisite to furthering this goal, HMC plans on continuing to carry out social welfare activities and programs

needed most by communities where we conduct our business.

Q: What are some of the special characteristics of this year’s sustainability report?

A: This year’s edition of HMC’s sustainability report, the third of its kind, is composed of qualitative and

quantitative data represented throughout the value-chain of environment management initiatives encompassing

R&D, procurement, production, sales and after-service with emphasis on employee ethics, transparent

management and social partnership activities. For the first time, the report includes quantitative and qualitative

data sets from HMC’s overseas manufacturing plants, Hyundai Motor India, Hyundai Assan Otmotiv Sanayi and

Beijing Hyundai Motor Co. Information regarding HMC’s quality management, brand management and global

management initiatives are included for the first time ever to enhance the readability of this year’s issue in an

attempt to reach out to a wider network aside from the primary investors, stockholders and other stakeholders.

Also, the report has undergone reporting assurance by an independent auditing firm as in past years in order to

maximize transparency and credibility.

Q: How has the role of stakeholders and communication been addressed in this year’s sustainability

report?

A: Last year’s report, which was presented in Korean and English, was distributed to over 1,500 organizations and

opinion leaders representing domestic and international government organizations, business partners, NGOs, media,

academic and financial institutions. This report, one of several reports distributed along with the annual report and

the corporate brochure, explains management and financial activities with the aim of improving the channels of

communication with stakeholders. This year’s edition is special in that it provides detailed qualitative and

quantitative information regarding HMC’s environment management and social partnerships thus helping play a key

role in meeting the information needs of various stakeholders while at the same time serving as a platform to

educate employees and broaden their understanding of key sustainability issues.

Interview Jae-kook Choi President

“We will continuously striveto further sustainabilitymanagement with continueddevelopment based onenterprising and the creativeHyundai Spirit.”

13 Hyundai Motor Company / 2005 Sustainability Report

Fuel efficiencysubcommittee

Emission subcommittee

Recycling subcommittee

Next generation vehiclesubcommittee

Production plantsubcommittee

Production technologysubcommittee

Environmental purchasingsubcommittee

Environmental logisticssubcommittee

Marketing/Salessubcommittee

A/S subcommittee

Environmental accountingsubcommittee

Environmental communicationsubcommittee

Environmental Philosophy & PolicyThe Chairman and CEO, Mong-koo Chung outlinedHMC’s Environmental Philosophy & Policy in June2003. The initiatives called for HMC to responddiligently to global environmental issues and totransform itself into a model sustainable company.The accomplishment demonstrated HMC’s desire tofulfill corporate social responsibility and it is expectedto enhance the confidence of stakeholders.

*Secretariat : Environmental Management Strategy Planning Team

Environmental Committee

Environmental CommitteeFor successful implementation of the environmentalstrategy, HMC organized a corporate-levelenvironmental committee. The committee, chairedby the Chairman & CEO, is comprised of threeindependent committees; the EnvironmentalProduct Committee, the Environmental ProductionCommittee and the Environmental ManagementCommittee. The committees work together with thesupport of 12 subcommittees to establishcorporate-wide and department-specific targets andaction plans based on our environmental policy.

EnvironmentalProductionCommittee

EnvironmentalProduct

Committee

EnvironmentalManagementCommittee

Environment ManagementHMC announced its Environmental Philosophy and Global Environmental Policy in 2003. Since then HMC hasarranged key ideas for systematic environment management. In addition, HMC has also established and isimplementing environment management strategy within the automobile industry’s value-chain encompassingR&D, purchasing, production, logistics, marketing & sales and A/S.

Recognize the environment as a core element ofbusiness and create corporate value by proactivelypursuing environment management.

Promote the development and distribution ofenvironmentally friendly products.

Dedicate to reducing pollutants and to preservingresources and energy for sustainable use at all stages ofour products’ life cycle, from development to production,sales, use and disposal.

Endeavor to provide all employees with environmentaltraining programs, support suppliers in environmentmanagement and contribute to public welfare.

Comply with all international and national environmentalregulations and agreements. Continue to improveenvironmental management and publicly disclose ourperformance.

Based on corporate citizenship, Hyundai Motor Companyis dedicated to respecting human value and preserving theglobal environment. We, thereby proclaim this GlobalEnvironmental Policy for sustainable society.

For the harmony of humankind, the environment andsociety, Hyundai Motor Company respects human valueand fulfills corporate social responsibility throughenvironment preservation.

Global Environmental Policy

Environmental Philosophy

■ Environment Management Strategy

ManagementHarnessing technological innovation and conserving resources to make safer and more environmentally friendly vehicleshas always been at the center of HMC’s commitment to sustainability. HMC commits to excel further to build asustainable future between humans and cars. Mobility is now a necessity so the automobile industry has a major impacton our lives. It is clear therefore that HMC needs to meet its economic, environment, and social responsibilities as acorporate citizen. This is the key to our sustainable management initiative.

Board of DirectorsHMC organized the Board of Directors for thepurpose of management transparency. In addition,HMC’s Board of Directors is responsible forindependent external audits for the purpose ofaccounting assurance.

HMC organized the Board of Directors in accordanceto the Korean Security Exchange Act for the purposeof management transparency. The Board ofDirectors consists of 3 executive directors and 4non-executive directors representing all fields of theautomotive industry. In 2004, a total of 12 Board ofDirectors meetings were held; 4 were regularlyscheduled meetings while the remaining 8 wereextra-session meetings.

Number of DirectorResponsibilities

Name of theExecutive Non-executiveCommitteeDirectors Directors

Board of Director Non-executiveNomination

2 2Directors

Committee Nomination of external directors

Accounting and Audit Committee - 3 Management

Audit

Category Title Name Remark

Executive Chairman and Mong-koo Chung Chairman and CEODirectors CEO of Hyundai·Kia Motors

Vice Chairman Dong-jin Kim Vice Chairman and

and CEO CEO of Hyundai

Motor Company

President Cheon-soo Jeon President of Hyundai Motor Company

Non-executive Director Kwang-nyun Kim Member of the Audit Directors Committee

Director Dong-gee Kim Member of the Audit Committee

Director Byung-il Park Member of the Audit Committee

Director Masao Miyamoto

■ Profile of Board of Directors (December 31, 2004)

(December 31, 2004)

■ Operation of Board of Directors

■ Board of Director Committees

Ethics Management Program• Employee Ethical Code of Conduct GuidelinesIn June 2005, HMC added new ethics regulations to itsexisting ethics charter and mapped out guidelines by whichall employees are expected to adhere to in all aspects ofbusiness practice. The guidelines specify the does anddoesnt’ of employee on the job and off the job behaviorincluding outlining employee job analysis. HMC hasensured user friendliness and practical applicability of thenew guidelines.

• Compliance Program for Fair TradeHMC is working toward a more transparent managementof its business. Through the operation of a ComplianceProgram, HMC aims to better conform to regulations andlaws, and to minimize economic losses. In line with itspromotion and support of transparent management andfair trade compliance, HMC enforces employees toundertake training on fair trade and focuses heavily onimproving ethics management policies.

• Cyber Audit OfficeThe Cyber Audit Office is one part of HMC’s ethicsmanagement initiatives. HMC’s ethics charter andbusiness principles are available directly on the Internet,giving employees clear standards to help make betterethical workplace decisions. Since April 2004, HMC hasbeen operating a cyber reporting online center to reportany illegal or unfair business practices and suggestions.All reports receive feedback from management andreporting employees are informed directly of the results.

*Ethics Management website : http://audit.hyundai-motor.com

15 Hyundai Motor Company / 2005 Sustainability Report14Management Environmentally Friendly Product Cleaner Production Communication with Stakeholders

Ethics ManagementExternal audits along with HMC’s Board of Directors assist to keep transparent management policies in checkas HMC is moving progressively closer toward its commitment of ethical and transparent management. To realize corporate social responsibility based on global corporate citizenship, HMC has adopted various ethicsmanagement programs helping to raise employees’ ethical awareness and to support the initiation of ethicallysound business decisions. In addition, in line with this objective, HMC enforces independent external audits andpursues ethics management through the development of systems.

• Contributions to our country and society We will contribute to our country’ s economic growththrough continuous employment creation and faithfultax payment. We will fully comply with all environment related laws andregulations to lead the way in environment protectionand make contributions to our society through culturaland welfare projects.

• Promotion of customer and investors’ interest We will promote customer and investors’ rights andinterests with the best products and service, keepconfidence with customer information, and fulfillcommitments with customers. We will manage and increase the assets of investors byimproving the financial structure by maximizing theefficiency of business management.

• Human respect and talent merit We respect every employee as an independent characterto form an advanced organizational culture based onmutual reliance and understanding and we will do ourbest to prevent sexual harassment from occurring. We strive for the cultivation of all employee’s ethicawareness and provide systematic support long term totrain them as flexible and creative individuals.

• Establishment of partner relations with suppliersWe actively assist our suppliers through technicalsupport and management directions to further thesynergetic effects and to allow them to obtaininternational competitiveness during the long haul. We deal with suppliers in a fair manner, never makingany unfair demands by taking advantage of ourprominent position.

• Settlement of transparent management We will deal with all businesses using transparentstandards and will settle the fair trade practice bykeeping fair transactions securing the interests of eachparty with transparent terms and conditions with allbusiness partners including customers and suppliers.Also, we will drive out all requests from interestedpersons which may be adverse to fair practice inconnection with posts.

Our company, Hyundai Motor Company, is reborn as anautomobile group unique in our country based on nationalexpectation and concerns and is charged with a mission ofparamount importance to lead national economic growth inthe 21st century by strengthening the competitiveness of theautomobile industry, a key industry of our country, to aworld class level.

Ethics Charter

*Corporate Governance website : http://ir.hyundai-motor.com

BusinessWeek CEO of the year 2004 BusinessWeek, a U.S. magazine, named Chairman and CEO Mong-koo Chung as one ofthe best CEOs in the corporate world for 2004, recognizing his leadership for turningaround HMC in automotive markets in the U.S. and other regions. BusinessWeek awarded17 CEOs of which Chairman Chung was the only selected from Asia.

Since accepting the position as Chairman & CEO of Hyundai Motor Company in 1999,Chairman Chung has concentrated heavily on raising company standards to a world-classlevel by introducing Six Sigma quality management pioneered by GE of the United Statesand adapting them to HMC’s unique engineering and manufacturing environment.Chairman Chung’s quarter century of experience in the automotive industry has helped himdevelop his “Quality is the Top Priority” management policy.

Chairman Chung’s decisions to expand investments in overseas operations particularly inthe newly industrializing countries of China, Turkey and India are paving the way for HMC’sgrowth in the 21st century. Investments of a comparable scale are being made in theUnited States and Europe.

BusinessWeek: A business magazine published by McGraw-Hill Group


Global ManagementHMC aims to establish international positioning through the implementation of global management initiatives.From the first exports to Ecuador in 1976 to the export of the Pony Excel to the American market in the 1980’s,HMC has continued to stir consumer interest and excitement. Since 1997, HMC has established overseasmanufacturing plants in fast growing foreign markets. With the establishment of HAOS in 1997, HMI in 1998,BHMC in 2002 and most recently HMMA in 2005, HMC has diversified its operations and has taken aim on theglobal market.

■ Global Network

1 Ulsan Plant 2 Asan Plant 3 Jeonju Plant

2

1

3

Asan Plant

Total plant site area of 1,811,000㎡Total floor space: 429,000㎡Production capacity: 290,000 (units/year)Vehicles produced: Sonata, Grandeur (Azera)Address : 123 Kumsong-ri, Inju-myun, Asan-si,

Chungchungnam-do, Korea

Jeonju PlantTotal plant site area of 990,000㎡Total floor space: 363,000㎡Production capacity: 60,000 (units/year)Vehicles produced: Medium and large sizebuses, medium and large size trucks, special duty carsAddress : 800 Yongam-ri, Bongdong-eup,

Wanju-gun, Jeollabuk-do, Korea

Ulsan Plant

Total plant site area of 5,000,000㎡Total floor space : 2,310,000㎡Production capacity : 1,530,000 (units/year)Vehicles produced : Accent, Getz, Santa Fe,Centennenial, Tucson, Elantra, Coupe, Matrix, H-1,Trajet, H100 Truck, H-1 Truck, TerracanAddress : 700 Yangjong-dong, Buk-gu, Ulsan, Korea

Korea


Ulsan manufacturing plant

Ulsan PlantThe Ulsan manufacturing plant, consisting of fiveindependent manufacturing facilities and covering1,215 acres of land, has an annual manufacturingcapacity of 1.53 million vehicles. Approximately 34thousand employees work here. This plant has itsown exclusive pier, which can accommodate threeships of 42 thousand tons each. It is one of thebiggest auto manufacturing plants in the world andplays a core role in the Korean automobile industry.

Asan PlantThe Asan manufacturing plant, focused onmanufacturing passenger cars for export, consists ofa stamping shop, a highly automated body line,paint shop and final trim and assembly line as wellas a foundry and an engine manufacturing facility.It stands on a 445 acre site and has an annualmanufacturing capacity of 290 thousand vehicles.This plant was built with the philosophy of creatingthe safest and most eco-friendly work environmentpossible. We have paid careful attention toenvironmental protection at this plant. We have also

designed a wide variety of facilities for the comfortand convenience of our employees, as we believe increating an optimal working environment for them,as they create excellence for our customers.

Jeonju PlantOur Jeonju manufacturing plant, situated on 243acres in the Korean heartland, specializes inmanufacturing buses, 2.5-ton and heavier trucksand special purpose vehicles. This plant has anannual manufacturing capacity of 60 thousandvehicles, and is one of the biggest commercialvehicle manufacturing plants in the world. This plantstrives to develop new eco-friendly products. The plant has various cutting-edge equipmentrequired to independently develop about 100different models of commercial vehicles.

Global Management

Management Environmentally Friendly Product Cleaner Production Communication with Stakeholders

Provided the Centennial for Turkish Protocol Service HMC provided a Centennial for diplomatic purposes to theTurkish government in June 2004.

Delivered Patrol Cars to Istanbul City PoliceDepartmentAcclaimed for its brand value in the Turkish market, HAOSdelivered an order of 100 Accents patrol cars to theIstanbul City Police Department in 2004

Plant ProfileHyundai Assan Otomotive SanayiAddress : Sehit Mehmet Fatih Ongul Sk.

No: 2, 34742 Kozyatagi, Istanbul, Turkey

Total plant site area of 1,000,000㎡Production capacity: 60,000 (units/year)Vehicles produced: Accent, H-1, H100

Assan plant, HAOS

Provided the Centennial for Turkish protocol service Accent supplied to Turkish Istanbul police office

In September 1995, HMC established HAOS inIzmit, Turkey as a joint venture with the KIBARgroup. Located 2 hours from Istanbul and within a20 km radius of other major automobilemanufacturing plants, the area was specificallytargeted and selected for its close proximity totrading infrastructure and to enhance the overallsynergistic effects. With a total size of 991,740m2

including the largest proving ground in Turkey,HAOS has an annual production capacity of 60thousand units. In addition, Korean suppliers inIzmit along with Turkish suppliers are workingtoward product enhancement and innovationdevelopments.

Through the implementation of various strategies tofurther production and sales initiatives in 2002,HAOS has now achieved economiccompetitiveness. Unlike other Complete KnockDown plants (CKD), HAOS is independent andencompasses its own engine production capability.In addition, HAOS has improved logistics systems toreduce environmental impacts.

HAOS initiated the Q-car 2004 campaign withemployees in an effort to manufacture world-classquality vehicles. To improve vehicle qualitystandards, HAOS has implemented state of the artequipment, technology, and facilities used in HMCKorea. Furthermore, all vehicles are fully tested viaits proving ground before delivery. HAOS implements a quality control reporting systemfor all models and a double-check system to ensurequality assurance in all of its processes. To improveemployee morale and productivity, HAOS selects‘Employees of the Month’ and ‘Employees of theYear’.

Hyundai Assan Otomotiv Sanayi Ve Ticaret A.S, HAOS

Prime Minister of Turkey to Ulsan Plant On February 2004, Turkish Prime Minister Recep TayyipErdogan met with Chairman and CEO Mong-koo Chungat the Ulsan plant to develop the Korean Turkishautomobile relationship. The purpose of the visit was toreinforce Korean Turkish relations and to discuss ways forHAOS to improve competitiveness in the local market.

Turkey


Visit of the Prime Minister of Turkey to Ulsan Plant

Global Management


Getz, India’s Best Car for 2005 HMI’s Getz was selected as CNBC’s Best Car in India for2005, and was also chosen by Business Standard as theBest Car for 2005 in December 2004.

Elantra, The Best Value for Money CarThe Elantra was chosen in India as The Best Value forMoney Car in 2005 by CNBC.

Ensuring Best QualityIn February 2005, Chairman and CEO Mong-koo Chungvisited affiliated automobile suppliers located in the Indianmarket. The Chairman inspected for quality assurance,and encouraged for continual improvements in productinnovation and quality.

Chairman and CEO Mong-koo Chung assuring product quality in the field

India is a central part of the BRICs (Brazil, Russia,India and China), developing countries that will playa key role as the key global economic centers of thefuture. Specifically, HMI has been targeted as oneof the key bases of HMC’s globalization efforts in theIndian, South West Asian and Central and SouthAmerican markets.

HMI is located in Chennai, one of four majorindustrial centers in India. The positioning of HMI ininfrastructure laden Chennai along with its closeproximity to supplier bases have allowed for HMC’ssmooth transition into the Indian automotive market.In addition, Chennai’s geographical positioning as aport city along with international airport facilitiesallow for cost efficiency and environmentally friendlylogistics.

