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VIEWS: 18 PAGES: 127

									THE ROAD TO SUSTAINABILITY
HYUNDAI MOTOR COMPANY 2008 Sustainability Report
Before You Read

Writing Guidelines
Hyundai Motor Company’s 2008 Sustainability Report is based on the most up-to-date G3 GRI (Third Generation of the Global Reporting Initiative). In
selection of reporting items, we have embraced additional content beyond what the G3 GRI guideline requires. For more information on GRI guidelines
applied to this report, please refer to the G3 GRI Sustainability Reporting Guidelines on page 111~114.


Collecting Relevant Data and Writing the Report
We collected data from relevant departments in accordance with the HMC Sustainability Reporting Guidelines developed in 2003. In addition, we col-
lected sustainability report data of domestic and foreign plants through Autoway, the HMC’s intranet system. In particular, we reviewed and edited this
report in each phase of preparation including data collection, content preparation, and final review, in consultation with relevant departments on a regular
basis.


The Scope of the Report
This report covers quantitative results obtained from 2007 (the fiscal year of 2007) and qualitative events that occurred between January 2007 and April
2008. This report is prepared based on sustainability activities and performance reports made by the HMC headquarters, domestic plants, domestic sales
points, service centers, distribution centers, training institutions, overseas plants and dealerships, R&D centers, and regional headquarters.


Degree of Compliance with the GRI G3
We self-declare that the 2008 Sustainability Report meets the requirements of the GRI G3 Level A+, which has been independently reviewed and ap-
proved by Deloitte.
CONTENTS




Overview                                          Economy                                         People & Society

00	 Before You Read                               34 Main Business Activities                     78 Employees
                                                      Global Production                               Employee Status
08	 Letter from Chairman & CEO                                                                        Building Trust
                                                      Global Sales
10	 Letter from Vice Chairman & CEO                                                                   Respect for Human Rights
                                                      Enhanced Global Competitiveness
    	
12	 Materiality Analysis and Stakeholder                                                              Employee Education
                                                                                                      Employee Benefits
    Engagement
                                                  38 Process Innovation                               Industrial Safety and Health
14	 2008 Highlights                                   Strategic Enterprise Management(SEM)
15	 Overview of HMC                                   Supply Chain Management & Order to          85 Suppliers
                                                      Delivery(SCM & OTD)                             Mutual Cooperation
16	 Stakeholder Discussion
                                                                                                      Support for Green Management of Suppliers
                                                      Customer Relationship Management
                                                      (CRM)                                       92 Shareholders and Investors
                                                      Plant Maintenance(PM)                           Shareholders’ Meeting and Dividend
                                                                                                      Stock Dividend for Employees
Corporate Philosophy
                                                                                                      More Effective Communication with
                                                                                                      Shareholders
20 Corporate Philosophy                           Environmental Management
    Management Philosophy                                                                         95 Customers
    Vision                                                                                            Customer Satisfaction
                                                  44 Efforts to Minimize the Impact of                Customer First Management
    Management Policy
                                                     the Climate Change                               Marketing
    Mid-and Long-term Strategies
                                                      Regional Responses
                                                      Development of Alternative Fuel Vehicles    99 Social Contribution
22			Environment Management                                                                           Social Contribution Philosophy and Vision
                                                      Fuel Cell Electric Vehicle(FCEV)
    Environment Management Philosophy &                                                               Progress and Plans
                                                      Improving Vehicle Fuel Efficiency
    Policy                                                                                            Social Contribution Activities in Korea
    Environmental Management Strategy and                                                             Global Social Contribution
                                                  55 Reduction of Gas Emissions
    System
                                                      Regional Responses
    Environmental Management Organization
                                                      Development of New Engines
                                                                                                  Appendix
24 Ethics Management
                                                  58 Increased Recyclability
    Ethics Management Philosophy
                                                      Resource Circulation Target                 111 GRI Index
    Establishment of Guidelines
                                                      Expansion of Recycling Technology
                                                                                                  115	 Independent Assurance Statement
                                                      Life Cycle Assessment (LCA)
26 Corporate Social Responsibility                                                                116	 Data Sheet
                                                      Minimizing Use of Harmful Substances
    Overview of Corporate Social Responsibility                                                   117 Index (Sheet & Graph)
    Organizational Structure to Support                                                           118	 Hyundai Motor Company Worldwide
                                                  64 Clean Production
    Corporate Social Responsibility                                                               120	 Reference Material
                                                      Production Sites Fighting Against Climate
    How to Fulfill the Social Responsibility
                                                      Change
                                                      Resource Circulation                        	
28 Corporate Governance and the
                                                      Reduction of Pollutant Emissions
   Board of Directors
                                                      Environmental Expenditures
    Board of Directors
    2007 Activities of the Board of Directors
    Committees under the Board of Directors
    Ethics Committee
이
룸	                                                  Hyundai Motor Company has made continuous effort to realize dream come true.
                                                    We are now driving our effort to open up the new world where convenience and
                                                    happiness reside through development of new cars.




   [irum]




Irum means achievement.
An achievement is something which someone has succeeded in doing, especially by superior ability, special effort, and great courage.
Achievement: 1) An obtaining by exertion; successful performance; accomplishment 2) A great or heroic deed
From the research and development stage to recycling process,

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




                                                                                                                      름	
                                                                                                       [pureureum]




Pureureum means evergreen.
An evergreen is a denoting plants that does not shed its leaves seasonally. Often used as a metaphor.
Evergreen: 1) Trees that bear leaves all the year around 2) Continually fresh or self-renewing; often used metaphorically
                                                           나
                                                           눔	
                                                        [nanum]




Nanum means share.
Share means the full or proper portion allotted or contributed by an individual or group.
Share: 1) A part allotted, contributed, or owned by an individual or groups 2) Portion; section; division
We are well aware that love and trust from executives, employees, suppliers, shareholders, investors, customers, and
communities will be the basis for our aspiration to become the world’s leading automaker.
8   Letter from Chairman & CEO
                                                                                 HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                      9




Sustainability and Competitiveness for the Future

         We, at Hyundai Motor Company, believe our global success is founded on the support of
our stakeholders - customers, shareholders and suppliers. The strong and continuous support of all our
stakeholders is critical to realizing our aspirations of global leadership in the auto industry.


By fulfilling our environmental and social responsibilities we strive to be a model corporate citizen in every
community where we conduct our business. And we are making progress to achieve global integration and
alignment in our efforts to address key environmental issues such as climate change. Moreover, we are
actively engaged in a variety of social contribution initiatives to meet the highest standards of corporate
citizenship. We believe such efforts will set the course for our pursuit of sustainability.


In May 2008, we inaugurated the “Corporate Social Responsibility Committee” which promotes sustainable
management by seeking to balance qualitative and quantitative growth. Our sustainability management ini-
tiative encourages stakeholder participation to ensure a wide range of views and opinions are reflected in our
business and corporate activities.


In the pioneering spirit of challenge, we are actively taking the lead to promote change and innovation which
will generate a competitive edge. And we believe in the importance of pursuing harmony and co-existence
with all of our stakeholders for mutual benefit.


We genuinely value your comments and ideas on our efforts to uphold the values of sustainability. We would
like to thank all stakeholders and concerned parties for your continued interest and support.



                                                                                                       July 2008




                                                                                        Mong-koo Chung
                                                                                                 Chairman & CEO
10   Letter from Vice Chairman & CEO




               Our Efforts towards Sustainability

                          We would like to thank all our stakeholders for their continuous support and valuable contribution.
               It is our pleasure to present this report as evidence of our determination to fulfill our social responsibilities.


               Climate change and surging oil prices, which have precipitated a new energy crisis, have drawn global atten-
               tion to sustainability issues. To reduce the industry’s dependence on fossil fuels, automotive manufacturers
               have been seeking alternative solutions which incorporate sustainability principles into management while at
               the same time facing intense competition.
                                                                                 HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                      11




It is our pledge to become a sustainable enterprise and a global automobile manufacturer responsive to the
expectations of our stakeholders. By embracing environmental and social values, we create added economic
value and promote growth while remaining attuned to changes in external and internal management condi-
tions.


We are continuously expanding and improving our sustainability management system and our achievements
have earned recognition from many independent organizations. We have won major sustainability awards in-
cluding the 2007 Presidential Grand Prize for National Environmental Management, the 2007 Grand Award for
Excellent Sustainability Management and the 2007 Korean Environment Award for the Automobile Industry.


Through the harmonious balance of qualitative and quantitative development goals, we will continuously con-
tribute to improving the quality of the lives of our stakeholders everywhere. Furthermore, we promise our best
efforts to become a global leader in preserving the earth’s ecosystem through the systematic implementation
of sustainability management.


Our efforts to address environmental issues are on the same page as our commercial success. We continue
to strengthen our strategies in global management through the quality of our products and in our brand build-
ing, with the goal of creating added economic values, while at the same time becoming proactively involved
in global environmental initiatives.


With the rising awareness of environmental issues around the globe, we aim for full compliance with local
and international environmental regulations. Moreover, the development and supply of environment-friendly
automobiles such as hybrid electric vehicles (HEV) and fuel cell electric vehicles (FCEV) are a strategically
important response to the depletion of petroleum resources and global warming.


We are striving to attain the highest standards in sustainability management and are continuously enhancing
our internal organizational structures and strategies. As this report is designed to form the basis of a more
comprehensive dialogue with our stakeholders, I am greatly thankful for the support of our stakeholders.



                                                                                                       July 2008




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




     Materiality Analysis and Stakeholder Engagement

                                                   Materiality Analysis

                                                                                               We have published our annual sustainability report for six consecutive years. However, we are
                                                   well aware that there is a gap between perceptions of HMC and readers over the quality and quantity
                                                   of information contained in the report. Therefore, in 2008, we conducted a materiality analysis on the
                                                   2008 Sustainability Report to identify information and issues that are essential to stakeholders. Also, we
                                                   included our sustainability management results and practices in the report. In order to become a leading
                                                   global automaker in sustainability management, we will continue to analyze and review the materiality
                                                   of reporting items to prepare a sustainability report that accommodates stakeholders’ perspectives and
                                                   needs.


                                                   ●                                           Materiality Analysis
                                                                                               One of the main objectives of the sustainability report is to provide stakeholders with essential
                                                   information on the company. In order to ensure that readers and stakeholders trust and accept the sustain-
                                                   ability report, we conducted a materiality analysis on reporting items related to our sustainability manage-
                                                   ment outcomes and practices. We used the result of the materiality analysis in selecting reporting items
                                                   that might affect stakeholders’ decision-making process. Moreover, we have referred to sustainability
                                                   reports of domestic and foreign industry leaders. We reflected the feedbacks and comments of stakehold-
                                                   ers through the 2007 HMC Sustainability Report Review Committee and stakeholders’ meetings in 2008.




                                                                                                               C                                            A
                                                   Degree of concern to stakeholders




     Key issues selected by materiality analysis

                                                                                               • Issues of low impact and high concern    • Social responsibility
                                                                                               • Global/local community contribution      • Development of environment-friendly
                                                                                                 strategies and initiatives                 vehicles
                                                                                               • Reduction in hazardous wastes/emis-      • Response to the United Nations Frame-
                                                                                                 sions reduction program                    work Convention on Climate Change
                                                                                               • Respect for employee diversity             the Climate Change (UNFCCC)
                                                                                               • Industry-academia collaboration to       • Mutually beneficial labor relations
                                                                                                 nurture talents                          • Improved corporate governance
                                                                                               • Support for cultural and sports events




                                                                                                                                                            B
                                                                                                                                           • Environment-friendly procurement
                                                                                                                                           • Encouraging suppliers to adopt
                                                                                                                                             environment-friendly management
                                                                                                                                           • Mutually beneficial cooperation
                                                                                                                                             program
                                                                                                                                           • Customer-oriented management
                                                                                                                                           • Reinforced auto safety




                                                                                                                                               Current or potential impact on the company

                                                                                       A: Issues of high impact and high concern
                                                                                       B: Issues of high impact and low concern
                                                                                       C: Issues of low impact and high concern
                                                                                          HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                               13




                                 Stakeholders Engagement

                                             HMC interacts and builds relations with various stakeholders through cars as a medium. Our
                                 management philosophy is to grow together with stakeholders based on mutual trust and cooperation.


                                 ●           Our Stakeholders
                                             Stakeholders refer to individuals or groups who are affected by business activities or affect
                                 business activities. Following is the list of stakeholders that HMC recognizes.



Identification of stakeholders
                                                                                            Shareholders
                                                           Customers
                                                                                            and investors




                                     Executives
                                        and                                                                         Global society
                                     employees                              Economy




                                                            Environment                  Community

                                                                                                                       Local
                                     Suppliers
                                                                                                                    communities




                                                              Non-
                                                           government                        Government
                                                          organizations




                                 ●           Communication with Stakeholders
                                             In relations with stakeholders, our ultimate goal is to build effective communication on trust
                                 based, and to grow and develop together. In this regard, we are in the process of identification of stake-
                                 holders’ major concerns and expansion of communication channels. In 2008, we developed the 2007
                                 Sustainability Report Review Committee into a consultative body with stakeholders in order to select
                                 important sustainability issues, and our executive management held a meeting with stakeholders to reflect
                                 their views in the management’s decision-making process.
14   Overview




          2008 Highlights


     ●           National Environmental Management Grand Prize Winner                   ●           Sponsorship for the EXPO 2012 YEOSU KOREA
                 The Ministry of Commerce, Industry, and Energy, and Ministry of                    We helped Yeosu win the bid to host the 2012 World Expo. Under
     Environment promotes environmental management practices on yearly basis            the theme of "The Living Ocean and Coast," the EXPO 2012 YEOSU KOREA aims
     by awarding the National Environmental Management Award to domestic                to propose and explore ways to address global environmental problems such
     companies with outstanding environmental performance. Well-recognized for          as ocean contamination and sea-level rise caused by climate change.
     our environment-friendly business activities, we won the 1 prize in this award.
                                                                st
                                                                                        As a corporate citizen, we actively supported Yeosu to win the bid to host
     We also won the 2007 Grand Awards for Excellence Sustainability manage-            the 2012 World Expo in collaboration with the Korean government, based on
     ment and the 2007 Korea Environmental Award in automobile category. This           the recognition that the theme of the Expo is relevant to our sustainability
     award recognizes that we have respected human values and dutifully fulfilled       management.
     the social responsibility by adopting environment-friendly business practices at   As the Honorary Chairman of the EXPO 2012 YEOSU KOREA Bid Committee,
     home and abroad.                                                                   Chairman Mong-koo Chung visited around the world to help Yeosu win the bid
     We have developed and implemented environmental management strategy in             to host the EXPO 2012 YEOSU KOREA. He organized a taskforce team, opened
     all areas of the automotive industry value chain by declaring our commitment       a secretariat office in Paris, France, and used HMC offices and sales network
     to preserve environment in our global business activities in 2003. Particularly,   around the world to support the World Expo Bid Committee. When Yeosu finally
     we have focused on developing innovative technologies to mass-produce eco-         won the bid to host the 2012 World Expo, we felt a sense of accomplishment
     friendly cars, implement a clean production system, introduce a resource recy-     as a private company contributing to the national and regional growth. In the
     cling system, and build a green partnership with our suppliers.                    future, we will continue to support the national and regional development proj-
     We believe that proactive environment-friendly management can enhance              ects, based on the recognition that improved national image leads to higher
     corporate values and contribute to making a better future of the earth and         corporate values of HMC.
     promoting the happiness of mankind, and will strive to create an affluent and
     sustainable society.                                                               ●           Corporate Social Responsibility Committee
                                                                                                    In April 2008, the Hyundai Motor Group Corporate Social Responsi-
     ●           The 40th Anniversary                                                   bility Committee was established to meet the global standards for responsible
                 The year 2007 marked the 40th anniversary of HMC. Since the            corporate citizenship, fulfill the social responsibility, and respond to government
     foundation in 1967, we have contributed to Korea's economic growth as the          policy for the disadvantaged. In addition, each of HMC, Kia Motors, Hyundai
     first auto manufacturer in Korea. In 1976, nine years after the foundation, we     Mobis, Hyundai Steel, and Hyundai Hysco has established its own corporate
     exported our first proprietary model Pony to Ecuador. In 1986, we exported         social responsibility committee to fulfill the social responsibility as a corporate
     Excel to the U.S. and laid the basis for global management. In the 2000s, we       citizen.
     built production bases in China and the U.S., constructed plants in Europe and     The HMC Corporate Social Responsibility Committee aims to lay the basis for
     Russia, and exported our proprietary engine technology to many countries, be-      socially responsible management, and help us gain trust from the government
     coming a leading global automaker. Particularly, in 2007, we sold a total of 2.6   and public. The committee further assists us to become a leader in sustainabil-
     million vehicles, the highest in our history.                                      ity management, and grow in terms of both quality and quantity. To this end,
     In the process of rapid growth, we have recognized that we not only have to        we have selected three major areas to focus on: trust-based management,
     create profits but also contribute to social development as a responsible cor-     environmental management, and social contribution. Also, we plan to continue
     porate citizen. Based on this recognition, we have pursued a balance between       our development of environmental management and ethical management.
     interests of all stakeholders and sustainable development. In addition, we have
     been a leader in providing sustainable mobility by developing eco-friendly ve-
     hicles and building mutually beneficial labor relations.
                                                                                                                          HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                   15




Overview of HMC

Since the foundation in 1967, we have led the automobile industry in Korea. The year 2007 marked our 40th anniversary. When HMC was
founded, no one expected that Korea would have an auto manufacturer with a proprietary technology. However, we have grown into a
leading global automaker with the prominent initiatives and strenuous efforts.
With 40 years of technology leadership and potential acquired during the development of the Korean economy and its domestic automobile
industry, we fulfill our social responsibility by contributing to creating a society, where nature and humanity can peacefully co-exist, and
promoting sustainable development worldwide



Assets (As of December 31, 2007)/(unit: billion won)
year                                                                              2005                                      2006                                        2007
Total assets                                                                    26,661                                    26,430                                       29,587
Revenue                                                                         27,384                                    27,335                                       30,489
Net income                                                                       2,349                                      1,526                                       1,682
Total liabilities                                                               11,608                                    10,379                                       11,384
Stockholders Equity                                                             15,053                                    16,051                                       18,203




Production and Sales


Production (As of December 31, 2007)/(unit: number of vehicles)                          Sales (As of December 31, 2007)/(unit: number of vehicles)
Category            location                               2006                  2007    Category                                                         2006             2007
Domestic	           ▒	Ulsan                            1,289,313             1,352,812   Domestic	         ▒ Domestic demand                           580,288           624,227
	                   ▒	Asan                              279,760               296,600    	                 ▒ Exports (Excluding CKD)                  1,030,774        1,076,070
	                   ▒	Jeonju                              49,195                57,315   	                 ▒	Total	                                   1,611,062        1,700,297
	                   ▒	Total                            1,618,268             1,706,727
Overseas	           ▒	HMI(India)                        301,590               338,755    Overseas	         ▒	HMI(India)	                               298,980           326,899
	                   ▒	BHMC(China)                       290,088               231,888    	                 ▒	BHMC(China)	                              290,011           231,137
	                   ▒	HMMA(USA)                         236,773               250,519    	                 ▒	HMMA(USA)	                                236,177           251,022
	                   ▒	HAOS(Turkey)                        60,870                90,180   	                 ▒	HAOS(Turkey)	                               60,660           91,270
	                   ▒	Total                             889,321               911,342    	                 ▒	Total	                                    885,828          900,328




              1,706,727                                        911,342                                    624,227                                        1,976,398
                    Domestic                                      Overseas                                 Domestic                                       Export and
                                                                                                            market                                         overseas
                                                                                                                                                            plants
16   Overview




     Stakeholder Discussion


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

        Stakeholders
        Il-Chung Kim          (Department of International Trade of Donguk University, Professor)
        Jong whan Noh         (General manager of Climate Change Mitigation Department of
                              Korea Energy Management Corporation)
        Young Jae Ryu	        (Sustinvest, CEO)


        Hyundai Motor Company	
        Jae Kook Choi         (President of Hyundai Motor Company)



                                                                                                                                                                Jae Kook Choi (HMC, President)




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


     Young-Woo Park (President of Business Institute of Sustainable Development) | HMC prepared     lems of labor relation as a seasonal risk. In case of HMC’s labor issues, the
     this discussion to reflect various stakeholders’ opinions on the new sustainabil-              public perception of labor union as stubborn group is also considered as one
     ity report that will be published. In 2007, the Review committee of sustainabil-               of the risk factors. Therefore, we encourage HMC to share long-term plans
     ity report was established to serve as the only independent source of providing                with more open-minded. Thirdly, for mutual development with suppliers, HMC
     opinions on the report. However, starting from this year, HMC extended its                     should establish set of long term objectives and strive to extend the scope of
     scope to become inclusive of stakeholders’ opinions.                                           mutual cooperation program.


     Jae Kook Choi (HMC, President) | Following the establishment of the Review Com-                Jae Kook Choi | For betterment of the brand, corporate culture, employment
     mittee of sustainability report, increasing number of insiders asserted the im-                satisfaction level, supplier relations should all be taken into consideration. It
     portance of embodying stakeholders’ opinions. In response, we are planning to                  has been true that quality management and global management accounted for
     embrace their opinions both in preparation of our management plans as well as                  HMC’s successful growth. Now, brand management will be our focus and we
     in our-decision making process. Based on the quality management and global                     will find exemplifying cases to benchmark. Last year, we successfully ended
     management, we are now focusing on brand management and also trying to                         wage negotiations without strikes and are currently working with unions to fin-
     enhance intangible values of our firm via fulfilling social responsibilities as well           ish this year’s negotiation peacefully. HMC runs the Labor-management Com-
     as environmental management.                                                                   mittee that consists of independent experts recommended by both the labor
                                                                                                    union and management. Labor relation is not only critical to public image of
     Young Jae Ryu (Sustinvest, CEO) | In the past, the value of corporation was mostly             HMC but also influential to the amount of supplies. The executives fully under-
     determined by the value of tangible assets. Now the situation is reversed. Al-                 stand the needs to enhance labor relation for HMC’s further growth. In addition,
     most 80% of the firm’s value now consists of intangible assets such as brand                   HMC actively implements cooperative management in order to grow together
     image, labor relation and others. In response to this new trend, rising number                 with its suppliers, building partnerships based on mutual trust.
     of investors is showing interests in intangible assets.
     Still, HMC could still be improved in three aspects. First aspect is regarding                 Jong whan Noh (General Manager of Climate Change Mitigation Department of Korea Energy Manage-
     corporate governance. Disclosing profiles and current status of Ethics Com-                    ment Corporation)   | As the climate change is becoming a major issue, there are
     mittee with respect to its neutrality and professionalism would be perceived                   ongoing discussions on who should be responsible for such changes. Theoreti-
     as an earnest effort to react to external stakeholders’ interest and would open                cally, the end consumer is regarded as the responsible member of the crisis.
     a ground for better communication. Secondly, most investors recognize prob-                    However, it is practically impossible to hold all the end consumers accountable.
                                                                                                                                      HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                             17




                        Young-Woo Park                               Young Jae Ryu                                   Jong whan Noh                                         Il-Chung Kim
(President of Business Institute of Sustain-                         (Sustinvest, CEO)             (General Manager of Climate Change                (Department of International Trade of
                        able Devleopment)                                                         Mitigation Department of Korea Energy                     Donguk University, Professor)
                                                                                                              Management Corporation)




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

Therefore, manufactures are starting to take more and more blames for the                        should be able to impress the readers by demonstrating its willingness for
climate change. In case of automobile industry, companies were not respon-                       innovation and changes.
sible for behaviors of individual drivers. Nowadays, firms are expected to
inform the drivers of the severity of climate change.                                            Jae Kook Choi | Although HMC has strong tangible assets, the under-per-
                                                                                                 formance of stock verifies that we still need more improvements especially
Jae Kook Choi | HMC puts more and more emphasis on climate change.                               something intangible. We would give our full consideration to inviting stake-
Unlike the past, it is a fair statement to conclude that cars are one of the                     holders from labor unions to our stakeholder meetings. Also, many external
major factors incurring climate change. Therefore, no HMC’s business ac-                         directors give us the advice that we should improve both tangible and intan-
tivities would persist unless careful consideration is given to climate change                   gible values that are essential to sustainability of corporation. HMC would
issue. HMC also needs to prepare for possible taxation based on different                        continue to maintain its transparent and ethical management via improving
CO2 emission level. HMC’s R&D center is thus working on improving both                           the level of transparency, adhering to principles and establishing mutually
performance and CO2 emission of cars. It intends to produce hybrid cars                          beneficial partnership with suppliers.
starting from next year. Such early response to climate change would be-
come a basis for our future success.                                                             Young-Woo Park | The most important factor to be considered in preparation
                                                                                                 of the report is communication. Still, we have not yet reached a desired level
Il-Chung Kim (Department of International Trade of Donguk University, Professor) | Having more   of understanding with stakeholders from lack of conversation. Stakeholders
conversation with citizens would certainly be beneficial, creating less con-                     find themselves not being fully informed about HMC’s plans and objectives
flicts in case the problem has risen. It would also be good idea to invite                       to address their concerns. From now on, we hope that this discussion was
representatives from labor unions to share opinions in stakeholder meet-                         instructive to HMC reminding the importance of conversation with stake-
ings due to public’s negative perception on labor union. I have been driving                     holders. Through active communication with stakeholders, HMC practice
Hyundai Sonata for 9 years, but including the minute cost for repair, I am still                 customer impression management to become a respectable HMC.
very satisfied with its features and performance. As a result, I have built a
trust that HMC is an excellent automaker. In spite of its excellence in quality
management, the under-performance of stock is perhaps the result of HMC’s
organizational structure. Ultimately, HMC needs to alter its organizational
structure to improve brand image. Also, through the use of CSR report, HMC
CORPORATE PhIlOSOPhy




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

Corporate Social Responsibility Committee and Ethics Committee
The HMC Group Corporate Social Responsibility Committee and HMC Corporate Social Responsibility Committee were established in order to fulfill the social responsibility as a global
corporate citizen and meet the diverse needs of interested parties. In addition, the HMC Ethics Committee was established to improve internal transparency and explore ways to
promote ethical management.


                                                                                                                                                                           page   26
20 Corporate Philosophy                        24 Ethics Management                                   28 Corporate Governance and the Board of
Management Philosophy                          Ethics Management Philosophy                           28 Directors
Vision                                         Establishment of Guidelines                            Board of Directors
Management Policy                                                                                     2007 Activities of the Board of Directors
Mid-and Long-term Strategies                   26 Corporate Social Responsibility                     Committees under the Board of Directors
                                               Overview of Corporate Social Responsibility            Ethics Committee
22		Environmental Management                   Organizational Structure to Support Corporate Social
Environmental Management Philosophy & Policy   Responsibility
Environmental Management Strategy and System   How to Fulfill the Social Responsibility
Environmental Management Organization
20   Corporate Philosophy

     20
     22
          Corporate Philosophy
          Environmental Management
                                                  Corporate Philosophy
     24   Ethics Management
     26   Corporate Social Responsibility
     28   Corporate Governance and the Board of
          Directors




                                                  We have developed and implemented our corporate philosophy including management phi-
                                                  losophy, vision, policy, and strategy to grow together with stakeholders and contribute to
                                                  improving the quality of life around the world. With "the Spirit of Creative Challenge," which
                                                  has so far guided HMC, we will strive to be a global leader in implementing sustainability
                                                  management.


                                                  Management Philosophy

                                                       With the spirit of creative challenge, we contribute to create a more affluent lifestyle for
                                                          humanity, and are contributing to the harmony and co-prosperity with shareholders,
                                                                customers, employees and other stakeholders in the automobile industry.


                                                              The spirit of creative challenge has been a driving force in leading HMC today. It is the perma-
                                                  nent key factor for HMC to actively respond to change in the management condition and seek creative and
                                                  self-innovative system. With the spirit of creative challenge, we create profits, the primary objective of a
                                                  private enterprise. Furthermore, we take the responsibility for the environment and society we belong to,
                                                  and offer sustainable mobility in order to implement our corporate philosophy and provide benefits to all
                                                  stakeholders including shareholders, customers, executives, employees, suppliers, and communities.



                                                  Vision

                                                              We announced "Innovation for Customers" as our mid-to long-term vision with five core strate-
                                                  gies: global orientation, respect for human values, customer satisfaction, technology innovation, and cul-
                                                  tural creation. We desire to create an automobile culture of putting customer first via developing human-
                                                  centered and environment-friendly technology innovation.

                                                                                     Global orientation
                                                                                   Growing as a leading global
                                                                                 automobile maker, building trust
                                                                                   and respect with the global
                                                                                           community
                                                         Respect for
                                                        human values                                                Cultural creation
                                                       Becoming a leader in                                         Creating an automobile
                                                     developing environment                                          culture where people
                                                      -friendly technology to                                         are respected and
                                                          contribute to the            Innovation                            valued
                                                      prosperity of humanity
                                                                                      for humanity




                                                               Customer satisfaction                 Technology innovation
                                                              Improving customer satisfaction           Developing an innovative
                                                                 by putting customers first               technology centered
                                                                       in all aspects                          on people
                                                                                                                           HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                         21




                                                                 Management Policy

                                                                            Based on the respect for human dignity, we make efforts to meet the expectations of all stake-
                                                                 holders including customers and business partners by building a constructive relationship amongst man-
                   Trust-based                                   agement, labor, executives and employees. Also, we focus on communicating our corporate values both
                   management                                    internally and externally, and gaining confidence from all stakeholders. Particularly, in 2007, management and
                                                                 labor of HMC finished wage negotiations without strikes, based on mutual trust. In addition, all executives
                                                                 and employees make efforts to acquire knowledge on auto industry fields to provide the highest quality and
       On-site                    Transparent                    service to customers. We endeavor to focus on on-site management by concentrating our business capacity
     management                   management                     on production and sales bases. Our fields include not only Korean business sites but also overseas production
                                                                 and sales bases. This on-site management played a significant role in supporting Yeosu to successfully win
                                                                 the bid to host the 2012 World Expo. In 2006, some of HMC executives were charged for illegal financial
                                                                 transaction. The case was closed with the court order of probation and community services in extenuation
Trust-based management
• Trustworthiness                                                of the facts; most of the funds were used inevitably for business management purposes and damages were
• Trust between management-labor, employer-employee,             mostly recovered. In 2007, we established Ethics Committee in order to prevent the recurrence. And in
  company-customer relationship
                                                                 2008, we established Corporate Social Responsibility Committee for the further efforts on trust-based man-
Transparent management                                           agement, environmental management, and social contribution. We also developed the institutional frame-
• Higher transparency in all areas of business
• Transparency in transaction and fair trade                     work to make management more transparent since we established and announced the Ethics Charter and
• Promotion of ethics and enhancing ethics management            Guidelines for Employees' Behavior in 2001. We will continue to focus on business transparency.
  system

On-site management
• Cultivation of on-site knowledge, and raising challenging
  spirit of field staffs.                                        Mid-and long-term Strategies
• Concentration on management capacity on industrial sites
• Management strategy based on the sites and promotion
  of R&D
                                                                            We developed five mid-and long-term strategies: global management, higher brand values, busi-
• Establishment of the immediate response communication          ness innovation, environmental management, and strengthening product competitiveness. Especially, we
  system
                                                                 selected environmental management as one of our strategies to meet the needs of our stakeholders and the
                                                                 society we belong to. We also intend to promote sustainability development and preservation of the environ-
                                                                 ment.



                                                                                           Global
                                                                                         management                                   With global management, we strive to become
                                                                                                                                      one of the top 5 automakers.


                                                                   Strengthening
                                                                                                              higher brand
                                                                      product
We focus on strengthening product competitiveness to compete                                                     values               With aggressive marketing and better product
                                                                  competitiveness
with world class automakers in the global market.                                                                                     quality, we aim to create brand values as one of
                                                                                                                                      the top 5 global automakers.




                                                                           Environmental                 Business
We seek to develop and implement environmental management                   management                  innovation                    We pursue business innovation to improve
strategy for the improvement of our corporate competitiveness.                                                                        product quality and productivity.
22   Corporate Philosophy

     20
     22
          Corporate Philosophy
          Environmental Management
                                                  Environmental Management
     24   Ethics Management
     26   Corporate Social Responsibility
     28   Corporate Governance and the Board of
          Directors




                                                  In 2003, we announced environmental management philosophy and global environmental manage-
                                                  ment policy, and laid the foundation for environmental management. Also, we apply our environ-
                                                  mental management strategy across all areas of the value chain. We will adhere to environmental
                                                  management and sustainability development as a global automaker, promoting environment pres-
                                                  ervation and taking social responsibility for lessening environmental impacts from our business
                                                  activities.



                                                  Environmental Management Philosophy & Policy

                                                                In 1995, we became the first Korean automaker to introduce environmental management.
                                                  Since then, we have developed environmental management philosophy and global environmental man-
                                                  agement policy that embody our will to promote environmental management. In June 2003, we officially
                                                  declared the environmental management philosophy and global environmental management policy. Based
                                                  on these, we have improved our environmental management system, presented executives and employ-
                                                  ees with consistent principles for environmental management, and informed external stakeholders of our
                                                  intention to fulfill the social responsibility of promoting environmental management.

                         Society
                                                  ●             Environmental Management Philosophy
                                                                We respect human values by protecting the environment and creating a society, where humanity
                                                  and nature peacefully co-exist, and accomplish the social responsibility as a responsible corporate citizen.
          Environment               human
                                                  ●             Global Environmental Management Policy
                                                  	             As a responsible corporate citizen, we respect for human and strive to create a sustainable
                                                  society. We preserve the global environment by implementing the following global environmental manage-
                                                  ment policy.
                                                  •   Recognize the environment as a core element of business and create corporate value by proactively pursuing
                                                      environmental management.
                                                  •   Promote the development and distribution of environment-friendly products.
                                                  •   Promote sustainable use of energy and reduce emissions in all processes of product from development to
                                                      production, sales usage, and disposal
                                                  •   Endeavor to provide all employees with environmental training programs, support suppliers in environmental
                                                      management, and contribute to public welfare
                                                  •   Comply with all domestic and international environmental regulations and agreements. Continue to improve
                                                      our environmental management efforts and publicly disclose our performance.




                                                  Environmental Management Strategy and System

                                                  ●             Environmental Management Strategy
                                                                We established five core tasks in order to effectively and consistently implement environmental
                                                  management with clear objectives and strengthen our capacity to respond to global environmental issues
                                                  and regulations.
                                                                                                                                                     HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                                                             23




                                                                                                     Response to                                 · Reduction in automobile green house gas emissions
                                                                                                    climate change                               · Development and production of alternative fuel vehicles
                                                                                                                                                 · Diversification of vehicle fuel sources
                                                                              Adoption of                                                        · Reduction in green house gases emitted from the workplace
                                                                                                                        Reduction of
                                                                               resource
                                                                                                                         hazardous
· Higher recycling rate                                                        recycling                                                         · Adoption of global standards to reduce four major heavy metals
                                                                                                                        substances
· Environment-friendly vehicle disposal a                                       system                                                           · Reinforcement of hazardous chemical materials management
· Zero wastes


                                                                                                                Establishment
                                                                                      Reduction of             of environmental
· Reduction in vehicle emissions                                                      air pollutants             management                      · Establishment of environmental KPI/ environmental accounting system
· Reduction of air pollutants from the workplace                                                                    system                       · More effective communication with internal and external stakeholders
                                                                                                                                                 · Establishment of information system on global environment regulations
                                                                                                                                                 · Strengthening green partnership with suppliers


                                                                          ●                 Environmental Management System
                                                                                            Based on our environmental management principles, we develop and implement environmental
                                                                          management objectives and strategies for the entire value chain of the auto industry including R&D, pro-
                                                                          curement, production, logistics, sales, and customer service.

