Automobile Industry South Korea

Hyundai Group, South Korea's largest business conglomerate, said its founder, Chung Ju Yung, will retire as honorary chairman, giving in to mounting pressure from the government and creditor banks. Hyundai Group also said Chung's two powerful sons--Chung Mong Ku, who heads the car-making units, and Chung Mong Hun, who controls electronics and several other units--will relinquish their posts, though there was some question about whether this would occur.

Once-lowly Hyundai Motor Co., the auto maker that gave South Korean cars a black eye in the U.S. a decade ago, has quietly surged past a sliding Mazda Motor Corp. to become the No. 5-selling Asian brand in the country. It is a symbolic victory, as Hyundai so far specializes in subcompact and compact cars that don't compete with much that the Japanese offer. But in a market in which appearance counts, outselling a well-known brand such as Mazda is an important symbol nonetheless.

Daewoo Nubira J.D. Power & Associates places the 2000 Nubira in the "premium compact" class, and who are we to argue? It is nicely designed in the generic-small-Asian-car school with touches of Italian flair around the nose, and it is plenty comfortable. The interior color scheme (brown on black on two-tone tan) is a bit busy but nothing to cancel a deal over, and there is enough head- and legroom for a 6-foot-2, 230-pound test driver.

It's still not hip to have a Hyundai, but it was only a few decades ago that it was no thrill to tool around in a Toyota, either. The Japanese auto makers have long since shown us that "made in Japan" is not code for "crud." They routinely capture the crown in surveys of buyer satisfaction and initial quality and, of course, they have also captured nearly a quarter of the U.S. new-vehicle market. Hyundai Motor Co. and its South Korean cousins, Kia Motors Corp. and Daewoo Motor Co.

Han Mi Sook, a 37-year-old company worker in Seoul, has owned a Daewoo sedan for several years. But riding around town with "Daewoo" on your hood has become a lot less prestigious since last August, when the entire industrial group was brought to its knees financially. "It's still running," she said with a laugh. "But it's a bit noisy." The same might be said for the entire South Korean auto industry these days.

South Korea's financial regulator said today that Daewoo Group and foreign creditors have reached a debt restructuring agreement. Daewoo Group's local creditors agreed to buy the company's debt to foreign banks in a move aimed at saving the South Korean conglomerate from bankruptcy. "Foreign creditors agreed to accept 39% to 40% of collection rate of their debts to four Daewoo affiliates," said a spokeswoman at the Financial Supervisory Commission.

Kia Motors Corp., a Seoul-based car and truck maker, said it's recalling 32,653 Sephia compact sedans to fix a defective hose that could cause the car to fail emissions tests. Sephias made between July 1, 1995, and Nov. 4, 1996, have hoses that are deteriorating prematurely, Kia said. That could cause them to fail tests necessary to renew automobile registrations. Kia said it will notify Sephia owners by mail that repairs will be made free of charge at a Kia dealership.

Just weeks after bankrupt Kia Motors Corp. was taken over by rival Hyundai Motor Co., a Hyundai official has been named chief executive of Irvine-based Kia Motors America, the North American import and distribution arm of the Seoul-based auto maker. B.M. Ahn becomes president and CEO of Kia Motors America, succeeding W.K. Kim, who had held the positions for nearly two years. Ahn was with Hyundai Precision & Industry Co., heading the export business division for the European and Russian markets.

TRW Inc., the world's largest maker of automobile air bags, agreed to buy the assets of South Korean auto parts maker Woo Jin Co. for an undisclosed amount to expand its products for South Korean auto makers. Closely held Woo Jin had 1997 sales of about $24.8 million. The company makes engineered fasteners, switches and controls for heating, ventilating and air conditioning, instrument panels and other parts, mostly for South Korea's Hyundai Motor Co.