In the 3 years since its inception in September 1998,HMI has become the 2nd top selling company in India.In 1998, a local joint venture automotive companyheld an 80% market share of the compact class.On the back of aggressive marketing strategies,HMI’s Santro overtook the local automotive companyas the top seller in the compact category in 2001and continues to maintain this status through 2005.During the 5 year period from its inception toDecember 2003, HMI has sold over 500 thousandvehicles and continues to garner accolades for itremarkable progress in the Indian market.

Hyundai Motor India, HMI

Chennai Plant, HMI

Plant ProfileHyundai Motor IndiaAddress : A-30, Mohan Co-Operative Industrial Area,

Phase-1 Mathura Road, New Delhi 110-044, IndiaTotal plant site area of 2,148,000㎡Production capacity : 250,000 (units/year)Vehicles produced : Santro, Elantra, Sonata


India Even as a foreign invested company, HMI isstrengthening its image as a local automotivemanufacturer. Over 70% of the parts used in HMIvehicles are supplied by Indian auto-partscompanies. Where as other foreign automobilecompanies continue to supply the Indian marketwith old out-dated models, HMI’s line-up includesnew and existing models that are currently beingsold in the Korean market. HMI operates HyundaiMotor Plaza as a sales and A/S dealer center.HMI’s success in India is a direct result of HyundaiMotor Plaza’s extensive education and serviceefforts, its analysis of consumer preferences and itsongoing commitment to marketing strategies.

Global Management


Improving Inter Korea·China Relations Mr. Jia Qinglin, the chairman of the National Committeeof the Chinese People’s Political Consultative Conference(CPPCC), visited HMC’s Ulsan plant in August 2004 todiscuss the future of China’s automobile industry withChairman and CEO Mong-koo Chung. Mr. Jia Qinglincommended HMC for its progress and described HMC’seconomic role in Korea as being vital. He used the term‘Hyundai miracle’ to describe the importance of HMC tothe Korean economy and hoped that HMC’s successwould translate into further development and success inthe Chinese automotive industry. The success of HMC’sjoint venture in BHMC has resulted not only in economicdevelopment but in improved inter Korea·Chinarelations.

Civilian Diplomatic Cooperation in Shanghai, ChinaChairman and CEO Mong-koo Chung is leading the wayin developing business opportunities in Shanghai forHMC and other Korean companies. Shanghai historicallyimportant to the Korean people as it was the location ofour exiled Korean Government and symbolized our drivetowards independence during the Japanese occupationof Korea from 1910-1945. Shanghai has been preparingto undergo redevelopment initiatives in areas where theexiled Korean Government was located. To protect thearea of concern, Chairman Chung has lobbied to secureredevelopment contracts for Korean companies. In addition, lobbying efforts are viewed as a tool to utilizeintensive human networks within overseas andinternational business operations.

Mr. Jia Qinglin, the chairman of the CPPCC, visited in Ulsan plant Chairman and CEO Mong-koo Chung, meeting with Zheng Han, mayor ofShanghai city

The small park inside the plant used as leisure area for employees


China

BHMC began operations in December 2002 with theproduction of the new EF Sonata. With the opening,BHMC has begun to receive recognition throughoutthe globe. The new EF Sonata became an instanthit in the Chinese market as consumers have takennotice of HMC’s improved quality, performance andsleek design. BHMC has shown such remarkableprogress in a short period of time that its successhas been dubbed as ‘Hyundai Speed.’

BHMC sold over 50 thousand of the new EF Sonatain its first year of production, garnering a 10%market share of the entry mid-size class in China.In a mere 6 months, the Elantra, modified to meet thedemands of local consumers became an instantsuccess as well, ranking number one in total sales inits class. As the top foreign automobile manufacturerin terms of sales in the Chinese market, HMC ispushing forward to sustain its lofty status.

Plant ProfileBeijing Hyundai Motor CompanyAddress : Room 601,Millennium Tower No.38

Xiaoyun Road,Chaoyang District, Beijing ChinaTotal plant site area of 670,000㎡Production capacity : 150,000 (units/year)Vehicles produced : Sonata, Elantra, Tucson

Beijing Hyundai Motor Company, BHMC

Beijing Plant, BHMC

Assembly line in Beijing Plant

Global Management


Q: How do Chinese people perceive Hyundai Motor Company?A: A Korean trend have been heating the Chinese mainland. If you turn on the TV at night today, you can catch

up to seven channels playing Korean drama programs out of the forty channels. The most important effect that

the Korean trend has given is people’s new understanding about “the People’s Republic of Korea”.

It’s true that the Korean trend has given influence to the marketing of HMC, however minute overseas marketingstrategies might have born the fruits. Since entering the Chinese mainland with the release of the new EF Sonatain Dec., 2002, BHMC which is a joint venture of HMC and a Chinese party has settled down as a professionalautomobile enterprise and has achieved top monthly sale ranking for all models in just two years time. Just as in the domestic market, the results derived from efforts to enhance brand image has made quality andlocal production prominent. Chinese people wish that the growth of HMC and the Korean economy might havegood effects on the Chinese economy. In August 2004 chairman Qinglin Jia who is forth in line in the communistparty visited the Ulsan plant of HMC and met with Chairman and CEO Mong-koo Chung as this elaborates thewish of the Chinese people.

Q: What is BHMC doing for social engagement?A: China is growing very fast with the big events such as gaining membership into WTO, the 2008 Olympic

Games to be held in Beijing, the World Exhibition in 2010 and so on. Now it has become impossible to talk

about the world economy without China. China occupies 1/15 of total global land area, which is third largest in

the world and a 1.3 billion population as well as complicated and various languages and cultures. To meet the

various demands of such a great number of Chinese people, BHMC is promoting various contributory activities

to society.

When SARS(Severe Acute Respiratory Syndrome) broke out in April, 2003, BHMC donated vehicles to BeijingSARS Eradication Measures Headquarters, performed thorough sanitary control inside the plant, and sentemployees from the head office to cope with the situation rapidly. These efforts have helped allow us to bedesignated the best company in SARS prevention by China government. In addition, we have also promotedother various social contribution activities such as supporting the Guo An football team, which is a well knownprofessional football team in Beijing. Through activities, we have cultivated friendly relations with the Chinesepeople and further enhanced our corporate image.

Q: How do you communicate with employees of your company?A: We offer information on overall business activities regularly to all employees, cultivate talented employees,

and give equal opportunities to realize flexible and active communication. We also make efforts to provide good

working conditions for employees’ health and safety. When the New Year arrives, we invite family members of

our employees to enjoy special events to foster their sense of community and further promote relations among

their families. Such activities for promoting communications are performed not only among employees of BHMC

but also with Hyundai Motor dealers.

Interview Jae-man Noh Senior Executive Vice President, BHMC

1. Public service for the underprivileged2. Employee blood donation campaign3. Computer donation to a grade school in Shunyi district 4. Vehicle engines donation to Tsinghua Univ 5. 2005 Beijing New Year’s concert, sponsored by BHMC6. Employees New year’s party7. SARS sanitation activity8. Signing ceremony of supporting with vehicles for 2008

Olympic Organization Committee 9. Offering testimonial for the contributors in SARS control


5

6 7

8 9

1 4

2 3

Global Management


Ceremony for completion of HMMA Sonata, recognized for quality in U.S.

Social Contribution of Hyundai Motor America

ABC’s of Car Traffic Safety EducationSince automotive related accidents are the #1 cause ofdeath and injury for young Hispanic under the age of 34,The ABC’s of Car Traffic Safety is a Hispanic targetedfamily education program. The program not onlyencompasses car safety, it also involves pedestrian safetyand bicycle safety issues. HMA’s objective with thisprogram is to become an automotive company that isactively involved with major concerns in the HispanicCommunity and to provide education at an early age toprevent the number of deaths and injuries fromescalating. This program was launched with the LosAngeles School District, the Los Angeles PoliceDepartment and the Los Angeles Sheriff’s Department.The booklet created by HMA and the National Assn ofHighway Traffic Safety Administration is written in bothEnglish and Spanish and is one of the cornerstones of theprogram.

High School Poster Contest and Peer PSA Contest HMA wants to emphasize the importance of not drinkingand driving, with high school students being the primarytarget. The poster contest was launched this spring withthe Miami Dade Police Department. The high schools inMiami-Dade County participated and three award winningposters were selected, reproduced, and distributed to thehigh schools. Prizes were awarded to the studentwinners at a special ceremony. The program is to beexpanded to the Dallas-Fort Worth area in 2006. This program is a supplement to the ABC’s of Car TrafficSafety and will be administered by Hyundai’s HispanicPublic Relations Agency, Machado/Garcia-Serra PublicRelations.

Power of the Purse ProgramThe program is designed to improve public perception ofthe HMC brand and HMC dealers. By providing non-biased factual information on everything involved with thecar buying process, HMC has distinguished itself asbeing one of the first companies that targeted the femalemarket specifically with an educational tool that wouldenable them to make a more informed purchase.

Hyundai Motor America

Plant ProfileHyundai Motor Manufacturing AlabamaAddress : 7515 Halcyon Summit Dr. Montgomery

Alabama 36117, U.S.A.Total plant site area of 6,900,000㎡Production capacity : 300,000 (units/year)Vehicles produced : Sonata

Hyundai Motor Manufacturing Alabama, HMMA

U.S.A

Alabama Plant, HMMA


Chairman and CEO, Mong-koo Chung visiting theAlabama plant for examining quality

Assembly line in Alabama plant

With the unveiling of Hyundai Motor ManufacturingAlabama, HMMA, HMC became the first Koreanautomobile company to open a manufacturing plant inthe U.S. Featuring 100% made in the USA, productioncapability is set at 300 thousand vehicles annually. From engine production to the painting process,HMMA encompasses the whole production processfrom top to bottom.

With American production having begun in 2005, 35quality assurance specialists from the headquarterswere sent to HMMA and developed a system tomaintain quality management standards. HMMA hasdeveloped rigorous testing and monitoring standardsto achieve high quality vehicles. HMC has beenworking in close relation with Montgomery City and theAlabama State Government. Prior to the completion ofHMMA, production line employees had received basictraining sponsored by the government for a period ofsix weeks, and 330 managerial level employeesreceived extensive training from HMC’s headquartersand the manufacturing plant in Korea. Furthermore,the opening of HMMA is expected to create 2,500 jobsdirectly, and is also expected to have a multiplier effectof an additional 4,000 jobs. Through job creation,HMMA is expected to revive the local economy.

The international media is closely watching thedevelopments of the first made in USA automobile, theSonata. BusinessWeek magazine published a specialfeature story on the Sonata in its September 2004edition and the Sonata received accolades in theOctober 4th version of the Wall Street Journal. The journal stated, “Through the production of the firstfully made in the U.S., the Sonata, it has providedHMC with the opportunity to take one step closer tobecoming a major player in the global automotivemarket.” Additionally, the Sonata was selected as the“Most Reliable Car” in Consumers Report, earning highranking in quality, performance and safety.

HMMA is set to play an important role in HMC’sglobalization efforts. Including the California Design &

Tech. Center, Hyundai·Kia America Technical Center,and the Mojave Proving Ground, HMC has establisheda complete localized network from vehicle design tothe final test stage.

GlobalManagement


Hyundai-Kia America Technical Center Inc.To be opened in late 2005, this newly expandedfacility in Detroit, Michigan will play a bigger role aswe scale up our efforts to design and developvehicles within the United States and it reflects theseriousness of our ongoing commitment to theUnited States market. This will serve as our coreresearch and development facility in the UnitedStates and will coordinate closely with our Design &Technical Center and California Proving Ground.

Hyundai-Kia Motors California Design &Technical CenterLocated in Irvine, California, Hyundai-Kia MotorsCalifornia Design & Technical Center is a cuttingedge facility which is attracting, new design talent. Its principal role is to research new concepts anddevelop vehicle designs that meet the unique tastesand needs of North American customers.

California Proving GroundIn March 2005, we cut the ribbon on our state-of-the-art proving ground in California, which at 4,300acres in the Mojave Desert, is nothing short ofspectacular. This site, together with our newmanufacturing plant in Alabama, means that HMC iscapable of undertaking every step of development,from design to testing and vehicle production, onNorth American soil.


Hyundai Motor Europe Technical CenterLocated in Russelsheim, Germany, this is a state-of-the-art multifunctional compound designed todevelop high quality vehicles catering to the tastesand preferences of our European customers. This center was especially designed to meetenvironmental standards in Europe, and to createvehicles that meet these same standards. The center works in conjunction with our Europeansubsidiary, managing product planning, marketing,and sales.

Global R&D Network

Hyundai-Kia Corporate R&D DivisionHyundai-Kia Corporate R&D Division in Namyang isthe backbone of the company. Equipped withcutting-edge facilities, Hyundai-Kia Corporate R&DDivision encompasses the whole design processfrom pre-design studies, prototyping and full-scaleaerodynamic testing to crash testing and final testdriving. The division serves as the hub of our globalR&D network and consolidates our research effortsaround the world. One of our newest facilities, theMabook Environmental Technology R&D Center, willopen in September 2005. This center will ensurethat all new cars are equipped with the latest inenvironmentally compatible technologies.Development work is underway on an environmentalassessment system that will survey the entireproduct life cycle from design, to manufacturing,use, and end-of-life vehicle disposal.

Hyundai Motor Japan R&D CenterLocated in Chiba, on the outskirts of Tokyo, thisimpressive facility focuses on developing cutting-edge technologies in challenging new fields.Operations at the center are enhanced by theirproximity to the Hyundai-Kia Corporate R&D Divisionin Korea.

GlobalManagement


Global Quality Control OfficeHMC operates a Global Quality Control Office forover 200 countries worldwide to verify quality controlissues on a real-time basis. The office operates 24hours a day, 365 days a year and is responsible forcollecting and analyzing maintenance and qualitycontrol data. In March 2004, HMC developed aglobal network to share quality control informationas a means of improving the rate and accuracy ofinformation that is exchanged. The role of the officeis to collect and organize product quality data fromall HMC subsidiaries and affiliates. When anoverseas maintenance center reports a qualitycontrol issue to the office, the office collects data toresolve the quality issue, and then distributes theinformation to the related quality control departmentsin HMC headquarters for appropriate correctivemeasures and further recommendations. All processes headed by the Global Quality ControlOffice may be monitored for verification purposes,and all information can be translated and sent out tothe overseas maintenance center.

Quality Control Training ProgramsHMC offers specialized training and educationsessions to raise employee awareness regardingproduct quality control. In September 2004, about3,500 HMC employees received specialized trainingon various topics ranging from product qualityperformance review to countermeasure in analyzingand improving product quality. Additionally, HMCprovides training for managerial level employees ofits suppliers. Suppliers are informed about HMC’s

quality management policy, of its short and long-term direction, and of its overall objectives.Furthermore, suppliers receive training and arepresented with successful case studies that have setthe precedent. In 2003, HMC established anoverseas educational program for employees whoexcelled in their field. As a result, 7 employees wereselected and sent to Australia for education.


Quality ManagementHMC began to renew efforts on quality management initiatives from 1999. In 2002, HMC and Kia Motors’product quality divisions were merged to stimulate synergistic effects. For management of overseas qualitystandards, HMC developed a North American product quality division and an international product qualitydepartment in charge of all international affairs to further product enhancement efforts in 2003. In line with theChairman’s commitment to quality, HMC has chosen quality management as its key initiative. Chairman andCEO Mong-koo Chung has committed to ensure that every stage of production is systematically controlled andvalidated. Chairman Chung participates in and chairs major quality assurance meetings and emphasizes qualitymanagement initiatives.

Pilot Production CenterHMC operates the pilot production center to improvequality standards, to reduce product defects, and toensure the non-recurrence of malfunctions in newmodels. The technical aspects of all newly developedvehicles are tested and verified at the center. The center also provides training for productionworkers on technical standards. Models are taken tothe factory for mass production and assembly onlyafter all stages have been conducted and passed.

Quality Approval SystemHMC maintains a quality approval system at eachstage from planning to sales. It is only after a vehiclepasses quality control standards that it can proceedon to the next level. Before a new vehicle officiallyhits the market, HMC calls a meeting for final vehicleinspection. HMC implements a stringent cross-checking inspection system throughout all levels ofthe company. HMC runs various quality controlmeetings such as top management quality controlmeetings chaired by the CEO and weekly andmonthly quality control meetings held at productionfacilities.

Supplier Quality Rating SystemHMC has established a supplier product qualityrating system to help improve overall qualitystandards. Although the finished product is used todetermine the overall level of quality, HMC realizesthat suppliers play a key role in the final grading of avehicles’ total quality. HMC has implemented a 5Star Quality Rating System to better determine a

supplier’s quality and technological advancements.For second tier suppliers, HMC has introduced aSupplier Quality Marking System (SQ) to ensureproduct enhancement and development. Suppliers on all levels are cooperating with HMC’squality enhancement efforts. Through theimplementation of quality rating systems, HMC isaiming to improve the working relationships of the150 domestic suppliers and to enhance supplierquality standards to world-class levels by 2010. In addition, HMC is working in cooperation with thesupplier association to improve and maintainworking relationships.

Six-Sigma InitiativeIn 1999, HMC adopted Six-Sigma initiative, ascientific product quality innovation system toenhance product quality management. From 1999,HMC engaged in the training of Six-Sigma expertsand the project was initiated in full force startingfrom 2000. 360 projects were cited in 2000, and byDecember 2004 the number of cases totaled 5,092.The number of Six-Sigma experts (black belt andgreen belt) totaled 3,618 in all fields ranging fromproduction to research and development. In 2002,HMC adopted the Design for Six Sigma System(DFSS), a system used to verify the design quality.From 2004, HMC has promoted for moreconsistency between company objectives andquality control issues by connecting the Six Sigmainitiative. Additionally, HMC has called for moreeducation and has established an online educationalsystem specifically designed for green belts.