                                                                          • Philosophy & Policy                  - Establishment of environmental philosophy & policy
                                                                                                                 - Declaration of global environmental management
                                                                          • Organization & Strategy	 - Establishment of environmental management strategy
                                                                                                                 - Operation of environmental committee
                            Philosophy
                             & Policy                                     • Management System 	                  - Environmental accounting - Establishment of communication channels with stakeholders
                                                                                                                 - Sustainability training for all employees - Sustainability report publication
                                                                          • R & D	                               - Environment friendly design - Fuel economy & vehicle emissions - Expansion of Recycling
                   Organization & Strategy
                                                                                                                 - Environmental information system - Developing environmentally friendly vehicles
                                                                          • Purchasing	                          - Establishing green procurement system - Establishing SCEP - Logistics optimization

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

       R&D       Purchasing Production
                                            Marketing Customer            • Marketing & Sales 	                  - Green marketing - Green sales
                                             & Sales Service
                                                                          • Customer Service	                    - Green service - Supporting Customer Service Providers’ EMS




                                                                          hMC Environmental Management Organization

                                                                                            We organized the Environmental Committee, which is the highest decision-making body with
                                                                          regard to environmental management, to facilitate swift decision-making and systematically implement
                                                                          environmental management. The Hyundai Motor Company's Environmental Committee is chaired by Vice
                                                                          Chairman and CEO, and composed of three strands: the Environmental Product Committee, Environmen-
                                                                          tal Production Committee, and Recycling Committee. Each committee has subcommittees, the total of
                                                                          eleven, classified by various environmental issues to promote collaboration among organizational units.

                                                              Environmental Product                                       Environmental                                         Recycling Committee
                                                                    Committee                                          Production Committee	                                     (Chair: Domestic Sales Director)
             hMC                                                      (Chair: R&D Director)                      (Chair: Ulsan Plant CEO, Head of Manufacturing
    Environmental Committee                                                                                                                                             - Compliance Strategy for Domestic policy and
                                                                                                                                     Division)
                                                         - Fuel Efficiency subcommittee                                                                                   regulation (Strategy to respond to domestic laws
                                                         - Emissions subcommittee                                 - Green House Gases subcommittee                        and regulations)
    Review and adjust enterprise-wide
                                                         - Eco-friendly Vehicles subcommittee                     - Wastes and Emissions subcommittee                   - Compliance Strategy for Overseas policy and
       environment-friendly policy
                                                         - Recycling, technology development subcom-              - Four Major Heavy Metals subcommittee                  regulation (Strategy to respond to overseas laws
          (Chair: Vice Chairman&CEO)
                                                           mittee (Strategy to develop recycling technology)      - Hazardous Substances subcommittee                     and regulations)
                                                         - Light-weight Car subcommittee
24   Corporate Philosophy

     20
     22
           Corporate Philosophy
           Environmental Management
                                                              Ethics Management
     24    Ethics Management
     26    Corporate Social Responsibility
     28    Corporate Governance and the Board of
           Directors




                                                              We implement ethics management to gain trust from stakeholders and fulfill our social respon-
                                                              sibility. We developed the Ethics Charter, Workplace Ethics, and Guidelines for Employees'
                                                              Behavior. Currently, we conduct Work Management Principles and Anti-bribery Policy.
                                                              In addition, we offer ethics education to executives and employees to help them make a right
                                                              decision in the face of an ethical dilemma. We conduct a cyber inspection and operated the
                                                              Ethics Committee to ensure compliance with ethics management principles.



                                                              Ethics Management Philosophy

                                                                          Transparency and trust are important criteria to evaluate a business. We implement ethics
                                                              management to ensure that our executives and employees make an ethical decision in the face of an ethi-
                                                              cal dilemma. Based on ethics management, we rectify unethical elements of business activities to improve
                                                              corporate values and competitiveness.
                                                              Upon ethics management, we gain confidence from customers, and suppliers while reducing time and
                                                              cost for making transactions and improving sales figures. In addition, ethics management help our execu-
                                                              tives and employees feel a sense of fulfillment from their work, become more loyal to the company, and
                                                              voluntarily contribute to the growth of the company. From a long-term perspective, ethics management
                                                              supports HMC to improve our business performance.



                                                              Establishment of Guidelines

                                                              ●           Ethics Charter

                                                              Contribution to the nation and society 	| We contribute to the national economy through ongoing
                                                              creation of jobs and trustworthy payment of taxes. We strictly comply with all laws related to the environ-
                                                              ment, spearheading the effort to protect the environment and contributing to society through cultural and
                                                              welfare initiatives.

                         Contribution
                         to the nation                        Enlargement of customers’ and shareholders’ rights | We protect customer rights and value by
                          and society
                                                              optimizing products and services, safeguarding customer information, and fulfilling our promise made to
                                             Enlargement of
     Establishment of
                                             customers’ and   customers. We maximize management efficiency to ensure that our financial structure is viable, safe-
       transparent
                                              shareholders’
      management         Ethics                               guarding and increasing shareholders’ assets.
                                                  rights
                         Charter

                                       Respect                Respect for human dignity and cultivation of competent human resources | We respect the indi-
            Establishment of      for human dignity
                                                              vidual employee as an independent being and created a sophisticated corporate culture based on mutual
            partnership with      and cultivation of
                suppliers         competent human             trust and understanding, while striving to prevent sexual harassment at work. We actively seek to increase
                                      resources
                                                              our employees’ sense of ethics and support them structurally with a long-term view to cultivate them into
                                                              independent, creative and effective individuals.
                                                              HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                     25




Establishment of partnership with suppliers | We actively support our suppliers with technical
knowledge and management guidance to ensure co-prosperity in the long-term by securing competitive-
ness in the international market. We trade with the suppliers as on an equal footing and do not make any
unfair demands by leveraging our position.


Establishment of transparent management | We deal with all tasks in a transparent manner and es-
tablish an honest corporate culture that garners trust by maintaining fair trade relationships that guarantee
transparent transaction conditions with all business partners and customers.
We reject all types of requests from all stakeholders that may infringe upon fairness and objectively in our
operations and do not pursue unlawful profit.


●            Regulation on Ethics at Work
	            We established the Regulation on Ethics at Work related to relationships among employees,
customers, suppliers, and competitors. Moreover, we developed detailed procedures and guidelines re-
lated to the actual practice for the Regulation on Ethics at Work. We specified basic rules and penalties for
violations of the basic rules in the Regulation on Ethics at Work. We also established the Workplace Ethics
Committee to effectively apply the Regulation on Ethics at Work.


●            Guidelines for Employees' Behavior
	            HMC executives and employees recognize that ethics is the source of corporate competitive-
ness and pledge to comply with the Ethics Charter to gain trust from the public and stakeholders.
Accordingly, we promise the following:
• We always behave with dignity and reject unethical requests in our daily life and in the workplace based on
    the pride and recognition that we are leading the Korean auto industry.
• We comply with applicable laws, regulations and corporate policies while fulfilling our duties to create a
    corporate culture that abides by ethical rules and principles.
• We value and protect customer information, tell only the truth to customers, and fulfill our promise with
    customers, without any exception.
• We do not accept shareholder requests that contravene the fairness, and reject any unfair requests from
    executives or employees or via employees.
• We protect confidentiality of information obtained during business activities and do not conduct action or
    make a relationship that interferes with the interest of the company and individuals.
• We diligently fulfill our duties as a responsible firm and continuously contribute to advancement of the nation,
    society, and company.


* For more information on ethics management, please visit the website of the Cyber Audit Center for Ethics
Management at http://audit.hyundai-motor.com.
26   Corporate Philosophy

     20
     22
          Corporate Philosophy
          Environmental Management
                                                  Corporate Social Responsibility
     24   Ethics Management
     26   Corporate Social Responsibility
     28   Corporate Governance and the Board of
          Directors




                                                  We established the Hyundai Group Corporate Social Responsibility Committee and HMC Cor-
                                                  porate Social Responsibility Committee in order to fulfill its duties as a global corporate citizen
                                                  and meet the various needs of stakeholders. Based on green and ethics management, we plan
                                                  to take the social responsibility more systematically and pursue sustainable and balanced
                                                  business growth.



                                                  Overview of Corporate Social Responsibility

                                                              Corporate social responsibility covers three areas: trust-based management, environmental
                                                  management, and social contribution. For trust-based management, we will focus on enhancement of
                                                  labor relations, mutually beneficial cooperation with suppliers, ethics management, and transparent man-
                                                  agement. As for environmental management, we will proactively respond to global trends and regulations
                                                  related to the environment, as Korea's leading auto manufacturer. For social contribution, we plan to en-
                                                  large our capacity and obtain expertise to effectively carry out global social welfare projects and participate
                                                  in volunteering programs to contribute to development of communities.




                                                                   Trust-based
                                                                   management                       • To gain trust from the
                                                                                                      government and public            • Improving corpo-
                                                                                                    • To pursue growth both
                                                                                                                                         rate competitive-
                                                                       hMC                            in quality and quantity
                                                                     Corporate                                                           ness
                                                                      Social                          terms
                                                                                                                                       • Growing as a re-
                                                                   Responsibility                   • To become an industry
                                                                    Committee                                                            spected company
                                                   Environmental                      Social          leader in sustainability
                                                   management                       contribution      management




                                                  Organizational Structure to Support Corporate Social Responsibility

                                                              In April 2008, the Hyundai Motor Group Corporate Social Responsibility Committee was es-
                                                  tablished, which implicates that we are willing to fulfill the social responsibility in our business activities,
                                                  and shows strong commitments and developed interests. The Hyundai Motor Group Corporate Social
                                                  Responsibility Committee consists of 10 executives and is chaired by Chairman and CEO Mong-koo Chung.
                                                  We have regular meetings bi-annually and sub-committee meetings at each quarter to check the progress
                                                  of corporate social responsibility plans and projects. Furthermore, we plan to establish an independent
                                                  assessment group of external experts in order to objectively assess our corporate social responsibility
                                                  progress and improve our social responsibility strategy.
                                                                                                   HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                              27




hyundai Motor Group Corporate Social Responsibility Committee

                                                                                                                           Trust-based Management
                                                                                                                                   Manager
                                                                                                                          • Labor relations • Procurement
                                                                                                                              • Finance • HR • Audit


                                                                                   Domestic Corporate                    Environmental Management
                                                                                                                                 Manager
                                                                                   Social Responsibility                • Green products • Green production
                                                                                       Committee                               • Resource recycling


                                                                                                                         Social Contribution Manager
                                                                                                                            • The Headquarters • Plants
                                                                                                                                 • Domestic sales



     Chairman:           Vice Chairman:
   Vice Chairman            President
                                                                                                                       USA Plant Management Director
    Dong-jin Kim         Jae-gook Choi

                                                                                                                           Czech Plant Management
                                                                                                                                   Director


                                                    Secretary:                                                         China Plant Management Director
                                                                                    Global Corporate
                                                Head of Business
                                                                                   Social Responsibility
                                                Strategy Planning
                                                                                       Committee
                                                      Group                                                            India Plant Management Director


                                                                                                                          Turkey Plant Management
                                                                                                                                   Director

                                                                                                                          Russia Plant Management
                                                                                                                                   Director




                                          how to Fulfill the Social Responsibility

                                                     Our determination to accomplish the social responsibility management will be reflected on
                                          detailed strategic objectives and action plans by sections in the latter half of 2008. To this end, we estab-
                                          lished the HMC Corporate Social Responsibility Committee led by Vice Chairman Dong-jin Kim and other
                                          executives to practice the social responsibility management cross the company.
                                          In addition, we aim to organize an independent assessment group consisting of global social responsibil-
                                          ity experts and opinion leaders by the end of 2008 and operate a CSR forum to objectively evaluate the
                                          outcomes of our CSR activities. We will pursue sustainable growth and development by exercising the
                                          social responsibility management and proactively meeting the needs of stakeholders in an environment-
                                          friendly manner.
28   Corporate Philosophy

     20
     22
                Corporate Philosophy
                Environmental Management
                                                                       Corporate Governance
                                                                       and the Board of Directors
     24         Ethics Management
     26         Corporate Social Responsibility
     28         Corporate Governance and the Board of
                Directors




                                                                       Under the Board of Directors, there are the Audit Committee and External Director Candidates
                                                                       Recommendation Committee. We further established the Ethics Committee in 2007.



                                                                       Board of Directors

                                                                                    The Board of Directors makes decisions on matters defined by the laws or articles of incorpora-
                                                                       tion, matters delegated by the general shareholders’ meeting, and key matters related to the basic guide-
                                                                       lines for company operations and work execution. Moreover, we have the authority to supervise duties of
                                                                       directors and management, and consist of four internal directors and five external directors. The Board of
                                                                       Directors holds regular meetings and special meetings, if necessary.




                                                                                                                Board of Directors



                                                                                                                                                              Ethics
                                                                                                                                                            Committee




                                                                                                                                        External Director Candidates
                                                                                  Audit Committee
                                                                                                                                        Recommendation Committee



                                                                                                                                                               (As of December 31, 2007)

     	                      Name                                                                           Remarks
     Internal               Mong-koo Chung        Chairman and CEO                                         Member of the External Director Candidates Recommendation
     Committee              Dong-jin Kim          Vice Chairman and CEO                                    Member of the External Director Candidates Recommendation Committee
                            Yeo-cheol Yoon        President and CEO                                        -
                            Jae-guk Choi          President                                                -
     External               Dong-gi Kim           Professor Emeritus, Business School, Korea University    Member of the External Director Candidates Recommendation Committee,
     Committee                                                                                             Audit Committee Member
                            Gwang-nyeon Kim       Samhan LLC                                               Member of the External Director Candidates Recommendation Committee,
                                                                                                           Audit Committee Member
                            Il-hyung Kang         BAE, KIM & LEE LLC                                       Audit Committee Member
                            Young-cheol Lim       SHIN & KIM                                               Audit Committee Member
                            Sun Lee               Professor, Department of Law, Soongsil University        -
                                                                                                                     HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                           29




2007 Activities of the Board of Directors		

Meeting                              Issues                                                                                                         Approval
1st Regular Meeting   January 25     39th annual financial statements                                                                               Approved as drafted
                                     39th annual report
                                     2007 business and investment plans
                                     Convening of 39th Shareholders' Meeting and matters to be submitted to the Shareholders' Meeting
                                     - convening of the shareholders' meeting
                                     - balance sheet statement of profit and loss, surplus appropriation statement
                                     - revision of the articles of incorporation
                                     - appointment of directors
                                     - appointment of external directors who are members of the Audit Committee
                                     - ceiling on compensation for directors
                                     Limits on trading with the largest shareholder
                                     Limits on the amount of corporate bonds to be issued
                                     Payment guarantee for local financing for HMA (USD 200 million)
1st Special Meeting   March 9        Appointment of a CEO (Director Dong-jin Kim)                                                                   Approved as drafted
                                     Appointment of members of the External Director Candidates Recommendation Committee
                                     (Directors Dong-jin Kim and Dong-gi Kim)
                                     Prevention of conflicts of interest of a director (Director Dong-jin Kim)
                                     Establishment of an ethics committee
2nd Special Meeting   March 30       Corporate bond issuance (total face value – 300 billion won)                                                   Approved as drafted
2nd Regular Meeting   May 2          Establishment of an ethics committee                                                                           Approved as drafted
                                     Payment guarantee for local financing for HMFC (USD 400 million)
                                     Overseas investment
3rd Regular Meeting   July 26        Payment guarantee for local financing for HMMA (USD 100 million)                                                Approved as drafted
                                     Changes in provisions on the Board of Directors
                                     Changes in matters delegated to the CEO
                                     Changes in provisions on the Audit Committee
3rd Special Meeting   September 20   Stock buy-back                                                                                                  Approved as drafted
                                     Stock disposal
                                     Transactions with subsidiaries
4th Regular Meeting   October 24     How to exercise stock options (issuing new stocks)                                                              Approved as drafted
                                     Transactions with subsidiaries
                                     Investment in the largest shareholder (Hyundai Powertech, paid in capital increase – 15 billion won)
                                     Appointment of managers
30   Corporate Philosophy

     20   Corporate Philosophy
     22   Environmental Management
     24   Ethics Management
     26   Corporate Social Responsibility
     28   Corporate Governance and the Board of
          Directors




                                                  Committees under the Board of Directors

                                                                The Audit Committee under the Board of Directors consists of four external directors. It is re-
                                                  sponsible for auditing finance and management of HMC. It has the authority to review reports on business
                                                  management and financial status. The Audit Committee approves matters related to audit, the sharehold-
                                                  ers' meeting, directors, and the board of directors. It can access business and management information
                                                  for auditing.
                                                  The External Director Candidates Recommendation Committee consists of two internal directors and two
                                                  external directors. External directors should be recommended by the External Director Candidates Recom-
                                                  mendation Committee. The 2007 Shareholders' Meeting approved the directors' compensation ceiling of
                                                  10 billion won. From January 1 to December 31, 2007, total compensation paid to internal and external
                                                  directors was 7.737 billion won.


                                                  2007 Activities of the Audit Committee 	
                                                  Meeting                        Issues                                                        Approval
                                                  1st Meeting     January 25     39th financial statements and annual report                   Approved as drafted
                                                                                 Assessment of internal accounting control in 2006
                                                                                 Appointment of an independent auditor
                                                  2nd Meeting May 2              Business performance reporting on the 1st quarter of 2007     Approved as drafted
                                                                                 Agreement with the independent auditor on non-audit service
                                                  3rd Meeting     July 26        Business performance reporting on the first half of 2007      Approved as drafted
                                                                                 Assessment of internal accounting control
                                                  4th Meeting     October 24     Business performance reporting on the third-quarter           Approved as drafted
                                                                                 (accumulated) of 2007
                                                           HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                     31




Ethics Committee

            We established the Ethics Committee, which monitors internal transactions and supervises
transparency and ethics management. The Ethics Committee consists of five external directors, one ex-
ecutive, and two advisors (independent). It reviews matters related to the Anti-Trust and Fair Trading Act,
transactions between parties in special relations specified in the Securities Trading Act, voluntary compli-
ance with fair trading regulations, policies on ethics management and social contribution, and the Ethics
Charter.


2007 Activities of the Ethics Committee
Meeting                                   Issues                                               Approval
1st Regular Meeting July 18               Appointment of the Chairman of the Ethics            Approved as drafted
                                          Committee
                                          Payment guarantee for local financing for
                                          overseas Hyundai Motor Companies
                                          Reporting
                                          - internal transaction
                                          - compliance program on fair trading
                                          - social contribution projects
                                          - implementation of the Workplace Ethics in the
                                           first half of 2007
1st Special Meeting   September 20        Transactions with subsidiaries                       Approved as drafted
2nd Regular Meeting October 24            Guarantee for subsidiaries                           Approved as drafted
                                          Transactions with subsidiaries
                                          Investment in the largest shareholder
                                          Reporting
                                          - social contribution in the 3rd quarter of 2007
                                          - internal transactions in the 3rd quarter of 2007
2nd Special Meeting November 29           Guarantee for subsidiaries                           Approved as drafted
ECONOMy




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

Quality Competitiveness and Brand Values
In 2007, HMC manufactured 2.6 million units of cars, the highest in history, in domestic and overseas plants, and sold the cars in the global market. Also, the accumulated number of
cars sold in the U.S. market exceeded 5 million in 2007. In addition, HMC has successfully improved its quality competitiveness and brand values. For example, the Azera, Santa Fe, and
Entrourage were named Best-in-Segment in Strategic Vision's Total Quality Index (TQS). HMC was ranked 72nd in the Interbrand Top 100 Global Brands.

                                                                                                                                                                              page   36
34 Main Business Activities       38 Process Innovation
Global Production                 Strategic Enterprise Management(SEM)
Global Sales                      Supply Chain Management & Order to Delivery
Enhanced Global Competitiveness   (SCM & OTD)
                                  Customer Relationship Management(CRM)
                                  Plant Maintenance(PM)
34   Economy

     34
     38
              Main Business Activities
              Process Innovation
                                                          Main Business Activities



                                                          HMC currently operates a sales network of 6,000 dealerships, 19 overseas factories and sales
                                                          centers in 180 countries. Despite 2007 economic hardships due to the fluctuation of exchange
                                                          rates, increase in the prices of oil and raw materials, we have manufactured and sold 2.6 mil-
                                                          lion vehicles, the highest in HMC history, in many countries around the world.



                                                          Global Production

                                                          ●          Domestic Production
                                                          	          In 2007, HMC started manufacturing a new model called i30 with sophisticated design and
                                                          stable handling that successfully entered into the European market. Also, i30 has been very popular among
                                                          younger generations in Korea. In addition, HMC opened a plant specialized in manufacturing luxury sedans
                                                          in Ulsan and launched Genesis, a premium sedan, in order to compete in the global luxury sedan market.
                                                          As for commercial vehicles, HMC increased the plant capacity to produce larger buses since supply fell
                                                          short in Korea.


                                                          ●          Overseas Production
                                                          	          In 1997, HMC built the Turkey Plant as the basis for its global business expansion. In 2007, the
     1
      		Completion ceremony in the Turkey Plant           Turkey Plant increased its production capacity from 60,000 to 100,000 vehicles per year and started to
     2
      		Opening ceremony in the India Plant II            manufacture Lavita, a model strategically designed to enter the European market. In early October 2007,
     3
      		Ground-breaking ceremony in the Czech Plant
                                                          HMC also opened the Second Indian Plant for i10 in order to take advantage of growing demands of auto-
                                                          mobiles in India. In addition, HMC used the Indian Plant as a global export outpost for strategic purposes.
                                                          Currently, i10 is manufactured only in India but it is also sold in Europe, Middle East, and Latin America.
                                                          In April 2007, HMC established Czech Republic Plant in Nosovice, a region close to the city of Ostrava,
                                                          in Czech that can manufacture 300,000 vehicles per year. The Czech Plant is scheduled to produce cars
                                                          from March 2009. In April 2007, HMC built the CKD Plant with an annual capacity of 50,000 vehicles to
                                                          establish a production base in Brazil, the largest automotive market in South America. In December 2007,
                                                      1   HMC signed the Letter of Intent with the State of Saint Petersburg in Russia to build a factory that can
                                                          manufacture 100,000 vehicles per year.


                                                          ●          2008 Production Plan
                                                          	          In 2008, HMC plans to stabilize its global production system and strengthen competitiveness
                                                          of factories. We expect overseas production will account for more than 45% of the total production based
                                                          on the establishment of the second Chinese plant, and stable production in the United States and India.
                                                      2
                                                          Particularly, second plant in China is a preparation to meet growing demand of vehicles after the Beijing
                                                          Olympics. In addition, we plan to expand our organization and workforce to support the global production
                                                          system. To this end, we will develop a localization plan to recruit and nurture competent local engineers to
                                                          provide better technical services and improve productivity at the local level.




                                                      3
                                                                                                                   HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                        35




                              2007 status of enlargement of overseas production sites
                              Plant                                     Item                                                                    Capacity (annual production)
                              Czech Plant                               Broke the ground in April                                               300,000 vehicles
                              CKD Plant, Brazil                         Completed in April                                                          50,000 vehicles
                              Russia Plant                              Singed the Letter of Intent in December                                 100,000 vehicles


                              Accumulated number of cars sold in the u.S. market
                              (unit: 10,000 vehicles)                                                                                                                 July 17, 2007
                                                                                                                                                                      5 million
                                  5 million



                                  4 million

                                                                                                                                                                   2005
                                  3 million
                                                                                                                                                                   4 million
                                                                       1992
                                                                       2 million                                                             2002
                                  2 million                                                                                                  3 million

                                  1 million                    1990
                                                               1 million

                                                        1990    1991   1992   1993   1994   1995   1996   1997   1998   1999   2000   2001   2002    2003   2004   2005   2006   2007




                              Global Sales

                              ●                  Domestic Sales
                              	                  In 2007, HMC sold total of 624,227 units of vehicles, a 7.6% increase from previous year and
                              achieved our domestic sales target of 600,000 units, first time since 2003. The company has attained the
                              domestic market share, measured by units sold, of 50% for 4 consecutive years.
                              By model, Sonata, Elantra, and Azera ranked first, second, and third, respectively in sales figures. Espe-
                              cially, newly released Sonata Transform model with advanced functional technologies and convenient
                              functions, sold 119,133 units last year. It was the highest Sonata sales figure since 1999. In addition, i30
1
 		Dealership in China
2
 		Dealership in Russia
                              Hatchback, which was launched in July 2007, a model targeted for Europe, was sold an average of 2,000
                              units per month, acquiring stable customer base. Grand Starex released in May, 2007 sold 51,392 units
                              last year to facilitate mini bus market in Korea.


                              ●                  Overseas Sales
                              	                  In 2007, HMC increased the sales by 3.1% from previous year and sold 1,986,070 units of
                              vehicles in overseas markets. We have analyzed and developed models for each region in strategic terms,
                          1
                              considering purchasing trends of consumers in each region. Through the strategic sales, we have exported
                              1,076,070 units to overseas markets, and sold 910,000 units manufactured from overseas factories.
                              Particularly, in 2007, HMC achieved aggregate sales of 5 million units in United States since we first ex-
                              ported Excel in 1986. Currently, Elantra (1.23 million units) and Sonata (1.02 million units) are best-selling
                              cars in the American market. Moreover, since 2000, we started to export premium cars such as Santa
                              Fe (580,000 units) and Azera (138,000 units) to enhance our brand value and profit. HMC now strives to
                          2   become a luxury brand by selling premium luxury cars such as Genesis and Veracruz.
36   Economy

     34      Main Business Activities
     38      Process Innovation




                                                                       ●          2008 Sales Plan
                                                                                  In 2008, HMC plans to sell 670,000 units of cars in the Korean market and export 1.13 million
                                                                       units of cars. Also, we plan to manufacture a total of 3.11 million units of cars including 1.8 million units
                                                                       in domestic plants and 1.31 units in overseas plants, which is a 20 percent increase year-on-year. To this
                                                                       end, HMC will continue to focus on global and customer-oriented management, and make more efforts to
                                                                       have the first-mover advantage in emerging markets including the post-BRICs economies.



                                                                       Enhanced Global Competitiveness

                                                                                  In 2007, despite business difficulties such as the strong Korean currency and intensifying com-
                                                                       petition in overseas markets, HMC has made a continuous effort to improve quality. Therefore, we gained
                                                                       favorable comments from major auto magazines and quality assessment organizations overseas. More-
                                                                       over, HMC ranked among the 2007 Top 100 Global Brands selected by Business Week and Interbrand, and
                                                                       were valued at 4.5 billion dollars. HMC's ranking has increased, since it became the first Korean auto maker
                                                                       to be one of the Top 100 Global Brands in 2005.
                                                                       We plan to increase its quality competitiveness and brand power based on its global production line-up,
                                                                       local production in major auto markets around the world, and strong sales network worldwide.


                                                                       ●          Higher Quality Competitiveness
                                                                       	          HMC has taken advantage of research centers through the partnerships in the U.S., Europe,
                                                                       and Japan along with the Nam-Yang R&D Center in Korea. Based on the R&D network, HMC successfully
                                                                       developed and launched i30 and i10 for regional markets. Moreover, after four years of investment and
                                                                       research process, we developed and launched Genesis, a highest technology luxury sedan.
                                                                       We also succeeded in developing three mid-and large-sized commercial diesel engines using our propri-
     Ranked 7th in the 2007 Annual Car Reliability Survey (Consumer-   etary technology, building a full diesel engine line-up ranging from passenger car diesel engines to small
     Reports, April 2007)
                                                                       commercial diesel engines and large commercial diesel engines.
                                                                       In 2008, HMC plans to continuously promote quality-oriented management. By adopting innovative quality
                                                                       management, we will help overseas factories independently improve quality, differentiate product quality
                                                                       to compete with leading and emerging auto manufacturers, and improve quality to establish highest qual-
                                                                       ity brand images.


                                                                       Enhanced Quality Assessment | In 2007, HMC attained the highest quality scores through continu-
                                                                       ous effort to improve product quality. In the Vehicle Dependability Study conducted by J.D. Power, HMC
                                                                       received an award in Quality Satisfaction for three consecutive years. In 2007 Annual Car Reliability Survey
                                                                       released by ConsumerReports, we ranked 7th, six steps above from previous year, becoming one of the
                                                                       top auto brands with highest reliability in the United States.
                                                                       The 2008 Annual Auto Issue of ConsumerReports presented Elantra and Santa Fe as one of the 2008 Top
                                                                       Picks in the Annual Car Reliability Survey, and Elantra, Santa Fe, Sonata, Azera, and Tucson as Recom-
                                                                       mended Cars. Azera was selected as both one of the Most Overlooked Cars and Most Satisfying Car in
                                                                       Value in the Owner Satisfaction survey.
                                                                                                                        HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                              37




                                                                i30, a model for the European market, and Veracruz, a luxury utility vehicle released to the U.S. market,
                                                                have been well reviewed by major press and auto magazines in Europe and the U.S. Santa Fe received the
                                                                perfect score (★★★★★) in the vehicle crash test conducted by the National Highway Traffic Safety
                                                                Administration (NHTSA) and earned the 2007 Top Safety Pick award from the Insurance Institute for
                                                                Highway Safety (IIHS) in the U.S.
                                                                Strategic Vision, a San Diego-based research firm, selected Azera, Santa Fe, and Entourage as a highest
                                                                quality vehicles in its Total Quality Study, and Azera and Santa Fe as the winners of the 2007 Total Value
                                                                Index.
                                                                Furthermore, i-10 won the Indian Car of the Year (iCOTY) 2008 award, which was the highest honor
                                                                granted to a car model in India.


                                                                ●          Higher Brand Competitiveness
                                                                	          Since HMC announced brand management policy and disclosed brand strategy and slogans
                                                                in 2005, we have reinforced brand management both in quantity and quality terms. As part of our brand
                                                                management, we published a new brand advertisement, "Think about it" in the U.S. market. In November
HMC ranked among the 2007 Top 100 Global Brands and valued at   2007, HMC held the "Brand Day," where executives and employees learned how to apply brand strategy at
4.5 billion dollars (Business Week, August 2007)
                                                                work, in order to enhance employees' awareness and understanding of the HMC brand.
                                                                In 2008, we are planning to focus on improving brand image and power via expanding sales of high-end
                                                                vehicles. We plan to promote Genesis, a full size sedan released in early 2008, and BK, a high-performance
                                                                sports car to be released in the second half of 2008, as leading luxury models to upgrade our brand values.
                                                                Moreover, we will strive to become one of the world class high-end automakers by providing high values
                                                                to customers in terms of sales strategy, service, and customer management.


                                                                Enhanced Brand Competitiveness | Our brand value continuously improved. HMC ranked 92nd in
                                                                2005, 80th in 2006, and 76th in 2007, in the Fortune 500 Companies. In the Top 100 Global Brands con-
                                                                ducted by Interbrand and BusinessWeek, we ranked 72nd, three steps above previous year, with brand
                                                                value of 4.5 billion dollars. Among the auto brands, HMC ranked 8th, following Audi. Our ranking in brand
                                                                value has been on the rise from 84th in 2005 and 75th in 2006 to 72nd in 2007, since we became the first
                                                                Korean auto manufacturer to be one of the Top 100 Global Brands in 2005. AutoPacific, a marketing re-
                                                                search and consultancy firm for the automobile industry, announced that HMC showed the largest opinion
                                                                improvement with 32% enhancement from previous year.
38   Economy

     34
     38
          Main Business Activities
          Process Innovation
                                                                 Process Innovation



                                                                   In September 2004, HyundaiㆍKia Motor Company started to introduce PI (Process Innova-
                                                                   tion). We planned to build new plants overseas and develop new cars to meet the sales and
                                                                   production targets. However, in 2004, we focused only on the domestic market, and produced
                                                                   and sold 1.67 million units per year. In order to make another leap forward as a global auto-
                                                                   maker, we had to shift to global production and sales system to improve its management both
                                                                   in quality and quantity terms. We also had to reinforce its capacity to minimize risks caused
                                                                   by large-scale investments and rapid business expansion, and support the global production
                                                                   and sales network. To this end, HMC selected 35 tasks to improve eight processes; Strategic
                                                                   Enterprise Management (SEM), Supply Chain Management (SCM), Customer Relationship
                                                                   Management (CRM), Plant Maintenance (PM), Quality Management (QM), Human Resources
                                                                   (HR), Standardization, and Construction Management (CM).



                                                                   Strategic Enterprise Management(SEM)

                                                                                Auto manufacturers have to make an enormous amount of investment and spend at least two
                                                                   to three years in developing new models and building new plants. Therefore, they are always exposed to
                                                                   many risks. HMC introduced strategic enterprise management (SEM) to support the corporate decision-
                                                                   making process and respond to business risks.
                                                                   HMC identified seven major steps for decision-making in the process of new model development (from
                                                                   research to mass production), and developed rules to make best decisions based on quantity, pricing, cost,
                                                                   investment, and profit and loss simulation results. To improve the reliability of investment cost calculation
                                                                   and assessment for building a new plant, we established standardized plant investment models (for an
                                                                   annual capacity of 150,000 and 300,000 units) that helps the decision making of the management.



                                     Strategic Enterprise Management Simulation Model

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




                                           Revenue                          Development of new cars
                                            • Quantity                      • Sales quantity estimation
                                                                            • Price estimation                         Target                                           Actual
                                             • Price
                                                                            • Material cost estimation
                                                                            • Estimation of investment
                                                                              amount of product development
                                              Cost
                                        • Cost of materials                                                       Quantity       Price                             Quantity       Price
                                                              Alternative                                                                          Gap analysis
                                                              simulation                                                                            by factors
                                                                                                                        Material                                         Material
                                                                             Investment in factories                     cost                                             cost
                                          Investment                        • Selection of best plan for plant
                                        • Product develop-                    investment                                      Contribution                                     Contribution
                                                                                                                 Investment                                       Investment
                                               ment                                                                             margin                                           margin
                                        • Plant investment
                                                                               HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                      39




Supply Chain Management & Order to Delivery(SCM & OTD)
	
            Supply Chain Management (SCM) and Order to Delivery (OTD) are designed to deliver vehicles
to customers in a timely manner by shifting the current supplier-oriented sales and operation system to a
market- and customer-oriented system, and closely liking sales requirements to the production area.



                Dealership/                             Order/Delivery management
                                   Contract                                                                   SCM Monitoring
                corporation/
                                                       Order placed                                              SCM operation
                 domestic
                  market           Delivery                                                                        information
     Forecast                     to promise             delivery                                                Global logistics
                                                                                Weekly                             information
                                                       management            demand planning
                  Demand                                              COP                                               KPI
                 management                                                                                       management
                                                                             7-week production
                     Demand                                  Monthly/weekly/     demand
                     forecast        SAS
                                                              daily capacity
                                                                                                         Mornitoring & Alert
                  Early demand                 5-month demand planning
                    planning
                                      DM                  Advanced production planning
                 Weekly demand
                                                                                                   APS
                   planning
                                                          Monthly
                                                      planning review
                                           SCP
                                    Engine              Engine and
                                                  transmission integration                                          4-week
                                     and                                                                              daily
                                transmission                                                 MS                     planning
                APS                demand                                    Weekly production     Daily/sequence              Material system
                                                  Monthly sales volume
            CKD/AS                              and option master planning      planning              planning
                                                                                                                               Material requirement
                                           SCP                                                                        MS
                                                   Monthly and weekly                             Engine production
                                                       planning                                       planning




●           Demand Management Innovation
	           The demand management innovation increases the accuracy in demand forecast and makes
a profound plan based on consultation between the Headquarters and overseas bases. The management
system analyzes the local market conditions and forecasts sales figures for next five months. Subsequent-
ly, we establish the demand strategy and specify the demand management levels to verify its demand
planning.


●           Order and Delivery Management
	           In the past, we only notified the domestic customers of the delivery schedule in two weeks
prior and often failed to provide a reliable delivery schedule to overseas dealerships. Recognizing the issue,
HMC introduced Advanced Planning & Scheduling (APS II) to offer a delivery schedule based on production
planning and inventory for the following two months. APS II can effectively manage the processes from
order to delivery. If there is no inventory, the system first checks production planning to divert production
capacity to the model that customers ordered. HMC can now swiftly respond to customer orders by the
visibility of demand and supply based on sophisticated production planning.


