South Korea’s second-largest conglomerate Hyundai Motor Group faced with multiple external and domestic scourges this year will enforce 10-percent cut in executive-level pay as well as other cost-saving efforts as a part of emergency measures to fight challenging times.

Hyundai Motor Group on Tuesday announced that executives of 51 umbrella companies will “voluntarily” surrender 10 percent of their monthly pay starting this month. The cut would affect as many as 1,000 on the senior-level payroll and last until the end of next year, it said. The country’s top automaking group last cut pay of senior-level in January 2009 following the 2007-2008 financial crisis.

The conglomerate added that it will concoct other ways to save costs.

Hyundai Motor Group’s emergency plans come at a time when its flagship units Hyundai Motor and Kia Motors, the country’s two largest automakers, have been struggling from sluggish sales and deteriorating profit. In the first nine months of the year, the two automakers’ global sales reached 5,621,910 units, down 1.8 percent from a year ago. It is the first time in 18 years since the Asian financial crisis in 1998 that their global sales have retreated. Sales have largely been affected by slowing demand in emerging markets including Russia and Brazil.

Business conditions have also been affected by the lengthy strike staged by unionized workers, which has disrupted production of 142,000 vehicle units, costing 3.1 trillion won ($2.7 billion) in revenue loss at Hyundai Motor and 70,000 units or more than 1 trillion won loss at Kia Motors.

Amid worsening business environment, Hyundai Motor’s profitability in the first half of the year reached 6.6 percent, a significant fall from 10.3 percent in 2011 and 10 percent in 2012. Local brokerage firms project that Hyundai Motor’s accumulated operating profit rate for the first three quarters this year will hover below 6 percent. Kia Motors has also seen its profit rate drop from 8.1 percent in 2011 to 5.2 percent in the first half of the year.

Hyundai Motor stocks jumped 2.6 percent, or 3,500 won from the previous day’s closing to end at 138,000 won on Tuesday while those of Kia Motors jumped 0.73 percent, or 300 won to close at 41,650 won.

By Lee Seung-hoon

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