Special session for quality control training

Hyundai Motor Company as a Leader in the KoreanAutomobile IndustryThe Korean automobile industry first began production about30 years ago. Since then, the Korean automobile industryhas become the 5th largest automobile producing country inthe world. In 2004, the Korean automobile industryproduced 3.4 million vehicles and exported about 2.4 millionvehicles worldwide. As the largest automobile company inKorea, HMC plays a key role in the Korean automobileindustry and in the domestic economy.

Established in 1967, HMC has made remarkable progress in a short period. Through the development of the firstindependently made Korean automobile and enginetechnology, HMC is the engine that propels the Koreanautomobile industry. In 2004, HMC produced 1.67 millionautomobiles in domestic manufacturing plants, 48% of allKorean domestic automobile production, and produced 420thousand units of vehicle at the overseas manufacturingplants. Additionally, 1.12 million automobiles were exportedworldwide, 47% of all Korean automobile exports. This accounted for about 15.5 billion USD which accounts

for about 49% of the total automobile exports of Korea, sum31.8 billion USD. Especially, accumulated quantity of vehiclesexported was recorded 10 million units by July, 2004 in thehistory of automobile industry in Korea.

According to the Korean Automotive Research Institute, theautomobile industry has a huge economic influence on theoverall domestic economy, especially with respect toemployment levels. In 2001, the Korean automobile industrynumbered 210 thousand employees, outranking Korea’slargest, the semi-conductor industry by 40 thousandemployees. Combining the figures for all related automotivesectors (suppliers, dealers, maintenance centers etc.), theautomobile industry accounted for 1.53 million employees or10% of the total domestic workforce. Currently, HMCemploys about 53 thousand workers in Korea. 200 thousandworkers were employed in some 400 first tier suppliers andabout 500 thousand more in second and third tier suppliercompanies.

■ 2004 Number of VehiclesProduced in Korea

■ 2004 Number of Vehicles Exported ■ 2004 Number of VehiclesProduced


Brand ManagementIn January 2005, HMC introduced a new corporate direction for brand management, and a resulting globalbrand slogan to alter company perception, and to enhance brand value and global competitiveness. ‘Refined and Confident’ and ‘Drive Your WayTM’ were selected as the company’s corporate direction for brandmanagement and slogan respectively. The new brand slogan ‘Drive Your WayTM’ensures customer satisfactionin all facets of life. Based on the brand management strategy, HMC strives to provide consumers with valueand comfort.

In 2005, Chairman and CEO Mong-koo Chungannounced a new corporate vision, ‘Innovation forHumanity.’ Through brand management, the aim of‘Innovation for Humanity’ is to stir economic growth,to refine brand competitiveness, and to improve totalproduct quality. Ultimately, HMC’s mission is to turnour corporate vision into reality.

Based on the new brand management strategy, HMCcontinues to engage in action plans to improve allaspects of production from the initial design stages toafter-service. In addition, HMC plans to aggressivelyimplement its new brand management strategy withindomestic and overseas markets. HMC long-termgoal is to become a top 5 global automotivecompany and one of the top 30 brands worldwide.

As part of its brand strategy implementation, HMChas developed a Brand Committee, which includes aworking level sub-committee. The committeeregulates operations for brand consistency, andenhances the brand management system.

For those rational customers who lead a balancedlife, we offer stylish and refined cars that are easy todrive with the best quality and safety in the industry.Furthermore, we shall always be thoughtful of ourcustomers and inspire them through top-classservices. Ultimately, it is our mission to make eachone of our customer’s life more Refined & Confident.

The slogan means that HMC always gives top priorityto customers’s satisfaction and does the best tomake the life of customers refined and confident.

Brand Slogan

Brand Statement


County Aero Town Aero Queen

Mighty II 5 Ton Cargo Tractor Dump Truck

Terracan Starex (H-1) Porter (H-100 Truck) Libero (H-1 Truck)

Santa Fe Tucson Trajet XG (Trajet )

Tuscani (Hyundai Coupe) Lavita (Matrix) Verna (Accent) Click (Getz)

Equus (Centennial) Grandeur (Azera) Sonata Avante XD (Elantra)

Full Line-up

HEV Road Test Demonstration ProjectHMC sponsored Korea’s first official HEV Pilot Project byproviding 50 Getz HEVs to the Korean Ministry ofEnvironment in October 2004. The project, which hasbeen undertaken by the Ministry, is to last for 3 years,and calls for the testing of HEVs along public roads inthe Seoul metropolitan areas.

The Getz HEV drive system combines a 1.5L gasolinepowered engine and a 12kW electric motor along withthe Continuously Variable Transmission (CVT) system.The electric motor is used to increase the performanceof the engine, stop and restart the engine when thevehicle is at rest, and drive the vehicle at low speeds. In addition, the HEV provides less damage to the powertrain during acceleration. During deceleration, the HEVstores kinetic energy which is later re-used during theacceleration phase, thus reducing overall gasconsumption. The HEV allows HMC to achieve superiorfuel economy and low emissions without sacrificingperformance, helping to improve overall air quality ofmetropolitan area.

HMC delivered Getz HEVs to the Korean Ministry of EnvironmentHMC unveiled Getz HEV at the ceremony event of “The Next GovernmentDesignated Growth Engines”.

Getz Hybrid Electric Vehicle1

■ Specifications of Getz Hybrid Electric Vehicle

Type Parallel

Engine 1,400cc DOHC gasoline

Motor BLDC / 12kW

Battery Nickel-metal hybrid (144V)

Transmission CVT (Continuously Variable Transmission)

Max. speed 161km/h

Emission ULEV (Ultra Low Emission Vehicle)


■ Korea and Overseas Emissions and Fuel Economy Regulations

■ EU ELV Directive

Environmentally Friendly ProductHMC has begun to place greater emphasis on the R&D of new environmentally compatible technologies in support of itsenvironmental protection initiatives. Focus has been placed on technologies to reduce exhausted emissions from vehicle,and to enhance the recycling efficiency of end of life vehicles. In order to achieve those objectives, HMC has continuedto focus on the development of low emission and zero emission technologies, such as hybrid electric power-train andfuel-cell technologies. Furthermore, HMC has been researching on the development of eco-friendly materials to eliminatethe potential release of hazardous substances from vehicles. In addition, HMC has increased efforts to use easilyrecyclable materials in the design and has centered itself on reducing pollutants emitted during the end of life vehicledisposal stage.

Environmentally Friendly VehiclesHybrid Electric Vehicle (HEV)HEV vehicles combine the conventional power-trainalong with the electric motor and the batterysystem. As a result, the HEV offers improvedenergy efficiency and an overall reduction inemissions. In comparison to conventionalpetroleum powered vehicles, the HEV provides agreater than 50% improvement in fuel economy anda 15% and greater reduction in total emissions.HMC officially unveiled the HEV in 2004 and plans toincrease production of HEV beginning from 2005.From the 2nd half of 2005, HMC is to commence thesmall scale production of the Verna HEV, included inwhich will be superior fuel economy improvementsachieved earlier. HMC also plans for thedevelopment and full scale production of the SonataHEV by the latter half of 2007. To play a leadingrole in the global HEV market, HMC plans tocommence full production of selected futuristic HEVmodels by the year 2010.

Hydrogen Fleet & Infrastructure Demonstration andValidation ProjectHMC has been selected by the U.S. Department ofEnergy to take part in the Hydrogen Fleet & InfrastructureDemonstration and Validation Project. From 2004 until2009, the project allows HMC to test drive FCEV on U.S.roads for a period of 5 years. HMC is the first Koreancompany to be selected as a partner of U.S. governmentsponsored project. The project presents opportunities forHMC to further develop cutting edge FCEV technologyand to establish the global standard. As an active partner, HMC stands at the forefront in thedevelopment of FCEV technologies as well as relatedstandards and regulations pertaining to FCEV. Other partners taking part in the project include GM,DaimlerChrysler, Ford, Toyota, Nissan, Honda etc. Set to end in 2009, the U.S. government has set abudget of approximately $380 million USD over theduration of the project. By participating in the HydrogenFleet & Infrastructure Demonstration and ValidationProject, HMC aims to stabilize technological levels and tobuild infrastructure in major cities throughout the U.S.HMC is working in partnership with Chevron Texaco andUTC Fuel Cells to ensure the completion of theseobjectives. HMC plans to use the Tucson FCEV model for testingduring the 5 year term of this project.

Hydrogen Fueling Station in CaliforniaAs part of the Hydrogen Fleet & InfrastructureDemonstration and Validation Project, HMC completedthe construction of its first hydrogen fueling stationlocated at the Hyundai-Kia America Technical Center inChino, California. A state of the art facility, the fuelingstation produces 15kg of natural gas per day. Daily fueling capacity is 30 vehicles and fueling takesroughly 2 minutes to complete. Working in cooperationwith Chevron Texaco, HMC has made plans to buildmore hydrogen fueling stations in California and otherstates.

Hydrogen fueling station in California


Fuel Cell Electric Vehicle (FCEV)The Fuel Cell Electric Vehicle (FCEV) uses hydrogen,methanol, or natural gas as its main fuel source inreaction with oxygen, resulting in the outflow ofelectricity. Presently, the Proton ExchangeMembrane Fuel Cell System is widely used in FCEVand efficiency levels stand at 55-60%. FCEV offersa quiet ride and is environmentally friendly like itspredecessor, the Electric Vehicle (EV). However,unlike the EV, the FCEV offers improved fueleconomy to the HEV. The FCEV includesenhancements in re-fuelling ease, increased powerand better overall performance. Using hydrogen asa fuel source, the only emission from FCEVs is H2O.Even when liquefied fuel sources are used, exhaust

emissions are minimal withthe exception of CO2

emissions.

In replacement of the 1st

generation Sante FeFCEV, HMC introducedthe 2nd generation TucsonFCEV in December 2004.The Tucson FCEVoutperforms its

predecessor, the Sante Fe FCEV in performance,reliability, durability, and safety. The Tucson FCEVoffers new technological advancements unseenbefore. Having been started in conditions reaching

-20℃, one of the Tucson FCEV’s main features isthe ability to start in frigid weather conditions.Powered by an 80kW engine, the top speed of theTucson FCEV is 150km/h. Reaching 0 to 100km in15 seconds and needing only a single charge todrive a maximum distance of 300km, the 2nd

generation Tucson FCEV is superior in every respectto its predecessor.

HMC has received recognition for its technologicaladvancements in the FCEV. Since 2001, HMC hascompeted in the Michelin Challenge Bibendum, anenvironmentally friendly vehicle racing competition.In 2001, the Sante Fe FCEV was awarded 2 gold

and 1 silver medals, and 3 gold and 1 silver medalsin the 2003 race. In 2002 and 2003, the Sante FeFCEV competed in and completed the CaliforniaFuel Cell Partnership Road Rally. In 2004, HMC wasselected as s partner in the Hydrogen Fleet &Infrastructure Demonstration Project. The programenables HMC to test-drive the Tucson FCEV andconstruct hydrogen re-fuelling stations in major U.S.cities for the next 5 years. HMC is planningproduction technology improvements in FCEV fuelefficiency, long distance drivability, and lowtemperature startups to begin low-scale productionof FCEVs by 2010.

Tucson FCEV

Hydrogen Fueling Pump

Hydrogen fueling station in Hyundai-Kia Corporate R&D Division

Environmentally Friendly PublicTransportation Natural gas is the preferred source for full sized andlarger engines due to its low emissions of CO2 andhigh power output. HMC has been developingcompressed natural gas (CNG) vehicle technologysince 1995 to improve the air quality of themetropolitan area and to diversify the use of fuelsources pertaining to the government policy. From 2003, HMC has produced and sold Global900 CNG buses for commercial use. In 2004, HMCdeveloped the first domestic environmentally friendlynatural gas accordion bus, and plans to market thebus in the near future. HMC’s accordion busesoffer more comfort than conventional models, and isfocused more on safety. New features in the formof a sturdier body frame, a rear camera, discbrakes, ABS, and operational wheelchair fasteningequipment have been added.

Catalyzed Particulate FilterTo reduce particulate matter (PM) emissions, HMChas developed the Catalyzed Particulate Filter (CPF)used in diesel engine technology and has set plansfor production. HMC’s innovative CPF technologyreduces PM emissions from the diesel engine byover 90%.

Environmentally Friendly New DieselEngine Technology SymposiumDue to the increased interest in diesel poweredpassenger vehicles, HMC is building networks andworking in close association with related institutions.In October 2004, HMC co-hosted the 4th annualEnvironmentally Friendly New Diesel EngineTechnology Symposium with Bosch KoreaMechanics and Electronics at the Hyundai-Kia NextGeneration Vehicle Research Institute, Seoul NationalUniversity. Discussions were held with the 11related organizations that attended. Topics includeddiscussions on Euro-IV compliance and thedevelopment of new diesel engine technologies. In addition, HMC introduced new CPF, a new PMreduction technology for the diesel engine.

Environmentally Friendly Natural Gas Accordion Bus4th Environmentally Friendly New Diesel Engine Technology Symposiumhosted by HMC


Fuel Economy & Emissions HMC has developed environmentally friendly dieselengine vehicles that emit low levels of CO2, NOxand particulate matter (PM) offering high fuelefficiency. The Common Rail Direct Injection DieselEngine (CRDi), the Variable Geometry Turbo-charger(VGT), and the Exhaust Gas Reduction (EGR)enhance the environmental friendliness of HMC’sdiesel vehicles. Plans have been taken to introduceCatalyzed Particulate Filter (CPF) enhancements inpassenger vehicles in compliance with Euro-IV tocurb air emissions. In addition, research efforts forHomogeneous Charge Compression Ignition (HCCI)is being undertaken, advanced technologyresponsible for reducing NOx emissions.

Gasoline CAI EngineHMC is developing the Controlled Auto-IgnitionEngine (CAI), specifically designed to reduce NOxemissions produced from gasoline engines. The CAI engine reduces NOx emissions by over90% compared to existing conventional engines. In addition, fuel efficiency improves by 15% whenthe Gasoline Direct Injection System is applied tothe Gasoline CAI engine.

Plasma CoatingEngine efficiency can be improved when the valve-train and piston parts, which contributeapproximately 70% of all friction in engine, areplasma coated. HMC achieved a 4% improvementin engine efficiency through the application ofplasma coating tappets, piston rings, and pistonskirts. Encouraged by this success, HMC is takingplasma coating technology to the next level.Research on coating process optimization has beencompleted and is ready for application. Also, HMCsent a Korean delegation to the Korea-Germanyplasma coating research project to develop ways toreduce cost in plasma coating processes.

Diesel HCCI Engine One advantage of diesel-powered engines is higherfuel efficiency along with low emissions. However,internal combustion chamber related problems mayresult in excess NOx emissions. In response to thisproblem, HMC has been developing theHomogeneous Charge Compression Ignition (HCCI),technology that reduces the overall amount of NOxemissions.

■ Gasoline CAI Engine NOx Emissions

Ideal combustion at lowtemperature

■ HCCI Combustion

Aluminum Space Frame BodyStarting in November 1998, it took 4 years for HMCto develop an aluminum space frame body as part ofthe G7 Next Generation Vehicle Development Project.The result is improved rigidity, and a 40% lighter andhigher energy absorption rate during collisions thanconventional mono-coque frame bodies. Moreover, itis quicker to assemble because it requires a fewernumber of parts. It is therefore more economical andmore adoptive to model changes. It is especially advantageous in small-scaleproduction. HMC plans to apply the technology toUltra-high Fuel Efficient Vehicles (UFEV) such as 3-litre cars. In the case of the Getz HEV, theconventional hood, door and tailgate are planned tobe replaced with aluminum parts.


Design for Lean ProductCentennial Aluminum Trunk LidDesign for Lean Product (DfLP) plays a key role inour efforts to increase fuel efficiency. HMC has beendeveloping aluminum plating with high feasibility andpracticality. In November 2003, we started to mass-produce these items for use on our Centennialmodel reducing its weight by 6.6kg. It is Korea’sfirst case of applying aluminum plating in acommercial model.Aluminum plates are difficult to shape compared tosteel plates due to their anisotropic property, whichcreates limitations for traditional ways of plateforming. We developed new press technology anddesign specifications to solve the problem with theelongation of aluminum plates. In addition, HMCdeveloped a work manual to specify operationprocedures for minimizing quality problems.Aluminum hoods and trunk lids are often used inluxury vehicles. HMC plans to apply this pioneeringtechnique to other model lines.

Lighter Reinforced Body PlateIn December 1998, HMC initiated joint research withother companies to develop lighter reinforced bodyplates. It took 5 years for the joint research team tocomplete the project. As a result, HMC now holdstailored blank technology and partial reinforcementtechnology, capable of reducing the plate weight by10% and doubling the rigidity of body plates(590MPa). The partial reinforcement technology isexpected to increase the rigidity of the total body by25% and collision safety by 15%. HMC plans toreplace up to 80% of conventional body plate withthis lighter reinforced body plates by 2006.To overcome the increased amount of tearing,ripping and/or wrinkling during the manufacturingprocess because of higher rigidity levels wedeveloped new shape forming, painting and weldingtechnology as part of the project.

Steel Trunk Lid Aluminum Trunk Lid Body frame Made of Lighter Reinforced Body Plate

Aluminum Body (Forming)

Aluminum Body (Extrusion)

Aluminum Plating■ Aluminum Space Frame

■ Getz HEV applying Aluminum Space Frame

Management Environmentally Friendly Product Cleaner Production Communication with Stakeholders 47 Hyundai Motor Company / 2005 Sustainability Report46

The Climate Change Convention Task Force TeamCorresponding to the Kyoto Protocol on Climate Change, HMC officially began the Climate ChangeConvention Task Force Team in February 2005. The TFT outlines the development and production ofenvironmentally friendly vehicles, energy efficiency improvements in the production process and prescribespractices that adhere to the Kyoto mechanism. HMC’s Climate Change Convention TFT was created toprotect the natural environment and its role extends to initiatives to enhance the future economiccompetitiveness of HMC.