●           Monitoring System
	           We established an integrated system to monitor sales, production, and inventory status, pro-
viding 80 types of information needed for the decision-making process. Currently, HMA (Hyundai Motor
America) and Korean plants that produce commercial vehicles and transmissions have already introduced
the integrated monitoring system.
40   Economy

     34   Main Business Activities
     38   Process Innovation




                                     Customer Relationship Management(CRM)
                                     	
                                                Customer Relationship Management(CRM) aims to provide consistent customer services.
                                     Moreover, CRM is designed to attract new customers by helping a business efficiently allocate internal
                                     sales resources.


                                     ●          Integrated Customer Information Management System
                                     	          HMC unified the disparate customer information management criteria of the multiple sales
                                     and repair organizations. We selected 39 types of customer information as standard criteria. Based on
                                     the criteria, we developed an information collection and renewal system, taking into account features
                                     of each customer contact point. Relevant sales and repair departments share updated customer infor-
                                     mation to provide personalized service to each consumer.


                                     ●          Integrated Customer Information Management System
                                     	          We expanded our prospect collection channels to include repair service centers and various
                                     events from the existing customer center and website quotation service. If a prospect shows intention
                                     to purchase, the customer center contacts to ask purchasing period, preference of vehicle model, and
                                     offer consulting service from a car master. For example, if a prospect wants to buy a model within three
                                     months and receive consulting from a car master, a dealership in the region can directly contact the
                                     prospect. To other prospects, the customer center provides useful information to prevent from defect-
                                     ing to other automakers.


                                     ●          Target Marketing
                                     	          HMC classified customers into 7 groups and 24 sub-groups according to age, gender, and
                                     preference of vehicle model. For example, despite our customers choose the same model of vehicle,
                                     we provide a differentiating service by customer group. Via this method, we can classify our target
                                     customers for the campaign initiatives such as launching a new model in order to increase the sales.
                                     In addition, HMC allowed multiple departments to share marketing event information to minimize cus-
                                     tomer complaints and conduct an analysis on the event results.


                                     ●          Integrated Voice of Customer(VOC) Management
                                     	          We diversified the data collection channels and standardized VOC classification into six
                                     criteria to respond the customers’ expectation. As VOC effectively delivers the issues to the relevant
                                     departments, customer complaints are swiftly addressed and we can increase customer satisfaction.
                                     We plan to establish a global customer management system, taking into account features of each mar-
                                     ket. The system will first implement into global management starting HMA (Hyundai Motor America)
                                     and HMI (Hyundai Motor India). Currently, HMC is developing a global customer needs analysis process
                                     and system to reflect global customers’ needs to product development.
                                                                                                 HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                      41




                 VOC collection channels                              VOC analysis                              VOC sharing/utilization
VOC management
system
                        Customer                                                                                           Sales
                         center                                                                                       public opinion on
                                                                                                                      new cars, sales
                                                                                                                         promotion

                         Branch/
                        car master                                   VOC system                                            Repair
                                                                                                                      customer service
                                                                                                                        improvement
                      Repair/service
                       technicians
                                                                                                                          Quality
                                                                                                                     quality improvement
                                                                  Classification criteria
                          Auto
                        prosumer                               1. Sales
                                                               2. Repair                                                 Research
                                                               3. Quality                                             new car develop-
                          Test                                 4. Marketing                                            ment, product
                          drive                                                                                         improvement
                                                               5. After-market Loyalty Program
                                                               6. Suggestion/comment
                                                                                                                     The headquarters
                                                                                                                         institutional
                         Extranet
                                                                                                                        improvement




                                    Plant Maintenance(PM)

                                    	          Auto manufacturing is considered as an assembly business or a process industry. Therefore, it
                                    is important for an automaker to manage and maintain its plant facilities in best conditions from the mo-
                                    ment of procurement to disposal. We improved plant facilities to support the production lines based on
                                    effective plant maintenance, and maximize the value of assets. First of all, we established a collaboration
                                    system, where production and maintenance departments discuss new facility procurement.
                                    Secondly, HMC standardized the preventive inspection checklist and built a database to systematically
                                    manage preventive maintenance activities and their implementation results. HMC introduced PDAs and
                                    computerized drawings management system to help workers efficiently inspect facilities. This is designed
                                    to shift from the existing event-oriented maintenance to prevention-oriented maintenance to minimize
                                    facility failures and maintain plants in optimum conditions.
                                    Lastly, HMC increased efficiency of maintenance materials procurement and management. Based on the
                                    collaboration between maintenance and procurement (Value Advanced Automotive Trade Zone: VAATZ),
                                    HMC provided maintenance activities in a timely manner and efficiently managed maintenance materials.
                                    We first implemented VAATZ to the Asan Plant in January 2007 and then, Ulsan and Jeonju Plants later.
ENVIRONMENTAl MANAGEMENT




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

Technological Prowess Shaping the Future of the Environment-friendly Car Market
In November 2007, HMC became the first Korean automaker to acquire the certificate of preliminary assessment of the Recyclability Assessment Information System for Homologation
from the EU. This was made possible thanks to HMC’s strenuous research on resource recycling and green management over the years. All processes of the car development at HMC
are proven environmentally friendly. In addition, the Tucson FCEV won the first place in the fuel cell vehicle category of the 2007 Michelin Challenge Bibendum, proving HMC’s advanced
fuel cell technology.
                                                                                                                                                                              page   50
44 Efforts to Minimize the Impact of the   58 Increased Recyclability             64 Clean Production
   Climate Change                          Resource Circulation Target            Production Sites Fighting Against Climate Change
Regional Responses                         Expansion of Recycling Technology      Resource Circulation
Development of Alternative Fuel Vehicles   Life Cycle Assessment (LCA)            Reduction of Pollutant Emissions
Improving Vehicle Fuel Efficiency          Minimizing Use of Harmful Substances   Environmental Expenditures

55 Reduction of Gas Emissions
Regional Responses
Development of New Engines
44   Environmental Management

     44      Efforts to Minimize the Impact of the
             Climate Change
                                                                                Efforts to Minimize the Impact of
     55
     58
             Reduction of Gas Emissions
             Increased Recyclability                                            the Climate Change
     64      Clean Production




                                                                                The 13th Conference of the Parties to the United Nations Framework Convention on Climate
                                                                                Change resulted in the adoption of the Bali Roadmap.* The aim was to draw up a roadmap that
                                                                                calls for advanced and developing nations to take strong measures against climate change.
                                                                                The roadmap will be employed in 2013, following the Kyoto Protocol, which ends in 2012.
                                                                                After a two-year discussion period, the UN is planning to finalize the “post-Kyoto regime,”
                                                                                which involves strengthening the greenhouse gas reduction target for 38 advanced nations
                                                                                after 2013 and assigning developing nations, such as Korea, China, and India, with manda-
                                                                                tory reduction targets. This is substantially stronger than the Kyoto Protocol, under which 36
                                                                                industrialized countries are reducing their collective emissions of greenhouse gases by 5.2%
                                                                                below the 1990 level between 2008 and 2012.
                                                                                Key advanced nations are re-establishing greenhouse gas reduction targets. The European
                                                                                Union (EU), which is taking a leading role in implementing international regulations on reduc-
                                                                                ing greenhouse gas emissions in the automobile industry, is engaging in discussions on a bill
                                                                                that would place a 130g/km limit on vehicle CO2 emissions starting in 2012. The legislation is
                                                                                expected to be finalized by end of 2008. EU member nations are adopting a CO2 tax system,
                                                                                which gives incentives to low CO2 emission vehicles and levies a tax against high CO2 emis-
                                                                                sion vehicles. In December 2007, the US government approved a regulation that imposes a
                                                                                35 mpg(miles-per-gallon) average for cars and light trucks by model year 2020. The regulation
                                                                                makes it mandatory for cars and light trucks to meet a fleet average of 31.6 miles per gallon by
                                                                                model year 2015. China has also been further strengthening automobile fuel efficiency regu-
                                                                                lations since 2008, and is implementing two-step regulations on fuel efficiency. We expect
                                                                                these movements will gain even more momentum and spread in 2009, when the international
                                                                                community will agree on a new goal to achieve substantial reductions in greenhouse gas
                                                                                emissions by 2020.
                                                                                As a global automobile manufacturer, we recognize the importance of alleviating impacts driv-
                                                                                en by climate change and is doing its best to reduce greenhouse gas emissions. The best way
                                                                                to reduce vehicle greenhouse gas emissions is to cut down the use of fossil fuel and to use al-
                                                                                ternative, low-carbon energy sources instead. Starting from the automobile design phase, we
                                                                                are performing research on car body design, application of new technologies, and production
                                                                                of lightweight vehicles so as to improve fuel efficiency. We are also increasing investments in
                                                                                research and development, with the goal of developing hybrid vehicles, which would cut fuel
                                                                                use by more than 50%, as well as alternative fuel vehicles that do not need fossil fuel.
     unit conversion table
     1gallon              3.785ℓ
     1mile                1.609km
     1mpg                 2.36kpℓ(kilometer per liter)




     * The Bali Roadmap adopted at the 13th United Nations Climate Change
     Conference in 2007 specifies the post-2012 framework, where develop-
     ing countries as well as developed countries including the U.S. that has
     not ratified the Kyoto Protocol should be committed to reduce Green
     house Gas emissions.
                                                                                                       HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                            45




                                             Regional Responses

                                             ●          EU
                                             	          The EU is moving forward with establishing mandatory regulations on vehicle CO2 emissions. In
                                             December 2007, the Commission of the European Communities tabled a proposal to the EU Council to cut
                                             CO2 emissions to 130g/km on average by 2012, and to soften CO2 regulations according to the weight of a
                                             vehicle. The EU Council is currently engaging in discussions on this proposal. We expect this will cause a
                                             serious burden, considering the five to six years of prior time is needed for an auto maker to develop a new
                                             vehicle. Considerable efforts made by HMC to cut down CO2 emissions in the EU region have resulted in an
                                             achievement of 161g/km in 2007, which is a reduction of 3g/km from 2006. We continuously strengthened
                                             efforts to drive down CO2 emissions in 2008. We certainly ensure these strenuous efforts will lead to CO2
                                             emission improvements in the near future. We are continuously reducing CO2 emissions by releasing the
                                             i30 diesel model that emits 119g/km and i10, the sequence model of Santro, that emits 114g/km in 2008.
                                             We will make strenuous efforts towards achieving its new CO2 emission target in the EU region which is
                                             an annual fleet average of 130g/km for new vehicles.



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




  210


  200

  190


  180
                                                                                                       -24g/km
  170


  160                                                                                                                           -29%
                                                                                               161g/km(HMC)
  150
                     KAMA actual
  140                HMC actual
                     HMC target
  130
                                                                                                                              130g/km(New target)
               95   96    97       98   99   00    01      02      03     04      05      06      07      08      09     10      11      12
46   Environmental Management

     44       Efforts to Minimize the Impact of the
              Climate Change
     55       Reduction of Gas Emissions
     58       Increased Recyclability
     64       Clean Production




                                                                      low CO2 emission models sold in the Eu region (As of February 2008)
                                                                      (unit: g/km)

                                                                      Model                                                    Engine                     CO2 Emissions
                                                                      i10                                                    Diesel 1.1 MT *                  114
                                                                      Getz                                                   Diesel 1.5 MT                    116
                                                                      i10                                              Gasoline 1.1 MT                        119
                                                                      i30                                                    Diesel 1.6 MT                    119
                                                                      Accent                                                 Diesel 1.5 MT                    120
                                                                      Atoz                                             Gasoline 1.1 MT                        129
                                                                      Getz                                             Gasoline 1.1 MT                        130
                                                                      Getz                                             Gasoline 1.3 MT                        134
                                                                      Getz                                             Gasoline 1.4 MT                        136
                                                                      i10                                               Gasoline 1.1 AT *                     139
                                                                      Matrix                                                 Diesel 1.5 MT                    139
                                                                      Atoz                                              Gasoline 1.1 AT                       140
                                                                      *MT: Manual Transmission, AT: Automatic Transmission


     Changes in combined fuel efficiency (uS)                         ●              USA
     YEAR                             Fuel Efficiency                 	              HMC has been continuously supplying vehicles with improved fuel efficiency to the US market.
     Model year 2004                  27.7 mpg                        By engaging in efforts to improve the average fuel efficiency level while expanding its product lineup to
     Model year 2005                  28.5 mpg                        include small- to medium-sized passenger vehicles and SUVs, We were able to improve the average fuel
     Model year 2006                  28.9 mpg                        efficiency level from 28.9mpg in model year 2006 to 29.2mpg in model year 2007. We are also actively
     Model year 2007                  29.2 mpg                        implementing fuel efficiency improvements so as to thoroughly prepare for the regulation that imposes a
                                                                      35mpg average for cars and light trucks by model year 2020. Thanks to these efforts, HMC’s Accent and
                                                                      Elantra were among the top 30 environment-friendly vehicles chosen in the 2007 Automotive Environmen-
     The Accent and Elantra rated among top 30 environment-friendly
                                                                      tal Index (AEI), which combines the results of surveys by JD Power and Environmental Protection Agency
     models by JD Power and Associates in 2007
                                                                      (EPA) on fuel efficiency, level of air pollution, and CO2 emissions.


                                                                      ●              Korea
                                                                      	              Due to the increase of the oil barrel prices and the adoption of the Bali Roadmap, there are
                                                                      movements in Korea to strengthen vehicle fuel efficiency regulations. In fact, the Ministry of Knowledge
                                                                      Economy announced a new plan to adopt an average fuel efficiency scheme that is roughly 15% stronger
                                                                      than the current level. The regulated average fuel efficiency target for domestic vehicles with a 1,600cc
                                                                      or smaller engine has been strengthened from 12.4km/l to 14.9km/l, while the target for vehicles with
                                                                      an engine larger than a 1,600cc engine has been strengthened from 9.6km/l to 11.5km/l. The Korean
                                                                      government is promoting the spread of low CO2 emission vehicles by giving incentives to fuel efficient
                                                                      automobiles. An example is the adoption of a five-grade fuel efficiency system that is applied to all domes-
                                                                      tic models, regardless of the vehicle class. This fuel efficiency system involves giving vehicles that have
                                                                      achieved a fuel efficiency level of at least 15km/l with the top grade (Grade 1).
                                                                      The average fuel efficiency of HMC’s 2007 models with a 1,600cc or smaller engine was 14km/l, and
                                                                      11.6km/l for the models with an engine larger than a 1,600cc, thereby contributing to improvements in
                                                                                                                              HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                            47




                                                               the average fuel efficiency of domestic passenger vehicles. In domestic market, we are developing and
2007 Status of response to fuel efficiency                     launching a large diesel-powered passenger vehicle with greenhouse gas reduction effects while supplying
regulations in Korea                                           the hybrid vehicles simultaneously to demonstrate our high level of concern for climate change.
(unit: km/ℓ)                                                   	
                                     Average fuel efficiency
 15
                           14.0      of domestic passenger
                                                               Fuel efficiency grade system
 14                                  vehicles: 11.0km/l
 13            12.4                                            (unit: km/ℓ)
 12
                                                11.6
 11
                                                               Category	                      Scope of application
 10                                9.6
  9                                                            Grade 1	                       15.0 or higher
                                                               Grade 2	                       14.9~12.8
                                                               Grade 3	                       12.7~10.6
               1,600cc and under    Over 1,600cc
                                                               Grade 4	                       10.5~8.4
                                   Regulated value     HMC
                                                               Grade 5	                       18.3 or lower


                                                               ●              Other Countries

                                                               Canada | The Canadian government announced a plan to introduce fuel efficiency regulations similar to
                                                               the US after 2010 in order to further facilitate greenhouse gas emission reductions. In 2007, we improved
                                                               the fuel efficiency of our passenger vehicles from 13.0km/l to 14.9km/l, but the increase in sales of high-
                                                               class SUVs has caused the average fuel efficiency of the light trucks to slightly drop from 11.2km/l to
                                                               10.8km/l. We are increasing investments in research and development to further improve the average fuel
                                                               efficiency of our vehicles, especially in the field of light trucks.


                                                               yearly fuel efficiency achieved in Canada
                                                               (unit: km/ℓ)
                                                               15                                                      14.7
                                                               14
                                                               13                      13.2             13.0
                                                               12
                                                                                11.6             11.6           11.6                                  11.2
                                                               11
                                                                                                                                         10.5                        10.8
                                                               10
                                                                                                                                                9.2           9.4
                                                               9                                                                   8.8
                                                               8




                                                                                  2005              2006          2007                2005         2006         2007
                                                                                               Passenger cars                                   Light Truck
                                                                                                                                                                    Regulated value   HMC




                                                               China | All HMC vehicles sold in China satisfy the second step of fuel efficiency regulations that has been
                                                               enforced from the beginning of 2008. However, due to the rapid increase of greenhouse gas emissions
                                                               in China, we forecast the strengthened automobile fuel efficiency regulations. Thus, we will continuously
                                                               develop and supply eco-friendly products with improved fuel efficiency to contribute on reduction of the
                                                               greenhouse gas emissions.
48   Environmental Management

     44   Efforts to Minimize the Impact of the
          Climate Change
     55   Reduction of Gas Emissions
     58   Increased Recyclability
     64   Clean Production




                                                                   Development of Alternative Fuel Vehicles

                                                                                    The development of alternative energy sources as well as the development and supply of
                                                                   alternative fuel vehicles is important in responding to the depletion of oil and reducing greenhouse gas
                                                                   emissions. The ultimate goal of developing new and renewable energy sources is developing and supply-
                                                                   ing non-polluting vehicles that have zero gas emissions. At present, hybrid electric vehicles, which use
                                                                   internal-combustion engines and electricity as their power source, are gaining attention as a powerful
                                                                   alternative. HMC is doing more than simply developing new technologies. We are concentrating to develop
                                                                   and supply practical and truly environment-friendly alternative fuel vehicles.


                                                                   ●                Hybrid Electric Vehicle(HEV)
                                                                                    The worldwide increase in oil use is leading to forecasts that the imbalance between supply
                                                                   and demand for oil will substantially grow around 2015. It is therefore necessary to develop alternative
                                                                   energy sources and ensure high efficiency in the transportation sector, which accounts for 30% of energy
                                                                   use. Moreover, regulations on vehicle CO2 emissions are spreading all across the globe in order to mitigate
                                                                   climate change. Against this backdrop, the high-efficiency and environment-friendliness of HEVs is highly
                                                                   considered. An HEV combines the conventional power-train with an electric motor and a battery system
                                                                   to improve fuel efficiency and reduce gas emissions. In addition, an HEV can be fueled through the existing
                                                                   gas station infrastructure, predicting a bright future in terms of marketability.



     Conceptual diagram of hEV and how it works                                                                       Air


                                                                                            Gasoline/
                                                                                             diesel      Internal-
                                                                                                                                                 Trans-
                                                                            Fuel tank                   combustion             Motor
                                                                                                                                                 mission
                                                                                                          engine
                                                                                                                                   Electricity (Direct current)

                                                                                     Exhaust gas                                             Braking energy
                                                                                                                             Battery




                    STARTING                           CRuISING                               ACCElERATION                          DECElERATION                          AT A STOP

          During startup                     During driving                              During acceleration                  During deceleration                 At a Stop
          Engine startup is based on the     Engine operates at the optimal              Engine and motor simultaneously      Supplied fuel is discontinued and   At full stops, the engine is au-
          motor. During cold startup and     state; the car runs; surplus driving        operates the driving power to ac-    the vehicle’s kinetic energy is     tomatically turned off, resulting
          when battery is low, engine is     power is stored in the battery              celerate                             transformed into electric energy    in improved fuel efficiency and
          used for startup.                                                                                                   and stored in the battery           lower emission




            START                                                                   GO                                                                                                     STOP
                                                                                                          HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                49




                                  ●           Development and Supply
                                              Since 2004, We have been participating in pilot operation programs carried out by government
                                  and public organizations as part of projects on supplying HEVs. We began test driving 50 Getz HEVs in
                                  2004 and provided approximately 200 Accent HEVs to public organizations in the metropolitan area. In
                                  2006, five major cities – Busan, Daegu, Gwangju, Ulsan, and Daejeon – received 220 HEVs. In 2007, we
                                  expanded the scope of recipients of HEVs to include other public organizations (i.e. kindergartens, schools,
                                  and welfare organizations). We have plans to supply roughly 1,010 vehicles for two years by the end of
                                  2008. In 2009, we will commercialize the Elantra LPI (LPG Injection) HEV that will allow the reduction of car
                                  maintenance costs, thus increasing the supply of HEVs to general consumers. We are planning to release
                                  a hybrid version of a mid-sized model that features a hybrid system independently developed by HMC in
                                  North America in 2010 as well.


                                  Elantra lPI hEV | In 2009, we are planning to produce and release the Elantra LPI HEV that will become
                                  the first to use an LPI engine in the world. For the successful development of the HEV, we are planning
                                  for the domestic production of expensive part, such as the motor, battery, and inverter. The aim is to
                                  minimize the price increase compared to existing vehicles, while ensuring environment-friendliness and
                                  practical use. We are faithfully implementing a plan to ensure high efficiency of the hybrid system and cost
                                  competitiveness through the development of domestic parts. The company is increasing investments into
1
  Accent Hybrid (2008)            research and development to commercialize plug-in hybrid vehicles after 2012 that allow for recharge of
2
  LPI Hybrid Concept Car		
3
  LPI Hybrid Car 1.6 Engine       the battery at homes and driving in electric drive mode in the neighborhood.



                                  Steps for hybrid car development


                                                     Step 1                                        Step 2                                           Step 3
                                                 (      ~2004)                                  (2005~2009)                                      (2010~         )
                              1



                                        Acquire production technologies           Establish a mass production system                           Diversify models
                                              [Pilot production]                  [Domestic development of parts]                         [Increased exports]


                                                                                                                                             2012	Plug-in hybrid cars	

                                                                                                                                    2010		 evelopment and increased exports
                                                                                                                                         D
                              2                                                                                                           of a proprietary system
                                                                                                                         2009		 evelopment of Korean parts and release of LPI
                                                                                                                              D
                                                                                                                               hybrid cars on the market
                                                                                                             2008		 rovide Accent HEVs to general public organizations(710
                                                                                                                  P
                                                                                                                      units)
                                                                                                    2007	Provide Accent HEVs to general public organizations(300 units)

                                                                                            2006		 ontribution of the Accent HEVs to the public organization at 5 major
                                                                                                 C
                                                                                                  cities(220 units)

                                                                                  2005		 ontribution of the Accent HEVs to the public organization in the metro-
                                                                                       C
                                                                                        politan area(200 units)

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

                                                 2000 Pilot production of the Accent HEVs

                                        1995	Preliminary development(Concept-I)
                              3
50   Environmental Management

     44        Efforts to Minimize the Impact of the
               Climate Change
     55        Reduction of Gas Emissions
     58        Increased Recyclability
     64        Clean Production




                                                         ●           Fuel Cell Electric Vehicle(FCEV)
                                                                     Once hydrogen replaces fossil fuels using new and renewable energy, people all across the
                                                         global will become free from air pollution and global warming resulting from CO2. A Fuel Cell Electric Vehicle
                                                         (FCEV) is considered as the alternative non-polluting vehicle since it does not emit any hazardous sub-
                                                         stances. There are, however, various tasks that need to be addressed, such as high price tag, and the need
                                                         to establish hydrogen infrastructures and use an excessive amount of energy in the hydrogen production
                                                         process. As a globally-renowned auto manufacturer, we are very much concerned about the environment
                                                         and fully recognizes the essential need for environment-friendly vehicles. The company is continuously
                                                         making investments into developing technologies to overcome the various issues related to FCEVs.


                                                         ●           Technology Development
                                                         	           We began developing fuel cell technologies in 1998, and is currently developing fuel cell sys-
                                                         tems that incorporate the unique philosophies of HMC. In order to improve the performance of fuel cell ve-
                                                         hicles and increase marketability, we successfully verified the freeze-start capability of fuel cell 20 degrees
                                                         below zero environments. We are focusing our efforts on technological development to resolve issues
                                                         related to fuel cell technologies, such as durability and high production costs.
     Fuel cell-powered Tucson                            In 1999, HMC became the first to develop a fuel cell stack with a maximum output of 2kW and a power
     Item	                         Specification         density of 0.2kW/l In September 2005, it succeeded in the development of an 80kW stack with a power
     Fuel Cell Power               80 kW                 density of 1.0kW/l that can be installed on a vehicle. We achieved great technological growth – 40 times
     Battery                       20kW – LiPB           greater stack output and 5 times higher power density. These technologies are being adopted for the
     Motor System                  80kW                  hydrogen fuel cell-powered Tucson and fuel cell buses that have been used for the “FCEV monitoring
     H2 Tank                       3.6 kg H2 @ 350 bar   project” since 2006.
     Driving Range                 384 km                With proprietary technologies of fuel cell systems, we ramped up development of more than 90% of local
     Acceleration(0   ~ 100kph)    16.2 sec              parts. The hydrogen fuel cell-powered Tucson is equipped with 20kW-LiPB auxiliary power, a 40kW/80kW
     Max. Speed                    141 KPH               driving motor system, and 35 MPa (Mega Pascal) hydrogen storage fuel tanks. It can accelerate from zero
                                                         to 100km/h in 16.2 seconds, and reach a maximum speed of 141km/h. In November 2006, we developed
                                                         a hydrogen storage fuel tank with a capacity of 70MPa so that more fuel can be stored, thereby extending
                                                         the cruising range.
                                                         In May 2007, we developed a 100kW stack that achieved a 25% and 20% improvement in the maximum
                                                         output and power density, offering the same performance as internal-combustion engine vehicles. The
                                                         stack was installed on the Tucson and testing is held on actual streets. The Tucson equipped with the
                                                         100kW stack is expected to accelerate from zero to 100km/h in 12 to 13 second range and reach a maxi-
                                                         mum speed of at least 160km/h.


     Fuel cell-powered bus                               hMC Fuel Cell Electric Vehicle | The excellent features offered by the Tucson have resulted in winning
     Item	                         Specification         first place in fuel efficiency in the environment-friendly vehicle category of the <2005 Monte Carlo Rally>,
     Fuel Cell Power               160 kW                and in the fuel cell vehicle category of the <2007 Michelin Challenge Bibendum>. The Michelin Challenge
     Super Capacitor               MAX. 240 kW           Bibendum is a contest that was launched in 1998 with the aim of evaluating environment-friendly technolo-
     Motor System                  240kW                 gies and cars that would lead the future automobile market and promoting such technologies and cars by
     H2 Tank                       40kg H2 @ 350 bar     relevant companies. A total of ten fuel cell vehicles from globally-renowned auto makers entered into the
     Driving Range                 386 km                contest. The Tucson was the only vehicle to receive an A in all categories - noise, exhaust, fuel efficiency, and
     Acceleration(0~50kph)         14.2 sec              CO2 emissions. The outstanding fuel cell technologies of HMC were thus proven.
     Max. Speed                    74 KPH
                                                                                                                        HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                51




1
    2007 Michelin Challenge Bibendum Awards			          history of fuel cell stack development by hMC
2
    Fuel cell-powered Tucson 	
                                                        Stack output density(W/liter)

                                                        1400                                                                                                 ● 100kW
                                                                                                                                                                 (2010, plan)
                                                                                                                                                             ●
                                                        1200
                                                                                                                                                             100kW
                                                                                                                                                             (2007.5)
                                                                                                   ●                                      ●
                                                        1000
                                                                                                       35kW(2003.10)                      80kW(2005.9)

                                                        800
                                                                                                                             System operation in air pressure
                                                                                                   ●
                                                        600                               ●     35kW(2003.8)
                                                                                          25kW(2002.10)                 Minimization of electric power consumed
                                                    1
                                                        400
                                                                                                                                  by driving equipment
                                                                          ●
                                                                          10kW(2000.10)                                 Achievement of the highest system efficiency
                                                        200        ●
                                                                                                                                      in the industry
                                                                   2kW(1999.10)
                                                               0          10        20        30          40       50   60       70       80       90       100          110
                                                                                                                                                           Stack output(kW)



                                                        The i-Blue, which was unveiled at the <2007 Frankfurt International Motor Show>, features a future image
                                                        of fuel cell vehicles that we are moving towards. An increase in the power density will result in a reduction in
                                                    2
                                                        the size of the 100kW stack by half. It will be installed on the vehicle’s underfloor resulting in an equal distribu-
                                                        tion of the car’s weight, for a dynamic driving experience and steering stability. The driver will be able to start
i-Blue(2007 Frankfurt International Motor Show)         the engine even at 30 degrees below zero. By improving system efficiency to 60 % and employing a hydrogen
Item	                       Specification               storage tank with 700 bar, the cruising range of the vehicle will be extended to 600km.
Mileage                     600 km [375 miles]
Maximum speed               170 kph[106 mph]            ●                Others
Fuel cell                   100 kW [134 hp]
Super Capacitor             450V/100kW/13 Wh/L          Biofuel Vehicles
Driving motor               FR In-line 100 kW           ▪	Ethanol Vehicles	| Bioethanol mostly derived from sugar canes in Brazil. There has recently been an in-
                            RR In-whell 20 kW x 2       crease in the use of bioethanol derived from corn in the US. As a measure against the high oil prices and global
Fuel                        Compressed hydrogen         warming, nations are implementing policies on Flexible Fuel Vehicles (FFVs) which can use ethanol and gasoline
                            [700 bar]                   mixture, and E85 vehicles, which use a blend of 85% denatured ethanol and 15% gasoline. However, bioethanol
                                                        fuel has its limitations in reducing fuel costs since it is produced by using food resources. As a countermeasure,
                                                        the US is taking a lead in the development of bioethanol fuel that uses cellulose. To this end, we expect the
                                                        supply will increase after 2012. In response, we are engaging in research and development of a proprietary
                                                        vehicle that runs on bioethanol fuel.
                                                        ▪	Biodiesel Vehicle | Bio-diesel made from rapeseed, palm, and soybean replaces diesel. The EU, where die-
                                                        sel vehicles are prevalent, is promoting the use of BD5 (5% biodiesel blend) through fuel quality standardization.
                                                        All diesel models of HMC can use diesel fuel with a 5% biodiesel blend. In preparation for a substantial increase
                                                        in the supply of environment-friendly biodiesel, we are developing diesel engine technologies that allow the use
                                                        of biofuel blend of 20% to 30%. When developing biodiesel vehicles, HMC will sufficiently consider their positive
                                                        and negative impacts on society and cautiously make decisions based on the profound business judgment.
52   Environmental Management

     44       Efforts to Minimize the Impact of the
              Climate Change
     55       Reduction of Gas Emissions
     58       Increased Recyclability
     64       Clean Production




                                                          Compressed Natural Gas (CNG) Bus
                                                          CNG has the effect of reducing gas and CO2 emissions, but the further infrastructures establishment is
                                                          needed for the use. This is why CNG has been mostly used for express and city buses that run in a specific
                                                          area. Since July 2004, we have been supplying CNG buses in major regional areas across the nation as
                                                          well as in Seoul. The CNG buses by HMC have been appreciated for excellence in quality and recognized
                                                          for technological competence. Consequently, our share of the domestic CNG bus market reached 68.4%
                                                          in 2005. Starting with the export of CNG buses to Peru in 2006, HMC has been exporting CNG buses to
                                                          Latin America and Southeast Asia, thereby contributing to the improvement of air quality in areas where
                                                      1   such vehicles are in operation. We stabilized CNG bus production in 2007 and has been smoothly supply-
                                                          ing a great number of CNG buses. The company is making strenuous efforts for the development of more
                                                          eco-friendly CNG buses.



                                                          Improving Vehicle Fuel Efficiency

                                                                      Reducing greenhouse gas emissions and contributing to the mitigation of climate change by
                                                          making improvements to vehicle fuel efficiency is an important task. We have made considerable achieve-
                                                          ments in the development of new engines and new automatic transmissions as well as the application of
                                                      2
                                                          lightweight materials to vehicles, aiming to improve vehicle fuel efficiency. We are expanding investments
                                                          into research and development in this field.


                                                          ●           Improvement of Engine
                                                                      We made a roughly 10% improvement in maximum output and an approximately 12%
                                                          (13.8km/ℓ) improvement in fuel efficiency to the new Elantra HD, compared to the previous model. This
                                                          has been made possible by the adoption of a wide range of environment-friendly technologies and speci-
                                                          fications, including a new lightweight gamma-1.6VVT engine featuring an aluminum cylinder block, a new
                                                      3   small-sized transmission, a Motor Driven Power Steering (MDPS) system, and silica tires.
     1
       1.6 VVT engine                                     The new Santa Fe has achieved an improvement in fuel efficiency by 9.2% compared to the previous
     2
       2.5 VGT A engine
     3
       Next-generation small auto transmission
                                                          model. This was enabled by the employment of a second generation 2.2 liter D engine, high-performance
                                                          Variable Geometry Turbocharger (VGT) technology, and the second generation common rail system with
                                                          high injection pressures of 1,600 bar. High pressure fuel is injected into air, which is optimally controlled by
                                                          the VGT through the common rail system, providing the best conditions for combustion.
                                                          The Grand Starex gained a 6% fuel efficiency enhancement over its predecessor while improving its maxi-
                                                          mum output by 20%. To this end, we applied the 2.5 liter VGT A engine, second generation common rail
                                                          system with high pressure injection of 1,600 bar, and 5-speed automatic transmission. Also, drag coef-
                                                          ficient (Cd) improvements were made.


                                                          ●           Improvements to the Transmission
                                                                      A well-designed transmission can improve fuel efficiency by more efficiently transferring the
                                                          power of the engine, thereby contributing to the mitigation of climate change. Improving the efficiency of
                                                          the automatic transmission has become an extremely important task for improving fuel efficiency and reduc-
                                                          ing CO2 emissions, in tandem with the increased use of automatic transmissions. Realizing miniaturization
                                                                                                                   HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                         53




                                                       and applying multi-speed technologies are of prime importance to improving the efficiency of automatic
                                                       transmissions. Taking this into due consideration, We have been engaging in extensive research and de-
                                                       velopment. We succeeded in the independent development of the next-generation downsized automatic
                                                       transmission, which can be applied to compact vehicles, the 5-speed automatic transmission for use in
                                                       mid- and full size vehicles, and the lightweight automatic transmission that can be used for light vehicles.
                                                       After a development period of five years, we successfully developed the 4-speed automatic transmission
                                                       for use in light vehicles in 2007, thereby considerably contributing to fuel efficiency improvements.


                                                       ●           Lightweighting
                                                                   Reducing the weight of the vehicle is an important factor in improving fuel efficiency. In general,
                                                       a reduction of a vehicle’s weight by 100kg leads to a roughly 8g/km improvement in CO2 emissions for
                                                       every 1km driving. We are continuing research for the development of space frame type vehicle bodies,
                                                       high-strength steel plates with reduced weight, and environment-friendly compressors.
                                                       We developed and applied a high strength, light weight steel plate with reduced thickness. The strength
                                                       of the new plate is 1,180Mpa (strengthen that can withstand a weight of up to 120kg per 1mm2), twice
                                                       as much from the previous plates, whose strength was merely around 590Mpa (up to 60kg per 1mm2).
                                                       The new plate also improved in terms of thickness by about 33%. By applying the new high strength, light
                                                       weight steel plate to all models, HMC will enhance vehicle safety and contribute to a reduction in CO2
                                                       emissions and fuel costs through lighter weight.




Growing into a Global Environment-friendly Company through
The Development and Sales of Hybrid Vehicles



Ki-sang Lee (Director, HMC Hybrid Design Team)


Although the development of alternative fuel is urgently needed in confronting environmental issues such as climate changes and depletion of recourses, develop-
ment of fuel efficient hybrid vehicles is underlined since there are currently no straight answers to the issues. We plan to launch Elantra LPI Hybrid in the domestic
market in 2009 by combining LPG fuel and electric motor. Moreover, we aim to introduce mid-sized gasoline hybrid car in 2010 in North American market. We are
strengthening research and development in preparation for deployment of plug-in hybrid vehicles in 2010, which can be charged with the electricity at home and
travel a short distance. Plug-in Electric Vehicle is a new concept car whose batter can be charged with the external power while it requires seven to twelve times
more battery power than before. For a battery technology is the key factor as well as a problem in implementing environment-friendly vehicles technology, we plan
to gear up to develop environment related technology and bring up suppliers. HMC is on the verge of strengthening the image of clean “BLUE” in order to develop
as an eco-friendly company and laying a basis for becoming a top automobile company. We will grow as a global automobile company by promoting development
and sales of products according to domestic and foreign environmental standards and environment preservation activities.
54   Environmental Management

     44         Efforts to Minimize the Impact of the
                Climate Change
     55         Reduction of Gas Emissions
     58         Increased Recyclability
     64         Clean Production




                                                        Establishment of a System to Manage Information on Global
                                                        Environmental Regulations and Relevant Risks
                                                        HMC is making efforts to minimize management risks that are related to the environment by building
                                                        and operating an information system on environmental issues and regulations for the integrated man-
                                                        agement of global environmental regulations that are becoming stronger and diverse across the globe.