In compliance to the Kyoto Protocol, HMC is working in close association with the national government topromote emissions reductions and to ensure that the development of new forms of clean energy objectivesare met. As its initial step, HMC implemented the TFT in 2005 and has begun to analyze more aggressiveenergy reduction strategies. These efforts have been undertaken to implant the importance of understandingthe climate change issue within the general public. As its next step, HMC plans to work in partnership withthe national government, post secondary institutions and NGOs to apply cleaner production solutions to theentire value-chain of the automobile industry by 2006. Finally, HMC aims to establish a stringent climatechange management system, which includes the development of an environmentally friendly vehicle, and toactively participate in the emissions trading demonstration project by 2007. To prepare for Korea’s inclusionin the Kyoto Protocol, HMC is actively undertaking these voluntary emissions measures.

EU CO2 Emission Reduction Convention to Curb Global Warming

HMC actively participates in developed countries’efforts to curb CO2 emissions, the main contributorof global warming. In June 1999, KAMA (KoreaAutomobile Manufacturers Association) along withHMC made a commitment to the EU’s CO2 EmissionReduction from Passenger Cars. As outlined, HMCvoluntarily agreed to reduce passenger vehicleaverage CO2 emissions output to 165~170g/km by2004. By 2009, HMC plans to reduce passengervehicle average CO2 emissions levels to 140g/km.Compared to HMC’s passenger vehicles exports tothe European market, which averaged 197g/km in1995, KAMA’s reduction estimates call for a 14%and 29% decrease by 2004 and 2009.

In response to the EU, HMC introduced the Getz D-1.5 CRDi diesel powered subcompact. With average CO2 emissions of 116g/km, the dieselpowered Getz has been available in Europeanmarkets since 2003. To minimize CO2 emissions,HMC’s line-up of vehicles feature less enginefriction, low friction tires, an HSDI diesel poweredengine, CVVT, and MDPS (Motor Driven Power

Steering). In 2004, HMC’s vehicles in the Europeanmarket recorded average CO2 emissions of166g/km, meeting the 165~170g/km targetsprescribed by KAMA. KAMA posted average CO2

emissions of 168g/km, again achieving postedtargets. To meet the forecasted CO2 emissions of140g/km for 2009, HMC continues efforts todevelop low CO2 emissions emitting vehicles.

■ Trend of Average CO2 Emission from PassengerCars in the European Market

■ Outline of Voluntary Agreement on EUCO2 Emission Reduction

KAMA ACEA JAMA Remark

Intermediate 165~170 165~170 165~170target (2004) (2003) (2003)(year)

Passenger Final target 140 140 140 Cars(year) (2009) (2008) (2009) (9>)

Additional 120 120 120target (2012) (2012) (2012)

(year)

■ Corporate Average Fuel Economy of HMC

(Units : g/km)

Design for DisassemblyFor more efficient and environmentally friendly vehicledisposal, HMC has been developing varioustechnologies of Design for Disassembly (DfD) since1998. In 2001, HMC integrated DfD assessment andoptimal design techniques into the RAIS through the jointresearch with several Korean domestic universities.HMC has also been developing the integrated DfDsolution system coupled with a professional systemoffering optimal design solutions since 2004. The system can offer the alternative design solution ofimproving efficiency of disassembly.

Alternative Material Technology for Heavy Metals HMC has developed alternative material technology freeof heavy metal content and monitors the use of heavymetals in supplier made parts. In compliance with EUELV directives regarding the use of heavy metals, HMChas developed lead-free steel plates, paints, wirecoverings and brake lining including cadmium-freeadhesives. As a substitution, HMC has replaced the useof chrome (Ⅵ) plating with parts developed from chrome(Ⅲ). Working in cooperation with suppliers, HMCdeveloped the Korean website version of theInternational Material Data System (IMDS) in 2003 andhas commenced educational training sessions forsuppliers.

Material LabelingMaterial labeling plays an important role in HMC’srecycling efforts. All vehicle parts made of plastic andrubber over 50g are labeled accordingly to improve therecycling efficiency rate.

■ Design System for Recycling

Recyclability Assessment Information System in theDesigning Process (RAIS)RAIS is a recyclability evaluation program that waslaunched in 2002. The system allows designers to inputand evaluate material recyclability, parts recyclability,dismantling issues and total related costs. In addition, thesystem allows designers to compare the recyclability ofHMC automobiles to that of other non-HMC manufacturers.HMC has been developing a software enabling designers tocompute the rate of recycling and recovering of vehiclessold throughout the EU. The software will be officiallyimplemented in October 2005.

Environmentally Friendly Vehicle Design Guidelines In December 2004, HMC issued the EnvironmentallyFriendly Vehicle Design Guidelines for both HMC’s R&Dstaff and suppliers to communicate the company’sinitiatives regarding recycling.


RecyclingHMC has been working to improve theenvironmentally friendliness of its products. In compliance with the EU directive on end-of-lifevehicles, HMC has been developing and applyingvarious heavy metal-free parts, and has registeredon the International Material Data System (IMDS), amonitoring and managing system of harmfulchemicals. HMC has been implementing the LifeCycle Assessment (LCA) from the production designstage to the disposal stage to better assess the totalenvironmental ramifications of vehicles. In addition,HMC is developing recycling technologies to reducethe waste generation in the disassembly stage. To exceed a 95% weight-based recycling rate in thedisassembly process by 2015, HMC aims to developnew recycling systems and technologies, includingthe construction of facilities.

Life Cycle AssessmentHMC has been performing Total Car Life CycleAssessment (LCA) to determine the overallenvironmental impact of the automobile. The resultsof LCA are applied to HMC’s Design forEnvironment (DfE), a system encompassing theentire vehicle’s life cycle from development todisposal. For more extensive and efficient LCA,HMC plans to develop a joint system along with asystematic database program and LCAmethodologies.

■ Environmentally Friendly Design for Recycling

Vehicle RecyclingParts Recycling HMC is developing various waste parts recyclingtechnologies for use in the production of newvehicles. In line with its plastic and rubber recyclinginitiatives, HMC recycles vehicle carpets and seatingfoam, and reuses these parts in trunk trim and noisereducing padding parts. In addition, HMC plans toinitiate a recycling system for waste bumpersstarting from 2005. Waste bumpers from disposaland A/S centers are to be re-circulated through re-use, and remade into bumper covers and engineunder-covers sold in the aftermarket. The systemallows for the large-scale re-circulation of materialsfrom used bumpers and for the elimination ofdisposal wastes through recycling.

Catalysts Recycling Platinum Group Metals (PGM) are used as the maincatalyst to refine petroleum and to purify exhaustemissions. Due to rising global demand and therelatively high cost of PGM, recycling initiatives havebeen set as a major priority. In partnership withsuppliers, HMC established a joint venture that isthe first domestic environmentally friendly PGMrecycling company in September 2004. Working inassociation with suppliers, the establishment of therecycling company allows for HMC to achieve costsavings reductions and continued progress in thedomestic automobile industry.


ELV Disassembly Plant In November 2004, HMC completed the constructionof the ELV Disassembly Plant. The plant includesstate of the art disposal equipment and relatedtechnologies and has a maximum recycling capacityof 4,000 vehicles. Composed of 8 phases, the plantincludes a continuous flow disassembly system alongwith a system, which monitors recycling. Efficiencyenhancements and more accurate monitoring of thedisposal process have been achieved as a result ofthe establishment of the plant.

Dismantling ManualUsing the International Dismantling Information System(IDIS), HMC publishes and distributes dismantlingmanuals for all new models in EU dismantling serviceproviders. Dismantling information regarding new HMCmodels are updated twice per year. Domestically, HMCpublishes the electronic manual on its website and onDVD for dismantling service providers.

■ ELV Disassembly Plant Process Flow

■ Disassembly Process

1. Explosive parts treatment2. Fluid recovery3. Interior, exterior parts dismantling4. Engine, transmission dismantling

IDIS Website - in Korean, IDIS DVD

1

2

3

4


Cleaner ProductionCleaner production is a management tool to increase productivity and environmental friendliness by optimizing naturalresource use. It is also a measure to achieve cost reduction and environmental protection by preventing environmentaldamage from raw material extraction to the final disposal of the product. HMC has adopted Life Cycle Assessment (LCA)and Design for Environment (DfE) from the design stage of product development. HMC has also adopted cleanerproduction technologies in manufacturing to prevent and/or minimize impacts to the environment. HMC has beenimproving the recyclability and reusability of the product. Also, we have been searching for alternative resources toreplace restricted materials in the European Union End of Life Vehicles Directive.

EnergyHMC has been applying new energy savings initiativesand conducting performance evaluations regardingenergy savings on a regular basis. Technologies for LNGand other environmentally friendly energy sources arebeing developed and introduced in an effort to maximizethis initiative.

In 2004, the energy consumption from domestic andoverseas operations totaled 32.3 million GJ. This represents an 11.4% increase in total consumptionfrom the previous period as Beijing Hyundai MotorCompany (BHMC) was accounted for. Although totalenergy consumption has risen, consumption per sales(1,010 GJ/billion Korean Won) fell from the previousperiod.

Greenhouse GasIn 2004, 97% of HMC’s energy sources were a result ofLNG and electricity usage, sources which emit relativelylow levels of CO2. CO2 emissions increased by 11% to1.62 million tons and emissions per sales decreased to50.6 tons/billion Korean Won. The amount of CO2

emitted during the production of a single automobile was770kg, a drop of 23kg per vehicle from the previous year.

WaterIn 2004, total water consumption from domestic andoverseas operations totaled 14.5 million m3, an increaseof 20.6% from the previous year. Water consumption persales, however, decreased to 450 m3/billion Korean Won.The Asan manufacturing plant and HMI continue toimplement a zero discharge system to utilize and torecycle wastewater. In 2004, 1.18 million m3 ofwastewater was recycled, representing 8.2% of totalwater usage.

Wastewater Treatment Facility

■ 2004 EnergySources Categories

■ Energy Consumption ■ Greenhouse Gas Emissions ■ Water Sources

■ Cleaner Production

■ Zero-Discharging Wastewater Recycling System PlanZero-Discharging Wastewater Recycling SystemHMC Asan plant and HMI implemented the Zero-Discharging Wastewater Recycling System. The systemcan treat whole wastewater from production processes,employees’ residence, office, cafeterias.

Recycling Rust Preventive Oil HMC has introduced a new facility used in the recyclingof rust preventive oil, which is used to protect productionequipment. Through application, less waste and highercost savings have been achieved. Overall, 50% of theused rust preventive oil is now recycled and only two-thirds of the initial total amount of oil is presently used.

Waste HMC disposes of the wastes produced fromautomobile manufacturing processes in compliancewith related laws and regulations and the wastesproduced is in trends of continued reduction byexpansion of recycle application. Since 2004,computation of quantity of wastes produced hasbeen modified and waste metal which accounts forthe main portion of total wastes has been deleted.Metal can be recycled in full and used for otherindustries as raw materials and thus regarded aswaste materials and excluded from total the wastes.Therefore, it is shown that the quantity of generalwastes and recycle wastes which were included inmetal wastes previously is remarkably reduced and,total waste produced in 2004 totalled approximately.260 thousand tons. HMC has been continuouslyincreasing the recycle ratio by improving its wastemanagement system. In 2004, up to approximately78% of wastes except for the waste metal asmentioned above was recycled and remaining wasteof approximately 60 thousand tons was disposed byincineration, reclamation and discharged into the sea.

Improving Waste-oil Collection MethodA water-oil separating facility has been implemented todecrease the amount of waste-oil generated from millingthe process, and to improve the recyclability rate ofwaste-oil. Previously, the top portion of the waste-oilwas extracted from waste-milling oil tanks. With thismethod, the extracted and collected waste-oil containedlots of water, exactly water-soluble milling oil. It causeda distorted measure of waste-oil generated.

■ 2004 Waste Categories

■Waste Generated


Raw MaterialsHMC has been making efforts to continuously extendthe use of recycled materials and to enhance theefficiency of the utilization of resources. Especially,with respect to the use of important raw materials, ironand aluminum, the defect ratio percent defective isreduced by improving the press process and thequantity of waste materials produced during productionby complementing the design of die set. In addition,the lightweight automobile process is under progressby improving materials used for the body, engine andother parts and rationalizing some parts and aluminum,which is a kind of material used for realizing lightweight,and used for the engine which accounts for a largeportion of the total weight of automobile. In 2004,there also has been a great change in the computationof raw materials. Metal wastes are regarded as theconcept of waste materials to be excluded from thewastes and the quantity of scrap sold as wastematerials is also excluded from raw materials.Accordingly, it’s shown that the quantity of iron andaluminum used in 2004 was considerably reduced, 530thousand tons of iron and 48 thousand tons ofaluminum annually. To examine the trends of increaseof aluminum engine from 2004, a research on thequantity of iron used was conducted dividing thequantity of iron into that for press and engine, and theresults showed that the quantity of aluminum enginesproduced accounted for 22% (in weight). For quantityof paint used for coating, with continuous new coatingtechnologies as electrostatic coating-pure watercleaning recycle technology and robobell beingintroduced, efficiency of coating work was enhancedand paint consumption reduced.

Reduction of Metal ScrapTo reduce the amount of metal scrap in the blankingprocess, HMC has optimized the panel, profile and thetrim line of the metallic pattern. As a result of thismodification, overall scrap width has been reduced by40mm and, a reduction in total scrap waste as well ashigher cost savings has been achieved.

■ Raw Materials Usage

Cleaner Energy SourceHMC has been replacing B-B oil with LNG as an energysource. Emissions of CO2 and other pollutants havedecreased and, at the same time, an overall decrease inthe use of toxic chemicals, which are used for emissionscontrol facilities maintenance, has been achieved.

Replacement of the Outmoded Air Quality ControlFacility10 year old and older air quality control facilities havebeen replaced. Replaced facilities have shown a markedimprovement in dust collection and energy efficiency,and have led to a reduction in CO2 emissions includingother pollutants.

Application of the Refrigerant Coolant RecoverySystemHMC has adopted a new refrigerant coolant recoverysystem. The system allows for the extraction ofremaining refrigerant in the injection pipe and induces areduction in material usage as well as the amount of airpollution produced.

Air EmissionsHMC continues to implement strict internal emissionstandards at a stringent 10~30% of the domesticregulations. In 2004, total CO, NOx, SOx, and PMemissions totaled 1,262 tons, a reduction of 7.4%from the previous period.

■ Air Emissions (Domestic)


Volatile Organic Compounds (VOCs)HMC has been exerting efforts to reduce the use ofpaint and solvent in its painting process. For this, itis in the process of replacing outmoded VOCscontrol facilities and adopting new technologies toimprove overall VOCs removal efficiency. By widening the application of water soluble paint,HMC has decreased the use of solvent and hasincreased the recycling rate of used solvent. As aresult, VOCs emissions for 2004 dropped 25% to9,956 tons and the recycling rate of used solventincreased from 29% to 39% from the previous year.

Reducing Packing WasteHMC has engaged in a parts packing improvementinitiative to reduce suppliers’ over-packing and hasbegun to promote the use of recyclable forms of packing.

Water Soluble PaintingReplacing the use of the traditional solvent basedpainting system, HMC has implemented the water-soluble painting systems. As a result, a 50% reductionin VOCs emissions has been achieved. Additionally, aslower temperatures are now needed in the paint-dryingprocess, overall energy efficiency levels have beenreached.

VOCs Control FacilityIn order to effectively reduce the outflow of VOCs andother odor emissions, regenerative thermal VOCs controlfacilities have been installed. An emissions improvementof 100 tons per year is a direct effect of this introduction.Further upgrades with activated carbon to the facilitieshave led to improvements in efficiency of controllingVOCs emissions.

Robobell Type Painting The efficiency of the painting process has improved as aresult of replacing the Gun Type system with the TheRobobell type. The Robobell type is designed to paintalong the curvature of a car surface resulting in thereduction of paint over-use, the improvement of VOCsemissions and the decline in other raw material costs.

■ VOCs Emissions (Domestic)

VOCs Control Facility

Robobell Type Painting Booth

■ Reduction of Air Emissions after Energy Source

ISO 14001 Environmental ManagementSystemIn an effort to establish and develop environmentalmanagement practices to a global level, ISO 14001certification was obtained for HMC operations.Beginning with the Ulsan manufacturing plant in1995, all of HMC’s domestic operations including its23 after-service centers have been ISO 14001certified. The certification for HAOS and HMI wereobtained in 2003. Currently, ISO 14001 Certificationfor BHMC is in process and certification preparationis being made for HMMA.

Environmental AuditsHMC continually conducts internal and externalaudits to investigate the effectiveness ofEnvironmental Management Systems (EMS) and topromote continual process improvement. During a10-month span from February to December 2004,63 departments were audited on processimprovement results and effects, documentation onwork process, and the appropriateness ofenvironmental management initiatives. The majorityof internal audits focused on incidents of non-compliance to regulations. The 2004 internal auditexposed 114 cases of non-conformity of which,95.6% or 109 cases were quickly resolved. In Mayand June of 2004, TUV-Korea conducted externalaudits on 50 departments including those at theheadquarters, the Ulsan, Asan and Jeonjumanufacturing plants. A total of 5 recommendationswere made and corrective actions were taken in atimely matter.

Environmental Expenditure HMC’s total environmental expenditure is separatedinto two parts, environmental investment andenvironmental expense. Environmental expense hasbeen split up into 5 categories. As stated in the2003/2004 Sustainability Report, environmentalinvestments for production were included withenvironmental expenses figures until 2002.However, HMC separated these categories from2003 and onward. Beginning from 2004, HMC hasbeen developing a new environmental investmentvaluation system. In 2004, environmental expensesamounted to 37.2 billion Korean Won, a 12%increase from the previous period, and the totalenvironmental investments amounted to 78.1 billionKorean Won.

■ Environmental Cost


Wastewater DischargeHMC has been successful in managing COD(Chemical Oxygen Demand), BOD (BiochemicalOxygen Demand), SS (Suspended Solids), and N-H(Normal Hexane) levels, in compliance to KoreanEnvironmental Standards, reaching only 10~50%.In accordance with Korean environmental law, HMCwas fined once for leakage of milling-oil to a nearbystream. As a result, they fortified the milling-oilcontainer and took further preventative measures.

ChemicalsHMC stringently manages chemical use, especiallythe use of NaOH, H2SO4, HNO3 and HCl. Under HMC’s chemical management guidelines,fume control equipment is required in all chemicalstorage facilities. Additionally, chemical containersare required for recollection by the chemical supplierand recycling company. Chemical managers arerequired to participate in periodic training programsand chemical storage facilities are subjected tostringent inspections. The amount of chemical usehas a direct correlation to production becausechemicals are used in the electro-deposit washwater and wastewater treatment processes.However, water treatment significantly minimizes thetoxicity of chemicals. HMC’s chemical managementinitiatives are centered on the safety aspects ofhandling, storage, use and the disposal of allchemicals.

Chemical Management TrainingHMC stringently monitors its wastewater dischargepoints and levels in order to reduce the frequency andseverity of potential environmental accidents. In 2004,2,276 employees were trained regarding chemicalmanagement, and various information on the chemicalhandling manuals and guidelines are updated at theHMC’s internal Environment, Safety & Health InformationSystem (i-ESH). Along with employees, externalchemical waste management service providers areactively involved in the chemical management program.HMC has begun MSDS (Material Safety Data Sheet)training programs on MSDS manuals and toxic chemicalmanagement with over 130 employees of chemicalwaste management service providers, and continue toprovide educational outsourcing for 26 of our domesticsuppliers.

■ Chemicals Usage

■ Wastewater Discharge (Domestic)

*i-ESH website : http://iesh.hmc.co.kr

··

Communication with StakeholdersPrior to being a leading automobile manufacturer, HMC is pursuing to become a responsible member of the globalcommunity. As a global corporate citizen, HMC is actively fulfilling responsibilities by providing employmentopportunities and by focusing on stakeholders’ interest on sustainable growth issues of the company. HMC alsocontributes to the national economy and focuses on the sustainable developmental issues of the community. In pursuit of customer and community satisfaction, HMC minimizes environment impacts, provides high qualityvehicles and service. Renewed emphasis has been placed on the mutual growth between business partners and thecompany, and on providing various educational opportunities and a safer working environment for employees.As the foundation of its sustainability management initiatives, HMC is building trust by establishing effectivecommunication channels with stakeholders. Through communication with stakeholders, HMC has increasedawareness of its environmental, economic, and social responsibilities, has begun to develop and solidify mutual trust,and has shared in its sustainable development efforts. In pursuit of excellence in sustainability management, HMC setSustainability Communication Strategy (SCS) and developed communication methods through organizationalrestructuring in 2004.


CustomerIn line with its policies to provide high quality vehiclesand first rate service, HMC is actively involved incommunication with customers. In addition, HMCoperates various customer satisfaction programs toensure the retention of its existing customer base.

Marathon CSHMC operates Marathon Customer Satisfaction(CS), a program that helps employee better focus onthe customer satisfaction objectives being tenderedat HMC. Voice of Customer (VOC) is an integralpart of Marathon CS where customers directly voicetheir opinions and where employees are given theopportunity to listen directly to voiced customers’opinions. To improve customer satisfaction, HMChas appointed regional CS managers. Working withA/S providers to improve the entire chain ofcustomer satisfaction services, HMC operates theCS Plaza, a database system which encompasses aprocedure manual and information pertaining tocustomer satisfaction.

Customer Satisfaction and Management DecisionMakingFor continual improvement in the field of customersatisfaction, HMC established a process to reflect theresults of a customer satisfaction survey into makingmanagement decisions. The results of HyundaiCustomer Satisfaction Index (HCSI), Korean StandardService Quality Indexes (KS-SQI), Korean CustomerSatisfaction Index (KCSI) and National CustomerSatisfaction Index (NCSI) are included in key performanceindex of different divisions in HMC. Particularly, opinionsand suggestions from surveys managed with specialcare. Corrections and improvements are reviewed semi-annually and employees are provided with customersatisfaction training every year.

*CS Plaza website : http://csplaza.hmc.co.kr

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The Best Environment Report AwardHyundai Motor Company 2003/2004 SustainabilityReport took the Best Environment Report Prize in 2004Corporate Environment Report Award hosted by KoreaGreen Foundation.


Overseas Customer SatisfactionWhich Magazine HMC received top marks invehicle durability for 2003 and 2004 from UKconsumer report, Which Magazine. The Getzranked number one out of 81 new vehicles,displaying no problems for 2 years running. The magazine ranks all vehicles based on durabilityand consumer satisfaction. As the survey resultsare published every August, the magazine influencesconsumer preferences regarding purchasing car.

Strategic Vision In October 2004, Strategic Visionpublished its Total Value Index Study (TVI). HMCranked number two overall in the value satisfactionstudy, trailing only the leader, a major Japaneseautomaker. HMC’s Elantra, Grandeur and Santa Feall placed number one overall in their respectiveclasses. Located in San Diego, California, StrategicVision was established in 1987. As a consumerreliability rating organization, Strategic Visiondeveloped the TVI to help consumers reach aninformative purchasing decision. Results for the TVIstudy are published annually.

Consumer Reports Consumer Reports analyzesand collects product data relating to consumerpreferences. From 1997 until 2004, ConsumerReports had surveyed over 810 thousand vehicleowners to analyze vehicle reliability. ConsumerReports selected HMC as the first Korean automobilecompany to register a higher than average ranking.The New EF Sonata ranked 3rd overall in the mid-sizesegment and the Elantra, Accent, Santa Fe, andXG350 all received higher than average scores.

J.D. Power & Associates In April 2004, J.D. Power& Associates released its 2004 Initial Quality Studyresults. The study was conducted on new carbuyers from November to December 2003. HMC outranked some of the automobile industry’sheavyweight with a total index score of 102, HMCjumped 8 spots to place 2nd overall in the 2004ranking. Additionally, HMC ranked 7th overallcorporate level study regarding the product quality.The New EF Sonata ranked first in J.D. Power &Associates’ study for the entry mid-size segment, thefirst Korean automaker to receive the ‘2004 WinnerAward.’ The Santa Fe and Accent ranked numbertwo in the SUV and compact car segmentsrespectively. HMC vehicles scored higher than theindustry average including the Accent and theTiburon. Additionally, the Tucson received a score of99 in the 2005 1st half IQS performed from Novemberto December 2004. The Tucson was the first evervehicle to receive a double digit score in its first yearof release in the North American market. IQS is astudy ranking the number of defects in vehicles; thus,the lower the number, the less defects.

Customer SafetyHMC has long been pursuing developments incomfort and performance. In line with theseinitiatives, HMC has placed a renewed focus onsafety issues through the implementation of varioustechnologies regarding passive and active safetyfeatures. To ensure passenger safety duringcollision, HMC has developed advanced safetyfeatures such as an advanced body frame and theSmart Airbag. HMC continues to develop electronicsafety features ranging from air pressure sensorsmonitoring equipment.

HMC is committed to ensuring the safety of itsdrivers and passengers through rigorous R&Dadvancements. The Elantra and Grandeur receiveda five star rating, top marks for safety in the NationalHighway Traffic Safety Administration’s (NHTSA)New Car Assessment Program (NCAP) for 2004. In addition, the Sonata received the top grade invehicle safety in a study conducted by the KoreanMinistry of Construction and Transportation in 2004.The Sonata received five stars in front and sideimpact collision tests, the first for a Koreanautomobile manufacturer. In brake performancetests, the Sonata recorded a breaking distance of44.9 m and 48.3 m in dry and wet road conditions.The Sonata also received a top mark of five stars inthe internal safety test that applies the sameprinciples as the NCAP and NHTSA. HMC hasgarnered the attention of numerous domestic andoverseas safety boards and is committed tocontinuing R&D to develop safers vehicles.

The New EF Sonata ranked first in J.D. Power’s IQS study for the entry mid-sizesegment in 2004

Domestic Customer SatisfactionNational Customer Satisfaction In nationalcustomer satisfaction appraisement, HMC hasobtained the No.1 ranking in the NCSI (NationalCustomer Satisfaction Index) for 4 successive years.

This survey was conducted against customers whopurchased an automobile within the last three yearsand had six months of experience of use, in themost of detailed items making up the customersurvey satisfaction HMC ranked No.1, confirmingleading status once again. NCSI is determined based on relations amongproduct/product service, the expectation index ofcustomers and recognition value. Through thisNCSI, customers can check the consumer behavior.

Korean Customer Satisfaction AppraisementIn 2004 KCSI (Korean Customer Satisfaction Index)survey, HMC achieved a ranking No.1 in the part ofcar and RV classes and have achieved 11successive years (1994~2004) of ranking No.1 incustomer satisfaction, in our country, since the timeKCSI survey was launched. KCSI is the firstcustomer satisfaction index in our country which wasresearched and announced by KMAC from 1992. It has been conducted against more than 100industries and more than 1,000 companies toenhance the competitiveness of related industriesand companies to improve problems in product andservice, and to protect the rights and interests ofconsumers.

Following the No.1 ranking in customer satisfactionobtained by HMC for July, 2004, it again achievedthe No.1 ranking for September (KCSI).

Advanced Curtain Airbag SystemVehicle Dynamic Control System, VDC


Motor Smart Card ServiceTo improve overall vehicle safety and comfortstandards, HMC has provided Motor Smart Card(MSC) services beginning from March 2005. The MSC improves customer service through theintegration of vehicle management, maintenance,fueling, credit card and auto-insurance services.

Through joint services with the Smart Card ControlUnit (SCU), MSC’s informational service offersassessments regarding part replacement, vehiclemalfunction and navigational information. All relevantinformation can be accessed directly through theMSC website. Expected to continue for 6 monthsbeginning from March 2005, HMC has initiated theMSC demonstration project, which is to comprise of1,100 consumers from the Seoul metropolitan area.

Lane Departure Warning SystemDemonstration ProjectHMC is conducting a demonstration project on itslane departure warning system used in full sizecommercial vehicle. Development of the systemcommenced in 1998 and ended with the recentcompletion of the technology. The system features awarning signal that goes off in the event the driverfalls asleep at the wheel or the vehicle abruptlychanges lanes. Recently, the system has beenadded to 18 express buses and 15 full size trucks asa trial run. In Korea, a driver falling asleep at thewheel is a major cause of traffic accidents. Followingthe end of the project in July 2006, HMC plans forthe full-scale implementation of the lane departurewarning system in all full size commercial vehicle.

Advanced Safety VehicleHMC actively pursues the development of state ofthe art passive and active safety features. HMC’spassive safety initiatives include features protectingdrivers, passengers, and pedestrians though the useof seatbelts, impact-absorbing steering wheels andadvanced pedestrian injury reduction hood systems.Active features include a Traction Control System(TCS), Anti-lock Brake System (ABS), a tire airpressure sensor, a vehicle distance sensor alongwith other brake related assistant systems to aid indriver maneuverability.

HMC plans to use active safety features to completethe core technology in Advanced Safety Vehicle(ASV). HMC also aims to improve comfort andsafety levels by adopting advanced safety features inHMC’s full line-up. ASV is used to assist the driverby enhancing perception and decision making, andby expanding the control operations of the driver.HMC’s future development of ASV is expected tosignificantly reduce traffic congestion and accidentrates, greatly improving the overall drivingexperience. Recent developments of HMC’s ASVtechnologies have included a vehicle distancesensor and a lane departure warning system.

Customer CommunicationCustomer Events HMC launches test-driving events for new vehiclesreleased for sale in the marketplace. The opportunity for consumers to test-drive vehicleperformance prior to purchase allows for improvedcommunications between HMC and customers.HMC initiates various events ranging from a drivingschool to an environmental field trip, and theresponse has been positive.

For the newly released Sonata, 100 consumers wereselected to participate in HMC’s comparability testdriving event held in 2004 as a means to improvecommunication channels. The Sonata was testedagainst foreign competition, in design, reliability,handling, performance and safety. HMC had theopportunity to receive feedback about the Sonatadirectly from the 100 drivers who participated in theevent.

As another means to promote customerparticipation, HMC has been sponsoring the GetzSummer Camp and the Getz Speed Festival since2003. The Getz Speed Festival has garnered publicattention because it has been geared towardsenhancing the amateur racing culture of the generalpublic and not racing professionals.In addition, HMC sponsors the annual HMC Cup

Amateur Ski·Snowboard Tournament.

Encompassing over one thousand participants eachyear, the tournament is the largest of its kind inKorea. As well, HMC actively supports a wide arrayof vehicle clubs, which are described in full detail onthe HMC website. Such initiatives have beenundertaken to enhance the communication channelsas part of its continuing commitment to improvecustomer relations.

Manufacturing Plant Tours HMC provides manufacturing plant tours to improvethe communication channels with consumers andother stakeholders. In 2004, visitors to the Ulsanmanufacturing plant totaled 158,860 domestic and13,652 foreign nationals, a rise of 16% from theprevious year. The breakdown of foreign nationalvisitors is as follows; 1,636 North Americans, 5,875Asians, 114 Pacific Region visitors, 804 MiddleEasterners, 788 Europeans, 158 Africans, and 4,277 visitors from other regions.

Customer Information Security Program Customer information is managed according toHMC’s internal customer information securityprocedures, which sets limitations on accessibility.Each department using the information employsinformation security personnel. Internal users arerequired to receive approval from security personnelby submitting a customer information request formbefore any information is obtained. In addition,external users are required to sign a confidentiality

Wu Bang Guo, President of the Standing of the National People’s Congress ofChina, visited Ulsan plant

2005 Getz Speed Festival

*Getz Speed Festival website : http://www.clickfestival.com

*MSC website : http://www.motorsmartcard.com

1. Road Condition Sensor2. Magnetic Sensor3. Vehicle Distance Sensor4. Forward Obstacle Sensor5. Blind Spot Monitoring

Camera6. Drive Recorder7. Side Obstacle Sensor8. Air Pressure Sensor9. In-side Door Lock/Unlock10. Rear Obstacle Sensor

Sensor11. GPS Sensor

12. Airbag13. Road-to-Vehicle/Vehicle-

to-Vehicle 14. Rear View Camera15. Water Repelling Wind

Shield16. Seat-belt Pretensioner17. Driver Monitoring Sensor18. Head-up Display19. Steering Angle Sensor21. Electronic Control Brake22. Fire Detection Sensor23. Vehicl Speed,

Acceleration Sensor

24. Collision Detection 25. Pedestrian Collision

Injury ReductionStructure

26. Electronic ControlSteering

27. Message Display SystemCommunication System

28. Hands-free System20. Electronic Control

Throttle

■ ASV Product Development

Providing comprehensive vehicle management service through MSC


agreement, which must be notarized before anycustomer information is issued. In completion ofcontracted work, external users are required toreturn or dispose of any information and arerequested to submit a customer information returnand a disposal confirmation form for approval. HMC requires customer information securitypersonnel and system operators to receive securityand confidentiality training quarterly. In August2004, HMC adopted a Database Security System(DSS) to enhance the current security level ofinformation.

Internet Website Updates are continually made to HMC’s website inan effort to improve site usability. Improved webdesign, updates and the inclusion of more extensivecontent is initiated to satisfy the changing needs ofcustomers. With the re-launching of its new andimproved website in 2004, the HMC websitefocused on 3 sections; Owner’s Club, AutomotiveMuseum, and Kid’s World. Owner’s Club, offeringinformation and services ranging from vehiclemaintenance to customer support, is a new Internetbased customer relationship management servicelaunched in an effort to improve HMC’s ongoingcustomer service efforts. New information onHMC’s history and on the automobile industry,along with interactive services for children in theKid’s World section can also be viewed on theupdated website.

Redesigned HMC Internet Website

Cooperation and Development of WorldAutomobile IndustryChairman and CEO Mong-koo Chung participated in theopening ceremony of the 2004 Paris International MotorShow along with French President Jacques Chirac andthe top executives from 13 global automobile companies.Participants included the likes of GM CEO Rick Wagoner,Ford Chairman and CEO William Clay Ford, andDaimlerChrysler Chairman J rgen E. Schrempp. Leaders held discussions at the event regarding theindustry’s prospects and agreed to promote cooperationand eco-friendly management within the automobileindustry.

Investors RelationsHMC received the Corporate Investor Relations (IR)Excellence Award for outstanding IR activities inpromoting the interests of the corporation, shareholders,and investors from the Korea Investor RelationsAssociation (KIRA). HMC periodically holds briefings forinvestors on quarterly corporate performance tostrengthen global IR efforts and to bolster HMC’scorporate image. HMC updated and expanded its IRwebsite to allow for shareholders and investors viewingand accessibility.

Dealer Communication32 executives and managers from HMC’s Chinesedealerships were provided with tours to the Ulsanmanufacturing plant to discuss HMC’s growth in Chinaalong with the growing relationship with Koreanmanagement.