                                                                   A greater number of countries are prohibiting the use of harmful chemicals that is leading to
                                                        impact on environmental issues such as climate change, depletion of resources, and water shortage.
                                                        Advanced nations, such as the US and EU, are continuously strengthening environmental regulations to
                                                        protect the global environment and the health of the people and to preserve the ecosystem. This trend
                                                        is spreading all over the world. In addition, environmental regulations are becoming non-tariff trade bar-
                                                        riers against the backdrop of free trade gaining momentum in the global market. As such, environmental
                                                        regulations have become a big risk to export-oriented companies.


                                                        We launched the Global Environmental Regulation Information System (g-ERI) in December 2007 in or-
                                                        der to improve each sector’s structure of responding to environmental regulations and to manage, in an
                                                        integrated manner, all sectors, including the research institute, sales, production, and service centers.
                                                        The overseas bases of HMC that are spread throughout the world send information on environmental
                                                        regulations and trends in different nations through the g-ERI in a timely fashion, allowing to share the
                                                        information with the research institute, production, sales, and service centers. The implementation of
                                                        a scheme enables early measures. We expect this system will contribute to minimizing potential risks
                                                        from the strengthening and diversifying global environmental regulations.


                                                        HMC has drawn up plans to expand the role of the g-ERI so that it can be used as a communication sys-
                                                        tem for a wide variety of environment-related matters such as government policies, market changes,
                                                        and consumer needs in various nations. By doing so, we will actively incorporate the steadily increasing
                                                        environmental demands of stakeholders into corporate management.




     1
         『Global Environmental Regulations』	Brochure
     2
         http://g-eri.hmc.co.kr/ERMS
                                                                                   1                                                                         2
        Environmental Management                                                                                                                                                        55
        44          Efforts to Minimize the Impact of the
                    Climate Change
                                                                         Reduction of Gas Emissions
        55          Reduction of Gas Emissions
        58          Increased Recyclability
        64          Clean Production




                                                                         Reducing tailpipe emissions in urban areas, where there is a concentrated population, is an
                                                                         important task that needs to be tackled for the improvement of air quality. We strictly man-
                                                                         ages its vehicles’ tailpipe emissions, such as NOx and PM, around the world to conform to the
                                                                         relevant regional regulations, thereby improving air quality in urban areas. We are increasing
                                                                         investments for the development of new technologies to create vehicles with ultimately zero
                                                                         gas emissions.



                                                                         Regional Responses

                                                                         ●          EU
Emission report of the Getz and Sonata                                   	          Following the adoption of the Euro IV standard in 2005, the Euro V standard is expected to be
against Euro regulations                                                 enforced in the EU in September 2009, which will call for an 80% stricter reduction of Particulate Matter
(unit: g/km)                                                             (PM) emissions and 30% reduction of NOx emissions from diesel vehicles in comparison to the Euro IV
  PM
                                                                         standard. The EU is also engaging in discussions on enforcing Euro VI regulations which will mandate
0.025
                                          Euro 4	                        an additional 60% reduction in NOx from diesel vehicles compared to Euro V standards. HMC has been
0.020                                   Getz 1.5 diesel                  selling vehicles that are in compliance with the Euro IV requirements since 2006. In preparation for the
                                                                         strengthening of regulations on PM emissions from diesel vehicles to 0.005mg/km, we plan to equip our
0.015
                                                                         diesel models with Diesel Particulate Filters (DPFs). In case of the recently released i30 diesel model, the
0.010                                                                    NOx emissions level is 0.203g/km, which is roughly 80% of the regulated value. The PM emissions level
                                                                         is 0.017g/km, which is around 70% of the regulated value. Some of the models currently sold satisfy Euro
0.005
                               Euro 5          Sonata diesel,            V standards in terms of gas emissions performance. The Sonata 2.0 diesel model satisfies the PM stan-
                                               DPF applied
             0.05       0.10     0.15   0.20        0.25    0.30   NOx
                                                                         dards (0.005g/km) of Euro V. The Getz 1.5 diesel model, among other models, satisfies the NOx standards
                                                                         (0.18g/km) of Euro V.


                                                                         ●          USA
                                                                         	          The US can be divided into states in which the federal Tier-2 regulations or California’s LEV
                                                                         II regulations are in effect. California’s LEV II and Zero Emission Vehicle (ZEV) regulations are deemed
                                                                         to be the strictest gas emission regulations in the world, and thus, the development of environment-
                                                                         friendly vehicles that comply with these regulations is considered as a very important challenge for
                                                                         auto manufacturers. The achievement of former ZEV regulations was next to impossible with cur-
                                                                         rent automobile technologies. In March 2008, California partially softened ZEV regulations by add-
                                                                         ing the improved Advanced Technology Partial ZEV (AT-PZEV) that allows for the preferential applica-
                                                                         tion of plug-in hybrid vehicles in exchange for a reduction in the mandatory ratio of pure ZEV vehicles.
                                                                         Currently, all HMC vehicles sold in the US are gasoline-powered vehicles that satisfy the regional
                                                                         regulations. We developed and is selling Elantra 2.0 and Sonata 2.4 that boast gas emissions perfor-
                                                                         mances equal to that of Super Ultra Low Emission Vehicles (SULEVs) in the US market. We intend to
                                                                         produce a variety of vehicles with SULEV class emission performance to improve air quality and boost
                                                                         consumer satisfaction. Moreover, we are making efforts to develop and mass-produce future-oriented
                                                                         environment-friendly technologies, such as hybrid vehicles, plug-in hybrid vehicles, and fuel cell vehicles.
56   Environmental Management

     44       Efforts to Minimize the Impact of the
              Climate Change
     55       Reduction of Gas Emissions
     58       Increased Recyclability
     64       Clean Production




                                                          California’s lEV II and Zero Emission Vehicle (ZEV) regulations
                                                          Category                           Model year    Model year          Model year                 Model year
                                                                                              ’06 - ’08     ’09 - ’12           ’12 - ’14                 ’15 - ’17

                                                          Mandatory ratio of ZEV	               10%           11%                 12%                      14%
                                                          	                	                  Previous      Previous    Previous After revision   Previous After revision
                                                          	                Pure ZEV               -           2.5%        3%         0.9~3.0%       4%        3~6.0%
                                                          Composition of
                                                           vehicle types




                                                          	                Improved AT-ZEV        -             -          -          0~2.1%         -        0~3.0%
                                                          	                AT-ZEV               4%            2.5%        3%	               3%	     4%	          4%
                                                          	                PZEV                 6%            6%          6%	               6%	     6%	          6%


                                                          ●                    Korea
                                                          	                    Most passenger vehicles in the Korean automobile market run on gasoline, but most SUVs
                                                          have a diesel engine. In consideration of this fact, gasoline vehicles are governed by regulation as strict as
                                                          Low Emission Vehicle II (LEV II), which is enforced in California in the US for low emission vehicles, while
     Number of hMC models in each                         diesel vehicles are emission-controlled by the Euro IV standards. All our vehicles in the market comply with
     gas emissions grade category in 2007                 the above mentioned regulations. In fact, most products achieved much more than what is regulated.
     (unit: number of vehicles)                           In 2007, the Ministry of Environment conducted evaluations on tailpipe emissions to classify vehicles. Ten
     Fuel        Grade 1 Grade 2 Grade 3 Grades 4&5       gasoline vehicles, five diesel vehicles, and two LPG vehicles of HMC received grade 1 certification, which
     Gasoline       10            9       6           -   is presented when gas emissions are 45% or less than regulated levels. Nine gasoline and five diesel cars
     Diesel          5            5        -          -   achieved grade 2 certification, and six gasoline vehicles received grade 3 certification. We are making
     LPG             2            -        -          -   efforts to make vehicles more environment-friendly by achieving gas emission levels that are less than
                                                          regulated levels.
                                                                               HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                      57




                      Development of New Engines
                      	
                                 HMC is strengthening engine technologies aimed at reducing gas emissions. The diesel en-
                      gines of passenger cars have become equipped with the Catalyzed Particulate Filter (CPF). These engines
                      feature an exhaust gas purifying level of over 90%. The filter helps cut exhaust emissions dramatically.
                      In the case of the small and middle size I-4 gamma engine, which has a variety of environment-friendly
                      qualities, the Warm-up Catalytic Converter + Under-floor Catalytic Converter (WCC+UCC) is placed at the
                      back of the vehicle to shorten the catalyst activation time, thereby improving catalyst purifying efficiency.
                  1
                      We reduced gas emissions and improved fuel efficiency by employing the offset crankshaft to reduce fric-
                      tion of the piston and aluminum cylinder blocks to bring down the weight of the engine.
                      To improve gas emissions from mid- to large-sized commercial vehicles, we developed three commercial
                      diesel engines. The 3.9L F engine and 5.9L G engine employ the third generation common rail system with
                      high injection pressures of 1,800 bar, thereby satisfying the gas emission regulations of the Euro-IV and
                      achieving high performance and low fuel consumption. The 10L H engine applies a 2,500 bar high-pressure
                      unit injector for the variable control of the opening and injection pressure to realize optimal combustion
                      conditions. In addition, the multiple injection function has resulted in an improvement in noise and reduc-
                  2   tion in gas emissions. To cut down the level of particulate matters, HMC applies the Particulate Matters
                      Catalyst (PMC) after-treatment device, which lasts as long as the engine and removes the need for recircu-
                      lation and maintenance. In terms of NOx, the electronic Exhaust Gas Recirculation (EGR) cooler is applied
                      to allow for purification based on a low combustion temperature. Moving forward, we will continue to
                      develop new engines that are more environment-friendly to satisfy the gas emission regulations in North
                      America and Europe.




                  3

1
  3.9L F engine
2
  5.9L G engine
3
  10L H engine
58   Environmental Management

     44   Efforts to Minimize the Impact of the
          Climate Change
                                                  Increased Recyclability
     55   Reduction of Gas Emissions
     58   Increased Recyclability
     64   Clean Production




                                                  Automobile is the basic essential of human life. An important goal of HMC is to prevent envi-
                                                  ronmental pollution by recycling resources that are used for manufacturing of automobiles and
                                                  enhancing the value of end-of-life vehicles. We are prohibiting the use of hazardous substances
                                                  for the new vehicle development phase to prepare the recycling process of end-of-life automo-
                                                  biles. To verify the recyclability of all models, we are operating the Recyclability Assessment
                                                  Information System for Homologation (RAIS-H). The company is thus responding to recycling
                                                  laws and regulations that are being strengthened all across the globe. Moreover, HMC is re-
                                                  cycling scrap materials such as plastic parts and waste PET bottles that are generated during
                                                  the automobile parts manufacturing process. HMC is making efforts to boost research and
                                                  development through the Automobile Recycling Center in order to increase recyclability.



                                                  Resource Circulation Target

                                                             Based on recognition that automobiles are precious resources, HMC is making strenuous ef-
                                                  forts to improve the recyclability of end-of-life vehicles. The mid-term goal of HMC is the early achievement
                                                  of the recycling and energy recovery rate of 95% by 2015 targeted by the EU and Asia.
                                                  To this end, we are working on Design for Recycling(DfR) and making improvements to end-of-life vehicle
                                                  dismantling and handling technologies, and functional part manufacturing technologies along with the
                                                  development of polymer material recycling technologies. Through the partnership with the end-of-life vehi-
                                                  cles management companies, we are jointly developing vehicle dismantling technologies and transferring
                                                  the technologies to relevant industries. We are also making efforts to realize resource circulation through
                                                  the expansion of use of recycled materials.


                                                  Efforts to achieve the resource circulation target




                                                                                                 Resource
                                                                                                circulation




                                                                                 95% recyclability/recoverability rate




                                                       Design for          Development           Development           Expanded use
                                                                                                                                             Recycling rate
                                                       Recycling           of dismantling         of recycling          of recycled
                                                                                                                                              monitoring
                                                         (DfR)              technology            technology             materials
                                                          HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                  59




Expansion of Recycling Technology

●          Eco-Design
	          We are carrying out digital design verifications for all models in the design phase to reduce the
development period by bringing down the number of design changes that are made after the design phase
and cut down relevant costs. At the same time, improvements on disassembly were made through digital
recyclability verifications in the design phase, thereby increasing the percentage of end-of-life automobile
parts being reused, recycled, and remanufactured. Dismantling of parts needs to be easy in order to boost
recyclability. By using 3D diagrams in the design phase, virtual vehicles are created to carry out disas-
sembly simulations, thereby assessing and improving disassembly. HMC is currently applying Design for
Environment (DfE) for all models.


●          Calculation of the Recyclability Rate for Newly Developed Vehicles
	          In order to respond to EU’s Certificate of Compliance and the recycling laws and regulations
of nations around the world, we are calculating and managing the recyclability rate before the release of
all new vehicles. For this purpose, we use a web-based internal system, the Recyclability Assessment
Information System for Homologation (RAIS-H). RAIS-H is a program used to determine the recyclabil-
ity and recoverability rate. Data is collected from relevant sectors, such as the design and certification
sectors as well as partner companies, to determine the recyclability rate, which is used to respond to
recycling regulations in various nations. Information on the recyclability rate is used as basic guidelines for
environment-friendly design.
In 2007, we used RAIS-H to complete assessments on the Grand Starex, i30, and Genesis. The results
indicate that the vehicles satisfy the recyclability rate of 85% and recoverability rate of 95%, which are
stipulated in end-of-life vehicle domestic and foreign regulations, including Europe.


●          Development and Employment of a Wide Array of Recycling Technologies
	          To reduce CO2 emissions, achieve a recyclability rate of at least 95%, and meet the 2015
energy recovery target stipulated in end-of-life vehicle recycling domestic and foreign regulations, we are
developing various recycling technologies by choosing parts targeted for disassembly in consideration of
environment-friendliness, cost, and work efficiency.
For the recycling of rubber material scrap, HMC independently developed a technology that transforms
materials into powder in high temperatures. In 2007, we completed the development of base technologies
for the recycling of rubber material scrap, such as pulverization using shear force at high temperatures,
optimization of desulphurization conditions, recycled rubber powder manufacturing and production-related
mix design, and manufacturing of pilot products. In 2008, we are working on developing technologies for
mass production and commercialization. By employing the developed technologies, rubber material scrap
will be used for the production of the overslam bumpers and gaskets of automobiles starting from early
2009.
We have set a goal to reduce ELV (End of Life Vehicle) waste to around 5% by 2015. The company devel-
oped a technology that extracts polyurethane and textiles from Automobile Shredder Residue (ASR) that
result from the ELV shredding process to absorbed sound materials for automobiles. Other efforts include
the development of technology that use components such as plastic, rubber, and inorganic materials as
60   Environmental Management

     44          Efforts to Minimize the Impact of the
                 Climate Change
     55          Reduction of Gas Emissions
     58          Increased Recyclability
     64          Clean Production




                                                         fuel for cement production.
                                                         In addition, strenuous efforts are being made to minimize environmental load and enhance the recyclability
                                                         rate by developing technology that destroys, based on an environment-friendly approach, and stabilizes
                                                         automobile coolants, which have a considerable impact on global warming.
                                                         We aim to contribute to environment preservation by developing high value-added recycling technologies
                                                         for PET bottles. To this end, we have been conducting research on “Recompounding" technology since
                                                         2007 that allows for free control of the intensity and shape after a crushing and washing process. After
                                                         material development in 2008, we will use the recycled materials for window winding motor "Housing"
                                                         upon completion of a pilot product production and evaluation process. It is anticipated that the scope of
                                                         application will be expanded to include exterior parts, such as the "Step Assist" and "Fender" in 2009.


                                                         ●          Vehicle Recycling Center
                                                         	          The Vehicle Recycling Center is a 4,950m2 building on a site spanning 10,890m2. This facility
                                                         can process 4,200 vehicles each year. Through a monitoring system that employs cutting-edge ubiquitous
                                                         technologies, a series of processes related to end-of-life vehicles can be checked in real time, including
                                                         the recycling of end-of-life vehicles and the waste treatment volume. Through the operation of the Vehicle
                                                         Recycling Center, we are recovering more than 90% of liquids and gases and have improved the ELV recy-
                                                         cling rate to at least 85%. Using the technology gained through the operation of the recycling center, we
                                                         plan to study recycling and environment-friendly treatment methods from the early design stage, and will
                                                         apply the results to the design stages of new vehicles. Also, HMC will form a partnership with the domes-
                                                         tic car-scrapping industry and provide them with operational technology and know-how, and contribute to
                                                         establishing a high standard for end-of-life vehicle management.


                                                         ●          Acquisition of EU’s Certificate of Compliance
                                                         	          In November 2007, HMC became the first domestic automobile company to acquire EU’s Cer-
                                                         tificate of Compliance. This certificate was presented by RDW (the Center for Vehicle Technology and
                                                         Information of the Netherlands), an officially recognized certification organization by the EU, in recognition
                                                         for the prohibition of use of heavy metals and recycling strategies of all domestic plants as well as the
                                                         Indian and Turkish plants of HMC, and the process for calculating the recyclability rate. The results of many
                                                         years of research on environmental management and resource circulation thus gained objectivity. We have
     1|5
           Certification for domestic plants
     2|5
           Certification for the India Plant             drawn up plans to receive the certificate for the Czech plant, which will commence operations in 2009. The
     3|5
           Certification for the Turkey Plant            acquisition of the Certificate of Compliance has enabled the application for the certificate for each model.
     4|5
           RAIS-H Certification for i30




                                                1            2                                3                                 4                                5
                                                                                                                                       HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                             61




                                                                              In April 2008, i30 became the first in Korea to acquire the Certificate of Compliance from VCA (The United
                                                                              Kingdom Vehicle Approval Authority), an officially recognized certification organization by the EU. i30 was
                                                                              officially recognized for its eco-friendly system in all processes of vehicle development. The recyclability
                                                                              rate satisfies legal requirements, by using recyclable materials and the application of a structure that al-
                                                                              lows for easy disassembly and recycling. We are moving forward with receiving certifications for the i10,
                                                                              New Elantra, and Grand Starex. Plans have been devised to acquire certifications for all new models that
                                                                              are being developed.



                                                                              life Cycle Assessment (lCA)
                                                                              	
                                                                                         We conduct Life Cycle Assessment (LCA), which is a quantitative assessment on environmen-
                               Global warming                Previous model   tal impacts throughout the entire life cycle of acquisition of raw materials, production, use, and disposal.
                                   17.5%                     Genesis
                                          100
                                                                              HMC compares the newly developed vehicles through LCA process with the existing vehicles in the same

                                          90
                                                                              class and use the results as data for developing environment-friendly vehicles.


 14.8%                                    80                       18.6%      ●          Genesis
Resource                                                     Photochemical
depletion                                 70                     smog                    An assessment of the Genesis result a reduction in gas emissions and improvement in fuel ef-
                                                                              ficiency through engine performance improvements, which accounts for around 75% to 80% of the entire
                                                                              life cycle of a vehicle in comparison to previous models. Overall environmental performance has been
                                                                              improved in terms of global warming (17.5%), acidification (13.4%), eutrophication (13.5%), photochemi-
                                                                              cal smog (18.6%), and resource depletion (14.8%). Assessment results also indicated that environmental
                 13.5%                                  13.4%
             Eutrophication                          Acidification
                                                                              load substance (CO2) emissions were reduced by as much as 17.7%compared to its predecessors. Moving
                                                                              forward, we will carry out environmental assessments on all newly developed vehicles and use the results
                                                                              as a means for communication with stakeholders, including consumers, on environmental matters.
     Eco-efficiency
     (unit: %)                                                                ●          Eco-efficiency*
     130
                                                                                         For sustainable development, we adopted eco-efficiency as the environmental performance
     120                                                     129.2
                                                119.7                         index. Eco-efficiency is an assessment technique that was mainly developed in Europe and Japan. System
     110


     100
                                                                              involves comprehensively assessing sustainability in consideration of the environmental and financial per-
                                  103.5
      90
                     100                                                      formance of a company or product.
      80                                                                      A reduction in environmental burden meanwhile an increase in economic value needs to be achieved to
                                                                              increase eco-efficiency. Activities performed to enhance eco-efficiency are closely related to the sustain-
                    2004           2005         2006         2007
                                                                              ability of a company and product. We developed indexes on environmental load and economic values of
                                                                              the company, plants, and vehicles, and is using the indexes to perform eco-efficiency assessments. The
                                                                              eco-efficiency assessment indexes for the company include the sales volume (economic value), as well as
                                                                              total CO2 emissions and resource usage (environmental burden). The eco-efficiency level of HMC improved
                                                                              by 19.7% and 29.2%, respectively, in 2006 and 2007 compared to the year 2004. These results demon-
                                                                              strate that HMC is steadily improving its efficiency in terms of CO2 emissions and resource usage against
                                                                              the sales volume. This translates into improvements in the company’s sustainability. We have drawn up
     *                           Economic Value
           Eco-efficiency =
                                                                              plans to build an internal system that systematically manages eco-efficiency indexes on the company,
                              Environmental Burden
                                                                              plants, and vehicles so that it can be used as an essential tool for sustainable development, which involves
                                                                              pursuing a high level of environmental and financial performance.
62   Environmental Management

     44         Efforts to Minimize the Impact of the
                Climate Change
     55         Reduction of Gas Emissions
     58         Increased Recyclability
     64         Clean Production




                                                                            Minimizing use of harmful Substances
     Roadmap to expand global standardization                               	
     of the four heavy metals                                                             An important task in corporate environmental management is maximizing the recyclability of
                                                                            ELV (End of Life Vehicle) and strictly restricting the use of harmful substances from the vehicle design
                                                                            phase, thereby minimizing their impact on the environment and mankind. Based on collaboration with part-
                     2009.12
          3rd Step Plans to apply to entire vehicles and parts              ners in the development and production phase, we are placing restrictions so that harmful substances are
                     produced at BHMC, HMI, HMMA
                                                                            not used in all vehicle parts. The company is also strengthening the development of alternative materials.


                     2008.12
                                                                            ●             Global Standardization of the Prohibition of Use of the Four Heavy Metals
          2nd Step Plans to apply to entire vehicles and parts                            With the goal of satisfying EU’s end-of-life vehicle regulations, improving the environmental
                     produced at HAOS, HMMC
                                                                            performance of vehicles, and complying with regulations in the EU market, HMC developed substitutes for
                                                                            four heavy metals (lead, mercury, cadmium, and hexavalent chromium) included in parts and raw materials
                     2007.12                                                and have been using the substitutes since 2002. Moreover, HMC does not use the four heavy metals in all
                     Applied to entire vehicles and parts
                     produced in domestic plants                            materials, parts, and vehicles we globally sell. We established global standard guidelines of the four heavy
          1 Step
           st
                     2007.12                                                metals in November 2006 and implemented according to a three-phased roadmap. Since early 2008, the
                     Applied to entire vehicles and parts produced          company has been applying substitutes for the lead content of aluminum for machining purposes and lead
                     in domestic plants, HMI, HAOS, targeting
                     EU market(deferred items: 2006.12)*                    content in bearing shells and bushes. In preparation for the enforcement of domestic ELV laws in July
                                                                            2008, we are completely prohibiting the use of the four heavy metals in all new domestic models (exclud-
                                                                            ing deferment and exceptional clauses in relevant laws and regulations). We are implementing plans to
                                                                            completely prohibit the use of the four heavy metals in the global market by 2010.




                                                                                Global Standard Guidelines of the Four heavy Metals

                                                                                In accordance with the environmental operation policy of HMC, no lead, mercury, hexavalent chromium, or cadmium will
                                                                                be used in HMC automobiles or parts sold around the world, and we will conform to this voluntarily.
                                                                                1. All employees will fulfill their responsibilities to ensure that none of the four heavy metals are used in any part of the
                                                                                  process of our operations in development, production, sales, use, and disassembly.
                                                                                2. All domestic and foreign partners doing business with HMC will ensure that none of the four heavy metals are included
                                                                                  in any of the materials or parts delivered to HMC.
                                                                                3. HMC and all partners – domestic and foreign – will reinforce the response process to regulation regarding the four
                                                                                  heavy metals and strengthen environmental training of our employees.
                                                                                4. HMC and all partners – domestic and foreign – will do their best to cooperate with one another in promoting these
                                                                                  global standard guidelines of the four heavy metals.
     * The EU regulation on scrapped vehicle that has been executed since                                                                                                                November 15, 2006
     July 2003, exceptionally permitted 1~5 years of postponement period
     towards the technically irreplaceable parts. On December 2006, all
                                                                                                                                                                        Dong-jin Kim, Vice Chairman & CEO
     models and parts of HMC export to Europe were prepared to meet the
     regulation except for the lead content in bearing shells and bushes.
                                                                                                                                 HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                        63




                                                                    ●            Establishment of a Hazardous Chemical Material Management System
Annually generated volume of IMDS data                              	            Since 2004, we have been continuously monitoring and systematically managing all hazardous
(unit: cases)                                      100,830          materials for auto parts through the International Material Data System (IMDS). Currently IMDS is only
                                                                    implemented at domestic and some overseas plants. However, plans have been established to implement
                                     63,830
                                                                    the system at all overseas plants, and include materials that are managed offline, allowing for integrated
                       32,498                                       management of hazardous chemical materials based on a system.
                                                                    HMC is also developing the e-Chemical Management System (e-CMS), which is scheduled to be com-
                                                                    pleted in June 2008, to actively use data on chemical materials in automobile parts that is accumulated in
                       32,269        31,332         37,000
          229
                                                                    IMDS. We expect that the development of this system will lead to the systematic management of chemi-
          229
         2004           2005          2006            2007          cal materials and weight of automobile parts, continuous reduction of environmentally harmful materials,
                                           ● Cumulative		□	Annual
                                                                    and enhancement of environment-friendliness. In addition, we are providing training on IMDS and new
                                                                    environmental laws and regulations by region to all partner companies to manage harmful materials based
                                                                    on joint efforts.
e-CMS construction and operation

                         Management
                       of the four heavy
                           materials
                        prohibited from
 Recyclability rate,          use
                                               Interface with
    Provision of
                                                 IMDS data
   resulting data
                                                                        Sustainable Development of CO2 Reduction
                         e-CMS                                          Technology in Response to Environment
    Chemical                                   Monitoring of
material statistics/
 determine the
                                               environmental
                                                 laws and
                                                                        Regulations and Customer’s Need
   level of use                                 regulations
                         Search for
                          chemical
                        materials/build
                         a database
                                                                        Degen (Deputy General Manager, European Technology Center Legislation Assessment Team)



                                                                        EU is continuously strengthening the environmental regulations. According the ‘European Consumer
                                                                        Survey’, eco-friendly product is one of the main factors that affect customer’s decision-making. For the
                                                                        sustainable growth of HMC in European market, we will have to respond actively in both environmental
                                                                        regulations and the customer’s needs of environmental products. European technology research center
                                                                        has to play a significant role in establishment of European environmental strategy. As a director of environ-
                                                                        ment department, reduction of CO2 emissions is the key issue due to the increase of oil barrel prices and
                                                                        the impact of climate change. Through discussion, EU is planning to reduce averaged CO2 emissions from
                                                                        130g/km in 2013 to 95g/km in 2020. Advanced technologies such as light weighting, Hybrid and efficient
                                                                        air condition will be used to accomplish the new objective. Moreover, HMC will have to quickly acquire
                                                                        information from g-ERI and respond to the implementation of Euro 5 of Euro 6 and chemicals substance
                                                                        regulation (REACH)
64   Environmental Management

     44         Efforts to Minimize the Impact of the
                Climate Change
                                                                                 Clean Production
     55         Reduction of Gas Emissions
     58         Increased Recyclability
     64         Clean Production




                                                                                 An important task that needs to be addressed by automobile companies is to minimize envi-
                                                                                 ronmental pollutant emissions and optimize the use of resources during the automobile manu-
                                                                                 facturing process. The use of raw materials, subsidiary materials, energy, water resources,
                                                                                 among others, in the process of manufacturing vehicles results in byproducts such as waste
                                                                                 heat, wastewater, gas, waste, and stench. It is thus essential to establish a clean production
                                                                                 system to effectively manage byproducts. The adoption of the Bali Roadmap during the 13th
                                                                                 Conference of the Parties to the United Nations Framework Convention on Climate Change is
                                                                                 leading to forecasts that domestic plants will also be forced to reduce greenhouse gas emis-
                                                                                 sions by a certain level after 2013. HMC is actively making efforts for the preparations. We are
                                                                                 standardizing the management of harmful materials so that they are not contained in raw ma-
                                                                                 terials and not used in the manufacturing process. By establishing a clean production system
                                                                                 that encompasses all partner companies, HMC is contributing to the preservation of the global
                                                                                 environment and enhance environment-friendliness of the automobile industry.
                                                                                 We are managing the material balance between inputs and outputs. In 2007, our domes-
                                                                                 tic business facilities used 308 thousand tons of raw materials, 30.88 million GJ of energy,
                                                                                 11.683 million tons of water resources, and 2,635 tons of chemical substances, in the pro-
                                                                                 cess of manufacturing 1.707 million automobiles and 2.376 million engines. During this pro-
                                                                                 cess, 1.526 million tons of CO2 were emitted. In addition, 639 tons of air pollutants, 192 tons
                                                                                 of water pollutants, and 198 thousand tons of waste were generated.



     Material balance in domestic business facilities and causes of environmental overload by process in 2007*


                                                                   Air pollutants: 639 ton                                                Greenhouse gas: 1,526,399 ton




                                                                              Press                       Body            Painting             Decorative design

                                                                            Scrap/Noise             Scrap/Waste sealer   VOC/Stench,           Packaging wastes
                                                                                                                         Wastewater

               Energy: 30,881, 448 GJ                                                                                                                                   No. of finished cars:
               Water resources: 11,683,059 ton                                                                                                                          1,706,727
               Raw materials: 308,001 ton                                                                                                                               No. of engines:
               Chemical substances: 2,635 ton                                                                                           Engine                          2,375,737
                                                                                                                                     manufacturing/
                                                                                          Molding             Forging                  Assembly
                                                                                      Molding sand             Noise                   Waste oil/
                                                                                        waste,                                         Wastewater
                                                                                      Dust/Stench




     *   The scope of the domestic facilities to frame material
     balance includes Ulsan plant, Jeonju plant, Asan plant, R&D
     center, and customer service center.                          Water pollutants: 192 ton                                                    Wastes: 197,812 ton
     HMC applies the Greenhouse Gas emission calculation                                                                                      (Recycled: 151,104 ton)
     method by Korea Energy Management Corporation(KEMCO)
     to calculate GHG emission amount.
                                                                                                                                                                                                                                                          HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                                                                                                                                                                                                                  65




                                                                                                                        Production Sites Fighting Against Climate Change
                                                                                                                        	
                                                                                                                                                        We are establishing a greenhouse gas emission reduction scheme at domestic business facilities.
                                                                                                                        In 2007, we presented measures to reduce greenhouse gas emissions as a key agenda item to the Environ-
                                                                                                                        ment Committee and established a strategic direction. Our objective is to maintain total greenhouse gas
                                                                                                                        emissions in 2012 to the level of 2005, then reduce emissions by 10% from the 2005 level in 2017. Thereby
                                                                                                                        we are making various efforts to accomplish it.


                                                                                                                        ●                               Activities of the Greenhouse Gas Sub-committee
                                                                                                                                                        In the second half of 2007, we established the Greenhouse Gas Sub-committee under the
                                                                                                                        Environmental Production Committee, chaired by the Ulsan Plant CEO, the Head of Manufacturing Division,
                                                                                                                        to effectively reduce greenhouse gas emissions at the production sites. A greenhouse gas inventory was
                                                                                                                        established for each energy source and manufacturing process, based on which a strategy was drawn up
                                                                                                                        to engage in reduction activities starting with areas with high potential for reduction. The key to green-
                                                                                                                        house gas reduction is the promotion of efficient use of energy and development of new and renewable
                                                                                                                        energy sources.
                                                                                                                        In the short term, we seek to maximize energy efficiency based on existing production facilities. Further-
                                                                                                                        more, we are looking into making considerable investments to adopt efficient production facilities and
                                                                                                                        making a shift to new and renewable energy sources in the long term.
                                                                                                                        Utility Team of the Ulsan Plant is the secretary of the sub-committee. The team supervises taskforce team
                                                                                                                        activities and makes efforts to implement integrated execution measures that include the production technol-
                                                                                                                        ogy sector, Asan Plant, and Jeonju Plant. Working-level taskforce team activities are regularly carried out ev-
                                                                                                                        ery month, and involve identifying and implementing fundamental improvements that can be made for energy
                                                                                                                        use reduction. In particular, the team is researching and looking into adopting facilities that ensure high energy
                                                                                                                        efficiency to make the plants a low energy consumption structure. The Greenhouse Gas Sub-committee
                                                                                                                        reports its activities to the Environment Committee every quarter. It is carrying out relevant activities at the
                                                                                                                        corporate level after a deliberation and resolution process of the Environment Committee.

                                                                                                                                                   Environmental Production Committee
                                                                                                                             Chairperson: Ulsan Plant CEO, the Head of Manufacturing Division	
                                                                                                                                    Vice Chairperson: Vice manager of the Ulsan Plant


                                                                                                                                                       Greenhouse Gas Sub-committee
                                                                                                                                                       Chairperson: General affairs manager in Ulsan

                                                                                                                                                                                                                                                                                                               Secretary
                                                                                                                                                                                                                                                                         Utility Team manager | Production Technology
                                                                                                                                                                                                                                                                           Planning and Coordination Team manager



Plant                   Plant                   Plant                   Plant                   Plant                       Transmis-
                                                                                                                                                          Engine              Material                 Seat                   Asan               Jeonju                                            Production Technology
No. 1                   No. 2                   No. 3                   No. 4                   No. 5                          sion
                                                                                                                             Transmission Management




                                                                                                                                                                                                                                                                        Technology Planning Team




                                                                                                                                                                                                                                                                                                                                                       Technology Planning Team
                                                                                                                                                                                                                                                                                                    PT Production Technology
                                                                                                                                                                                                    Technology Department
Facility Management 1



                        Facility Management 2



                                                Facility Management 3



                                                                        Facility Management 4



                                                                                                Facility Management 5




                                                                                                                                                                              Material Management




                                                                                                                                                                                                                                                                                                                               Tooling Planning Team
                                                                                                                                                                                                                                                 Jeonju Environmental
                                                                                                                                                          Engine Management




                                                                                                                                                                                                                            Asan Environmental




                                                                                                                                                                                                                                                                           Hyundai Production




                                                                                                                                                                                                                                                                                                                                                           Early Production
                                                                                                                                                                                                       Seat Production




                                                                                                                                                                                                                                                                                                         Planning Team
                                                                                                                                                                                                                               Safety Team



                                                                                                                                                                                                                                                     Safety Team
                                                                                                                                    Department



                                                                                                                                                              Department



                                                                                                                                                                                  Department
66   Environmental Management

     44        Efforts to Minimize the Impact of the
               Climate Change
     55        Reduction of Gas Emissions
     58        Increased Recyclability
     64        Clean Production




                                                                   ●           Greenhouse Gas Reduction Target Management System
                                                                   	           In 2005, Ulsan plant established the Total Energy Management System (TEMS) that man-
                                                                   ages the cost and quantity of energy consumed, including electricity and LNG (Liquefied Natural Gas) to
                                                                   enhance efficiency in energy use. We are also building a new computer system that identifies potential
                                                                   reductions, sets reduction targets, and comprehensively manages the targets at the corporate level to ef-
                                                                   ficiently manage greenhouse gas emissions of each manufacturing process and business facility. The new
                                                                   computer system will determine annual targets every year, based on the long-term roadmap for corporate-
                                                                   level greenhouse gas reductions. Afterwards, execution methods will be established and implemented
                                                                   to achieve the target assigned to each business facility. The system will be implemented to all domestic
                                                                   facilities, including the Ulsan Plant, Asan Plant, Jeonju Plant, Namyang R&D Center and A/S Center from
                                                                   the second half of 2008. The new system will interface data on each department’s energy consumption
                                                                   level and cost to the accounting system, and create a database of basic information to be used for envi-
                                                                   ronmental accounting. Moreover, we will identify potential greenhouse gas reductions in detail by building
                                                                   a system that monitors the characteristics of production processes and energy use (Utility Monitoring
                                                                   Management System or UMMS). We are taking necessary action to receive certification for the Energy
                                                                   Management System (EMS KS A 4000) as well, to save energy even more and further improve the reduc-
                                                                   tion system.


                                                                   ●           Establishment of an Inventory on Greenhouse Gas Emissions of Domestic
     2007 Greenhouse gas inventory of                                          Business Facilities
     domestic business facilities                                  	           We are moving forward through establishing a greenhouse gas inventory to identify the status
     (unit: ton)                                                   of greenhouse gas emissions and potential reductions at all business facilities in Korea (Ulsan Plant, Asan
     	                        Category                 Emissions   Plant, Jeonju Plant, research institute, service centers, distribution centers, and Headquarters). The total
     Direct                   LNG                       500,635    greenhouse gas inventory for domestic business facilities in 2007 was 1.526 million tons of CO2. The total
     emissions                LPG                          4,820   greenhouse gas inventory in terms of direct emissions accounted for 34.4% at 525 thousand tons of CO2;
                              Kerosene                     3,381   and that in terms of indirect emissions accounted for 65.6% at 1.002 million tons of CO2. We are making
                              Gasoline                      579    improvements to the processes of minimizing hydrofluorocarbon and sulfur hexafluoride, although they are
                              Light oil                    6,715   used in small quantities. We are planning to strengthen the establishment of the greenhouse gas inventory
                              CO2 for welding               576    to cover all business facilities across the globe.
                              HFC                          7,799
                              SF6                            41    ●           Activities to Reduce Greenhouse Gas Emissions
     Indirect emissions                                1,001,853   	           We installed heat recovery devices that recycle high-temperature waste heat that is generated
     (electricity)	           	                                    during the painting process, resulting in a considerable reduction in energy use. Around 50% of the heat
     Total                                             1,526,399   that has a temperature of 220 degrees Celsius is recovered, after which the temperature is lowered to 125
                                                                   degrees Celsius. The recovered heat is used to produce steam, resulting in a 50% reduction in the energy
                                                                   usage for steam production. Moreover, efforts are being made to improve facilities that effectively prevent
                                                                   energy waste during non-working hours by optimizing the energy usage hours of production facilities. At
                                                                   material plants, we changed its “parallel resonance” smelting furnaces to “serial resonance” ones, thereby
                                                                   substantially improving efficiency in energy use. We became the first Korean company to introduce a sys-
                                                                   tem that uses waste heat from cooling towers to supply heating at plants and manufacturing processes.
                                                                   We expect to reduce 4,000 tons of CO2 emissions. We are carrying out a national greenhouse gas reduc-
                                                                   tion registration project to acquire official certification. Through these activities, we intend to cut down
                                                                   greenhouse gas emissions and achieve greenhouse gas emission-related targets.
                                                                                                                                                 HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                                       67




Reduction of greenhouse gas emissions through the recycling of waste heat at paint plants

           Before                                                                                                             After
        improvement                                                                                                       improvement

        heat with a temperature                                                                                         heat with a temperature
                of 220℃                                                                                                         of 125℃

                                                                                                                           Heat
                                                                                                                         exchange
                                                              RTO                             Painting                                                         RTO                      Painting



                                                                                                                            Hot water
                                                                                                                                                               Increased temperature
                                                                                                                                                                 of pre-treated water
                                       Supply of steam                                                                                       Supply of steam
                                                                                                                                              (for standby)
                                                            Increased temperature
                          Boiler
                                                              of pre-treated water
                                                                                                                                    Boiler



* RTO: Regenerative Thermal Oxidizer
                                                                                        ●          Greenhouse Gas Emissions by Energy Source
Greenhouse gas emissions by energy                                                      	          Greenhouse gases emitted from two energy sources-electricity and LNG-consist of most of
source at domestic business facilities                                                  the greenhouse gas emissions at domestic business facilities. Electricity 65.8%) and LNG (32.6%) use
(2007)                                                                                  accounted for 98.4% of total energy consumption in 2007. The figure for other energy sources was merely
                                   1.6%
                                                                                        1.6%. This demonstrates that the automobile production plants of HMC are mostly using more environ-
                                                                                        ment-friendly energy sources.
                                                            32.8%                       Meanwhile, HMC’s total greenhouse gas emission for all facilities were 1.827 million tons, 1.778 million
                                                                                        tons, and 1.903 million tons, respectively from 2005 to 2007, while total vehicle production volume was
                                                                                        2.314 million units, 2.508 million units, and 2.618 million units, respectively. Interesting characteristics

                                                         □	LNG
                                                                                        reveal when we compare GHG emissions to total production volume.
        65.6%                                            □ Electricity                  Although our production level increased by 8.4%, 2006 greenhouse gas emission declined by 2.7% com-
                                                         □	Others
                                                                                        pared to the previous tear. This is primarily due to our investment in RTO heat recovery system resulted in
                                                                                        enhancement of energy efficiency. Also, our response to global warming such as cutting energy consump-
Changes in greenhouse gas emissions at                                                  tion for painting procedure led to the LNG use reduction.
domestic and overseas business facilities                                               There are three main reasons that explain the 7.1% GHG emissions increase when the amount of produc-
of hMC                                                                                  tion increased by 4.4% compared to the previous year, higher level of plant operations in the US and China,
                                                                                        trial operation of completed vehicles and material plants at Ulsan Plant; higher energy consumption for air
Annual greenhouse gas emissions
(1,000 ton CO2)                                             (ton CO2/100 million won)
                                                                                        conditioning due to global warming. In order to overcome such difficulties, HMC plans to put more efforts
3,000             5.48                                                             6    that would decrease GHG emissions.
                              5.06        5.30
2,500
                                                     4.82        4.67              5


2,000                                                            1,903             4
                                          1,827     1,778
                             1,616
1,500             1,457                                                            3


1,000                                                                              2


500                                                                                1




                  2003        2004        2005       2006        2007
                                     □	CO2 emissions		●	CO2 emissions per sales
68   Environmental Management

     44      Efforts to Minimize the Impact of the
             Climate Change
     55      Reduction of Gas Emissions
     58      Increased Recyclability
     64      Clean Production




                                                                   ●                 Participation in External Activities
                                                                   long-term Project Established by the Ministry of Knowledge Economy to Analyze Greenhouse Gas
                                                                   Emission Reduction | The Korea Energy Economics Institute, Korea Automobile Manufacturers Association,
                                                                   and auto makers are jointly participating in a project operated by the Ministry of Knowledge Economy that
                                                                   involves analyzing potential greenhouse gas reduction capabilities of the automobile industry. The objective of
                                                                   this project is to carry out comparative analyses on various scenarios such as maintaining the current energy
                                                                   sources at automobile facilities and making a shift into new and renewable energy sources so as to deter-
                                                                   mine the most cost-effective approach. This project, which started in the first half of 2007, is planned to be
                                                                   completed in the first half of 2008. The results are expected to be used to establish a long-term roadmap for
                                                                   greenhouse gas emissions reductions in the automobile industry.
                                                                   Conclusion of an Agreement for Voluntary Reduction of Greenhouse Gas Emissions | We are taking
                                                                   part in a program that involves the Federation of Korean Industries and automobile-related groups concluding an
                                                                   agreement for voluntary reduction of greenhouse gas emissions. Tangible results will be achieved in 2008.




                                                                   Resource Circulation

                                                                   	                 HMC is continuously engaging in improvement activities that minimize the volume of waste and
                                                                   increase efficiency in resource use for resource circulation at production plants. For example, we developed
                                                                   recycling technology for paint waste sludge, VOCs fuel technology, and technology to re-use molding sand
                                                                   waste at production plants.


                                                                   ●                 Waste Reduction
                                                                   	                 We are estimating the quantity of waste generated by making a classification into designated waste
                                                                   that are harmful to the environment and human body such as paint waste, waste oil, and battery waste gener-
                                                                   ated from painting plants; and general waste such as molding sand waste used for the production of engines,
                                                                   other plastic waste, dust, and sludge generated from molding plants. We have been recycling metal scrap and
                                                                   paper waste by managing them separately since 2004. In 2007, the waste produced at domestic and overseas
                                                                   business facilities was 337,000 tons and roughly 76.9% was recycled. The remaining 23.1% was disposed
                                                                   (incineration: 10.8%; landfill: 8.2%; waste into the sea: 4.1%). To send less waste to the sea and landfills, we
                                                                   are continuously engaging in a wide array of improvement activities such as the development of molding sand
                                                                   waste recycling technology and technology to reduce water content in waste paint.


     Status of waste disposal                                      Quantity of waste generated                                                      Quantity of waste recycled
     (domestic and overseas)                                       (domestic and overseas)                                                          (domestic and overseas)
                       4.1%                                        (ton)                                                    (ton/100 million won)   (ton)
               8.2%                                                800,000                                                                   1.0
                                                                                                                                                    300,000
                                                                                                                           0.83                     250,000
                                                                   600,000                                                                   0.8
                                                                                                                                                                                   204,020
     10.8%                                                                            0.65                                                          200,000
                                                                                                                                                              166,505    175,432
                                                                                                         0.60                                       150,000
                                                                   400,000                                                                   0.6
                                                                                                                         337,224
                                                                                                                                                    100,000
                                                                                    223,155            223,242
                                                                   200,000                                                                   0.4    50,000

                                                □	Recycled	
                                                □	Incineration
                                                □	Landfill	                           2005               2006              2007                                2005       2006      2007
                                                □	Waste into sea       □	Quantity of general waste generated		□	Quantity of designated waste
                                  76.9%                                                   generated		● Quantity of waste generated per sales
                                                                                                                                                          HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                                                         69




                                                                               ●                  Conservation of Water Resources
Changes in water resource utilization                                                             The global water usage will increase by 40% in 2025 in comparison to 1995. UN has desig-
(domestic and overseas)                                                        nated Korea as a water-shortage nation. Thereby, we are making efforts to minimize the use of water
(1,000 ton)
                                     46
                                                       (ton/100 million won)
                                                                               resources during the automobile manufacturing process in order to preserve water resources that are
20,000            43                                                     45

18,000                                                                   40
                                                                               becoming scarce resulting from an increase in the population and industrialization. In 2007, water usage
                                                       36
16,000                                                                   35    by HMC was 14.79 million tons and usage per sales was roughly 360,000 tons. Recycled water in 2007
                14,798                               14,793
                                  16,852
14,000                                                                   30
                                                                               was 855,000 tons, accounting for 5.8% of total water usage. We are strengthening improvement activities
12,000                                                                   25

10,000                                                                   20
                                                                               and increasing facility investments for the efficient use of water resources.
8,000                                                                    15    In cleaning procedures, to reduce the water resource usage and waste water production, we are investing
                 2005              2006               2007                     significant effort. The second painting factory of Ulsan established a rinse water recycling facility to reduce
                                    □	Quantity of water resources used
                          	●	Quantity of water resources used per sales        amount of electro-coating rinse water used in cleaning procedures. These efforts led to lower concentra-
                                                                               tion of waste water and higher recovery of electro-coat paints. Moreover, waste water generation reduced
Changes in quantity of water resources                                         by 33%.
recycled(domestic and overseas)
(1,000 ton)


1,300

1,200
                 1,254
                                   1,177
                                                                               Reduction of Pollutant Emissions
1,100                                                                          	
1,000

900                                                    855
                                                                               	                  We set company management standards that are much more stringent than legal standards on air
800
                                                                               and water pollutants generated during the automobile manufacturing process, and is operating a monitoring
                 2005              2007               2007
                                                                               system on pollutant emissions. By so doing, we are focusing on the thorough management of pollutant emission
                                                                               sources and activities related to reducing pollutants. To process high-concentration refractory waste that may

Total quantity of air pollutants discharged                                    be too difficult to process in the existing disposal facilities, we are using efficiency and toxicity assessments of

(domestic)                                                                     microbe treatments and making efforts in pollutant reduction through waste paint and sludge reduction.
(ton)

1,500         1,363
1,200
                         1,262    1,151                                        ●                  Air Pollutants
                                               844
900
                                                           639                 	                  Air pollutants consist mainly of Volatile Organic Compounds (VOCs) that are generated when
600

300                                                                            painting the car body exterior including paint particles and dust. We set internal standards much more


              2003       2004      2005       2006        2007                 Management standard of air pollutants
                                                                               (unit: Sox, HCl, CO, NOx: ppm, PM: mg/sm³)




                                                                                                           500                     6.0            600                 100               120    120        120
                                                                                   Domestic
                                                                                   legal standards




                                                                                                                                                                       50


                                                                                                           150                                                       40~45                                  30
                                                                                   Company
                                                                                   standards                                      1.2                                                             15
                                                                                                                                                   50
                                                                                                          50~60                                                                           3
                                                                                   Actual range
                                                                                   of emissions                                0.3~0.6           9~11                                    2~3 12~15 12~15

                                                                                                                            Smelting furnaces   Incinerator          Cupola               Induction melting furnace	|	
                                                                                                                                                                                            Cupola	|	Other facilities
                                                                                                           Sox                    HCl              CO                 NOx                          PM
70   Environmental Management

     44          Efforts to Minimize the Impact of the
                 Climate Change
     55          Reduction of Gas Emissions
     58          Increased Recyclability
     64          Clean Production




                                                                                  stringent than legal standards and is minimizing the production of air pollution material.
                                                                                  In 2007, amount of air pollutants decreased 24.3% compared to the previous year and recorded 639 tons.
                                                                                  Compared to the previous year, there was a reduction of 100% in terms of CO and NOx, 91.2% in SOx, and
                                                                                  11.2% in PM. This has been made possible by Ulsan Plant changing its cast iron procedure to a light alloy
                                                                                  procedure, resulting in the shutdown of the cupola. In addition, The material plant substantially reduced air
                                                                                  pollutant emissions by improving the dust collector that collects and purifies dissolved dust and harmful
                                                                                  gases discharged from the aluminum smelting furnace. We established more stringent company standards
                                                                                  on smelting furnaces so that the quantity of PM is maintained at 30mg/Sm2 or lower and that of HCl is
                                                                             1
                                                                                  maintained at 1.2ppm or lower. The previous pall ring-based dust collection method involved spraying
                                                                                  water to create a water curtain on the pall ring, which then collected dust. This approach had its negative
                                                                                  aspects, such as low efficiency in collecting dust and the generation of secondary waste – pall ring. The
                                                                                  improved method, which is the immersion-based dust collection method, places polluted materials into
                                                                                  the water located at the bottom of the dust collector to collect spores. There are no pall rings inside the
                                                                                  dust collector and therefore no clogs. The new approach also ensures a high level of efficiency in dust col-
                                                                                  lection and does not discharge secondary waste. We adopted this new approach in 2007, and is planning
                                                                                  to employ it at other business facilities as a measure against air pollution.
                                                                             2    We also improved the work environment, enhanced work efficiency, and reduced odor in nearby areas by
     1
         Dust collectors for casting machines of LP I and II at the first light   installing dust collectors for casting machines and the removal of gate dust at the fourth cast iron plant and
         alloy plant                                                              light alloy plant in Ulsan and also changed the dust collector at the forging plant.
     2
         New dust collector with a capacity of 6000, 6500 tones at the
         forging plant to improve working conditions
                                                                                  Improvement to the dissolved dust collection method


                                                                                                                                                   Incoming
                                                                                           Clean air discharge
                                                                                                                                                      dust
                                                                                                                                       Clean air              Clean air Separation of            Dust micro
                                                                                                                                       discharge              discharge   moisture                 filter
                                                                                                                 Demister
                                                                                                                 Spray                                                       Incoming
                                                                                                                                                                                dust
                                                                                                                 Pall Ring
                                                                                                                 Spray                             Incoming
                                                                                                                                                      dust
                                                                                                                 Pall Ring

                                                                                                                 Incoming dust
                                                                                                                                                                                                     Sinking
                                                                                                                                            Separation of water                         Nozzle       of dust
                                                                                                 Water



                                                                                       Previous dust collection method                                         Improved method
                                                                                              [pall ring-based]                                                  [immersion]
                                                                                                                                       HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                                  71




                                                                               ●          Water Pollutants
                                                                               	          A considerable quantity of water resources is used during the automobile manufacturing pro-
                                                                               cess such as coolants and hot water for heating. HMC deems it an important task to efficiently manage
                                                                               the resulting wastewater. We manage with our own water pollutant regulation that is more severe than
                                                                               the legal regulations. Contaminants are divided into several classifications for management: Biochemical
                                                                               Oxygen Demand (BOD), Chemical Oxygen Demand (COD), Suspended Solids (SS), and mineral oil (n-H).


Water pollutants generated by                                                  Water pollutant management standard
domestic business facilities                                                   (mg/ℓ)

                                                                               100
(ton)                                                           (kg/vehicle)   90
                                                                                              90
                                                                                                                      80                       80
300
                   0.11                               0.11             0.11
                                                                               80
                                                                               70
                                                                       0.10    60
250
                                                                       0.09    50
                   193            0.08                187
200
                                                                       0.08    40             40
150
                                   129                                 0.07
                                                                               30                                     30                       30
                                                                               20
100                                                                    0.06
                                                                               10
50
                                                                                                                                                                         5
                                                                                                                                                                         2
                   2005           2006                2007                                   COD                      BOD                      SS                       n-H
                                                                         	
                           □	Total quantity of water pollutants generated	
                            ●	Generated quantity by vehicle (kg/vehicle)                                                                                 □	Company standards		●	Legal standards


                                                                               We are continuously engaging in improvement activities to reduce the volume of wastewater which is
                                                                               mainly produced from vehicle cleaning, paint dust collection procedures in paint plants, and engine gear
                                                                               parts manufacturing, as well as sewage from facilities. The Ulsan Plant runs seven disposal units that pro-
                                                                               cess wastewater, two unified sewage/wastewater disposal units, and one wastewater disposal system.
                                                                               The Asan and Indian Plant adopted a zero wastewater discharge system, and are thus being operated as
                                                                               clean production plants that do not discharge any wastewater.
                                                                               In particular, the Ulsan Plant is engaging in a wide array of activities, such as planting water hyacinth,
                                                                               which are free-floating perennial aquatic plants that are known to be effective in removing nitrogen and
                                                                               phosphorus from water, in the sedimentation and transfer tanks at the unified sewage/wastewater dis-
                                                                               posal units to ensure ecological-friendly wastewater treatment.
                                                                               According to the policies of the Ministry of Environment, We have been sending water treated at the
                                                                               Ulsan Plant to the Bangeojin Sewage Treatment Plant since 2007. The density of the discharge has been
                                                                               increased so as to maintain the operational load of the sewage treatment plant of Ulsan Metropolitan
                                                                               City. In 2007, the quantity of water pollutants generated by domestic business facilities was 187 tons,
                                                                               recording a year-on-year increase of roughly 33%. This resulted from softening water pollutant manage-
                                                                               ment standards to the level of legal standards – 80ppm BOD, 90ppm COD, 80ppm SS - in tandem with
                                                                               the abovementioned changes.




1
    Transfer tank at the unified sewage/wastewater disposal units in
    Area I
2
    Sedimentation tank at the unified sewage/wastewater disposal
    units in Area II
                                                                                                                               1                                                              2
72   Environmental Management

     44           Efforts to Minimize the Impact of the
                  Climate Change
     55           Reduction of Gas Emissions
     58           Increased Recyclability
     64           Clean Production




                                                                                      ●           Volatile Organic Compounds(VOCs)
     Changes in the quantity of VOCs gener-                                           	          Many companies have recently been minimizing VOCs in consideration of their negative impact
     ated at domestic business facilities                                             on the environment and human body. In 2007, the domestic production of VOCs was 10,019 tons and the
     (ton)                                                             (kg/vehicle)   recovery rate of organic solvent was 43%. VOCs are used for diluting paint and cleaning coating machines
     25,000                                                                      7
                        6.1                                                           for effective vehicle painting. We are continuously performing improvement activities to reduce their use.
     20,000                                5.3               5.9                 6

                                                                                 5
     15,000
                      10,289
     10,000                              8,077
                                                           10,019
                                                                                 4
                                                                                      use of Waterborne Paints | To lessen the use of VOCs, we are replacing oil based paints with
                                                                                 3
     5,000
                                                                                 2
                                                                                      waterborne paints. Paints for vehicles consist of four materials (resin, pigment, solvent, and additives).
                                                                                      Depending on the solvent, there are two types of paint; oil based paint and waterborne. Waterborne
                       2005               2006              2007
                                      □	Quantity of VOCs generated (Domestic)
                                                                                      paints use pure water as a solvent and are environment-friendly paints. In 2002, EU and US strengthened
              ●	Quantity of VOCs generated per manufactured vehicle (Domestic)
                                                                                      the environmental regulations on imported automobiles with high amount of VOCs emissions. To qualify
                                                                                      the regulations, we replaced the organic paints we previously used with waterborne paints. We greatly
     Changes in the recovery of VOCs at domestic                                      decreased the amount of organic solvent(g) used per electro deposition area (m2) of an automobile and
     business facilities                                                              the amount of VOCs discharged into the atmosphere during the coating process by utilizing booths.
     (1,000ton)                                                (kg/100 million won)
     6,000                                                                      50
                                                            43%
     5,000             37%                37%                                   40    Regenerative Thermal Oxidizers (RTOs) | To remove VOCs emitted from painting plants, we are operat-
     4,000             3,705
                                         3,439
                                                                                30    ing Regenerative Thermal Oxidizers (RTOs). An RTO is a device used to incinerate (around 800℃) VOCs.
                                                           3,225
     3,000                                                                      20
                                                                                      By storing heat that is generated during the incineration process in a ceramic material, it maximizes heat
     2,000                                                                      10

     1,000                                                                   1,000
                                                                                      efficiency during the waste gas treatment process. With RTOs, we are reducing the VOCs and stench
                                                                                      emission density at painting plants, thereby contributing to environmental improvements at the business
                       2005              2006                2007
                         □	Quantity of VOCs recovery		●	Ratio of VOCs recovery
                                                                                      facilities and neighboring areas.


                                                                                      ●          Hazardous Substances
                                                                                      	          Hazardous substances refer to chemical substances harmful to the human body and the glob-
                                                                                      al environment and include toxic and other chemical substances. Throughout many advanced nations,
                                                                                      chemical substance-related regulations are currently being reinforced and becoming a pressing issue in
                                                                                      corporate exports and international trading. The EU enacted the Registration, Evaluation, and Authoriza-
                                                                                      tion of Chemicals (REACH) regulation in June 2007. With the enforcement of the REACH ordinance, those
                                                                                      enterprises exporting chemical substances and products that contain chemical substances to EU nations
                                                                                      must make a pre-registration during the pre-registration period (June 1 – November 30, 2008).
     Installation and operation of RTOs(Ulsan Plant)
                                                                                      We are fully aware of what tasks need to be addressed in relation to the REACH ordinance, including
                                                                                      pre-registration and formal registration, and is taking measures accordingly. We are separately managing
                                                                                      poisonous substances, such as sodium hydroxide, sulphuric acid, nitric acid, and hydrochloric acid, and
                                                                                      making efforts to reduce their use. In 2007, the quantity of hazardous materials used domestically by HMC
                                                                                      was 2,635 tons, posting a 6% increase from the previous year, but the quantity per vehicle increased by
                                                                                      0.85%. This is because the casting plant in Ulsan used more sodium hydroxide (NaOH) to control odor. The
                                                                                      amount of chemicals used per vehicle went down in case of H2SO4, HNO3, and HCl.
                                                                                      We are developing a computer system that can comprehensively manage hazardous substances by inter-
                                                                                      facing with the VAATZ (Value Advanced Automotive Trade Zone) system, which is a purchasing system, to
                                                                                      effectively manage hazardous substances that are used in the manufacturing process. The plan is to fully
                                                                                      launch the system in the second half of 2008.
                                                                                                                                     HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                          73




                                                                      Moreover, we established a strict internal management scheme for ozone depleting substances and
Total consumption of hazardous chemical                               implemented a corporate-level policy that prohibits the use of ozone depleting substances throughout all
substances by domestic business facilities                            manufacturing processes and our partner companies. We are making efforts to preserve the global envi-
(ton)                                                  (kg/vehicle)   ronment. We are also implementing various research initiatives to establish an atmosphere management
3,500                      1.53              1.54              1.6

         1.30                                                  1.4
                                                                      process inside and outside its manufacturing processes by building reduction technology for hazardous
3,000
                                             2,635             1.2    substances generated during the manufacturing processes, developing a model of pollutants in the atmo-
2,500                      2,478
         2,190                                                 1.0
2,000                                                                 sphere, and constructing a design support system for ventilation equipment.
                                                               0.8
1,500
                                                               0.6




         2005              2006              2007
                                                               	
         □	Total consumption of poisonous substances (Domestic)	
                                                                      Environmental Expenditures
                          ●	Consumption per source (kg/vehicle)
                                                                      	
                                                                                      We calculate the environmental expenditures of three domestic plants (Ulsan, Asan, and Jeon-
                                                                      ju) and break them down into five items stated in the table below every year. A classification is made into
                                                                      the direct expenditures of environmental pollution reduction that is associated directly with environmental
                                                                      facilities and equipment, the indirect expenditures of environmental pollution reduction that is spent for
                                                                      environmental education for employees and environmental activities, the environment risk management
                                                                      expenditures for legal compliance, disposal and recycling for consigned waste treatment and waste re-
                                                                      cycling, and lastly, the social environmental activity expenditures for local environmental campaigns and
                                                                      green area management. In 2007, the environmental expenditures of the three domestic plants were 54.1
                                                                      billion won, and the recycling profit derived from selling wastes totaled around 28 billion won. We are plan-
                                                                      ning to more systematically manage environmental expenditures by adopting an environmental accounting
                                                                      system.


                                                                      Total environmental expenditure of the three domestic plants in 2007
                                                                      (unit: one million won)

                                                                      Category                          Main items                                                       Total amount
                                                                      Environmental expenditures        Direct expenditures of environment pollution reduction                26,655
                                                                                                        Indirect expenditures of environment pollution reduction              14,129
                                                                                                        Environmental risk management expenditures                               120
                                                                                                        Disposal and recycling expenditures                                     8,884
                                                                                                        Social environmental activity expenditures                              4,314
                                                                                                        Sub-total                                                             54,102
                                                                      Environmental profit              Profit from recycling (Proceeds from selling waste)                   27,994
74   Environmental Management

     44          Efforts to Minimize the Impact of the
                 Climate Change
     55          Reduction of Gas Emissions
     58          Increased Recyclability
     64          Clean Production




                                                         Acquisition of the ISO14001 Certification

                                                                        To actively respond to environmental regulations of countries around the world and strength-
                                                         ened monitoring by environmental NGOs, we have been acquiring the ISO14001 certification which is an
                                                         international standard on environmental management system established by the International Organiza-
                                                         tion for Standardization. All production plants in Korea acquired the certification. The Chinese plant also
                                                         acquired the ISO14001 certification in August 2006, followed by the acquisition of the certificate by the US
                                                         plant in December 2007. This is a part of efforts made by the company to provide cooperation for environ-
                                                         mental management at the respective nations and achieve early stabilization of the new overseas plants
                                                         by building an internal environmental management system. We will continuously improve the environmen-
                                                         tal management system in line with the follow-up audits conducted every three years. The company plans
                                                         to have more newly created overseas plants and partner companies acquire the ISO14001 certification.


                                                         ISO 14001 certification status
                                                         Business facility                                  Date of certification       Certification body
                                                         Ulsan Plant (including Headquarters,               Dec, 1995                   TUV-KOREA
                                                         Namyang Research Center, and A/S Center)
                                                         Asan Plant                                         Apr, 1998                   TUV-KOREA
                                                         Jeonju Plant                                       May, 1999                   TUV-KOREA
                                                         India Plant                                        Mar, 2003                   TUV-INDIA
                                                         Turkey Plant                                       Jul, 2003                   TSE
                                                         China Plant                                        Aug, 2006                   China Certification Center, Inc.
                                                         US Plant                                           Dec, 2007                   VCA




     1
         US plant certified to ISO 14001(2007.12)
     2
         China plant certified to ISO 14001(2006.8)
                                                                                                1                                   2
                                                      HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                           75




HMMA, Settlement of Environmental Management via
Acquisition of the ISO 14001 Certification

John Applegate (Senior Manager, Plant engineering, in charge of implementation ISO 14001 for HMMA)



HMC promoted ISO 14001 certification of HMMA for environment-friendly operation. Since ISO certifi-
cation is the process that necessitates involvement of the whole plant, almost a year was spent prepar-
ing HMMA for the certification process. First and foremost, all relevant team members established spe-
cific action plans to adjust internal processes in accordance with ISO 14001 and documented them.
These documentations were later used as guidelines for internal evaluation assessing the level of
compliance with ISO 14001 and discovering shortfalls that were later fixed. Active participation of
general managers and team members from all the departments helped their level of understanding on
environmental management and ISO 14001 certification. Through these efforts, HMMA also prepared
for external audit.
As a result, HMMA met all the requirements of ISO 14001. Also, any minute problems discovered in
the process of implementing ISO 14001 were fixed immediately, which smoothened the certification
process. More importantly, through the process of the ISO certification, employees increased the per-
spective of saving resources and obtained the effect of the reduction in energy consumption. We will
continuously practice environment-friendly management by analyzing internal success factors to obtain
renewal of ISO certification and environmental achievement.
PEOPlE & SOCIETy




hMC strives to fulfill sustainability commitments as well as to promote corporate growth based on the partnership and coopera-
tion with the stakeholders.

Building Mutually Beneficial labor Relations
HMC labor and management have pursued mutually beneficial relations and promoted mutual trust by holding a regular meeting on business performance and labor-management events. As a
result, in 2007, HMC labor and management reached a wage agreement without labor strikes. In addition, labor union members re-elected the union leader who successfully made the 2007
wage agreement as the leader for 2008, further stabilizing the labor relations.


                                                                                                                                                                            page   79
78 Employees                                92 Shareholders and Investors                    99 Social Contribution
Employee Status                             Shareholders' Meeting and Dividend               Social Contribution Philosophy and Vision
Building Trust                              Stock Dividend for Employees                     Progress and Plans
Respect for Human Rights                    More Effective Communication with Shareholders   Social Contribution Activities in Korea
Employee Education                                                                           Global Social Contribution
Employee Benefits                           95 Customers
Industrial Safety and Health                Customer Satisfaction
                                            Customer First Management
85 Suppliers                                Marketing
Mutual Cooperation
Support for Green Management of Suppliers
78   People & Society

     78
     85
              Employees
              Suppliers
                                                                     Employees
     92       Shareholders and Investors
     95       Customers
     99       Social Contribution




                                                                     In accordance with the principles of Trust-based Management, Environmental Management,
                                                                     and Transparent Management, we pursue to create the prosperity of company along with the
                                                                     development of job satisfaction. We make efforts to recruit competent workforce, develop
                                                                     global human resources, and help employees realize their potential.
                                                                     Moreover, we provide various employee benefits to improve employees’ quality of life. Our
                                                                     employees are committed to the growth of HMC, while pursuing a balance between work
                                                                     and life.



                                                                     Employee Status

                                                                     ●             Number of Employees
     Number of employees in Korea                                    	             As of December 2007, the number of our employees was 76,704, a 1.76% increase com-
     (As of December 31, 2007)/(unit: number of employees)           pared to the previous year. 55,939 employees work in domestic offices and plants, while 20,765 work in
     60,000                                                          overseas Hyundai Motor Companies. We are striving to create employment every year and contribute to
     58,000
                                                          55,939     stabilizing employment in Korea and overseas.
     56,000
                      54,440              54,973
     54,000
     52,000
     50,000
                                                    1.76%            Domestic employees by job category                                Employees on overseas
                                                   increase
                                0.98%                                (executives included)                                             (As of December 31, 2007)/(unit: number of employees)
                               increase
                                                                     (As of December 31, 2007)/(unit: number of employees)

                      2005                2006                2007                          298                                                              232
                                                                                  6,365
                                                                                                                                                3,184
                                                                                                          11,118
                                                                                                                                                                                  6,961


                                                                                                                   5,931
                                                                                          55,939                                                           20,765
                                                                                                                    □	Administration
                                                                                                                    □	R&D               5,314                                             □	North America	
                                                                                                                    □	Production and                                                      □	China
                                                                         32,227
                                                                                                                       maintenance                                                        □	India
                                                                                                                    □	Sales                                         5,074                 □	Europe
                                                                                                                    □	Other                                                               □	Other



                                                                     ●             Respect for Employee Diversity

                                                                     local Recruitment | Through the global management initiative, we have aggressively entered the over-
                                                                     seas markets and recruited employees from the local community. In 2007, the number of local employees
                                                                     increased by 4.97% from previous year to 20,765, accounting for 27.07% of the total HMC employees. We
                                                                     contributed to the local economy by hiring employees from the local community and treated all employees
                                                                     equally, regardless of their nationality, culture, ethnicity, language, and religion.


                                                                     Equal Opportunity | HMC is stepping up its effort to hire more female employees and allow to work
                                                                     along with male employees on an equal footing. The proportion of female employees to the total workforce
                                                                     at HMC is at 4.06%. In 2007, the number of domestic female employees increased by 1.52% compared
                                                                     to the previous year with 2,270 employees. We offer a daily leave every month and a 90-day maternity
                                                                     leave to female employees to improve their working conditions. Some of our offices and plants operate a
                                                                     workplace childcare center.
                                                                                                                        HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                               79




Number of female employees in Korea                            yearly female employees recruitment status
(As of December 31, 2007)/(unit: number of employees)          (unit: number of employees)
2,300
2,280                                               2,270
                                                               		                            Male            Female       Total Recruitment        Female Proportion (%)
2,260

                                           2,236
                                                               2005                          1,019                88                   1,107                         7.9%
2,240
                 2,229             2,230
2,220
                                                               2006                           862                 91                     953                         9.5%
2,200                     2,193
        2,178
2,180
                                                               2007                           635                 95                     730                        13.0%
2,160

                                                               Average                       2,903              317                    3,220                         9.8%

         2002    2003     2004     2005     2006        2007


                                                               Building Trust

                                                               ●              Mutually Beneficial Labor Relations

                                                               labor-Management Expert Committee | In 2007, we established the Labor-Management Expert Com-
                                                               mittee to develop mid-and long-term vision for building trust between labor and management and to lay
                                                               the basis for constructive labor relations. The Labor-Management Committee consists of ten members,
                                                               five experts each recommended by the labor union and the management. The committee conducts a study
                                                               on labor issues and holds meetings where working-level managers and labor experts discuss labor issues
                                                               to build effective labor relations.


                                                               Wage Negotiations without Strikes in 2007 | We respect three labor rights protected under the Con-
                                                               stitution and guarantee labor union activities within the scope of applicable laws. In addition, we have held
                                                               meetings of the Central Labor-Management and Working-level Labor-Management Committee in each
                                                               quarter by plant or business department in order to address labor issues in a timely manner and promote
                                                               mutual trust and understanding between labor and management.
                                                               Some uncertainties exist, as the HMC Labor Union is one of the largest labor unions in Korea and repre-
                                                               sents the auto industry. However, our labor and management have pursued mutually beneficial relations
                                                               and promoted mutual trust by holding a regular meeting on business performance and labor-management
                                                               events, and dutifully participating in wage negotiations. As a result, in 2007, our labor and management
                                                               reached a wage agreement without labor strikes, which occurred first time over the past few years.
                                                               Additionally, labor union members re-elected the union leader who made the wage agreement with the
                                                               company in 2007 as the leader for 2008.