*IR website : http://ir.hyundai-motor.com

Sports Marketing Through the official sponsorship of the Olympics andthe FIFA World Cup, HMC is helping to raise theglobal image of Korea worldwide and is contributingto the development of amateur and professionalsports throughout the world. In addition, HMC hasalso heavily supported the growth of domestic sportsthrough its continued sponsorship of marathons,soccer events, and various other HMC hostedevents. To further the development of Koreansoccer, HMC owns and operates the ChonbukHyundai Motors Football Club, and continues toexpand its support of sports such as archery.

Euro 2004 sponsorship 2004 Hyundai Mini Football Match

2006 FIFA Worldcup in Germany TM

Hyundai Motor Companyofficial partnership emblem

Professional Football Club, Chonbuk Hyundai official emblem

FIFA Partnership HMC provided full support as a show of its commitmentto ensuring the success of the 2002 FIFA World CupKorea·JapanTM. As an official sponsor of the 2006 FIFAWorld Cup GermanyTM, HMC continues its supportthrough the sponsorship and planning of World Cuprelated events. HMC became an official partner of FIFA inMarch 2005 for all FIFA related sports events taking placefrom 2007 until 2014. Aside from this, the partnership isto extend to the Women’s World Cup and the FIFA WorldYouth Championship. HMC’s partnership with FIFAshows our commitment to the sport of Football. As themost highly regarded sport in the world, the connectionwill undoubtedly enhance HMC’s corporate image as aglobal automaker.

Hyundai Free Ride Service FIFA Partnership Signing Ceremony

CEO’s of world automobile industry who were attending the openingceremony of 2004 Paris International Motor Show Athens 2004 Olympics Games Sponsorship

As an official sponsor of the Athens 2004 Olympic Games,HMC provided 500 vehicles including the Centennial to theAthens Organizing Committee for the Olympic Games(ATHOC). As part of its sports marketing promotionalactivities, HMC operated Hyundai Free Ride, a transportationservice that connected major locations in the city to Olympicstadiums. Furthermore, special booths were raised next tofree bus stops to provide passengers with official OlympicGames schedules, Athens city maps, local informationbooklets and HMC brochures. To showcase HMC’s environment management initiatives,the ATHOC was presented with Santa Fe Electric Vehicles(EVs) and aluminum body Getzs for committee use as ashow of support of the 2004 World Environmental Day.


Aftermarket Service Providing top quality service to customers,improving working conditions for employees, andminimizing environmental impacts are thefundamental building blocks of Green Service, oneinitiative in HMC’s aftermarket service sector.Offering special services for vehicles damaged bynatural disasters is another part of providing publicservice. From July to September 2004, HMC inassociation with Kia Motors and Hyundai Mobisorganized a Natural Disaster Relief Task Force Teamto minimize damage resulting from floods andtyphoons. The team consisted of 2,300 serviceproviders and staff from HMC service centersthroughout the country. Furthermore, HMCprovides special vehicle inspection services for thephysically challenged, residents of remote areas anddrivers of delivery vehicles.

For prompt maintenance service, HMC focuses onfour key areas. The service Manager Systemensures the competency of services rendered fromstart to finish, and provides the speedy and efficientdispatch of service vehicles. Quick processing oftechnological information is ensured by the Hi-TechCenter and the One Plus System is offered toprovide maintenance services above and beyondthe minimum requirements during service calls.

HMC’s free vehicle inspection service, One Plus system

Supporting Korean Archery As archery has come to play in an important role in thedevelopment of Korea’s image worldwide, HMC hascontinued its support of the industry. Chairman andCEO Mong-koo Chung was appointed as thechairman of the Korea Archery Association from 1985until 1997. He has since been named as the HonoraryChairman of the association, and his financial supportover the last 20 years has totaled 20 billion KoreanWon. As such, medal winning archery athletes fromthe Athens 2004 Olympic Games were rewarded with400 million Korean Won along with 10 passengervehicles. In addition, he promotes the technologicaladvancements of domestic archery equipment throughthe sponsoring of research and development.

Chairman and CEO, Mong-koo Chung encouraged Korearepresentative players

24-Hour Emergency Vehicle RescueService and Self-Maintenance TrainingProgramHMC operates a 24-Hour Emergency VehicleRescue Service for customer safety andconvenience in partnership with volunteering localtaxi drivers. HMC provides self-maintenancetraining program to promote safe driving practicesand to enhance vehicle maintenance skills.Following the completion of the session, driverslearn how to manage their vehicles in emergencysituations are educated on safe driving practicesand are informed of how to drive their cars for betterfuel economy.

BASIC Movement and Clean Service HMC has initiated the BASIC (Beautiful, Attractive,Safe service shop, Innovative, and Control)Movement to maintain cleaner working conditionsand higher work efficiency. For efficientimplementation, HMC standardized detailed servicemanuals that were distributed to all customer servicecenters. To promote the BASIC movement, HMChosts the Best Mechanical Technology Innovationcompetition and related competitions annually.Selected technologies are then shared withcustomer service centers throughout the country.Clean Service calls for the systematic inspection andcleaning of vehicles by service managers.

Each service center takes great pride in providingcleaning services for all vehicles large and small,including simple services such as providingcarwashes.

International Aftermarket ServiceEnhancement Program HMC has developed programs to foster the trainingof foreign aftermarket service mechanics, andservice coordinators are to be introduced beginningfrom 2005. To strengthen global brand image andto improve customer satisfaction, high-caliberforeign aftermarket service personnel are invited toparticipate in the enhancement program in Korea.

HMC overseas mechanic training programSelf-maintenance training for customer


■ Training and Education in 2004

Human Resource Human Resource PolicyHMC has established a progressive human resourcepolicy. Divided into three parts, the policyemphasizes a self-drive toward further learning,creativity, and social service in all employees. In addition, HMC provides the necessary tools forself-enhancement and the training to maximizeindividual potential.

Training and Education ProgramsIn line with its corporate vision and strategy, HMCredesigns training and education programs everyyear. The programs are interlinked to createsynergy and to maximize effectiveness. In addition,HR management tools are applied to evaluate theeffectiveness of its training and education programs.HMC takes a systematic approach to the trainingand education process as reviews are held toenhance the program and to re-evaluateperformance.

Employee Training and EducationHMC provides systematic job training as well ashigher educational opportunities. Training andeducational programs are designed to enhance theknowledge and skill of employees, and to improvetheir aptitude in completing given assignments.Talented employees showing potential are selectedfor the Overseas OJT (MBA) and Study Abroadprograms. In 2004, HMC invested 24.5 billionKorean Won for training and education, whichamounted to an average of 108 man-hours peremployee. In response to the global growth of thecompany, training and education for overseassubsidiaries have been on the rise.

EmployeeTrust Based Management, Site IntensiveManagement, and Transparent Management are thethree major elements, which are applied in HMC’shuman resource management policy supported bythe horizontal management initiatives. HMC iscommitted to looking after the well-being of its

employees, and to giving them job satisfaction andequal opportunity. HMC has been systemizingrelated support programs and training sessions forits employees to attract professional talent andpromote self-enhancement.

Number of EmployeesIn 2004, 61,951 workers were employed in major domesticand overseas operations at HMC. To acceleratelocalization and globalization, HMC has been recruitinglocal talent in global major markets.

Female EmployeesSince 2001, the number of female employed in theplanning, marketing, PR, finance, sales, procurement,general management, and R&D departments have beensteadily increasing. In 2004, the female employee basetotaled 2,193, or 4.1% of the total employee pool.Gender equality in employment and promotion are strictlyenforced at HMC. For the welfare of female employees,female workers receive an additional day of paid leave permonth and are eligible for a 90-day maternity leave. In addition, HMC operates a day care center at the Ulsanmanufacturing plant to aid young mothers.

Working ConditionsIn 2004, the recorded average weekly working hours for aproduction worker amounted to 33.5 hours and 16.5overtime hours. Over-time working hours were subjectedto payments that were 150-350% above regular hourlywages.

Paid Leave Policy HMC’s collective bargaining agreement outlines paid leaveand vacation policies in accordance to Korean LaborLaws. Providing 4 days of paid leave during the KoreanNew Year and Chuseok (Korean Thanksgiving) isstipulated as one part of the agreement. In addition,female employees receive an additional day of paid leaveper month and 90 days for maternity leave.

■ Number of Domestic Employees

■ Number of Domestic Employeesby Occupation

■ Number of Overseas Employees

■ Training and Education Process

■ Number of Female Employees

*Source : 2004 Hyundai Motor Company Annual Report


Human Resource Management Employee Welfare ProgramsHMC provides its employees with various welfareand benefit programs in accordance with thecultures and requirements of each region. In Korea,HMC offers both regulatory and non-regulatorywelfare programs. Regulatory welfare programsinclude health insurance, industrial accidentinsurance, national pension fund, medical welfareprograms and employment insurance. Non-regulatory welfare programs include subsidy ofclub operation costs, weekend trips to farms, out oftown retreats, and other related welfare programs.

Human RightsEstablished in 2001, HMC’s Code of Conductensures human rights to be one of the key elementsin all of HMC`s operations. HMC complies with alllaws and regulations governing a specific region withregards to human rights issues, and also operatesprograms to promote human rights awareness suchas the Employee Grievance Remedy Committeealong with the office of the ombudsman. HMC formalized the mechanism and offers variousprograms to rectify employee grievances.

Mentor Programs for New EmployeesHMC assigns a mentor, similar to the Big Brother program,to new employees for their first 6 months on the job. The program aims to help new employees become betteraccustomed to their new surroundings and to resolve anypotential problems through peer networking.

Cyber Audit Office and the Whistleblower HotlineThe Cyber Audit Office and the Whistleblower Hotline playa key role as HMC’s office of the ombudsman in ethicsmanagement. Upon receiving reports on unethical orunfair business practices, it orders corrective actions andconducts disciplinary training to prevent recurrences. With confidentiality policy on the report, corrective actionsand conduct disciplinary training are ordered whenunethical or unfair business practices are reported.

Sexual Harassment Counseling CenterIn compliance with the Gender Equality Employment Act,HMC operates a Sexual Harassment Counseling Center.The center provides education on sexual harassmentprevention to all HMC employees on a regular basis.

Child Labor and Forced Labor Child labor is prohibited at HMC. HMC adheres to alldomestic and international laws regarding child labor. In compliance to domestic and international laws andregulations, HMC bans the employment of those belowthe minimum legal age. In addition, all HMC employeesjoin the company voluntarily. Indemnity for employee laboris regulated under HMC’s corporate wage policy, andrelevant laws and regulations.

Labor Union and the Freedom of AssociationHMC complies with domestic and international labor-related laws and regulations guaranteeing the freedom of association. Domestically, all new employees arerequired to join the labor union, with the exception of those exempt under the Korean Labor Standard Act andthe Collective Labor Agreement. In overseas operations,the Labor-Management Association in HMI and BHMC’sPublic Association are utilized as channels forcommunication between the union and management.

Participating in Management from IndigenousEmployeesHMC encourages the recruitment of indigenousemployees in overseas operations. For instance, in thecase of BHMC, three Chinese directors team with threeKorean directors during HMC`s board of directors meeting.HMC’s global operations have implemented policies to hire people from the local area to ensure a diversereflection of values in corporate decision-making activities.

Equal OpportunitiesHMC prohibits all forms of discrimination (ethnicity, age,religion, gender or nationality) in employment, job postassignment, performance evaluation, training, andpromotion. HMC recruits new employees by followingstrict recruitment and screening standards. During theirstay at the new employee camp, all recruits undergo aseries of consultations and interviews for job posting.HMC does not recognize performance evaluation andrecommendation for promotion other than what isdescribed in the standardized protocol.

Hyundai·Kia Education CenterThe Hyundai·Kia Education Center is acomprehensive system made available online.Employees at HMC can access training andeducation programs, individual history, results &summaries, education priorities, and applicationswith the system.

Venture PlazaTo promote and enhance R&D, HMC operatesVenture Plaza. Venture Plaza supports the venturecompanies from Hyundai Motor Group, and alsoadministrates high tech endeavors to developenvironmentally friendly technological advancementsin safety and performance. Through the incubatingof high tech companies, HMC is initiating creativeand aggressive technology development projects.

Research Paper Contest and Incentive forInvention PolicyTo encourage employee research activities and thesharing of knowledge, HMC hosts a research papercontest annually. Topics ranging from vehicleperformance enhancements to low emissionproducing eco-friendly vehicle technologies werepresented. In addition, HMC implements anincentive for invention policy to encourageemployees to develop new technologies and tofurther enhance product quality. New inventionsthat lead to a cost reduction or an improvement inefficiency are reviewed by an HMC appointed panelto determine the level of incentives.

Joint Education ProgramsWorking with 7 domestic colleges, HMC has beenoperating the Joint Education Program foremployees since 2003. One of the objectives of thisprogram is to educate employees on new cuttingedge technologies. In January 2005, 180employees obtained the necessary 84 creditsrequirement to successfully achieve the completionof the course. At present, 181 employees areregistered in the program.

Education for Family Members HMC offers various continuous education programsfor the family members of employees. Some of theprograms that are offered include Love Your Family,Respecting One’s Parents, Children’s SummerCamps, and the Cyber Housewives’ College. HMC provides various family focused events toemphasize family value and to provide long-termcultural education programs.

Cyber Housewives’ CollegeHMC opened an educational website termed theCyber Housewives’ College in January 2004. The website offers 52 courses ranging from financeto computer studies.

Education Programs for Employees’ Children A basic economics course is offered to broaden achild’s financial background. In addition, HMCprovides children with various educational courses incomputers, and Chinese and English languageduring the summer vacation. Led by native andKorean instructors, 600 middle school students(Grade 6 and 7) participated in the 4 sessions thatwere offered during the summer, ranging fromconversation to composition classes. HMC providesan online website outlining all education programs foremployees’ children.

*Hyundai·Kia Education Center website : http://www.hkhrd.com

*Venture Plaza website : http://www.hkventure.co.kr

*Cyber Housewives’ College website :http://hyundai-kia.cyberjubu.com

*Education Programs for Employees’s Children website :http://ilovehk.com

Labor-Management Industrial Safety & HealthCommitteeHMC’s Labor-Management Industrial Safety andHealth Committee is co-managed by executivemanagement and the labor union. The purpose ofthis committee is to prevent industrial accidents andto provide better workplace conditions foremployees. The Committee meets quarterly and iscomprised of 7 executive managers, 7 membersfrom the labor union and an honorary advisor.

Medical ExaminationMedical examinations at HMC are broken down intotwo categories according to type of work. HMC office workers receive bi-annual medicalcheck-ups and production workers are providedwith specially designed medical examination on ayearly basis. HMC became the first Koreancorporation to offer traditional oriental medicaldiagnosis treatment for employees. In addition,employees over the age of 40 including familymembers are provided with a special medicalexamination. In partnership with Online-Med,employees are provided with various online medicalservices accessible through its corporate intranetsystem.

Industrial AccidentsIn 2004, total registerable industrial accidents inHMC’s domestic operations, according to Koreanregulations, added up to 1,518; this numberincluded 8 fatalities (1 by accident, 6 by personaldiseases, 1 by commutation) and 1,510 injuries ordiseases. The total number of registerable industrialaccidents increased despite our continued effort onimproving workers’ health and safety conditions. As part of going beyond compliance, HMC beganrecognizing ergonomics symptoms as registerableindustrial accidents from 2003.


Industrial Health & Safetyi-ESH System The i-ESH system is a comprehensive informationand data management system. It collects informationrelated to environmental, safety and health issuesfrom the domestic plants. Data is recorded andarchived by the system for statistical purposes. It is accessible by intranet and contains informationregarding relevant laws, technical standards, ESHFAQs and training materials.

ESH TrainingHMC continues to improve environmental safety andoverall health conditions by providing ESH training toits employees. At manufacturing plants, HMCprovides training in compliance to Korean laws aswell as to its own ESH standards that go beyondlegal requirements. Divided into two sub-sections,HMC offers specialized education for upper tiermanagerial levels, which cover environmentalmanagement. For employees injured on the job,HMC provides rehabilitation programs to aid inrecovery.

■ Safety & Health Training in Production Sites

■ i-ESH System

■ Industrial Accident Rate

Category Subjected Employee Type Training Hours Training Period Contents of Training

Routine Production 2 Monthly Regulation, safety

Training Office 1 Monthly Management protocol,

other industrial safety related

topics

Managerial 16 Yearly Supervising for work safety

New Employee General Work 8 Before Regulation, safety

Training (i.e. machining and assembly) assignment management protocol, PPE,

safety in work place

Special Work 16 Before Safety awareness and

(i.e. press and painting) assignment equipment safety, chemical

safety, safety in work place

Transferred General Work 2 In work scope Safety standard in

Employee change work place, PPE, ergonomics

Training Rotating Work 2 In work rotation The 11 Standard Safety &

Health Commandments

Special Work 16 In work scope Safety awareness and

change equipment safety,

chemical safety, safety in work

place

Environmental Safety and Health TrainingHyundai Motor continues its support for the betterment of the environment and safety and health conditions byproviding various ESH training. At production sites, Hyundai Motor provides training in compliance to Koreanlaw as well as its own training programs that go beyond legal requirements. The education program foremployees for environmental safety was evaluated by the health department as an outstanding program. The programs for the employees upper managerial level cover ethical cyber training and environmentalmanagement training.


■ SCEM ProjectSupplierThe building of networks with technologicallyadvanced and quality based suppliers, includingenvironment management and transparentmanagement conformity are crucial in HMC’s drivetowards becoming a global leading company. To further partnerships, HMC supports suppliers ontechnology developments and various improvementplans. HMC supports the 236 suppliers registeredwith the Medium Enterprise Job Training Consortiumand actively provides training and education with 1st

and 2nd tier suppliers in the fields of technologicaladvancement and product quality enhancement.