                                                               ●              Employee Idea Proposal

                                                               Idea Competition | Holding the 2007 Idea Competition, held between March to October, helped em-
                                                               ployees share ideas and knowledge to reduce costs and improve profitability. Ideas selected from the
                                                               competition and proposals from group discussions helped us save 95.8 billion won and 19.7 billion won,
                                                               respectively. In sum, in 2007, we were able to cut costs worth 115.5 billion won, which exceeded the
                                                               2007 cost reduction target by more than 20%. In 2007, the number of ideas proposed by one employee
                                                               increased by 1.1 to 9.9, and the rate of ideas selected increased by 6.1% to 97.1%. In addition, the number
                                                               of proposals made in a group discussion and adopted by company increased by 15.2% to 2,408.
80   People & Society

     78   Employees
     85   Suppliers
     92   Shareholders and Investors
     95   Customers
     99   Social Contribution




                                       Idea Competition and group discussions
                                       (Cost saved, unit: 100 million won)

                                       Year              Idea Competition                    Group discussions                    Total cost saved
                                       	                          Number of           Cost          Number of              Cost
                                                                             ideas   saved   proposals adopted	           saved
                                       2005                           432,141         598                2,027              179               777
                                       2006                           426,204         730                2,090              180              9010
                                       2007                           452,199         958                2,408              197              1,155


                                       In addition, we have kept "Employee Proposal Log" in many corners of each plant to accept any ideas and
                                       complaints about production from employees. In particular, the Asan Plant held "the Idea Competition for
                                       a Better Workplace" to encourage employees to present innovative ideas to improve the workplace. This
                                       on-site event contributed to promoting communication, mutual trust, and respect among employees, and
                                       creating a better workplace.


                                       CAP Meeting in the Hyundai-Kia R&D Center | The Hyundai-Kia R&D Center has held a Communication,
                                       Action, and Performance (CAP) meeting to encourage employees by proposing creative ideas. In a CAP meeting,
                                       employees discuss organizational problems and present solutions to the problems. Through the CAP meeting,
                                       employees voluntarily suggest a creative proposal to improve business performance. The Hyundai-Kia R&D Center
                                       built the CAP e-Lounge, a system designed to help employees share and manage ideas and proposals presented
                                       in a CAP meeting. In January 2007, the Hyundai-Kia R&D Center hosted "Thanks Cap 2007," which promoted shar-
                                       ing information on CAP activities and celebrated the best ideas adopted by the company.



                                       Respect for human Rights

                                       ●              Declaration of Respect for Human Rights of Employees
                                                      In 2001, we prepared and announced the Ethics Charter, which states our company respects of
                                       legislations on human rights protection in each country and global human rights protection standards. Fur-
                                       thermore, we opened the Office of Ombudsman and Employee Complaints Center to deal with difficulties
                                       employees facing and have operated various programs to protect human rights of employees by country,
                                       region, and culture.


                                       ●              Employees' Right to Association
                                                      We respect employees' right to establish a labor union and other representative bodies cor-
                                       responding with domestic and foreign labor laws. Currently, the HMC Labor Union has been established
                                       in Korea, and the Labor-Management Consultation Committee is operated in Hyundai Motor India(HMI),
                                       and the Public Assembly is established in Beijing Hyundai Motor Company(BHMC). As of December 2007,
                                       43,659 out of 55,914 employees are members of our labor union. We provide our employees with job se-
                                       curity and employees make a concerted effort to improve the quality of vehicles and vehicle sales in order
                                       to contribute to the growth of HMC, creating mutually beneficial labor relations.
                                                                                                                           HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                 81




                                                                   ●           Promotion of Local Employee's Participation in the Decision-making
Education status for domestic                                                  Process and Respect for Opinions of Local Employees
hMC employees                                                                  Overseas R&D centers mostly consist of engineers and researchers from local residents. In
Category              Number            Total   Average hours      conformity with the local recruitment principle, we allow local employees to actively participate in the
                           of        hours of     of education
                    employees       education   per employees
                                                                   management. Particularly, the highest decision-making body at BHMC appointed a local resident as a

Administration         11,122 1,306,694                  117
                                                                   director. We respect and reflect opinions of local employees in the decision-making process.

Production             29,080       582,776                20
Sales                   6,414       212,606                33
                                                                   ●           Prevention of Child and Forced Labor
Engineering             2,408       100,807                42
                                                                               HMC does not hire children under the minimum age for employment and support strictly re-

R&D                     5,680       550,590                97
                                                                   inforced relevant laws in each country. Our workforce only consists of people who are willing to work for

Total(Average)         54,704 2,753,473                    50
                                                                   HMC. We provide fair compensation for labor to our employees, adhering to pre-defined work hours and
                                                                   wage policy of each office or plant and labor laws in each country.
* Education participation: full-time employees(As of September
  2007)
* Total hours of education = (number of employees) X (hours of
  education)                                                       ●           Prevention of Sexual Harassment at Workplace
* Average hours of education per employees = (total hours of
  education) X (number of employees)                                           We completely prohibit physical, verbal, and visual sexual harassment and stalking. Our com-
                                                                   pany complies with provisions on prohibiting workplace sexual harassment specified in the Equal Employ-
          2007 Education Framework and
          Direction of the Main Objectives                         ment Opportunity Act and operates the Sexual Harassment Center in order to create a workplace with

               Spread organizational culture                       no sexual harassment. Every sexual harassment case is investigated and escalated to the Disciplinary
               share the core value of corporation,                Committee. We strive to disclose any disciplinary actions against the harassers to prevent recurrence.
           conduct education program to all employees	
                                                                   Moreover, we provide all employees with education twice a year on prevention of workplace sexual ha-
                Strengthen global capability                       rassment, according to the Equal Employment Opportunity Act. We also offer education on prevention of
    systematize the support of education program toward
  overseas business operations(Establish global standardized       workplace sexual harassment to employees in overseas plants and offices following laws and regulations
   education program), train local exports,develop language
                                                                   in each country.
     education programs linked to business performance

      Build basis of education focusing on capability
      strengthen the structure of the education programs to
      enhance work performance, classify education courses         Employee Education
                         by job category

              Aim for innovative performance                       ●           Education Programs
               share the core value of corporation,
           conduct education program to all employees                          Our education program has been expanded to employees' families, stakeholders, and retirees.
                                                                   Also, education areas have been expanded to include culture and art in addition to on the work related
                                                                   training.
                                                                   In 2007, HMC provided various education programs to all employees including new employees to promote
                                                                   common values and employee morale. In order to increase global competitiveness, we also developed ed-
                                                                   ucation courses for employees in overseas plants and offices, and created education programs like foreign
                                                                   language courses to nurture regional experts. We developed education programs closely linked to business
                                                                   performance and differentiated education courses by job category to nurture competent workforce.
                                                               1


                                                                   Domestic Employee Education | We provided all employees with both internal and external training
                                                                   courses. In 2007, the average number of training hours per employee was 50 hours receiving education
                                                                   on capacity building, foreign languages, and business management via on-line. In providing education,
                                                                   we expanded the areas to include not only OJT(On the Job Training) such as technical skill, sales, and
                                                                   maintenance but also life design, child education, and seminar to provide differentiating education courses

                                                               2
1|2
      Education of new employees in 2007
82   People & Society

     78         Employees
     85         Suppliers
     92         Shareholders and Investors
     95         Customers
     99         Social Contribution




                                                                         to each employee by job category.
                                                                         Additionally, we have partially implemented the Individual Development Plan (IDP). With the IDP, employ-
                                                                         ees attend education courses to complement their weaknesses, after making a self-development plan and
                                                                         receiving a capacity diagnosis.


                                                                         ●             Continuous Education
                                                                                       The Hyundai-Kia Learning Center manage and provide information on education courses for
                                                                         HMC employees. It is designed to provide continuous education to HMC employees. The Hyundai-Kia
                                                                         Learning Center offer on-line courses on foreign languages, OJT, and business management to help em-
                                                                         ployees receive education regardless of time or location.


                                                                         ●             Education for Retirees
                                                                                       Those who plan to retire can receive education to prepare for life after retirement. We pro-
                                                                         vide education courses on change management after retirement, opening a business, preparation for
                                                                         re-employment, wealth management, health management, and exchanges of information among retirees.
                                                                         In 2005 and 2006, 65 out of 77 employees and 32 out of 131 employees, respectively, attended education
                                                                         courses. However, in 2007, we did not open education courses as the retirement age was extended.



                                                                         Employee Benefits

                                                                         ●             Employee Benefits
                                                                                       Various and flexible employee benefits are being offered to meet the needs of employees.
     1
         HMC Marathon Club participating in the Kyungju Cherry Blossom
         Marathon in April 2007                                          Currently, we provide employees with National Health Insurance, Industrial Accident Insurance, National
     2
         Happiness Engine Concert, a concert tour for HMC plants in
                                                                         Pension, Employment Insurance, and regular medical examinations, in accordance with laws.
         Korea
                                                                         HMC also voluntarily offers employees with other benefits. Benefits include living expenses assistance
                                                                         such as financial aids, housing assistance including a free company house or dormitory, and health and
                                                                         hygiene benefits. Additionally, we operate cultural and motivational activity assistance program. Overseas
                                                                         Hyundai Motor Companies also provide various benefits to their employees, depending on local culture
                                                                         and laws and regulations.


                                                                         ●             Support for Cultural Activities
                                                                                       HMC encourages employees to participate in various club activities. In 2007, the Asan Plant
                                                                     1
                                                                         encouraged every employee to join at least one club, and the Ulsan Plant hosted a club festival. In June
                                                                         2007, we hosted ‘Power for Passion and Happiness,’ an in-house club festival, to celebrate employee club
                                                                         activities.
                                                                         We have supported employees to participate in various cultural events where they can recharge and
                                                                         increase morale. In 2007, we hosted ‘Happiness Engine Concert’ touring plants and offices across the
                                                                         nation, and became the first Korean company to provide employees with literature contents on-line. By
                                                                         opening the ‘Yangjae Atrium’, an art gallery, we offered our employees an opportunity to appreciate art.
                                                                     2
                                                                                                                HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                     83




                                                  Clubs at hMC in 2007
                                                  (Unit: number of employees)

                                                  Category           Headquarters         Ulsan Plant      Asan Plant    Jeonju Plant   Hyundai-Kia R&D Center
                                                  Sports                        329             4,636            829            1,322                      1,038
                                                  Hobby                         483             2,303            454             688                         734
                                                  Volunteering                     -            5,032            254             226                          35
                                                  Religion                        36             551             253             292                          65
                                                  Learning                         -                -             27                -                           -
                                                  Total                         848            12,522          1,817            2,528                      1,872


Website for hMC employees                         ●             Living and Housing Expenses Assistance
Gym for HMC employees                                           We offer company houses, dormitories, or long-term loans with lower interest rates to em-
http://health.hmc.co.kr                           ployees who do not own a house in order to help employees work in stable living conditions. Moreover,
Happy World                                       we operate a non-profit mutual savings system, where fund deposit by employees is used as loans for
http://wellbeing.hmc.co.kr                        employees and interest is provided to depositors as a dividend.
Cultural events for employees of the HKMC Group   HMC operates the Administrative Service Center and Legal Advice Center to help employees easily get ad-
http://culture.hyundai-kiamotors.com              ministrative documents and legal advice. The Counseling Center in the Hyundai-Kia R&D Center particularly
Social Contribution Festival of the HKMC Group    provides employees with expert counseling service for personal matters. In January 2007, the Asan Plant
http://festival.hyundai-kiamotors.com             invited legal law advisers to provide free law consulting to employees on the production floor.



                                                  Industrial Safety and health

                                                  ●             Industrial Safety and Health System
                                                  i-ESh, an Integrated System for Environmental Safety and health | We operate i-ESH, which is ac-
                                                  cessed via the HMC Intranet and efficiently supports the ISO 14001 standard for green management. i-ESH
                                                  contains vast information on environmental safety and sanitation regarding each domestic plant.
                                                  The recorded information is organized into statistical data of diverse formats and used by the employees



                                                                                  Safety
                                                                                management




                                                   Environment                    i-ESh                   Health
                                                   management                    System                 management




                                                                                 Statistical
                                                                                    data
84   People & Society

     78          Employees
     85          Suppliers
     92          Shareholders and Investors
     95          Customers
     99          Social Contribution




                                                            working in related areas. To allow our employees easily access information on safety, health, and the en-
                                                            vironment, i-ESH further offers information and education materials on safety, health, and the environment
                                                            as well as relevant laws and regulations, and technological standards. iesh.hmc.co.kr


                                                            Industrial Safety and health Committee | The Industrial Safety and Health Committee consists of
                                                            seven managers recommended by labor and another seven managers recommended by management to
                                                            deal with matters related to industrial safety and health. The committee has a regular meeting in each
                                                            quarter and special meetings whenever an industrial safety and health issue is raised.


                                                            ●          Prevention of Industrial Accidents and Medical Assistance

                                                            Preliminary Assessment and Safety Campaigns | HMC provides education and conducts a preliminary
                                                            assessment through the safety inspection to protect employees’ safety at a workplace. The Ulsan Plant
                                                            operates a 24-hour emergency center to reduce damage caused by industrial accidents. Employees can
                                                            contact the center by calling 119. The Asan Plant also conducts safety inspection twice a year and mea-
                                                            sures the working environmental quality to detect elements harmful to employees on the production floor.
                                                            We conduct a safety check on a specific area every month and allow the Ministry of Labor to conduct an
                                                            inspection on the compliance with plant safety guidelines once a year. Each HMC plant adopts various
                                                            preliminary assessments to prevent traffic accidents and fires.


                                                            Industrial Medical Centers and Medical Examinations | Industrial medical centers and dispensaries in
                                                            domestic plants continue to provide medical cares in preparation for sudden accidents and occupational
                                                            health. In accordance with the Industrial Safety and Health Act and collective agreements with the labor
                                                            union, HMC provides all employees with medical check-ups once a year and comprehensive medical
                                                            examinations to employees and their families who are over 35 years old. We pay the full costs for general
                                                            medical check-ups and tests, and half costs for comprehensive medical examinations. Moreover, we offer
                                                            medical expenses aids for employees and their families for other medical reasons. The Industrial Medical
                                                            Center in the Asan Plant operates a 24-hour emergency room and hires medical specialists to provide qual-
     Annual industrial accident rate                        ity medical service to employees. When the Ministry of Labor inspected occupational medical centers run
     (unit: %)                                              by private companies in Korea in January 2007, the Industrial Medical Center in the Asan Plant received
     1.80                                                   the highest score in the quality of medical specialists, equipment, sampling methodology, and medical
     1.70
     1.60                                                   examinations.
     1.50
     1.40
     1.30
     1.20                                                   Industrial Accidents | Since 2004, the industrial accident rate at HMC has been on the decrease because
     1.10
     1.00
                                                            of preliminary assessments, preventive measures, medical check-ups, and the industrial medical centers.
                                                            In 2007, the industrial accident rate of HMC was 1.68%, compared to 1.74% in 2006. Nonetheless, it was
                               2005       2006       2007
                                                            still higher than the average industrial accident rate of 1.10% in the Korean manufacturing industry due to
     □	Korea's manufacturing   1.28           1.18   1.10
       industry average	                                    the aging population of employees and long period of working time. In order to decrease the accident rate,
     □	HMC	                    1.64           1.74   1.68   we provide the information of i-ESH system and conduct surveys to reflect the employees’ expectations.
People & Society                                                                                                                                     85
78
85
      Employees
      Suppliers
                                         Suppliers
92    Shareholders and Investors
95    Customers
99    Social Contribution




                                         Maintaining cooperative relationship with the suppliers based on mutual trust is the most
                                         important factor in producing a vehicle which constitutes about 20,000 auto parts. As we
                                         acknowledge the high correlation between the quality of the parts and competitiveness of ve-
                                         hicle, we operate a system where suppliers can construct safe management conditions with
                                         an excellent technology, high quality, and responses to various regulations.



                                         Mutual Cooperation
               Completion of mutually
     2009
                 beneficial relations    ●             Overview of Mutual Cooperation
                                                       We develop and implement strategies to promote collaboration with suppliers. The areas that
                                         HMC focuses on to promote mutual cooperation include core competency, stable business management,
     2006     Development of mutually    global competitiveness, and support for suppliers of suppliers. We established the Mutual Cooperation
      ~
     2008       beneficial relations     Team within the company, the Foundation of Korean Automotive Parts Industry Promotion outside the
                                         company, and the Working Group on Mutual Cooperation, which serves an arbitrator. We have promoted
                                         mutual cooperation since 2003, and reinforced mutual cooperation since 2005. HMC plans to further
     2003      Foundation for mutually   increase mutual cooperation with suppliers by 2008, and develop effective mutual cooperation programs
      ~
     2005        beneficial relations    by 2009.




                                                                                      Core competency
                                                                                           · 5-Star Club
                                                                                     · Guest Engineer System
                                                                                     · Support for technology
                                                                                     development assistance
                                                                                · Foundation of Korean Automotive
                                                                                     Parts Industry Promotion

                                                    Support for
                                               suppliers of suppliers
                                                     · SQ Certification
                                                                                                                      Stable management
                                                · Quality Service Volunteer            Programs to                           · Cash payment
                                                  Group(Foundation of Korean         promote mutual                        · Capital assistance
                                             Automotive Parts Industry Promotion)                                        · Shared cost reduction
                                             · Vocational training consortium          cooperation                      · Support for information
                                             and expanded joint procurement                                          system and joint procurement
                                                · Management innovation
                                                        seminars


                                                                                    Global competitiveness
                                                                                · Nurturing global human resources
                                                                                  · Advance into overseas markets
                                                                                · Response to global environmental
                                                                                             regulations
86   People & Society

     78       Employees
     85       Suppliers
     92       Shareholders and Investors
     95       Customers
     99       Social Contribution




                                                                   ●          Strengthening Suppliers’ Core Competency


     5-Star quality club Symbol
                                                                   5 Star System | By operating 5-Star System, we help suppliers enhance the quality of vehicle parts
                                                                   and improve their competitiveness. The 5 Star System selects member suppliers based on an objective
                                                                   quality assessment. Suppliers who acquire 5 stars in the quality assessment can join the 5-Star System
                                                                   to receive various benefits. It was proved that the 5-Star System actually helped suppliers improve their
                                                                   product quality, as the average rate among suppliers increased from 3 stars (63.6 points) in 2002 to 4
                                                                   stars (79.4 points) in 2007.


                                                                   Suppliers that have joined the 5-Star quality club
                                                                   Category                               Supplier
                                                                   Existing members                       BorgWarner Transmission Systems Korea, Heesung Catalysts,
                                                                   (12 companies)                         Namyang Industry, Sejong Industrial, Hanil E-Hwa, Kyunshin Industrial,
                                                                                                          Sewon ECS, Yura, Sejung, Seojin Industrial, Sungwoo Hightech, KEFICO
                                                                   New members First half of 2007	        Halla Climate Control
                                                                   (3 companies)    Second half of 2007 THN Corporation, Korea Autoglass	


                                                                   Guest Engineer System | The Guest Engineer System is designed to nurture competent engineers by
                                                                   inviting engineers of HMC suppliers to HMC to conduct a joint research. In 2007, a monthly average of 232
                                                                   engineers from 48 suppliers were invited to HMC to participate in developing and revising parts designs
                                                                   to improve products manufactured by suppliers. With the Guest Engineer System, we aim to nurture en-
                                                                   gineering workforce of suppliers, transfer design expertise to suppliers, reduce the product development
                                                                   cycle, and minimize design failures.


     Benchmarking studies on advanced                              Support for Technology Development | We are grasping the trends in the latest technology developed
     technology                                                    by competitors in collaboration with suppliers. In 2007, we conducted a benchmarking study on 16 car
     Year       Number of           Number of        Number of     models, and provided 1,477 tear down parts of 11 models to suppliers free of charge. By 2008, we plan to
                    models        participated      participated   conduct a benchmarking study on 21 car models.
                                     suppliers        engineers
                                                                   Additionally, HMC hosted 12 new technology exhibitions and 183 new technology seminars to help sup-
     2005                 19              657              1,634
                                                                   pliers develop parts technology. In November 2007, we hosted the 2007 R&D Supplier Tech Day to offer
     2006                 22              679              1,861
                                                                   HMC suppliers in Korea an opportunity to promote their new technology and share technology information,
     2007                 16              415              1,071
                                                                   and reinforce trust between HMC and suppliers.
     Total                57            1,751              4,566

                                                                   Foundation of Korean Automotive Parts Industry Promotion | In July 2002, HMC, Hyundai Mobis,
                                                                   and 164 suppliers co-founded the Foundation of Korean Automotive Parts Industry Promotion (FKAPIP). In
     Management Innovation Seminar for CEOs of suppliers
                                                                   the first year, we donated 5.1 billion won to the FKAPIP, and have contributed about 5 billion won to the
                                                                   FKAPIP every year. The FKAPIP help suppliers improve competitiveness and business management as an
                                                                   organization designed to develop the auto parts industry.
                                                                   In 2007, "the Quality Technology Volunteer Group" under the FKAPIP guided 112 suppliers to develop
                                                                   new technology. Also, "the Supplier Supporters," which consists of former HMC executives, have been
                                                                   dispatched to 28 suppliers to provide voluntary management advice. The FKAPIP provided 216 secondary
                                                                   suppliers with on the job training, access to parts database, and used equipments without any charge.
                                                                   Moreover, it hosted technology seminars and conferences for suppliers of suppliers.
                                                                                                               HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                    87




                                                      ●          Support for Management Stabilization of Suppliers

                                                      Cash Payment | As a means to help small and medium-sized companies facing difficulties caused by high
                                                      oil price and other market challenges, we are disbursing cash to such companies for goods supplied and
                                                      shortened the period for promissory note payment from 120 to 60 days. In addition to continuing this policy
                                                      next year, we plan to introduce further improvements to payment conditions for the secondary and tertiary
                                                      suppliers as well. In 2007, we paid 8.2 trillion won to small and medium enterprises (SMEs) in cash.


Joint procurement by year                             Payment
(unit: 100 million won)                               Category                                         Payment means                      Term
Year                       2006   2007     2008       Parts for export                                      Cash                      Once a month
                                         (expected)   Parts for domestic use         SMEs*                  Cash                      Once a week
Suppliers                   593   542       800                                      Big enterprises         Bill	
Secondary suppliers          25   134       200
Amount                      618   676     1,000       Capital Assistance | In order to help suppliers stabilize business management, we offered suppliers
                                                      grants worth 2.3 trillion won including raw materials procurement aids, R&D grants, investment assis-
                                                      tance, and emergency operating capital aids, in 2007. In addition, we provided the Network Loan worth
                                                      296.1 billion won to suppliers facing a shortage of capital. HMC made an agreement with the Korea Credit
                                                      Guarantee Fund and Industrial Bank of Korea to develop the Network Loan and provided loans with lower
                                                      interest rates to suppliers based on recommendations by HMC.


                                                      Support for Information System and Joint Procurement | Our Vaatz (Value Advanced Automotive Trade
                                                      Zone) system, an information sharing system, help suppliers improve their information system and share
                                                      information on production planning and drawings with suppliers in real-time. The system uses its purchas-
                                                      ing power to support suppliers to adopt joint procurement with an aim of reducing costs. Joint procure-
                                                      ment amounted to 67.6 billion won in 2007 and is expected to reach 100 billion won in 2008. Also, joint
                                                      procurement is expanded to include raw materials such as stainless steel as well as general supplies.


                                                      ●          Strengthening Global Competitiveness

                                                      Advance into Overseas Markets | We help our suppliers enter overseas markets based on HMC over-
                                                      seas plants. As of 2007, a total of 220 HMC suppliers operate in China, India, the U.S.A., and other
                                                      countries. This is a win-win strategy, as we can procure parts from the global market in collaboration with
                                                      suppliers, while our suppliers experience continuous growth and increase global competitiveness.




* Small and Medium Enterprises
88   People & Society

     78   Employees
     85   Suppliers
     92   Shareholders and Investors
     95   Customers
     99   Social Contribution




                                       Nurturing Global human Resources | Our education programs continue to help employees of suppliers
                                       enhance competency and increase global competitiveness. In 2007, we built a vocational training consor-
                                       tium with suppliers to provide 32,000 employees of HMC suppliers with training courses on engineering
                                       and expertise on quality, technology, labor relations, security, and ethical management. In addition to
                                       educating 78 would-be CEOs of suppliers, we provided education courses to 58 employees of 37 suppliers
                                       working in overseas plants, and foreign language courses to 18 employees of 11 suppliers.
                                       In 2008, we plan to educate 32,000 employees of suppliers and provide training courses to suppliers of
                                       overseas plants and suppliers of suppliers.


                                       Education programs to nurture global human resources
                                       Category                Program
                                       Business management Educational courses for local suppliers of overseas plants (180 trainees)
                                       Quality                 Seminars by sector (for 3,500 trainees in 9 sectors, employees of suppliers of
                                                               suppliers included)
                                                               Managers of suppliers of suppliers
                                       Technology              Professional engineering courses (expanded to include suppliers of suppliers)
                                                               Increase in the number of cyber training programs (from 9 to 12 programs)


                                       ●            Support for Secondary Suppliers

                                       Management Support | Participating in joint procurement to help ease difficulties secondary suppliers
                                       face, HMC has induced suppliers to improve payment conditions for secondary suppliers. As a result,
                                       joint procurement increased from 2.5 billion won in 2006 to 13.4 billion won 2007, and 20 billion won is
                                       expected in 2008.


                                       Nurturing human Resources | It is not easy for secondary suppliers to improve their competitiveness
                                       because they lack the capacity to develop proprietary technology. For this reason, we have operated the
                                       Vocation Training Consortium to support secondary suppliers since 2006 and hosted the Management
                                       Innovation Seminar every two years. In 2008, we will encourage 1,000 secondary suppliers to participate
                                       in the seminar.


                                       Quality Improvement | The SQ Certification is introduced to help secondary suppliers improve the qual-
                                       ity of auto parts manufactured. In 2007, up to 3,054 secondary suppliers successfully obtained the SQ
                                       Certification. For a fair and objective assessment, we established the SQ Certification Assessment Center,
                                       which provided 24 education courses for a total of 521 SQ Certification evaluators. Starting from 2008, we
                                       plan to introduce a grading system to the SQ Certification. In 2007, the Quality Technology Volunteer Group
                                       guided 216 secondary suppliers to improve product quality and technology competitiveness.
                                                                                                                     HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                             89




                                                            Ulsan Plant's Safety Programs for Suppliers

                                                            The Ulsan Plant recognized that safety accidents occurring in suppliers have affected the
                                                            Ulsan Plant either directly or indirectly. We learned that the number of safety accidents
                                                            increases, as the relative importance of suppliers increases. Moreover, the awareness has
                                                            been raised that safety accidents among suppliers might be the source of labor disputes. In
                                                            response to this, the Ulsan Plant has introduced the following programs to address safety
                                                            and health issues of suppliers in advance.


                                                            1. Regular Safety Management Meeting
                                                            HMC safety managers hold a monthly meeting with 138 suppliers from 13 regions for dealing with
                                                            suppliers’ safety and health concerns. The Ulsan Plant has hosted not only regular meetings but also
                                                            special meetings from time to time to improve safety and health, and develop measures to prevent
                                                            safety accidents. We also has provided special safety education to presidents of suppliers.


                                                            2. Education on Safety and health
                                                            As part of our efforts to improve the quality of safety and health education, the Ulsan Plant developed
                                                            an intranet system (iesh.hmc.co.kr) to provide 526 safety education courses and safety and health
                                                            information to suppliers in real-time. The plant published and distributed a weekly magazine featur-
                                                            ing safety management guidelines, safety common sense, and safety case studies. In addition to the
                                                            publication, it produced videos and booklets on safety issues for suppliers.


                                                            3. Safety Promotion Events and Campaigns
                                                            The Ulsan Plant designates the first Wednesday as Safety Day and the third Wednesday as Fire Safety
                                                            Day in every month. The plant operates an emergency call center categorized into safety, health, fire
                                                            safety, and the environment that receives any difficulties or safety concerns of the site. The Ulsan Plant
                                                            has hosted the Safety Competition and operated outdoor electrical billboards to increase awareness of
                                                            safety issues among suppliers.




1
    Accident picture outdoor exhibition
2
    Safety Promotion Competition
3
    Outdoor electronic billboard for safety promotion




                                                        1                                                        2                                                       3
90   People & Society

     78       Employees
     85       Suppliers
     92       Shareholders and Investors
     95       Customers
     99       Social Contribution




                                                    Support for Green Management of Suppliers
                                                    	
                                                                 As a result of domestic and foreign environmental regulations’ rigidity, collaboration between
                                                    HMC and our suppliers for sustainable development becomes more important. Green management and
                                                    sustainable growth are also significant business issues for our suppliers. As an automobile requires more
                                                    than 20,000 parts, it is not easy for the auto industry to form a single network that consists of auto manu-
                                                    facturers and parts suppliers to promote mutual collaboration and communication for sustainable growth.
                                                    However, we recognize that a sustainable growth is only attainable when we collaborate with our sup-
                                                    pliers. Based on the recognition that cooperation with suppliers is essential for sustainable growth, we
                                                    introduced the Supply Chain Eco-Partnership (SCEP) to support suppliers to adopt green management
                                                    practices.


                                                    ●            Supply Chain Eco-Partnership(SCEP) Pilot Projects
                                                                 The SCEP project launched in April 2006 is designed to transfer HMC green management prac-
                              SCEP                  tices to suppliers. It is categorized into four areas of green management system introduction, hazardous
                                                    materials management, process improvement, and energy consumption management, providing suppliers
                                                    with the basis for environmental management. In addition, HMC has used the Supply Chain Environmental
                                                    Management (SCEM) system to promote communication among suppliers and induce them to increase
                                    Primary         operational efficiency of green management practices. By introducing a self-diagnosis for hazardous mate-
                                   suppliers
                                                    rials management, we further improved the SCEM system to help suppliers to benefit from the system.


                                                    SCEP schedule and participating suppliers
                              Establishing
                                 green              1st year           April 2006 ~ March 2007
                              partnerships
                                                    2nd year           April 2007 ~ March 2008
                     Expanding
                                        Expanding   Participating      Suppliers                        Secondary Suppliers
                  environmental
                                        network
                   management                       suppliers	         Doowon Climate Control           GE Sensing Korea, Youngbo Chemical, Lotte Aluminum,
                                                                                                        Sam-A Aluminum
                                                                       Sejong Industrial                Chungwoo, Hyuunwoo MC, Hanyoung Industrial
                                                                       BorgWarner Transmission          Dongwoo Heat Treating, Precision
                               Secondary,
                                 tertiary                              Systems Korea
                                suppliers
                                                                       Daesung Electric                 Jungwoo Plastic, IPL
                                                                       Hanil E-Hwa                      Sunil LOESS, Bumyang Industrial
                                                                       Donghee Industrial               Seojin Precision IND., Shindo Engineering
                                                                       Denso PS                         Wooju Tech, Yu Shin Industrial
     SCEM training for suppliers

                                                    ●            Green Management Transfer Model	
                                                                 The SCEP project focuses on the Green Management Transfer Model. Based on the expertise obtained
                                                    from the SCEM project launched in 2003, we have developed the Green Management Transfer Model, which clas-
                                                    sifies suppliers into 18 categories, and transfer different green management practices to suppliers in each category.
                                                    This model enables our company to classify suppliers by sector (parts and materials), size (large, medium, and
                                                    small), and green management level (high, mid, low), and transfer customized green management practices to
                                                    each supplier. The model helps suppliers improve green management practices themselves as it provides guidelines
                                                    on green management. Now, we plan to expand the Green Management Transfer Model to all suppliers.
                                                                                                                                            HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                                   91




                                                                          Examples of green management practices transfer
                                                                          Category              Supplier                    Area                     Outcome
                                                                          Suppliers             BorgWarner Transmission     Hazardous materials      Replaced hazardous solvents with
                                                                                                Systems Korea               management               water-soluble detergents
                                                                          Secondary             Youngbo Chemical            Waste recycling          Increased waste recycling
                                                                          Suppliers                                                                  Reduced incineration wastes
                                                                          Tertiary              Sam-A Aluminum              Energy saving            Reduced CO2 emissions and electricity
                                                                          Supplier                                                                   consumption thanks to improved
                                                                                                                                                     operation of the heating system


                                                                          ●               Benchmarking Study on Japanese Companies
                                                                                          In the SCEP project, we supported suppliers to conduct a benchmarking study on Japanese
                                                                          companies to help suppliers access to green management practices of advanced companies. The bench-
                                                                          marking study was conducted by 7 suppliers participating in the SCEP project and green management
                                                                          officers of HMC, who visited environmental organizations including the Eco Town in Kyushu, Japan.


                                                                          ●               Support for Green Procurement*		
                                                                          	               In September 2005, we voluntarily made an agreement on green procurement with the Min-
                                                                          istry of Environment. After declaring to purchase environment friendly products to promote sustainable
                                                                          consumption, in 2007, we spent 1.5723 trillion won in green procurement. This figure amounts to 8.2% of
                                                                          HMC's total procurement of 29.1 trillion won.


                                                                          Green procurement by plant in Korea
                                                                          (unit: 100 million won)

                                                                          Category                                                          2006                                2007
                                                                                                                          Number of items          Amount       Number of items         Amount
                                                                          Products with the Certified Green Mark                       58              111                       87          113
                                                                          Products with recycling marks (GR Mark)                      10              277                        9          440
                                                                          Products with reduced hazardous materials                    32           11,451                       35     15,170
                                                                          (lead/mercury/cadmium/chrome)
                                                                          Total                                                       100           11,840                      131     15,723




* Green procurement starts from purchasing goods that are necessary.
It is about buying not only products of good price and quality but also
environment-friendly goods that are less harmful to the environment and
people. Green products include goods with the certified green marks,
recycling marks (GR Mark), less hazardous materials, energy saving
marks, and less wastes. 	
92   People & Society

     78
     85
          Employees
          Suppliers
                                       Shareholders and Investors
     92   Shareholders and Investors
     95   Customers
     99   Social Contribution




                                       On behalf of shareholders and investors, we make efforts to increase profitability with proac-
                                       tive and effective IR activities. We hold the Shareholders' Meeting and quarterly performance
                                       presentation in order to build trust and increase the level of shareholders and investors’ un-
                                       derstanding of our activities. Participating in domestic and foreign investment conferences
                                       allowed us to offer investors information on HMC and discuss potential investment opportuni-
                                       ties. Moreover, IR website provides investors with real-time investment information including
                                       financial statements.



                                       Shareholders' Meeting and Dividend
                                       	
                                       	            We held the 40th Shareholders' Meeting on March 14, 2008 to receive an approval of the 2007
                                       business performance, appointment of internal and external directors, and compensation ceiling for direc-
                                       tors from the shareholders. Shareholders approved the re-appointment of Mong-koo Chung as the CEO in
                                       the 2008 Shareholders' Meeting, and our management plans to focus more on transparency and corporate
                                       social responsibility in 2008.


                                       Matters submitted to the 2008 Shareholders' Meeting
                                       Category                       Item
                                       Matters submitted to the       1. Approval of the 40th (January 1, 2007 to December 31, 2007) Balance Sheet,
                                       Shareholders' Meeting              Statement of Profit and Loss, and Surplus Appropriation Statement (draft)
                                                                      2. Appointment of a director (internal)
                                                                      3. Appointment of an external director who is to be a member of the Audit Committee
                                                                      4. Ceiling on the compensation for directors
                                       Approval                       Approved as drafted


                                       An auto manufacturer has to make continuous capital investment. Therefore, we determine the dividend,
                                       taking into account both investments for continuous growth and shareholder values. In 2007, the dividend
                                       rate was 20%, the same as that of in 2006. The dividend payout ratio decreased a little, compared to the
                                       ratio in 2006. However, in 2007, the dividend yield of common stocks maintained while the dividend yield
                                       of preferred stocks was higher than the yield in 2006.


                                       Dividend by year (common stocks)
                                       Category                                               2005                      2006                           2007
                                       Net profit (100 million won)                         23,487                     15,261                         16,824
                                       Dividend rate (%)                                       25.0                      20.0                           20.0
                                       Total dividend (100 million won)                       3,423                     2,754                          2,760
                                       Dividend payout ratio (%)                               14.6                      18.0                           16.4
                                       Dividend yield (%)              Common Stock             1.3                       1.5                            1.4
                                                                       Preferred Stock          2.1                       2.9                            3.2
                                                           HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                93




Stock Dividend for Employees

	            The Board of Directors of HMC approved to issue stock dividends to employees in September
2007, and offered 30 stock dividends to every employee in positions below the manager level in October
2007. The decision was made to celebrate the 40th anniversary and the 2007 collective wage agreement
reached without a strike. As employees become shareholders, they have a common interest with inves-
tors.



More Effective Communication with Shareholders

             Having published various reports including the Annual Report, Accounting and Audit Report,
and Sustainability Report, we have been able to provide accurate information to shareholders and inves-
tors. Since 2004, we have opened the IR website to offer information on the company, finance, stocks, and
sales in real-time and posted disclosure and investment conference information on the website.


IR website (Korean) http://ir.hyundai-motor.com
IR website (English) http://ir.hyundai-motor.com/eng


●            Overseas IR Activities
	            We seek diversification of our investors and attract new investors by demonstrating our efforts
for global management and growth potential through overseas IR activities. As part of our IR activities,
we participated in major international auto conferences and investment conferences around the world. In
2007, we participated in an IR event held in the Middle East for the first time and attempted to diversify
investors.


2007 Overseas IR activities
Date           Location                    Event
January        Detroit                     2007 Detroit Auto Show Conference
               USA                         Overseas NDR* on earnings and business plans
February       Asia, Europe                Overseas NDR on earnings and business plans
March          New York                    Woori Investment and Securities New York Investment Conference
               London                      Capital Research Conference
               Hong Kong                   Credit Suisse AIC Conference
May            Korea                       Conference call on the 1st quarter earnings (Headquarters)
               Hong Kong, Singapore        KRX* Conference
June           Boston, New York, London    2007 UBS Best of Asia Conference
August         Korea                       1:1 conference calls with overseas institutional investors (Headquarters)
September      Hong Kong                   CLSA Conference
December       Dubai                       DIC* Arab-Asian Investment Conference

                                                                                              * NDR: Non-Deal Road Show
                                                                                                  * KRX: Korea Exchange
                                                                                           * DIC: Dubai International Capital
94   People & Society

     78   Employees
     85   Suppliers
     92   Shareholders and Investors
     95   Customers
     99   Social Contribution




                                       ●          Domestic IR Activities
                                       	          We engage in continuous IR activities to notify Korean institutional investors our earnings, strat-
                                       egies, and new products in order to increase investor confidence in HMC. We announce business plans
                                       and earnings forecast in the beginning of each year, and disclose earnings result in every quarter. After the
                                       announcement of earnings, we have Non Deal Road show (NDR) on a regular basis to clarify any inquires
                                       from investors and, and improve credibility of our earnings reports.
                                       In response to increasing popularity of fund investment among Korean investors and their rising influence
                                       on the Korean stock market, we occasionally hold other investment conferences for Korean institutional
                                       investors in the beginning of each year.
                                       We hosted seminars on major economic issues to meet the information needs of the market and to
                                       encourage the management’s participation in IR events to present HMC business plans. Moreover, we
                                       hosted exhibitions for our new cars to help investors experience the excellent quality and marketability of
                                       new products, and comparative test ride events to allow investors to check our efforts in cutting costs and
                                       develop environment-friendly vehicles.


                                       2007 Domestic IR activities
                                       Date          Venue                        Event
                                       January       Korea Exchange               Reporting on the 2006 earnings and 2007 business plans
                                                     Seoul                        NDR for Korean institutional investors
                                       May           Korea Exchange               Reporting on the 1st quarter earnings
                                                     Seoul                        NDR for Korean institutional investors
                                                     Seoul                        Woori Investment and Securities IR event
                                       July          Korea Exchange               Reporting on the earnings in the first half of 2007
                                                     Seoul                        NDR for Korean Headquarters
                                                     Headquarters                 New car releases (i30, Grand Starex)
                                       August        Seoul                        Presentation on HMC's initiatives to cut costs
                                       October       Korea Exchange               Reporting on the 3rd quarter earnings
                                       November      Seoul                        NDR for Korean institutional investors
                                                     The Shilla Hotel             UBS Korea Investment Conference
                                                     COEX                         KRX IR EXPO
                                       December      Namyang Hyundai-Kia          Green Technology Seminar and Genesis Comparative Test Ride
                                                     R&D Center
People & Society                                                                                                                                                                95
78
85
         Employees
         Suppliers
                                                                     Customers
92       Shareholders and Investors
95       Customers
99       Social Contribution




                                                                     We advanced our mid- and long-term growth strategy from "Innovation for Customers" to
                                                                     "Customer First Management," which embodies our willingness to increase customer value in
                                                                     quality as well as in quantity terms by improving our brand image and product quality. "Cus-
                                                                     tomer First Management" has been applied in all business areas including R&D, production,
                                                                     sales, and maintenance.



                                                                     Customer Satisfaction

                                                                     ●          Customer Satisfaction in Korea
                                                                     	          We ranked first in both passenger cars and recreational vehicles (RVs) categories of the 2007
                                                                     National Customer Satisfaction Index (NCSI) survey conducted by the Korea Productivity Center. The fact
                                                                     that we have maintained as the top in both categories for seven consecutive years implies that our cus-
                                                                     tomers recognize the high quality of our products and services.
                                                                     Meanwhile, our passenger cars ranked first for 14 consecutive years in the Korean Customer Satisfac-
                                                                     tion Index (KCSI) survey conducted by the Korea Management Association Consulting (KMAC). Our RVs
                                                                     remained as the top for four consecutive years, since when the RVs category was newly introduced to
Ranked first in both passenger cars and RVs categories of the 2007
National Customer Satisfaction Index.                                KCSI in 2004.


                                                                     ●          Customer Satisfaction Overseas
                                                                                Our products are well acknowledged even in overseas markets. For example, Azera ranked first
                                                                     for two consecutive years in the midsize and large car segments in the 2007 Automotive Performance,
                                                                     Execution and Layout (APEAL) Study conducted by the J.D. Power and Associates in the U.S., and won the
                                                                     AutoPacific Vehicle Satisfaction Award. We will develop products that maximize customer value, improve
                                                                     product quality and services, and enhance brand images, according to its mid- and long-term strategy of
                                                                     "Customer First Management."



                                                                     Customer First Management

                                                                     ●          Protection of Customer Information
                                                                     	          As personal data privacy becomes increasingly important and violations of privacy frequently
                                                                     occur, we make efforts to protect customer data and increase customer confidence. Especially, in ac-
                                                                     cordance with the Regulations on Spam under the Information and Communications Act, we do not send
                                                                     advertising messages to customers, unless customers agree to receive such messages from HMC in
                                                                     advance. We also ensure that "opt-out" customers do not receive any marketing messages via DM(Direct
                                                                     Mail), e-mail, or text messages.
96   People & Society

     78      Employees
     85      Suppliers
     92      Shareholders and Investors
     95      Customers
     99      Social Contribution




                                                   ●          Customer-Value Partnership
                                                              We developed "Customer-Value Partnership" to become closer to customers and provide cus-
                                                   tomers with advisory service of highest quality. While operating a cyber advisory service page on its
                                                   website at (www.hyundai-motor.com), HMC provides one-stop service to address customer complaints
                                                   in real-time using the integrated customer complaint call number of 080-600-6000. We improved the
                                                   complex Interactive Voice Response (IVR) system to increase user convenience. HMC particularly adopted
                                                   "Helper," an advisory service system, to help customers easily access information on vehicles.
                                                   In the beginning of this year, we ranked first in the auto industry category of the 2008 Korean Service Qual-
                                                   ity Index survey conducted by the Korea Management Association Consulting.


                                                   ●          Voice of Customers
                                                              A cutting-edge Computer Telephony Integration (CTI) system has been introduced to swiftly
                                                   respond to Voice of Customers (VOC). We designate Voice of Customer (VOC) Day every week to help
                                                   employees share information on customer satisfaction and complaint cases to improve customer relation-
                                                   ship management. With VOC Day, we swiftly address customer complaints and send a thank-you letter to
                                                   customers who propose ways to improve customer service.


                                                   ●          One-Stop Service
                                                              In 2007, we introduced multi-purpose service centers in Korea, where customers receive vari-
                                                   ous auto-related services including maintenance, insurance, and vehicle purchasing. This attempt helped
                                                   improve customer service, enhancing our brand images.
     http://www.hyundai-motor.com(domestic only)


                                                   ●          BLU Service
                                                              We implemented BLU Service in April 2007, a premium membership service for HMC domestic
                                                   customers. BLU Service members use their membership cards to receive comprehensive customer ser-
                                                   vice including auto maintenance, integrated point service, lifestyle service, and personalized information.


                                                   ●          Before Service
                                                              We introduced "Before Service" to provide proactive service to customers. With Before Ser-
                                                   vice, HMC service engineers visit customers to offer car maintenance service before customers request
                                                   it. In October 2006, we became the first Korean automaker to provide Before Service and introduced 13
                                                   additional Before Service Cars.
                                                   Especially, we provided free preventive auto inspection to customers during traditional holidays and va-
                                                   cation seasons. A customer survey found that the auto inspection demand increased during traditional
                                                   holidays. In addition, six HMC service centers in remote areas offered local customers free auto inspection
                                                   and consumable parts replacement. We notify “Before Service” schedules on our web page every week.
                                                                                                                        HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                             97




                                                                  ●          Special Free Inspection Service
                                                                              We offered special inspection service to customers in the regions affected by Typhoon Nari.
                                                                  We sent emergency maintenance service engineers to those affected regions, provided special inspection
                                                                  service using the network of the service after the sale, and discounted maintenance fee by 50% for cars
                                                                  submerged. HMC has dispatched emergency maintenance service engineers to regions affected by heavy
                                                                  rains and provided customers with free inspection service every year to ensure that customers suffering
                                                                  from natural disasters use vehicles safely. HMC also plans to continue to offer auto maintenance service
                                                                  and conduct auto safety campaigns.



                                                                  Marketing

                                                                  ●          Marketing Events Celebrating the 40th Anniversary
1
  Emergency service
2
  Customer Invitation event for the 40th anniversary of HMC                  In 2007, we hosted the ‘Big Love and Big Thanks’ Festival and various marketing and promotion
                                                                  events to celebrate the 40th anniversary, and conscientiously complied with marketing-related laws and
                                                                  regulations, making no marketing law violations.


                                                                  ●          Auto-Prosumer Initiative
                                                                             HMC became the first Korean automaker to introduce the Auto-Prosumer Initiative, which re-
                                                                  flects customer opinions in the product or service development phases. When we developed i30 and
                                                                  selected the model name, we actively sought ideas from Auto-Prosumers in their 20s and 30s, who would
                                                                  be the main customers of i30.
                                                              1



                                                                  ●          Marketing for Overseas Customers
                                                                             We invited 50 overseas customers to the Seoul Motor Show in April 2007 to introduce HMC
                                                                  models to overseas customers and expand the export market for our commercial vehicles. In October
                                                                  2007, we invited buyers of Universe (a new bus model) around the world to the Asan Plant, and conducted
                                                                  various sales promotion activities to achieve the 2007 sales target. The HMC Commercial Vehicle Division
                                                                  has conducted constructive marketing campaigns by inviting overseas buyers to Korea once or twice a
                                                                  year.
                                                              2
98   People & Society

     78   Employees
     85   Suppliers
     92   Shareholders and Investors
     95   Customers
     99   Social Contribution




                                       HMC's Efforts to Ensure Customer Safety
                                       	
                                       As collision safety laws and regulations are becoming more intense, the role of the steering
                                       column is increasingly important. The steering column controls the direction of the rotation
                                       axis of the wheel and absorbs impacts of a collision, reducing shock transferred to the driver
                                       and passengers. Moreover, power steering contributes to lower emissions and higher fuel
                                       efficiency. Therefore, we began to develop the Motor Driven Power Steering (MDPS) unit
                                       in 2005.


                                                    The existing steering column causes many quality problems especially when motor weight
                                       over 5.5kg was installed. Steering column could not absorb the impacts of a collision. Thus, the existing
                                       steering column has limitations in protecting the driver.
                                       The MDPS unit offers more space for a motor since the overall length is 490mm, 150mm less than the
                                       exiting steering column. Also, it has an integrated mounting structure to efficiently withstand impacts
                                       of a collision.


                                       Furthermore, we changed the existing shaft and tube connection for absorbing impacts of a collision
                                       into a sliding structure using spline, and inserted Telesco for driver convenience.
                                       The MDPS unit is different from the existing steering columns in structure and functions. It turns the
                                       existing support structure into a mounting structure, increasing the strength of the steering column. In
                                       particular, it decreases bending of the steering column, improving collision safety. The MDPS unit itself
                                       also absorbs the impacts of a collision and prevents car theft.


                                       Since May 2007, we have applied the MDPS unit into i30 and plan to apply the MDPS unit to other
                                       compact cars, As the MDPS unit is expected to be mandatory for hybrid cars, we expect our MDPS
                                       units to replace imported items and prove our technological prowess in the global market.
                                       In April 2007, our MDPS unit was designated as the New Excellent Technology (NET) by the Ministry of
                                       Science and Technology and Korea Industrial Technology Association.
People & Society                                                                                                                                      99
78
85
         Employees
         Suppliers
                                          Social Contribution
92       Shareholders and Investors
95       Customers
99       Social Contribution




                                      Under the slogan of "Moving the World Together," we contributed to make the world a better
                                      place. In order to provide social welfare benefits to the disadvantaged, we have implemented
                                      Selected Social Welfare Projects for three years. As an automaker, we conducted the Easy
                                      Move campaign to improve mobility of physically disabled people, and the Safe Move cam-
                                      paign to promote safer traffic culture by leveraging the scale of our corporation in order to
                                      contribute to the society. Based on the recognition that social contribution can be more mean-
                                      ingful when all employees are involved, we have encouraged our employees to participate in
                                      various volunteer programs. We opened the global CSR website and established the Global
                                      CSR Network in 2007 to increase social contribution and fulfill its social responsibility.



                                      Social Contribution Philosophy and Vision

                                      ●          Social Contribution Philosophy
                                      	          With the management philosophy "Pursuing the Happiness of Humanity through Vehicles," we
                                      firmly believe in realizing the social contribution towards ‘happiness of humanity and a sustainable society’
                                      by promoting environment-friendly practices and fulfilling our social responsibility as a leading automaker.


                                      ●          Social Contribution Vision
                                      	          • Contribute to environment-friendly economic activities and preserves the environment.
                                                 • Contribute to corporate citizen and assumption of social responsibilities
                                                 • Contribute to the realization of a sustainable society, working with citizens.
                                                 • Contribute to the realization of social values that achieve human dignity and happiness.
                                                 • Contribute to immediate response to global social demands.


                                      Progress and Plans

                                      ●          2007 Achievements

                                      Global CSR Website | We opened the Global CSR Website to communicate HMC's global CRS activities
                                      and facilitate exchanges of information among CSR managers. The website is the first infrastructure for
                                      HMC's global CSR activities. The website offers information on various CSR activities conducted by HMC
                                      all around the world.


                                      Global CSR Network | Since 2007, we have made a social contribution and fulfilled our social responsibil-
                                      ity in earnest. Based on major overseas production and sales bases, we have established the Global CSR
                                      Network and plan to expand the network to include all HMC offices and plants around the world.

HMC Global CSR Website
http://csr.hyundai-motor.com
100   People & Society

      78   Employees
      85   Suppliers
      92   Shareholders and Investors
      95   Customers
      99   Social Contribution




      Global CSR Network
                                                                                                                            hMGC


                                                                                                    hAOS                                            BhMC
                                             Asan                 Ulsan
                                             Plant                Plant




                                                                              Korea                                    headquarters
                                 Jeonju                Korea
                                                                            -domestic                                                                           hMI
                                  Plant              -domestic                sales                                       hMC



                                           Namyang               Service
                                          Hyundai-Kia              after
                                          R&D Center             the sale
                                                                                                   hMMA                                              hME


                                                                                                                             hMA




                                                                   Deepening of Domestic Social Contribution Programs | In 2007, we reinforced our existing public cam-
                                                                   paigns, community volunteer programs, and social contribution activities in Korea. We especially focused
                                                                   on volunteer programs at the community level including "the One Company Sponsor for One Rural Village
                                                                   Initiative," HMC volunteer groups, and House Maintenance Volunteer Group.


                                                                   ●             2008 Plans

                                                                   Global CSR Programs | All HMC offices and plants across the world support CSR activities under the
                                                                   Global CRS Programs. Each office and plant focuses on CSR programs at the community level under the
                                                                   Global CSR Programs with Regional Focus.


                                                                   Global CSR Network Expansion | We plan to expand the Global CSR Network from our eight domestic
                                                                   and overseas Hyundai Motor Companies to include all major production and sales bases and regional
                                                                   headquarters by 2009. The Global CSR Network will promote internal communication at the company level
                                                                   and help us effectively develop CSR policies and programs for the company.


                                                                   Advanced Volunteer Programs | We recognized company should not only make donations but also
                                                                   participate in various volunteer programs in order to become a responsible corporate citizen. Over the
                                                                   past few years, we have continuously improved our volunteer programs in Korea. Now we are planning
                                                                   to conduct global CSR activities in earnest starting 2008. To this end, we will grant awards and prizes to
                                                                   employees who contribute to CSR programs, develop education courses for CSR managers, and create
                                                                   volunteer programs that can be universally applied to all offices and plants of HMC across the world. We
                                                                   plan to effectively link volunteer programs at the community level to its global CSR programs.
                                                                                                            HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                    101




                                                 Social Contribution Activities in Korea

                                                 ●           Focus Projects

                                                 Selected Social Welfare Projects | Since 2005, we have carried out Selected Social Welfare Projects to
                                                 increase our expertise and knowledge on social welfare projects. Through the projects, HMC has not only
                                                 donated money but also provided social welfare benefits to the disadvantaged. In 2007, we have selected
                                                 a total of 26 social welfare organizations and donated 300 million won (approximately $300,000) to them.
1|4
      Traffic safety campaign for children       The social welfare projects selected in 2007 were "the Family No.1 Project" for families with children with
2|3
      Grand Starex for Easy Move
                                                 serious disabilities and "the Small Library Project" for children without access to a library.


                                                 Projects by beneficiary
                                                 Year             People with     The elderly    Children and       Others           Total           Amount
                                                                   disabilities                  adolescents
                                                 2005                   6              6               6               4          22 projects     300 million won
                                                 2006                   7              6               6               -          19 projects     300 million won
                                                 2007                  11              7               8               -          26 projects     300 million won
                                                 Total                 24              19             20               4          67 projects     900 million won
                                             1




                                                 Safe Move | As a leading automaker and responsible corporate citizen, HMC has conducted the Safe
                                                 Move Campaign to create a world, where children play outside without any safety concern. Since 2005,
                                                 we started to operate the “Search for a Three-leaf Clover” program to grant the wish of children from
                                                 families affected by car accidents. In 2007, HMC provided grants to 77 children whose family suffered from
                                                 car accident. In January 2008, we invited 52 children with the same reason to the Three-leaf Clover Camp

                                             2
                                                 that offered various cultural events for children.
                                                 Since 2003, we conducted a traffic safety campaign for children in collaboration with the Citizen's Coalition
                                                 for Safety. Particularly in 2007, HMC introduced "No No Story," a musical for children, to help children learn
                                                 about traffic safety in easy words.


                                                 Easy Move | With the Easy Move Campaign, we helped the disadvantaged including people with dis-
                                                 abilities, elderly, and pregnant women easily move using its vehicles. In July 2007, we disclosed the Grand
                                                 Starex Easy Move Vehicle, which was equipped with an electric wheelchair lift and manual wheelchair
                                                 slope to help people with disabilities get on the vehicle without getting off their wheelchair.
                                             3
102   People & Society

      78          Employees
      85          Suppliers
      92          Shareholders and Investors
      95          Customers
      99          Social Contribution




                                                                                   Progress in the development of Easy Move Vehicles
                                                                                   Year                  Description	
                                                                                   April 2005            Disclosed the Easy Move Vehicles at the Seoul Motor Show
                                                                                   August 2005           Provided a test ride of the Easy Move Vehicles in collaboration with the National Assembly Spe-
                                                                                                         cial Commission on People with Disabilities
                                                                                   July 2006             Conducted a quality test on the Easy Move Vehicles by people with disabilities
                                                                                   September 2006        Released and operated the Starex, Lotze, and Grand Carnival Easy Move Vehicles
                                                                                   July 2007             Released the Grand Starex Easy Move Vehicle
                                                                         1



                                                                                   In August 2007, HMC donated 500 million won (approximately $500,000) to the Korea Differently Disabled
                                                                                   Federation to help the federation build facilities for safe movement in 84 organizations for people with dis-
                                                                                   abilities across the country. From May to December 2007, HMC supported five social welfare facilities for
                                                                                   people with disabilities to open Ai Maru, a playground, where children with disabilities can play without
                                                                                   safety concerns. In addition, in April 2007, HMC provided prosthetic legs and special shoes to people with
                                                                                   disabilities, and invited 300 members of the Amputee Coalition of Seoul to plant tours. The Ulsan Plant in-
                                                                         2
                                                                                   vited the blind to "Beautiful Journey with People with Disabilities," and 1,004 employees and their families
      1
          Ai Maru, an indoor playground for children with disabilities             volunteered to help guide the blind.
      2
          Balloon event on the beach for the Beautiful Journey with People
          with Disabilities
                                                                                   ●             Volunteer Groups
                                                                                   	             There are 115 volunteer groups at the HMC headquarters, plants, and R&D centers. Each of
                                                                                   115 HMC volunteer groups has alliance relations with a social welfare organization and makes a social
                                                                                   contribution with regular volunteering activities. They provide the disadvantaged with car maintenance
                                                                                   service and field trips to a HMC plant or R&D center.


      Structure of hMC volunteer groups



                                                                                                                                                       Led by the General Affairs
                                                                                                hMC volunteer groups                                   Team at the Headquarters




                     16 groups                      22 groups                   3 groups               4 groups             14 groups in                31 groups             25 groups
                       at the                          in the                    in the                  in the           the Hyundai-Kia              in domestic         in service after
                    Headquarters                    Ulsan Plant                Asan Plant             Jeonju Plant          R&D Center                     sales               the sale




                                                                             Monthly volunteering activities based on sister relations with
                                                                                      social welfare organizations and regions
                                                                                                                                             HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                                        103




                                                                             hMC Volunteer Program | HMC volunteer groups visit social welfare organizations in alliance relations
Three major volunteering activities                                          more than once a month. They have made a social contribution by not only serving service to the disadvan-
                                                                             taged but also identifying what the disadvantaged needs most.

                                  HMC                                        Volunteering activities
                                volunteer
                                program                                      Year               Number of                   Number of                 Number of                     Time
                                                                                                volunteers              volunteer groups                 visits
                                                                             2005                 12,755                        106                      1,017                 51,620 hours	
                                                                             2006                 15,136                        112                      1,372                 60,556 hours
                                                 One Company                 2007                 18,442                        115                      1,314                 92,210 hours
         House                                    Sponsor for
       maintenance                              One Rural Village
                                                   Initiative                house Maintenance | HMC employees and their families have replaced wallpaper, floor paper, and old
                                                                             facilities in houses for the disadvantaged. From September to December 2007, a total of 1,777 volunteers
                                                                             participated in the house maintenance service to repair 102 houses. In 2008, HMC expects the number of
                                                                             repaired houses to reach 776.


                                                                             One Company Sponsor for One Rural Village Initiative | HMC has promoted the One Company Sponsor
                                                                             for One Rural Village Initiative. Since 2007, our volunteers helped farmers in 69 rural villages in alliance
                                                                             relations during the farming season, and inspected vehicles and farm machines in those villages more than
                                                                             twice a year. Also, in order to help farmers increase income, we encouraged employees to buy agricultural
                                                                             produce directly from farmers, and operated farmers' markets both on-line and off-line. In 2007, we spent 3
1
    Helping farmers plant rice in rural villages in sister relations         billion won (approximately $3 million) in aiding rural villages directly or indirectly. HMC won the Presidential
2
    Quality Division’s volunteering to help distribute meals at the Silver
                                                                             Award for Urban-Rural Exchanges for its efforts to promote urban-rural exchanges.
    Nursing Home


                                                                             Volunteering activities by division
                                                                             Division         Villages in                                Number of   Activities
                                                                                              sister relations                            villages
                                                                             Headquarters     Wulwun-ri, Hongcheon-gun,                      1       Helping farmers and building village
                                                                                              Kangwon-do                                             lavatories, etc.
                                                                             Ulsan            11 villages including the Yangam Village      12       Purchasing Korean agricultural produce
                                                                             Asan             Sare-1-gu, Yeosan, Chungnam                    1       Maintenance of the community center
                                                                       1                                                                             and the senior center, etc.
                                                                             Jeonju           3 villages including the Surak Village         4       Farmers' market celebrating the 40th anniversary
                                                                             Hyundai-Kia      Onseok-2-dong, Whasung-si,                     1       Volume food purchasing, etc.
                                                                             R&D Center       Gyunggi-do
                                                                             Domestic sales   24 villages including Ogum-ri, Paju-si        25       Helping farmers for two days and one night
                                                                             Service after    24 villages including Juwul-ri, Paju-si       25       Car inspection, on-line farmers' market, etc.
                                                                             the sale
                                                                             Total                                                          69
                                                                       3
104   People & Society

      78         Employees
      85         Suppliers
      92         Shareholders and Investors
      95         Customers
      99         Social Contribution




                                                                                 Volunteering Activities to Help TaeAn Recover from the Worst
                                                                                 Oil Spill in Korean History


                                                                                 On December 7, 2007, a crane barge collided with an anchored crude carrier on the Yellow Sea
                                                                                 of Korea, resulting in the worst oil spill in Korean history. The amount of oil leaked was 12,547kℓ,
                                                                                 which was more than the combined amount of oil spilt from ships over the past decade in Korea.
                                                                                 Also, it was the largest oil spill in the world in 2007.


                                                                                            The catastrophic oil spill destroyed the fishing ground and seriously affected the livelihood
                                                                                 of fishers and residents in TaeAn. The incident also destroyed the TaeAn National Sea Park, which has
                                                                                 beautiful natural landscape including the foreshore, coastal land dunes, and sunset, and is a rich fishing
                                                                                 ground and home to 2,500 species of fauna and flora.


                                                                                 More than 1 million volunteers visited TaeAn to help local fishers recover from the oil spill and prevent
                                                                                 further environment destruction. HMC employees also volunteered to help the region recover from the
                                                                                 worst oil spill and minimize the environmental damage. HMC built the base camp on the beach named
                                                                                 Yoihang-ri in TaeAn, and invited volunteers to remove oil from the beach. We purchased all tools needed
                                                                                 for oil removal including absorbing cloth, oil-proof suits, masks, water, and food in advance in order to
                                                                                 minimize the burden on local residents. We also collected used clothes that could be used as alterna-
                                                                                 tives to non-woven fabric or absorbing cloth during oil removal. Volunteers did their best to remove oil
                                                                                 from the beach, as they recognized that oil removal in the early phases was critical.


                                                                                 HMC has hosted the Green Art Competition for Children and engaged in environment clean-up activities
                                                                                 at the community level. After the worst oil spill disaster in TaeAn, HMC has re-examined its corporate
                                                                                 social responsibility to protect the environment. HMC plans to do its best to create a world, where
                                                                                 humanity and nature peacefully coexist, by encouraging its employees to participate in volunteering
                                                                                 activities as well as increasing corporate donations.


      1|2
            Employees in the Asan Plant volunteered to help remove oil in
            TaeAn
      3
            Employees in the Jeonju Plant sent used clothes to help remove oil
            from the beach in TaeAn




                                                                            1                                                       2                                                         3
                                                                                                                                   HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                           105




                                                                         Global Social Contribution


Social contribution symbols and slogans
by language




    KOREAN                                                                   ENGLISH                                                  CHINESE

                                                                         ●             HMI's Social Contribution
                                                                         	             Since HMC first entered the Indian market, HMI (Hyundai Motor India) has continued to grow.
1
    Desks and chairs donated to schools in Thandalam by the Hyundai
                                                                         HMI became the second largest automaker in India in terms of market share, the largest auto exporter in
    Motor Foundation(HMI)
2
    Invitation of students from the disadvantaged families in the com-   India, and became the largest investor in Tamil Nadu. HMI has decided to contribute to the Indian society
    munity where the India Plant is located(HMI)                         based on its success. Therefore, on April 10, 2006, HMI founded the Hyundai Motor India Foundation
3
    Volunteering to enhance traffic safety in congested downtown
                                                                         (HMIF).
    areas(HMI)
                                                                         Whenever HMI sells a car in India, we donate 100 rupees to the HMIF. The donation fund is used for new
                                                                         social contribution projects and activities in India.


                                                                         Contribution at the Community level | Since March 2007, HMI has selected students in need of financial
                                                                         aids as Traffic Safety Campaigners and granted them scholarships. The Traffic Safety Campaigners serve as
                                                                         safety campaigners in congested areas of Chennai and Deli to help pedestrians and motorists recognize the
                                                                         importance of traffic safety.
                                                                  1      The HMIF also held the Medical Camp to provide free medical service to local residents. Medical profession-
                                                                         als of the Saveetha Medical College participated in three rounds of the Medical Camp to provide free medical
                                                                         service to 1,600 residents in villages close to HMI including Irrungattukottai, Thandalam, and Poonamali. In
                                                                         June 2007, HMI provided road maintenance, facilities repair, and medical device grants to the State Hospital in
                                                                         Kanchipuram, where HMI site is located. In January 2008, HMI donated a Tucson to an environment campaign
                                                                         with a theme of prevention of global climate change held on the Marina Beach.


                                                                         Scholarships | The HMIF has donated desks, chairs, and education tools manufactured by HMI to primary,
                                                                  2
                                                                         middle, and high schools in Thandalam on a regular basis. In 2007, we granted 3,000 sets of desks and chairs
                                                                         to six schools in the region. We are planning the number of desk-chair sets to reach 10,000 by early 2008.
                                                                         The donation helped HMI get closer to local residents. It is also environment-friendly, as wood from auto parts
                                                                         packaging is re-used to make desks and chairs.
                                                                         In June 2007, HMI provided education materials, facilities maintenance, scholarships, and employment oppor-
                                                                         tunities to the Department of Automotive Engineering of the Assam Technical High School.
                                                                         Since February 5, 2008, HMI has invited students in need of financial aids to the plant nine times. We invited
                                                                         a total of 1,570 students to the plant to provide them with breakfast at the plant cafeteria, a plant tour, and
                                                                  3
                                                                         excursion to a nearby park.
106   People & Society

      78          Employees
      85          Suppliers
      92          Shareholders and Investors
      95          Customers
      99          Social Contribution




                                                                                  ●          HMA's Social Contribution

                                                                                  hope on Wheels (hOW) | Since 1998, Hyundai Motor America (HMA) and the dealers have donated
                                                                                  to medical studies on pediatric cancers. Since 2004, we have donated more than 9 million dollars to 70
                                                                                  pediatric cancer research centers in the name of the Hope on Wheels (HOW), and have cooperated with
                                                                                  community organizations to increase public awareness about pediatric cancers. All HMA dealers in the
                                                                                  U.S. have agreed to donate four dollars to HOW, whenever they sell a Hyundai car.
                                                                                  In 2007, HOW visited 30 organizations in 29 cities, and donated 1.35 million dollars and six Santa Fes (pro-
                                                                                  duced in 2007). HMA is the largest donator in the American auto industry for pediatric cancer research,
                                                                           1      improving the image of Hyundai Motor in the American market.


                                                                                  Dana-Farber Boston Marathon Jimmy Fund Walk | The Dana-Farber Cancer Institute is one of the
                                                                                  leading pediatric cancer research institutes in the U.S. Since 1998, HMA has cooperated with the Dana-
                                                                                  Farber Cancer Institute to support the Jimmy Fund Walk. Every year, more than 7,000 people participate in
                                                                           2      the Jimmy Fund Walk and walk 26.2 miles to raise fund for pediatric cancer research and increase public
                                                                                  awareness of pediatric cancers. HMC and dealers in the U.K. have also donated more than 6.30 million
                                                                                  dollars to the Dana-Farber Jimmy Fund over the past six years. In 2007, they donated 400,000 dollars to
                                                                           2
      1
          Events in the Sun Village, a childcare center for children of inmates
                                                                                  the Dana-Farber Cancer Institute.
          on death row
      2
          Donation of vehicles to the Olympics Volunteers Group in Shunyi
                                                                                  DARE Program– long Beach Police Department | HMA donated two vehicles to the DARE Program of
          District, Beijing
                                                                                  the Long Beach Police Department in the U.S. The Drug Abuse Resistance Education (DARE) Program is a
                                                                                  drug prevention program, where policemen teach children how to reject drugs, delinquency, and violence.
                                                                                  The vehicles donated by HMA are now used for various education programs on Long Beach Island.


                                                                                  ●          BHMC's Social Contribution

                                                                                  Vehicle Donation to the Olympics Volunteers Group in Shunyi District, Beijing | In July 2007, BHMC
                                                                                  had a vehicle donation ceremony in the Shunyi Hotel to contribute vehicles to the Olympics Volunteers
                                                                                  Group in Shunyi District, Beijing. Shunyi District is the very center of the manufacturing industry and auto
                                                                                  industry in Beijing. BHMC has played a leading role in developing the manufacturing industry in Beijing and
                                                                                  contributed to growth of the Shunyi economy. In addition, BHMC has actively participated in social contri-
                                                                                  bution projects, setting an example as a model company that grows together with the local community.


                                                                                  Social Contribution at the Community level | In September 2007, Beijing-Hyundai Motor Company
                                                                                  (BHMC) donated 110 PCs to the Sun Village Children Center, a non-profit organization to take care of chil-
                                                                                  dren of prisoners currently serving sentences, and contributed 11 finished cars, 180 engines, 50 transmis-
                                                                                  sions, and other 1,000 auto parts to education facilities in order to help students from the disadvantaged
                                                                                  families and remote areas receive better education. This was the largest social contribution event since
                                                                                  the foundation of BHMC.
                                                                                                                              HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                     107




                                                                   ●          Global Social Contribution Activities

                                                                   Assistance for Disaster Recovery in Greece and Peru | HMC has provided various aids to countries
                                                                   hit by natural disasters such as a tsunami or earthquake to help affected people recover from the disaster,
                                                                   with an aim of contributing to the wellbeing of humanity. For example, we donated 200,000 euros to the
                                                                   Greek government, when Greece had a series of wild fires in 2007. We also provided Peru with special free
                                                                   maintenance service worth 100,000 dollars for cars affected by an earthquake. We inspected vehicles and
                                                                   replaced parts in the affected regions, regardless of car models or brands.
Donation of 200,000 euros for the recovery from the wild fire in
Greece
                                                                   Aids for the lower Classes in India | HMC has conducted social contribution activities at the community
                                                                   level in India. In particular, we helped the untouchable caste get education to be economically indepen-
                                                                   dent, and aided the operation of the Sujata Academy, a school for the untouchable caste in Dhaneshari
                                                                   in northern India. In January 2008, HMC had a groundbreaking ceremony in collaboration with the Com-
                                                                   munity Chest of Korea and Joint Together Society Korea to build additional classrooms and a dormitory in
                                                                   the Sujata Academy.