HMC is also working to ensure environmentmanagement and transparent managementconformity with suppliers. In May 2005, 690representatives from 355 suppliers and 480 HMCemployees participated in the HMC sponsoredenvironment management education conference.Sustainability, environmental strategy, andenvironmental policy and regulations were topicsthat were covered over 3 education sessions. Aside from these initiatives, HMC operates varioussystematic controls from support systems toeducational programs to enhance the regulation ofethics management policies, and to encouragemanagement reform and process innovation withsuppliers.

Supply Chain EnvironmentalManagementIn order to cope with the increasing level ofregulations placed upon automobileindustry from governments over theglobe, HMC has been participating in theSupply Chain EnvironmentalManagement (SCEM) project since 2003.The project was initiated to increaseglobal competitiveness through theestablishment of an environmentallyfriendly supply chain management system,whereby suppliers would be supported in aneffort to establish an environmentalmanagement strategy encompassing the entirechain of the business. Presently, the SCEMproject involves 15 selected suppliers. Through theSCEM project, suppliers have been developing their

environment management strategies, andestablishing cleaner parts-production systems.Since 2003, HMC has been providing training andeducational sessions for employees of participatingsuppliers. Using this as a base, the SCEM projecthas developed into 4 branches; environmentmanagement promotion, cleaner productionsystems, production of environmentally friendlyproducts, and the implementation of integratedenvironment management systems. The project hasbeen divided into a 3-year project, beginning fromJuly of 2003 and ending in June of 2006. With agovernment grant and a company investment HMChas selected 40 experts to further develop theproject. Already in the 2nd year of the 3-year project,not only has an environmental strategy beendeveloped in 2005, but an overall improvement inthe manufacturing process has already lead to costreductions of 2.2 billion Korean Won and higher costsavings are expected before the end of the project.

■ SCEM Organization

SCEM Workshop SCEM Reporting Session


Supplier Support ProgramIn 2001, the Supplier Association of Kia Motors andHMC were merged together to establish an efficientinter-supplier collaboration system. Suppliers fromboth sides have been exchanging trade information,developing new products and working on newtechnologies. Each year, HMC presents its businessplans and provides seminars regarding its newmanagement policy. Additionally, the association isoffered many training sessions to improve productquality and environment management. Informationregarding HMC’s technological advancements isoffered to its suppliers, and HMC provides a guestengineering site at the Namyang R&D Center to helpsuppliers in their R&D efforts. HMC establishedFoundation of Korea Automotive Parts Industry(KAP) in 2002 to focus on improving the relationsand quality of parts developed by domesticsuppliers. Furthermore, several programs for A/Sproviders have been developed by HMC to improverelations and to promote mutual understanding.

Medium Enterprise Training ConsortiumThe Medium Enterprise Training Consortium isworking with domestic suppliers to improvecompetency and enhance talent recruiting activities.Established in 2004, the consortium has been inplace for a year. Of the 428 suppliers involved,1,946 technicians have been chosen. 106 of thosechosen were displaced into a two to three montheducational program that involved extensive trainingin automation, car maintenance and appliedengineering. The remaining 1,840 technicians wereplaced into three to four day training sessions thatinvolved workshops relating to car manufacturing,automation, cars and engineering. The program,including accommodations and meals, is provided tosuppliers at HMC’s expense. Through the program,HMC has created a win-win situation. As a result ofits success in 2004, HMC has introduced plans toincrease the number of invitees by 40%, to a total of

2,720 technicians for the following year.Furthermore, HMC plans to invite technicians from2nd tier suppliers as well. HMC is working closelytogether with suppliers in an effort to improveproduct quality to world-class levels. This ongoingprocess begins at the very first stages ofdevelopment. Through the development of trainingprograms and by working together with suppliers,HMC is taking small steps forward to realizing thisgoal.

Supplier Employees Support CenterImproving human rights and the workplaceenvironment is an important part of HMC’ssustainability initiatives. Since 2003, theprocuremant division of has operated a SupplierEmployee Support Center to offer assistance in legal affairs, wage, welfare and unfair treatment.The VAATZ purchasing portal site offers an onlinesuggestion board for supplier employees to submitany comments and suggestions relating to anyprocesses. The system ensures 100%confidentiality. These suggestions are reviewed andtaken into account in order to improve HMC andsuppliers relations, which includes transparentmanagement policies.

Technical Assistance for Supplier Technical assistance for suppliers is one of HMC’smain initiatives. Working together with suppliers, allinformation pertaining to new product technology isdistributed by HMC to its suppliers. HMC alsosupports Venture Plaza, HMC’s internal ventureworkgroup, which researches and develops newtechnology. The outcomes of these R&D efforts areshared with suppliers so that it reinforces HMC’sresearch competency and enhances suppliers’technological proficiency. All efforts are being takento improve cooperation and to create a win-winsituation for both HMC and its suppliers.

Green Purchasing SystemHMC has been cooperating with suppliers toestablish environmental management systems. As part of HMC’s management strategy and greenpurchasing system, we provide training to 450suppliers on environmental management system.HMC is planning to improve the Five Star system (a supplier quality evaluation system) to includefurther elements relating to environmentalperformances as part of supplier selection criteria.

VAATZ SystemThe Value Advanced Automotive Trade Zone(VAATZ) is HMC’s proprietary system for thetransparent procurement of goods and services.The system directly links suppliers with HMC andthe entire transaction of purchasing and payment forparts is conducted entirely on-line through theVAATZ system.

■ Green Purchasing Plan

*VAATZ System website : www.vaatz.com

Our goal is to improve the quality of life bydeveloping and supporting environmentallyfriendly products.

We are pursuing mutual development withdomestic and foreign suppliers by creatingthe highest value through fair and transparenttransaction.

We aim to attain ethical transparentmanagement through responsible conduct.

We endeavor to earn respect by creating atransparent and fair purchasing culture,respecting ourselves by maintaining ourdignity.

Ethics Charter of Purchasing Division


Social Contribution Activities Mobility for the Physically Challenged To enhance the mobility of the handicapped and theelderly, HMC is the first domestic automobilemanufacturer to develop vehicles for the physicallychallenged. The Sonata and the Trajet have beenspecially equipped with factory-installed features forthe disabled to enhance mobility, HMC’s first step tomeeting its initiatives in providing mobility services.In addition, HMC has set plans to commercializelow-deck buses with a deck height of 28cm orlower, offering easy accessibility for the physicallychallenged.

Invitational Events for the Physically Challenged As one aspect of volunteer services provided byemployees, the physically challenged are invited onmanufacturing plant tours and are invited to participate inHMC sponsored sporting matches. In 2004, 600 and120 physically disabled persons were invited to tour theUlsan and Jeonju manufacturing plants respectivelythrough local associations for the physically challenged.Site tours and entertaining events were provided as partof HMC’s humanitarian activities. As a part of itsvolunteer activities, HMC’s Ulsan Football Club held afriendly soccer match in June 2004. Students from ahearing impaired school located in the northern district ofUlsan city were invited to a friendly soccer match wheredonations were provided. In order to improve the livingstandards of the disabled, HMC plans to continue welfareprograms, educational sessions and the sponsoring offriendly sporting events.

Social Contribution Council The Social Contribution Council is HMC’s governingbody responsible for planning and designing socialcontribution action plans for each department.Areas of the council’s social contributions includesocial welfare, cultural events support, sportingevents support, academic and education,environmental protection, disaster relief, internationalcommunications, and domestic development.

Social ContributionTo fulfill its commitment as a responsible corporatecitizen, HMC continues to place emphasis on socialcontribution activities. By providing monetarycontributions and voluntary public services inpartnership with stakeholders, HMC is taking thenecessary steps to achieve this goal. HMC initiatespublic interest marketing campaigns to help low-income families, and works together with non-profit

organizations, such as the Beautiful Store , to raisemoney through fundraising activities. HMC alsoprovides relief funding and sends support staff tolocal and international areas, which have been struckby natural disasters. In line with its commitments,HMC also continues its support of cultural andsporting events.

HMC’s social initiatives have been broken down intothe following areas; the first focusing on providingmobility services for the physically challenged and thesecond dealing with traffic safety education.Initiatives to provide the low-income physicallychallenged and the elderly with wheelchairs, and toprovide vehicles for the physically challenged allowingfor better mobility have been initiated. Safety partnership programs include the traffic safetyeducation of children and support programs forvictims of traffic accidents.

Employees participate in volunteer activitiesthroughout the year. HMC is comprised of 107employee led volunteer groups, which play a centralrole in HMC’s volunteer commitments to aid theunderprivileged. HMC plans to operate a socialcontribution data management system to moreefficiently systemize and organize the activities ofeach department. In addition, not only does HMCcontinue to donate monetary aid, plans to continueproviding public services in needed areas are in theworks.

Employees voluntary public service

HMC’s social contribution internet website

■ Social Contribution Area

Together | Emphasizing the partnership to keep harmonywith society as a corporate citizen Moving | Reflecting the features of automobile business,representing continuous changes Society | Disseminating HMC’s social contributionphilosophy around the world

Presentation session of Trajet for the physically challenged

Sonata for the physically challenged

Slogan and symbol for social contribution

Society moving all together


Public Campaigning of Social Welfare Projects HMC provides the necessary support to various socialwelfare organizations to aid desolate groups, included inwhich are the elderly living in solitude and foreign bluecollar workers, key groups relating to HMC’s socialwelfare cause. In May 2005, HMC announced its intention to launch apublic campaign in support of initiating social welfareprograms in cooperation with various organizations.Since May 2005, HMC has begun accepting potentialsocial welfare project proposals from various socialwelfare organizations. Submitted proposals havereflected four main areas including social welfareprograms designed for the physically challenged, theelderly, adolescents, and local communities andwomen’s associations. Final decisions regardingapproval were reached by an Admissions Board, whichwas comprised of a group of experts and professors. In total, 22 programs have been granted approval forHMC funding and support since May 2005. A few of the selected proposals include programs to help in thesocial adjustment of the physically challenged, programsto improve the daily living standards of the elderly livingin remote areas, school violence prevention programsand programs related to helping support the low-incomeelderly and foreign blue collar workers.

The Three Leaf Clover ProgramSince April 2005, HMC has provided a Three Leaf Cloverprogram to children who have lost their parents in fataltraffic accidents. The three Leaf Clover program closelyresembles the Make-A-Wish Foundation program, awish granting organization for children. Individuals andreferred applicants register online directly at the HMCsocial contribution website. All applications are reviewedtwice by HMC staff and 10 to 20 children are selectedand granted with their wishes. In the future, HMC plansto diversify this program to include the underprivileged.

Social Contributions in Collaboration with Non-Governmental Organizations Working in close association with Non-GovernmentalOrganizations, HMC provides social events andactivities in communities in response to its socialresponsibilities. In March 2004, HMC launched itsannual blood donation campaign to help those whoare in desperate need of blood services. The collection resulted in the donation of blood tovarious Korean leukemia associations.

Furthermore, HMC and the Beautiful Store held afundraiser, Beautiful Saturday with Hyundai Motor inMarch 2004. Over a period of two weeks,employees donated over 60 thousand personal itemsto the store, which has been the highest recordedtotal thus far. HMC also donated 7 billion KoreanWon as a relief fund to the Community Chest ofKorea and an amount of 1 billion Korean Won in reliefsupplies to underprivileged neighborhoods at the endof 2004. In order to help the underprivileged, HMCwas involved in a year-end social activity campaignlasting from December 6th to the 24th and distributedrice to 40 thousand low income and underprivilegedfamilies in partnership with the Taxi DriverAssociation. In addition, HMC contributes to socialwelfare facilities by donating used-computersannually.

Global Philanthropic ActivitiesHMC is directly involved in international naturaldisaster relief throughout the world and medical reliefsupport for Africa and other 3rd world countries.Domestically, HMC is working with non-governmentalorganizations to provide medical services for foreignlaborers working in Korea.

Traffic Accident Prevention for the PhysicallyChallengedHMC supports the Community Chest of Korea byproviding buses for educational purposes and financialaid. Acknowledging that physically challenged childrenare at a higher risk of traffic accidents, HMC haspromoted traffic safety education.

Vehicle Designed for Children’s SafetyHMC develops the H-1, a vehicle specially designed toenhance children’s safety and accident prevention.Available on the market since July 2004, the H-1 isspecially equipped with an auxiliary side foot panel, a parking sensor, and a front detection mirror.

Children’s Traffic SafetyHMC engages in wide-ranging activities to educateand to raise children’s overall level of awareness intraffic safety. As well, HMC produces speciallydesigned vehicles to enhance children’s safety.These efforts have been well received by relatedboards and institutions. In addition to the initiativeson children’s traffic safety, employees have alsoengaged in a volunteer programs, providingextracurricular sessions and preparing of meals forunderprivileged children.

Junior Traffic Safety CampaignSince 2002, the Junior Traffic Safety Campaign hasbeen undertaken in partnership with the Citizen’sCoalition for Safety. The campaign has taken placeevery 2nd and 4th Wednesday of the month, togetherwith parents and children in 25 different regions. To participate in the campaign, registration is acceptedonline through the Citizen’s Coalition for Safety websiteand/or in person at any one of HMC’s dealerships.

*Junior Traffic Safety Campaign website :http://www.safelife.or.kr and/or http://www.go119.org

*Social contribution website :http://shareway.hyundai-motor.com

‘Beautiful Saturday with Hyundai Motor’ co-hosted withBeautiful Shop

Wheelchair donation for the physically challenged Food aid for the underprivileged


Attracting TalentA major focus of HMC’s initiatives is the developmentof future working professionals. In pursuit of this,HMC provides the necessary support for students todevelop and practically apply their education. HMCinitiates wide-ranging educational programs insupport of university and college students studying inprofessional programs. In addition, HMC givesKorean students the opportunities to experience theglobal community.

Student Marketing Forum and Design ContestHMC hosts Korea’s largest annual Student MarketingForum to advance fresh and creative ideas on automobilemarketing. In addition, HMC hosts a Vehicle DesignContest for students annually. The contest has receivedmuch interest from students studying in engineering fieldsand allows for the practical application of theories andideas.

R&D Scholarship Program HMC has sponsored the R&D Scholarship Program toidentify and nurture future leaders graduating fromengineering fields since 2003. HMC provides 4 billionKorean Won in scholarships and practical training sessionson vehicle design, parts development, and vehicleassembly to 180 students annually. In 2004, HMC 137selected students have been receiving education at theNamyang R&D Center and the Next Generation VehicleResearch Institute (NGVRI) located in Seoul NationalUniversity.

Mechanics ContestHMC has been working in close association withautomobile industries and academic institutions. To nurture professional mechanics, HMC has hosted theJoint Mechanics Contest for students since 2001.Students from 11 engineering colleges and universitiescompete with fellow students to upgrade professional skillsrelating to repair and maintenance. The initiatives allowHMC to breed potential future leaders in the area of vehiclemaintenance. By engaging in joint research relationshipswith these 11 schools, special HMC courses are nowbeing offered to students of the Department of Automobile.In addition, HMC provides vehicles and other educationalmaterials for the program and letters of recommendationsto graduates.

Be Global Friends! The Be Global Friends HYUNDAI program supportsstudents from domestic colleges and universities toexperience the international community. Each year,HMC reviews and selects a new region for the programto be held. Selected students are provided with theopportunity to broaden their knowledge about thechosen country’s history, culture, and economy.

Next Generation Vehicle Research InstituteIn June 2004, HMC established the Next GenerationVehicle Research Institute (NGVRI) at Seoul NationalUniversity to conduct research on futuristic vehicles andto nurture R&D professionals. HMC plans to supportthe NGVRI’s faculties and R&D staff in its research ofnext generation vehicle technologies and to share in itsfindings.

Supporting Eco-friendly Movement HMC supports the National Trust of Korea’s eco-friendlybuilding enterprise. As part of its 3rd public propertyproject, the National Trust of Korea has undertaken thecomplete residential redevelopment of Jaejang village, inKangwon Province. One of the distinctions of this projectis the replaced usage of concrete and chemicals withmore environmentally friendly raw materials. Through itsengagement of active employee participation inresidential projects since April 2005, HMC continues itssupport of the National Trust of Korea’s residentialredevelopment initiatives.

Environment Restoration & Protection HMC has been engaged in diverse environmentalprotection activities to restore the local environmentin areas where HMC facilities are in operation. In 2004, Ulsan city presented Ecopolis Ulsan,initiatives to re-establish the city as an eco-friendlyarea. In line with and in support of the city’sinitiatives, the Ulsan manufacturing plant has beguna 3-year project to protect the Sericinus telamon, anendangered butterfly, beginning from 2004. The plant initiates a clean-up project for areas closeto rivers and beaches every year. Due to thedestruction of forest landscape from forest fires, theplant in association with the local government andsecondary institutions has commenced a forestationproject on Mooryong Mountain. In addition, theAsan and Jeonju manufacturing plants alsoundertake diverse protection activities to restore thelocal environment.

Tsunami Relief in Southeast Asia In December 2004, Southeast Asia was hit by atsunami causing great damage to the area. HMCoffered $1.5 million USD in aid to the countries hithardest by the tsunami by providing relief supplies anddispatching 5,000 volunteer workers. In addition, HMIcontributed $500 thousand USD in relief aid andprovided special services for damaged vehicles, andrelief supplies totaling $700 thousand USD. Over 3,500employees from HMI and its dealers were also activelyinvolved in volunteer services in regions located in andaround India.

Donating Medical Vehicles to Africa HMC donated two H-1 Ambulances to the KoreaInternational Foundation for Health & Development tosupport the public health development of Eritrea, one ofthe poorest countries in Africa. Public healthdevelopments in Eritrea have been projected to beginsomewhere between in 2004 and 2007. The firstphase of the project is now underway and includes thereconstruction of old hospitals in Asmara, the capital ofEritrea.

Supporting Domestic Foreign Laborers’ MedicalServiceThe number of foreign laborers working in Korea is astaggering 140 thousand, with most not eligible toreceive medical insurance. This poses a specialproblem as the majority of foreign laborers work in the3D industries (Difficult, Dirty and Dangerous). In response, HMC contributed 600 million Korean Wonto the Community Chest of Korea for foreign workers’medical welfare as laborers are at a higher risk ofsustaining workplace accidents and contractingdiseases. HMC’s contributions were used for medicalwelfare purposes and costs associated with childrearing.


EN2. Waste material reuse 55

EN3. Direct energy use 53

EN5. Water use 53

EN8. Greenhouse gas emissions 53

EN10. Air emissions 57

EN11. Total amount of waste 55

EN12. Water discharge 58

EN13. Chemicals, oil spills 58

EN15. Product reclaimability 48

EN16. Incidents of non-compliance 58

EN17. Energy initiatives 47

EN18. Energy consumption footprint 46

EN22. Water recycling and reuse 53

EN27. Ecosystem protection and restoration 84

EN31. Hazardous material handling 58

EN33. Supplier performance 76~77

EN35. Environmental expenditures 59

Social Performance

LA1. Breakdown of workforce 70

LA2. Employment creation 70

LA3. Union representation 73

LA4. Communication with employees 70

LA5. Occupational accidents and diseases 75

LA6. Health and safety committee 75

LA7. Industrial health and safety 74~75

LA9. Employee training and education 71

LA10. Equal opportunity 73

LA11. Female employees and diversity indicator 70

LA12. Employee benefits beyond legal mandates 73

3.3 Expertise of board members 15

3.6 Sustainability management organization 13, 15, 81

3.7 Mission and value statements 8~9, 12~13

3.8 Mechanism for shareholders to

provide recommendations 15

3.9 Identification and selection of stakeholders 60

3.10 Stakeholder consultation 60

3.11 Information from stakeholder consultation 83

3.12 Use of information from

stakeholder consultation 83

3.13 Explanation of precautionary approach 32~33

3.14 Application of external sustainability

principles 46, 84

3.16 Systems for managing upstream

and downstream impacts 76~79

3.18 Operational decisions during

the reporting period 28~29

3.19 Sustainability management program (Presented throughout the report)

3.20 Certification status regarding

sustainability management 59

4.1 GRI content index 86~87

Economic Performance

EC1. Sales 6

EC5. Total payroll and benefits 70, 73

EC13. Indirect economic impacts 35

Environmental Performance

EN1. Material use 54

Vision and Strategy

1.1 Corporate sustainability vision

and strategy 8~9

1.2 Statement from the CEO 2~5

Profile

2.1 Name of reporting organization 6

2.2 Products and services 6, 36~37

2.3 Corporate operational structure 15

2.4 Major divisions, subsidiaries,

and joint ventures 16, 90

2.5 Countries of operation 16, 18~31, 90

2.6 Nature of ownership 6

2.8 Corporate scale 6

2.9 List of stakeholders 60

2.10 Contact point for the report 91

2.11 Reporting period 1

2.12 Date of most recent previous report 1

2.13 Boundaries of report 1

2.14 Significant changes in corporate 28~29

2.17 Decision to apply GRI Guidelines 1

2.19 Measurement changes 55, 58

2.20 Internal process ensuring reliability report 88

2.21 Independent assurance 89

2.22 Additional information (Presented website addresses in the report)

Governance Structure and Management Systems

3.1 Corporate governance structure 15

3.2 Independence of Board of Directors 15

GRIReference Indicator Description PageNumber

GRI Index

LA13. Cooperation with employee

representatives 73

LA15. Agreements with employee

representatives on the health and safety 75

LA16. Supporting continuous employability 71

LA17. Life long education program 72

HR1. Human right policy 73

HR3. Supply chain management system 79

HR4. Preventing discrimination 73

HR5. Freedom of association and

collective bargaining 73

HR6. Child labor 73

HR7. Forced labor 73

HR8. Human right training 73

HR9. Appeal practices 73

HR10. Non- retaliation policy 73

HR12. Management of indigenous

people's needs 73

SO1. Management of community impacts 27, 29

SO2. Compliance mechanisms for anti-bribery

and corruption 14~15

SO4. Awards 61

SO7. Compliance mechanisms for

anti-competitive trade practices 15

PR1. Customer health and safety 63~64

PR3. Customer privacy 65

PR8. Customer satisfaction 61~63




Independent AssuranceInternal Process Ensuring theReliability of the Report Independent Assurance Statement to Management of Hyundai Motor Company

Introduction

We have performed an assurance engagement on environmental and social aspects of the Hyundai Motor Company

2005 Sustainability Report (hereinafter, the Report). The Report is the responsibility of Hyundai Motor Company, with

whom the objective and terms of the engagement were agreed. We are responsible for expressing our conclusions

based on the engagement.

We have based our approach on emerging best practice for independent assurance on environmental and

sustainability reporting, including ISAE 3000 (“Assurance Engagements other than Audits or Reviews of Historical

Financial Information”), issued by the International Auditing and Assurance Standards Board (IAASB).

Subject matter

The subject matter is described as follows;

1. The process that Hyundai Motor Company at corporate level has put in place for the preparation of the Report, as

described in the section, ‘Before you read.’

2. The procedures and practices for the collection, calculation, aggregation and validation of performance figures for

2004 on environmental performance and industrial H&S and employee diversity as described in the section ‘Before

you read,’ and whether such data collected in this way are appropriately reflected in the sections Cleaner

Production (pages 52 to 59), Industrial Health & Safety (pages 74 to 75) and Stakeholders Communication (pages

60 to 85) in the Report.

3. Whether the above identified data, reported from Hyundai Motor Company production plants, are consistent with

instructions from corporate level and with the source documentation supporting the submitted data.

Procedures

Our objective was to achieve limited assurance. Based on an assessment of materiality and risk, we have gathered

and evaluated evidence supporting the conformity with criteria for the subject matters described. This work included

analytical procedures and interviews with management representatives and employees at Hyundai Motor Company

Headquarters in Seoul and at four manufacturing plants (Ulsan, Jeonju, and Asan in Korea, and the Beijing

manufacturing plant in China) and we engaged with the remaining two plants (Chennai, India; Izmit, Turkey) using

various means of communication. Our work was performed on a sample basis, as we deemed necessary in the

circumstance, but no substantial testing was undertaken. Therefore, the assurance that we obtained from our

evidence gathering procedures is limited. We believe that our work provides an appropriate basis for our conclusion.

Results

Based on our work described in this report, we conclude that nothing came to our attention that causes us not to

believe that in all material respects;

1. Hyundai Motor Company has applied detailed and systematic methodologies and processes for the preparation of

the Report in order to achieve its reporting objective.

2. Hyundai Motor Company at Headquarters level has applied detailed and systematic procedures for the purpose of

collecting, calculating, aggregating, and validating performance data for 2004 on environmental performance,

industrial H&S and employee diversity from reporting units for inclusion and appropriate reflection in the Report.

3. At the Korean production plants, the specified data submitted to Hyundai Motor Company Headquarters were

consistent with instructions from Headquarters. Data were consistent with the source documentation presented to

us. With respect to overseas plants in Chennai, India; Izmit, Turkey; and Beijing, China, instructions from

Headquarters were not fully implemented. As a consequence, as mentioned in the Report, certain data from these

plants were excluded from consolidation for 2004, and we have recommended improvements to be made for

coming years. Hyundai Motor Company has made respective adjustments and commentary to the Report.

Hereafter, those data were appropriately reflected in the Report.

Seoul, September 30, 2005

DELOITTE Statsautoriseret Revisionsaktieselskab

Content from this report are based on input from stakeholders as well as from HMC’s business

performances. The report was written by an internal team of the HMC Environmental

Management Strategy Planning Team. The information presented follows HMC’s internal reporting

guidelines and is based on official HMC documents and on information received from related

employees and departments. Contents are reviewed by managers and employees of related

departments and approved by the upper management of HMC before finalization and publishing.

Preben J. SoerensenDanish State Authorized Public Accountant Environment & Sustainability Services

Domestic FacilitiesHeadquartersYangjae-Dong OfficeTotal lot area: 22,177㎡

Total floor space: 82,750㎡Address: 231, Yangjae-Dong, Seocho-Gu,

Seoul, 137-938, Korea

Kye-Dong Office (Domestic Business Division)

Address: 140-2, Kye-Dong, Chongro-Gu, Seoul, 110-793, Korea

Ulsan Plant Division: No.1 Plant, No.2 Plant, No.3 Plant,

No.4 Plant, No.5 Plant, Total plant site area of 5,000,000㎡Total floor space: 2,310,000㎡Production capacity: 1,530,000 Vehicles produced: *No.1 Plant- Accent, Getz*No.2 Plant- Santa Fe, Centennial, Tucson *No.3 Plant- Elantra, Coupe, Matrix*No.4 Plant- H-1, Trajet, H100 Truck, H-1 Truck*No.5 Plant- Terracan, TucsonAddress: 700 Yangjong-dong, Buk-gu, Ulsan, Korea

Asan Plant

Total plant site area of 1,811,000㎡Total floor space: 429,000㎡Production capacity: 290,000 Vehicles produced: Sonata, Grandeur (Azera)Address: 123 Kumsong-ri, Inju-myun, Asan-si,

Chungchungnam-do, Korea

Jeonju Plant

Total plant site area of 990,000㎡Total floor space: 363,000㎡Production capacity: 60,000Vehicles produced: Medium and large size buses,

medium and large size trucks, special duty cars

Address: 800 Yongam-ri, Bongdong-eup, Wanju-gun, Jeollabuk-do, Korea

Hyundai & Kia Corporate R&D Division Address: 772-1, Changduk-dong, Hwasung-si,

Kyunggi-do, Korea

Environmental Technology Research CenterAddress: Guseong-myun, Younging-si,

Kyunggi-do, Korea

Commercial Vehicle R&D Center Address: 800 Yongam-ri, Bongdong-eup, Wanju-gun,

Jeollabuk-do, Korea

Overseas FacilitiesHyundai - Kia America Technical Center Inc. (HATCI)Address: 5075 Venture Dr. Ann Arbor. Mi 48108, U.S.A.

Hyundai - Kia California Design & Technical Center(HKMDTC)Address: 81 Bunsen Irvine. CA 92608, U.S.A.

Hyundai Motor Europe Technical Center GmbH (HME R&D)Address: Marie-Curie-Strasse 2, 65428 Russelsheim,

Germany

Hyundai Motor Japan R&D Center (HMJ R&D)Address: 3-2-2 Nishinohara Inzai-City,Chiba,

Japan #270-1334

Hyundai Motor Manufacturing Alabama (HMMA)Address: 7515 Halcyon Summit Dr. Montgomery

Alabama 36117, U.S.A.Total plant site area of 6,900,000㎡Production capacity: 300,000Vehicles produced: 2005 Sonata, New SUV

Hyundai Motor India (HMI)Address: A-30, Mohan Co-Operative Industrial Area,

Phase-1 Mathura Road, New Delhi 110-044, India

Total plant site area of 2,148,000㎡Production capacity: 250,000Vehicles produced: Atos Prime, Elantra, Sonata

Beijing Hyundai Motor Company (BHMC) Address: Room 601,Millennium Tower No.38

Xiaoyun Road,Chaoyang District, Beijing ChinaTotal plant site area of 670,000㎡Production capacity: 150,000Vehicles produced: Sonata, Elantra, Tucson

Hyundai Assan Otomotive Sanayi (HAOS)Address: Sehit Mehmet Fatih Ongul Sk. No: 2, 34742

Kozyatagi, Istanbul, TurkeyTotal plant site area of 1,000,000㎡Production capacity: 60,000Vehicles produced: Accent, H-1, H100

Taganrog Automobile Plant (TagAZ)Address: 99, Halturinskiy, Rostov-on-don 344011, Russia Vehicles produced: Accent, Sonata

Oriental-Hyundai Sdn BhdAddress: Wisma Kah Motor, 2nd Floor, Hq A/C,

Dept. No 566, Batu 3 1/2 Jalan Ipoh, 51200 Kuala Lumpur Malaysia

Vehicles produced: Accent, Elantra, Sonata

Inokom Coporation Sdn HbdAddress: Lot38, Mukim Padang Meha, 9400 Padang

Serai, Kulim Kedah Malaysia Vehicles produced: Atos, Matrix, Porter

Sudan Master Technology (SMT)Address: P.O. Box 444 Khartoum 11111, Sudan Vehicles produced: Accent

Prima Engineering Industries S.A.EAddress: Egyptian Vehicle Manufacturing,

Ghabbour Km3 Cairo, Alex Agriculture Road, Egypt

Vehicles produced: Accent

Hyundai Indonesia MotorAddress: Jl. Sultan Iskandar Muda No.

81 Arteri Pondok Indah Lt 2 Jakarta Selatan 12240, Indonesia

Vehicles produced: Atos, Accent, Trajet

Auhui Jianghuai Automotive Co., LtdAddress: 176, Donglim Road Hefei, ChinaVehicles produced: H-1

Huatai Automobile Co., LtdAddress: No.1 Anyuan Li An Dingmen Wai

Chaoyang District, Beijing, ChinaVehicles produced: Terracan

Reyan Vehicle Manufacturing Co. (RVMCO)Address: Sadaf Complex, Arg Vlvd.,

Kerman Khodro Blvd. Km 16 Karadj Special Road, Tehran, Iran

Vehicles produced: Accent

Vietnam Motors Industry Coporation Address: 120 Hang Trong, Hoan Kiem, Hanoi VietnamVehicles produced: Porter, H100 Truck

Dewan Farooque Motors LtdAddress: Dewan City, Sujawal, District Thatta Vehicles produced: Atos, H100 Truck

MMC Automotriz S.A.Address: Caracas, Venezuela Vehicles produced: Accent, Elantra

Sanyang Industry Co.,LtdAddress: 3 Chunghua Road, Hukou Hsinchu

Taiwan R.O.CVehicles produced: XG, Elantra, Tucson,

Getz, Matrix

Hyundai Motor America (HMA)Address: 10550 Talbert Avenue, P.O. Box 20850,

Fountain Valley, CA 92728 0850, U.S.A.

Hyundai Auto Canada (HAC)Address: 75 Frontenac Drive, Markham,

Ontario L3R 6H2, Canada

Hyundai Motor Company Australia (HMCA)Address: 8 Baywater Dr. Homebush Bay, NSW 2127

Hyundai Motor Japan (HMJ)Address: Shuwa Sanbancho Building 2F 28

Sanbancho Chiyoda-Ku, Tokyo

Hyundai Motor Company Poland (HMP)Address: Natpoll Building. No. 30, 4,

Migdalowa Street, 02-796 Warsaw, Poland

Hyundai Motor Hungary KFT (HMH) Address: H-1123 Budapest Alkotas U. 50, Hungary

Hyundai Motor Norway AS (HMN)Address: Ensjovn. 12D, Postboks 6466, Etterstad,

0605, Oslo, Norway

Hyundai Motor Europe (HME)Address: Marie-Curie-Strasse 2,

65428 Russelsheim, Germany

World Marketing Group (WMG)Address: 4 Park Plaza Suite 950 Irvine,

CA 92614, U.S.A.

Hyundai Motor Finance Co. (HMFC)Address: 10550 Talbert Avenue, Fountain Valley,

CA 92728 0850, U.S.A.

Beijing Jingxian Motor Safeguard Service Co., LtdAddress: 18A Zhichun Road, Haidian

District Beijing, China

Hyundai Motor Company (Central & Eastern Europe Regional Headquarters)Address: World Trade Center, Ent.3 #1902,

Krasnopresnenskaya nab.12, 123610 Moscow, Russia

Hyundai Motor Company (Asia Regional Headquarters)Address: Level 5, Wisma Hong Leong, 18 Jalan Perak,

50450, Kuala Lumpur, Malaysia

Hyundai Motor Company(Africa & Middle East Regional Headquarters)Address: #2903, Api World Tower Sheikh Zayed Rd.,

P.O. Box 34406 Dubai, U.A.E.

Hyundai Motor Company(Central & South America Regional Headquarters)Address: 9250 NW 25th Street Miami, FL 33172 U.S.A.

Hyundai Motor Company

(Pacific Regional Headquarters)

Address: 8 Baywater Dr. Homebush Bay, NSW 2127

Hyundai & Kia China Regional HeadquartersAddress: Room 1001, Hyundai Motor Tower,

No. 38 Xiaoyun Road, Chaoyang District Beijing, China

Hyundai Motor Beijing OfficeAddress: Room 701, Millennium Tower

NO.38 Xiaoyun Road,Chaoyang District, Beijing China (POST BOX NO.100027)

Hyundai Washington OfficeAddress: 1660 L Street, NW, Suite 201,

Washington DC 20036 U.S.A.

Hyundai Detroit OfficeAddress: Hyundai Kia Motor Company 41850 W.

11 Mile Road Ste 110 Novi, MI 48375

Hyundai Motor Company Hanoi OfficeAddress: Suite 1004, 10th, Hanoi Central Office Building,

44B Ly Thuong Kiet Street, Hanoi, Vietnam

Environmental Management Strategy Planning Team

TEL : 82-2-3464-2015 FAX : 82-2-3464-8796Mail : 231 Yangjea-Dong, Seocho-Gu

Seoul, Republic of Korea (137-938)e-mail : [email protected] : www.hyundai-motor.com

Contact Information

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