                                                                        To Become an Automaker that Contributes to the
                                                                        Public Interest

                                                                        Sridar K, Deputy Manager, Hyundai Motor Foundation, HMI



                                                                        Since the foundation, HMI has made a success in the Indian market. HMI has the second largest market
                                                                        share, and becomes the largest auto exporter in India and largest investor in the State of Tamil Nadu.
                                                                        HMI attributes its success to longstanding trust and support from the Indian public. Therefore, HMI has
                                                                        made efforts to give what it has earned back to the society based on the recognition that a business is
                                                                        sustainable only when it gives back its profits to the society, HMI aims not only to raise fund for public
                                                                        welfare but also to promote the development of civil society in its real meaning. To this end, HMI has
                                                                        encouraged employees to use their time, knowledge, experience, and energy for the public interest.
                                                                        I believe that the greatest happiness comes from giving what I have to others, not from possessing
                                                                        money or wealth. The most memorable contribution of HMI was to donate desks and chairs to nearby
                                                                        schools. Students in nearby schools had to sit down on the floor because they had no desks and
                                                                        chairs. However, 1,300 students now sit on the chair and before the desk with HMI logos. I was deeply
                                                                        touched by the students who had a big smile and studying hard. In order to help students who will lead
                                                                        India in the future focus on learning, HMI plans to donate a total of 7,000 pieces of chairs and desks
                                                                        to local schools.
108   People & Society

      78     Employees
      85     Suppliers
      92     Shareholders and Investors
      95     Customers
      99     Social Contribution




      2007 Global Social Contribution Activities
      Subsidiary                      Country         Program                                                  Content

      Hyundai Motor America(HMA)      United States   Hope On Wheels                                         ㆍsupported child cancer movement

                                                      Hyundai Scholars Pediatric Cancer Fellowship Program   ㆍprovided financial support for children who survived through cancer

                                                      Dana-Farber Boston Marathon Jimmy Fund Walk            ㆍdonated vehicles and fund to Dana-Farber Boston Marathon sponsor

                                                                                                               (fund& vehicles donation)

                                                      National Association for the Advancement of Colored    ㆍsupported National Association for the Advancement of Colored

                                                      People (NAACP)                                         ㆍPeople (NAACP)

                                                      Louis Barajas Hispanic Book Tour                       ㆍsupported Hispanic society through partnerships and activities of celebrities

                                                      Habitat for Humanity                                   ㆍvolunteered in building "Love House" for low-income family

                                                      DARE Program – Long Beach Police Department            ㆍdonated vehicles for the prevention of children's drugs taking and violence

                                                      Fountain Valley Educational Foundation                 ㆍprovided scholarship for the implementation of culture and art

                                                      Mother’s Against Drunk Drivers (MADD)                  ㆍaided Mother Against Drunk Driving (MADD) in the United States

                                                      Soccer for Hope                                        ㆍdonated soccer supplies to African children

      Hyundai Motor Europe(HME)       Greece          Greece forest fires relief support project             ㆍfunded 20,000 euro for the fire rescue

      Hyundai Motor India(HMI)        India           Sujata Academy support project                         ㆍprovided financial support for low-income schools in India

                                                      Local school support project                           ㆍdesks&chairs to local schools - expect a total of 10,000 sets

                                                                                                             ㆍsupported field trips of local school students

                                                                                                             ㆍgave gifts to students in memory of Independence Day

                                                                                                             ㆍrenovated Thandalam school

                                                                                                             ㆍprovided equipments for ITI automobile technology at Assam institute

                                                      Korean culture exchange & cultural art area support    ㆍopened Chennai InKo Centre and helped its operations

                                                                                                             ㆍsupported various cultural art festivals




                                                                                                                                1
                                                                                                                                    Traffic Safety Campaigners of HMI
                                                                                                                                2
                                                                                                                                    Habitat for Humanity program of HMMA
                                                            1                                                            2
                                                                                                                            HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                     109




2007 Global Social Contribution Activities
Subsidiary                     Country        Program                                                     Content

Hyundai Assan Otomotive        Turkey         Hyundai Torches                                           ㆍscholarship program

Sanayi(HAOS)

Beijing Hyundai Motor Company China           Computer donation to “Sun Town”                           ㆍdonated 110 computers to rescue research center

(BHMC) &                                      Vehicles & spare parts donations to educational institutes ㆍdonated11 vehicles, 180 engines, 50 transmissions, and 1,000 other parts

Hyundai Motor Group China                                                                               ㆍto Beijing University of Technology, Beijing Union University, and etc.

(HMGC)                                        Vehicles donation to Shunyi District Olympic Volunteer    ㆍdonated 5 Tucsons

                                              Council

                                              Donation of equipments for educational purposes at Iljo   ㆍdonated 343 parts in 64 categories including 2 vehicles

                                              City Hyundai Motors Technology Institute                  ㆍdonated 40 Hyundai/Kia vehicles

                                              Hee Ah Lee's piano recital support                        ㆍdonated 50,000 yuan for social events

                                              China snowfall damage support                             ㆍdonated Tucson for restoring damages of snowfall and 1,000,000 yuan

Central & Eastern. Europe      Ukraine        Orphans Drawing Competition

Regional Headquarters          Azerbaijan     Traffic safety campaign

                                              Orphanage support

                                              Safe driving campaign

                                              Cultural activities sponsorship

Middle East Regional           Oman           Hyundai’s Al Mostaqbal Al Moshirique Awards               ㆍgranted yearly awards such as computers for students with

Headquarters                                                                                            ㆍacademic excellence

Hyundai Motor Deutschland      South Africa   Harry Gwala Secondary School support project              ㆍconstructed school facilities and provided security services

GMBH                                                                                                    ㆍplan to construct a student Gym in 2008

Africa Regional Headquarters   South Africa   Sports sponsorship                                        ㆍagreed on the management of Soweto (residency densely populated with

                                                                                                        ㆍnatives) soccer stadium with Saudi Arabia Football Association

Hyundai Motors Latin America   Chile          "SanHak Network" support                                  ㆍdonated technology materials to support local schools

                               Peru           Peru earthquake restoration-related support               ㆍconducted restoration activities in cities with earthquake damages

                                                                                                        ㆍ(for 2 weeks starting October 22nd)

                                                                                                        ㆍdonated supplies : water, food (2000 units), blanket (3000), automobile

                                                                                                        ㆍparts (windshield wiper, oil, etc.)

                                              Peru local educational institutes support                 ㆍsupporting organization: National Educational Organization that operates

                                                                                                        ㆍ45 industrial schools

                                                                                                        ㆍspecification of donation: engine & 13 T/Ms

Asia & Pacific Regional        New Zealand    Child Cancer Foundation                                   ㆍdonated vehicles to organization fund-raising for child cancer

Headquarters                                  Pinnacle Program                                          ㆍprovided sponsor program to nurture child with athletic talents

                               Singapore      Fund-raising of Singapore Agency owned professional

                                              football club for disabled/ heart disease children
110   Appendix




      APPENDIx




                 111
                 GRI Index



                 115
                 Independent Assurance Statement



                 116
                 Data Sheet



                 117
                 Index(Sheet & Graph)



                 118
                 Hyundai Motor Company Worldwide

                 120
                 Reference Material
                                                                                                                                        HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                             111




GRI Index

Profile                                                                                                                                                           Reference
Strategy and                      1.1    Statement from senior decisionmaker about the relevance of sustainability to the organization                            9
                                  1.2    Description of key impacts, risks, and opportunities                                                                     10, 12, 13, 16, 17
Organizational                    2.1    Name of the organization                                                                                                 119
Profile                           2.2    Primary brands, products, and services                                                                                   119
                                  2.3    Operational structure of the organization                                                                                118, 119
                                  2.4    Location of organization’s headquarters                                                                                  119
                                  2.5    Number and names of countries where the organization operates                                                            118, 119
                                  2.6    Nature of ownership and legal form                                                                                       27, 28
                                  2.7    Markets served                                                                                                           15, 34, 35
                                  2.8    Scale of the reporting organization                                                                                      15
                                  2.9    Significant changes during the reporting period                                                                          14, 26, 35
                                  2.10   Awards received in the reporting period                                                                                  14, 103
Report           Report Profile   3.1    Reporting period for information provided                                                                                0
Parameters                        3.2    Date of most recent previous report                                                                                      0
                                  3.3    Reporting cycle                                                                                                          0
                                  3.4    Contact point for questions regarding the report or its contents                                                         121
                 Report Scope     3.5    Process for defining report content                                                                                      0
                 and Boundary     3.6    Boundary of the report                                                                                                   0
                                  3.7    State any specific limitations on the scope or boundary of the report                                                    0
                                  3.8    Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities
                                  3.9    Data measurement techniques and the bases of calculations
                                  3.10   Explanation of any re-statements of information provided in earlier reports
                                  3.11   Significant changes from previous reporting periods
                 GRI Content      3.12   Table identifying the location of the Standard Disclosures in the report                                                 111-114
                 Index
                 Assurance        3.13   Policy and current practice with regard to seeking external assurance
Governance,      Governance       4.1    Governance structure of the organization                                                                                 28
Commitments,                      4.2    Whether the Chair of the highest governance body is also an executive                                                    28
and Engagement                    4.3    State the number of members of the highest governance body                                                               28

                                  4.4    Mechanisms for shareholders and employees to provide recommendations or direction to the highest                         24, 25
                                         governance body
                                  4.5    Linkage between compensation for members of the upper management
                                  4.6    Processes in place for the highest governance body to ensure conflicts of interest are avoided
                                  4.7    Process for determining the qualifications and expertise of the members of the highest governance body
112   Appendix




      Profile                                                                                                                                              Reference
                                   4.8           Internally developed statements of mission and principles                                                 20, 21
                                   4.9           Procedures of the highest governance body for overseeing the management of economic, environmental, and
                                                 social performance
                                   4.10          Processes for evaluating the highest governance body’s own performance
                  Commitments      4.11          Explanation of whether and how principle is addressed to external                                         20, 21, 84
                  to external      4.12          Externally developed charters to which the organization subscribes                                        0
                  initiatives      4.13          Memberships in associations or International/international advocacy organizations                         44
                  Stakeholder      4.14          List of stakeholder groups engaged by the organization                                                    13
                  Engagement       4.15          Basis for identification and selection of stakeholders with whom to engage                                13
                                   4.16          Approaches to stakeholder engagement, including frequency of engagement                                   78-83, 86-88, 92-94, 95-97,
                                                                                                                                                           102-103
                                   4.17          Key concerns that have been raised through stakeholder engagement                                         16, 17, 78-106
      Economy     Management       5.1           Management Approach and Performance Indicators                                                            20, 21
                  Approach
                  Economic         EC1    Core   Direct economic value generated and distributed                                                           92, 102, 103, 119
                  Performance      EC2    Core   Financial implications for the organization’s activities due to climate change                            44-57
                                   EC3    Core   Coverage of the organization’s defined benefit plan obligations
                                   EC4    Core   Significant financial assistance received from government
                  Market Presence EC5     Add    Range of ratios of standard entry level wage compared to local minimum wage
                                   EC6    Core   Policy, practices, and proportion of spending on locally-based suppliers                                  34, 35, 88
                                   EC7    Core   Procedures for local hiring and proportion of local senior management                                     78-81
      	           Indirect Economic EC8   Core   Development and impact of infrastructure investments and services provided                                99-109
                  Impacts          EC9    Add    Understanding and describing significant indirect economic impacts                                        78, 88-91, 101-104
      Environmental Management     5.2           Management Approach and Performance Indicators                                                            22, 23
                  Approach
                  Materials        EN1    Core   Materials used by weight or volume                                                                        64
                                   EN2    Core   Percentage of materials used that are recycled input materials                                            58-62
                  Energy           EN3    Core   Direct energy consumption by primary energy source                                                        66
                                   EN4    Core   Indirect energy consumption by primary source                                                             66
                                   EN5    Add    Energy saved due to conservation and efficiency improvements                                              67
                                   EN6    Add    Reductions in energy requirement as a result of energy-efficient or renewable energy initiatives          44-53
                                   EN7    Add    Initiatives to reduce indirect energy consumption and reductions achieved                                 65-68
                  Water            EN8    Core   Total water withdrawal by source                                                                          69
                                   EN9    Add    Water sources significantly affected by withdrawal of water                                               69
                                   EN10   Add    Percentage and total volume of water recycled and reused                                                  69
                                                                                                                                  HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                           113




Profile                                                                                                                                                     Reference
             Biodiversity   EN11   Core   Location and size of areas of high biodiversity value
                            EN12   Core   Description of significant impacts of activities on biodiversity
                            EN13   Add    Habitats protected or restored
                            EN14   Add    Strategies, current actions, and future plans for managing impacts on biodiversity
                            EN15   Add    Number of IUCN Red List species and national conservation list species                                            67
             Emissions,     EN16   Core   Total direct and indirect greenhouse gas emissions by weight                                                      67
             Effluents      EN17   Core   Other relevant indirect greenhouse gas emissions by weight                                                        44-46, 55-57, 65-68
             and Waste      EN18   Add    Initiatives to reduce greenhouse gas emissions and reductions achieved                                            72, 73
                            EN19   Core   Emissions of ozone-depleting substances by weight                                                                 69, 70
                            EN20   Core   NOx, SOx, and other significant air emissions by type and weight                                                  71
                            EN21   Core   Total water discharge by quality and destination                                                                  68
                            EN22   Core   Total weight of waste by type and disposal method
                            EN23   Core   Total number and volume of significant spills
                            EN24   Add    Weight of exported, imported, transported, or treated hazardous under the terms of Basel Convention Annex
                            EN25   Add    Identity, size, and protected status of water bodies and related habitats                                         44-59
             Products and   EN26   Core   Initiatives to mitigate environmental impacts of products and services                                            58-60
             Services       EN27   Core   Percentage of products sold and their packaging materials
             Compliance     EN28   Core   Monetary value of significant fines noncompliance with environmental regulations
             Transport      EN29   Add    Significant environmental impacts of transporting products and other goods
             Overall        EN30   Add    Total environmental protection expenditures and investments                                                       73
Society      Management     5.3           Management Approach and Performance Indicators                                                                    20, 21, 24, 26, 27, 99, 100,
             Approach                                                                                                                                       105
Labor        Employment     LA1    Core   Total workforce by employment type, employment contract, and region                                               78, 79
Practices                   LA2    Core   Total number and rate of employee turnover by age group, gender, and region
and Decent                  LA3    Add    Benefits provided to full-time employees
Work         Labor/         LA4    Core   Percentage of employees covered by collective bargaining agreements                                               79
             Management     LA5    Core   Minimum notice period(s) regarding operational changes
             Relations
             Occupational   LA6    Add    Percentage of total workforce represented in formal joint management-worker health and safety committees          84
             Health and     LA7    Core   Rates of injury, occupational diseases, lost days, absenteeism, and fatalities                                    84
             Safety         LA8    Core   Programs to assist workforce members, their families, or community members regarding serious diseases             82-84
                            LA9    Add    Health and safety topics covered in formal agreements with trade unions                                           83, 84
             Training and   LA10   Core   Average hours of training per year per employee                                                                   81
             Education      LA11   Add    Programs for skills management and lifelong learning                                                              81, 82
                            LA12   Add    Percentage of employees receiving regular performance and career development reviews                              81
114   Appendix




      Profile                                                                                                                                                        Reference
                    Diversity and      LA13   Core   Composition of governance bodies and breakdown of employees per category                                        28, 29, 78, 79
                    Equal Opportunity LA14    Core   Ratio of basic salary of men to women by employee category
      Human         Investment and     HR1    Core   Percentage and total number of significant investment agreements that include human rights clauses
      Rights        Procurement        HR2    Core   Percentage of significant stakeholders that have undergone screening on human rights and actions taken
                    Practices          HR3    Add    Total hours of employee training on policies/procedures in aspects of human rights                              80, 81
                    Non-               HR4    Core   Total number of incidents of discrimination and actions taken                                                   80
                    Discrimination
                    Freedom of         HR5    Core   Operations identified in which the right to exercise freedom of association and collective bargaining           80
                    Association and
                    collective bargaining
                    Child Labor        HR6    Core   Operations identified as having risk for incidents of child labor and actions taken                             81
                    Forced and         HR7    Core   Operations identified as having risk for incidents of forced or labor and actions taken                         81
                    Compulsory Labor
                    Security Practices HR8    Add    Percentage of security personnel trained in the organization’s policies or procedures
                    Indigenous Rights HR9     Add    Total number of violations involving rights of indigenous people and actions taken
      Society       Community          SO1    Core   Effectiveness of any programs/practices that manage the impacts of operations                                   99-109
                    Corruption         SO2    Core   Total number of business units analyzed for risks related to corruption                                         24, 25
                                       SO3    Core   Percentage of employees trained in organization’s anti-corruption policies                                      25
                                       SO4    Core   Actions taken in response to incidents of corruption                                                            25
                    Public Policy      SO5    Core   Public policy positions and participation in public policy development and lobbying                             68, 90, 91
                                       SO6    Add    Total value of financial and in-kind contributions to political parties or related institutions
                    Anti-Competitive SO7      Add    Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly
                    Behavior
                    Compliance         SO8    Core   Monetary value of significant fines for noncompliance with regulations
      Product       Customer Health PR1       Core   Public or voluntary policies for customer health and safety                                                     95-98
      Responsibility and Safety        PR2    Add    Total number of non-compliance incidents with regulations concerning health and safety                          25
                    Product and        PR3    Core   Type of product and service information required by procedures                                                  95-98
                    Service Labeling PR4      Add    Total number of non-compliance incidents with regulations concerning products and services                      25
                                       PR5    Add    Practices related to customer satisfaction including survey results on satisfaction                             35, 36, 37, 95, 96
                    Marketing          PR6    Core   Programs for adherence to standards and voluntary codes related to marketing communications                     25
                    Communications PR7        Add    Total number of non-compliance with regulations concerning marketing communications                             25, 97
                    Customer Privacy PR8      Add    Total number of substantiated complaints regarding customer privacy and data losses                             25
                    Compliance         PR9    Core   Monetary value of significant fines for non-compliance with laws concerning the provision and use of products
                                                     and services
                                                                                                     HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                          115




Independent Assurance Statement

Independent Assurance Statement to hyundai Motor Company Management

We have reviewed environment and social aspects of the Hyundai Motor Company 2008 Sustainability Report (hereinafter, ‘the Report’). The
Report is the responsibility of and has been approved by the management of the Company. Our responsibility is to draw a conclusion based on
our review.

We have based our work on emerging best practices and standards for independent assurance on sustainability reporting, including the interna-
tional standard ISAE 3000 “Assurance Engagements other than Audits and Reviews of Historical Financial Information”, issued by the Interna-
tional Auditing and Assurance Standards Board. The objective and scope of the engagement were agreed with the management of the Company
and included those subject matters on which we have concluded below.

Based on an assessment of materiality and risks, our work included analytical procedures and interviews as well as a review on a sample basis
of evidence supporting the subject matters. We have performed interviews with management responsible for environment, health & safety and
social responsibility at corporate level, as well as at the three domestic manufacturing plants.

We believe that our work provides an appropriate basis for us to conclude with a limited level of assurance on the subject matters. In such an
engagement, less assurance is obtained than would be the case had an audit-level engagement been performed.

Conclusions

In conclusion, in all material respects, nothing has come to our attention that causes us not to believe that:

1. Hyundai Motor Company has applied detailed and systematic methodologies and processes for the preparation of the Report, as described
   in the section ‘Before you read’, in order to achieve its reporting objective.
2. Hyundai Motor Company at Headquarters level has applied detailed procedures to identify, collect, compile and validate data for 2007.
   Data for 2007 on Environment Management (page 42-75), Industrial Safety and Health (pages 83-84) and Social Responsibility (pages
   76-109) is consistent with data accumulated as a result of these procedures and appropriately reflected the Report.
3. Data for 2007 for Hyundai Motor Company domestic production plants has reported according to the procedures noted in item 2 above and
    is consistent with source documentation presented to us.




Copenhagen, July 30, 2008                                                  Seoul, July 30, 2008
DElOITTE Statsautoriseret Revisionsaktieselskab                            DElOITTE Korea




Preben J. Soerensen                                                        Jae Sool lee
Danish State Authorized Public Accountant                                  Managing Partner		
Environment & Sustainability Services
116   Appendix




      Data Sheet

                                              (ton)                                                                 (ton)

                                              200                                                                   200
      Quantity of air pollutants discharged
      (domestic)                              150                                                                   150


                                              100
                                                       99                                                           100

                                                                           68                                                67
                                              50                                                                    50
                                                                                                                                                 28
                                                                                             6                                                                     -

                                                      2005               2006              2007                             2005               2006              2007
                                                                 □	Quantity of air pollutant discharged (SOx)                           □	Quantity of air pollutant discharged (CO)
                                              (ton)                                                                 (ton)
                                              1,200
                                                                                                                    100
                                              1,000   940
                                                                                                                    80
                                              800
                                                                          712
                                                                                            633
                                              600                                                                   60

                                              400
                                                                                                                             45
                                                                                                                    40                          36
                                              200
                                                                                                                                                                   -
                                                                                                      -
                                                      2005               2006              2007                             2005               2006              2007
                                                                  □	Quantity of air pollutant discharged (PM)                         □	Quantity of air pollutant discharged (NOx)


                                              (ton)   57.67                               58.28      (kg/vehicle)   (ton)                                                 (kg/vehicle)

      Water pollutants generated(domestic)    150                                                             55    120
                                                                                                                            31.59
                                                                                                                                                                                   30

                                                                                                                    100                                         23.09              25
                                              120                        47.26                                50
                                                       97                                   99                      80                                                             20
                                              90                                                              45                               16.57
                                                                           76                                       60                                                             15
                                                                                                                             53
                                              60                                                              40
                                                                                                                    40                                            39               10
                                                                                                                                                27
                                              30                                                              35    20                                                              5


                                                      2005                2006             2007                             2005               2006              2007
                                                              □	Quantity of water pollutants generated (COD)	                       □	Quantity of water pollutants generated(BOD)	
                                                                 	●	Generated quantity by vehicle (g/vehicle)                          ●	Generated quantity by vehicle (g/vehicle)
                                              (ton)                                                  (kg/vehicle)   (ton)                                                 (kg/vehicle)
                                                                                           29.80                              3.00
                                              120                                                             30    12.0                                                            3

                                              100     22.29                                                   25    10.0                                                          2.5

                                              80                                                              20    8.0                                                             2
                                                                         15.06
                                              60                                                              15    6.0                                                           1.5
                                                                                            51                                5.0                                  1.08
                                              40       38                                                     10    4.0                          0.84                               1
                                                                           24
                                              20                                                               5    2.0                                             1.8           0.5
                                                                                                                                                  1.4

                                                      2005                2006             2007                               2005               2006              2007
                                                               □	Quantity of water pollutants generated (SS)	                       □	Quantity of water pollutants generated (n-H)
                                                                	●	Generated quantity by vehicle (g/vehicle)                          	●	Generated quantity by vehicle (g/vehicle)

                                              (ton)                                                  (kg/vehicle)   (ton)                                                 (kg/vehicle)

      Consumption of hazardous chemical       3,500                                                          1.6    300                         0.13                             0.14

      substances(domestic)                    3,000                                         1.25
                                                                                                             1.4    250     0.11                                                 0.12
                                                                          1.19                                                                  215              0.10
                                                                                                             1.2                                                                 0.10
                                              2,500
                                                      1.00                                                          200      186                                  170
                                                                                           2,128             1.0                                                                 0.04
                                              2,000                       1,922                                     150
                                                      1,687                                                  0.8                                                                 0.06



                                                      2005                2006              2007                            2005                2006             2007
                                                         □	Consumption of a poisonous substance (NaOH)                         □	Consumption of a poisonous substance(H2SO4)	
                                                             	●	Generated quantity by vehicle (g/vehicle)                           ●	Generated quantity by vehicle (g/vehicle)

                                              (ton)                                                  (kg/vehicle)   (ton)                                                 (kg/vehicle)

                                              50
                                                                           0.022                           0.025    400                         0.19                             0.20
                                                                                            0.021                                                                0.18
                                              40
                                                       0.018                                               0.020    350     0.17                                                 0.18
                                                                            36                36
                                                        31                                                 0.015                                305               300            0.16
                                              30                                                                    300      286
                                                                                                           0.010                                                                 0.14
                                              20                                                                    250




                                                       2005                2006              2007                           2005                2006             2007
                                                            □	Consumption of a poisonous substance(HNO3)	                           □	Consumption of a poisonous substance(HCl)
                                                                ●	Generated quantity by vehicle (g/vehicle)                            ●	Generated quantity by vehicle (g/vehicle)
                                                                                                                           HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                                      117




Index
(Sheet & Graph)


Corporate Philosophy                                                                                                      People & Society
Management Philosophy                                  20    Number of HMC models in each gas emissions                   Number of employees in Korea                          78

Vision                                                 20    grade category in 2007                                  56   Domestic employees by job category

Management Policy                                      21    Efforts to achieve the resource circulation target      58   (executives included)                                 78

Mid-and Long-term Strategies                           21    Eco-efficiency                                          61   Employees on overseas                                 78

Global Environmental Management Policy                 22    Annually generated volume of IMDS data                  63   Number of female employees in Korea                   79

Environmental Management Strategy                      22    e-CMS construction and operation                        63   Yearly female employees recruitment status            79

HMC Environmental Management Organization              23    Material balance in domestic business facilities and         Idea Competition and group discussions                80

Ethics Charter                                         24    causes of environmental overload by process in 2007     64   Education for HMC employees in Korea in 2007          81

Guidelines for Employees' Behavior                     25    Greenhouse Gas Sub-committee                            65   2007 Education Framework and Direction of

Hyundai Motor Group Corporate Social Responsibility          2007 Greenhouse gas inventory of domestic                    the Main Objectives                                   81

Committee                                              27    business facilities                                     66   Clubs at HMC in 2007                                  83

Board of Directors                                     28    Reduction of greenhouse gas emissions through                Website for hMC employees                             83

2007 Activities of the Board of Directors              29    the recycling of waste heat at paint plants             67   i-ESH System                                          83

2007 Activities of the Audit Committee                 30    Greenhouse gas emissions by energy source                    Annual industrial accident rate                       84

2007 Activities of the Ethics Committee                31    at domestic business facilities(2007)                   67   Programs to promote mutual cooperation                85
                                                             Changes in greenhouse gas emissions at domestic              Suppliers that have joined the 5-Star quality club    86

Economy                                                      and overseas business facilities of hMC                 67   Benchmarking studies on advanced technology           86

2007 status of enlargement of overseas production sites 35   Status of waste disposal(domestic and overseas)         68   Payment                                               87

Accumulated number of cars sold in the U.S. market     35    Quantity of waste generated(domestic and overseas)      68   Joint procurement by year                             87

Strategic Enterprise Management Simulation Model       38    Quantity of waste recycled(domestic and overseas)       68   Education programs to nurture global human

VOC management system                                  41    Changes in water resource utilization                        resources                                             88
                                                             (domestic and overseas)                                 69   SCEP schedule and participating suppliers             90

Environmental Management                                     Changes in quantity of water resources recycled              Examples of green management practices transfer       91

Changes in average CO2 emissions of HMC cars                 (domestic and overseas)                                 69   Green procurement by plant in Korea                   91

sold in the EU region                                  45    Total quantity of air pollutants discharged(domestic)   69   Matters submitted to the 2008 Shareholders'

Low CO2 emission models sold in the EU region          46    Management standard of air pollutants                   69   Meeting                                               92

Changes in combined fuel efficiency(US)                46    Improvement to the dissolved dust collection method     70   Dividend by year(common stocks)                       92

2007 Status of response to fuel efficiency                   Water pollutants generated by domestic                       2007 Overseas IR activities                           93

regulations in Korea                                   47    business facilities                                     71   2007 Domestic IR activities                           94

Yearly fuel efficiency achieved in Canada              47    Water pollutant management standard                     71   Global CSR Network                                    100

Conceptual diagram of HEV and how it works             48    Changes in the quantity of VOCs generated                    Projects by beneficiary                               101

Steps for hybrid car development                       49    at domestic business facilities                         72   Progress in the development of Easy Move Vehicles     102

Fuel cell-powered Tucson                               50    Changes in the recovery of VOCs                              Structure of HMC volunteer groups                     102

Fuel cell-powered bus                                  50    at domestic business facilities                         72   Three major volunteering activities                   103

History of fuel cell stack development by HMC          51    Total consumption of hazardous chemical substances           Volunteering activities by division                   103

i-Blue (2007 Frankfurt International Motor Show)       51    by domestic business facilities                         73   Social contribution symbols and slogans by language   105

Emission report of the Getz and Sonata against               Total environmental expenditure of the three domestic        2007 Global Social Contribution Activities            108

Euro regulations                                       55    plants in 2007                                          73

California’s LEV II and Zero Emission Vehicle(ZEV)           ISO 14001 certification status                          74

regulations                                            56
118   Appendix




      Hyundai Motor Company Worldwide




                                         Hyundai Motor Norway AS(HMN)

                                                                               Hyundai Motor Company(Eastern Europe Regional Headquarters)
                           Hyundai Motor United Kingdom      Hyundai Motor Company
                           Ltd.(HMUK)                        Poland(HMP)                         Hyundai Motor CIS(HMCIS)
                                                                                               Taganrog Automobile Plant(TagAZ)
                                                          Hyundai Central Europe
        Hyundai Motor Europe Technical                    Regional Headquarters
              Center GmbH(HME R&D)
                                                          Hyundai Motor Manufacturing
                 Hyundai Motor Europe GmbH.               Czech(HMMC)
                                                                                                                                                            Hyundai Motor China          Beijing Hyundai Motor Company(BHMC)
                                                                                                                                                   Huatai Automobile Co., Ltd             Hyundai Motor Beijing Office
                                                                 Hyundai Assan Otomotive
                                                                 Sanayi Ve Ticaret A.S                                                           Beijing Jingxian Motor Safeguard                                Hyundai Motor Japan(HMJ)
                                                                                                                                                                  Service Co., Ltd.
                                                                                                        Reyan Vehicle Manufacturing
                                                                                                        Co.(RVMCO)                                                                                                    Hyundai Motor Japan
                                                                                                                                                                                                                      R&D Center(HMJ R&D)
                                                                                                                                                      Auhui Jianghuai Automotive Co., Ltd
                                                                                                                             Dewan Farooque
                                                                   Prima Engineering Industries S.A.E                        Motors Ltd.
                                                                        Hyundai Motor Company           Hyundai Motor Company
                                                                                                        (Africa Regional Headquarters)                                                             Sanyang Industry Co.,Ltd.
                                                             (Middle East Regional Headquarters)
                                                                                                                               Hyundai Motor India
                                                                                                                               Engineering Pvt. Ltd(HMIE)
                                                                                                                                                                           Vietnam Motors Industry Corporation
                                                                                                                                   Hyundai Motor India(HMI)                    Hyundai Motor Company Hanoi Office
                                                                   GIAD Motor Co,. Ltd
                                                                                                                                                                     Oriental-Hyundai Sdn Bhd
                                                                                                                                          Hyundai Motor Company
                                                                                                                            (Asia & Pacific Regional Headquarters)     Inokom Corporation Sdn Hbd




                                                                                                                                                                                      PT. Hyundai Indonesia Motor




                                                                                                                                                                                                Hyundai Motor Company Australia(HMCA)




             	headquarters (Ulsan Plant, Asan Plant, Jeonju Plant, Hyundai & Kia Corporate R&D Division, Hyundai & Kia Eco Technology Research Institute, Commercial Vehicle
                                Development Center)
       ●	Overseas Production Facilities		●	Overseas CKD Assembly Facilities		●	Overseas Sales Subsidiaries		
       ●	Regional Headquarters		●	Regional Offices		●	R&D Center 	●	Other Subsidiaries		
                                                                                                                         HYUNDAI MOTOR COMPANY | 2008 SuSTAINABIlITy REPORT
                                                                                                                                                                              119




                                                                                                                     Hyundai Auto Canada(HAC)

                                                                                                                Hyundai- Kia America Technical Center Inc. (HATCI)
                                                                                                                      Hyundai Detroit Office
                                                                                 Hyundai Motor Finance Co.
                                                                                                                        Hyundai Washington Office
                                            Hyundai Motor America(HMA)             World Marketing Group
                                        Hyundai California Design Center(HCDC)
                                                                                                             Hyundai Motor Manufacturing Alabama(HMMA)

                                                                                                                  Hyundai Motor Company
                                                                                                                  (Central & South America Regional Headquarters)




                                                                                                                                         MMC Automotriz S.A.




                                                                                                                                     Caoa Montadora de Veiculos S.A.


hyundai Motor Company Profile
Name                    Hyundai Motor Company
Headquarters            231, Yangjae-Dong, Seocho-Gu, Seoul, ROK
Foundation              December 29, 1967
Chairman & CEO          Mong-koo Chung
Business area           Manufacturing and sales of vehicles and vehicle parts




Main Models by Country (As of December 31, 2007)
Category     Location            Main models
Domestic     Ulsan               12 models including Genesis
             Asan                Sonata NF, Grandeur
             Jeonju              4 models including Universe,
                                 cargo 4 models including Trago, Special vehicles
Overseas     HMI (India)         Santro, Click, Verna, Avante, Sonata NF, i30
             BHMC (China)        Verna, Sonata EF, Sonata NF, Avante XD, Tucson
             HMMA(USA)           Sonata NF, Santa Fe
             HAOS (Turkey)       Verna, Lavita
120   Appendix




      Reference Material

      Published Report
      2001 Environment Report
      2002 Environment Report
      2002/2003 Sustainability Report
      2003/2004 Sustainability Report
      2005 Sustainability Report
      2006 Sustainability Report
      2007 Sustainability Report
                                                                               2002/2003           2003/2004                 2005            2006                     2007


      Others
      2006 Business Report
      2007 Business Report
      2007 PR Report
      2008 PR Report
      2006 Hyundai Motor Group Society Contribution White Paper
      2005 Hyundai·Kia Motor Group Society Contribution White Paper
      2006 Hyundai·Kia Motor Group Society Contribution White Paper
      2007 Ulsan Plant Society Contribution White Paper




      Domestic and Foreign Public Website                                                  	공개	웹사이트

      Category         Site                         Domain                                 Category        Site                     Domain	공개	웹사이트
      homepage	        KOREAN                       www.hyundai-motor.com                  Club	           Main	                    club.hyundai-motor.com
                       INTERNATIONAL                world.hyundai-motor.com                	               Grandeur                 club.hyundai-motor.com/club/gog
                       HYUNDAI IN                                                                          Sonata                   club.hyundai-motor.com/club/soc
                       YOUR COUNTRY/REGION          global.hyundai-motor.com                               Tuscani                  club.hyundai-motor.com/club/tog
      Ethical                                       audit.hyundai-motor.com                                Avante                   club.hyundai-motor.com/club/j2
      management  	 	                                                                                      Verna                    club.hyundai-motor.com/club/vinside
      Representative 	                              ad.hyundai-motor.com/catalog                           Atoz                     club.hyundai-motor.com/club/amg
      vehicle	         Others	                      tuscon2009.hyundai-motor.com                           Santa Fe                 club.hyundai-motor.com/club/santafe
                                                    newsantafe.hyundai-motor.com                           Terracan                 club.hyundai-motor.com/club/khan
                                                    www.hyundai-i10.com                    Sports	         Soccer team              www.hyundai-motorsfc.com
      Society	         HMC Society contribution	    csr.hyundai-motor.com                                  Euro 2008                euro2008.hyundai-motor.com
      contribution	    HKMG Society contribution	   www.hyundai-kiamotors.com                              Snow festival            ski.hyundai-motor.com
      Service	         blu-members	                 www.blumembers.co.kr                   ETC	            Marketing forum          www.marketing-forum.co.kr
      	                global service way	          www.globalserviceway.com                               Young Hyundai            www.young-hyundai.com
      Motor show	      2008 Motor show	             2008motorshow.hyundai-motor.com                        Woman Hyundai            www.woman-hyundai.com
      	                2007 Motor show	             2007motorshow.hyundai-motor.com                        Venture plaza            www.hkventure.co.kr
CONTACT INFORMATION
Environmental Management Strategy Planning Team
Mail:     231 Yangjae-Dong, Seocho-Gu
          Seoul, Republic of Korea (137-938)
TEL:      82-2-3464-2015
FAX:      82-2-3464-8796
e-mail:   environ@hyundai-motor.com
Website: www.hyundai-motor.com
CorporateRegister.com 05/08/2008

								
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