By Yoon Ja-young
The country's Fair Trade Commission (FTC) rejected Hyundai Mobis' self-corrective measures for fair trade with its dealers. The auto parts distributor will face regulatory sanctions if it fails to come up with better plans.
The FTC announced Monday it determined that the self-corrective measures submitted by Hyundai Mobis for its abuse of dealers are not effective enough.
The auto parts maker set up "excessive sales targets" between 2010 and 2013, and its employees unilaterally allocated or demanded dealers purchase more than they needed. The FTC determined it was a "forced sale."
To avoid the FTC penalty, Hyundai Mobis suggested it would submit self-corrective measures to compensate dealers and improve its trade practices. The FTC may close the case by accepting the proposal.
The auto parts maker had submitted its plan in June, in which it suggested compensation for the dealers. It included contributing an additional 10 billion won to the fund for mutual growth with dealers and expanding support for them such as helping in the operation of computer systems and providing management consulting.
It also suggested penalizing employees who forced dealers to increase their purchases.
The FTC, however, determined Hyundai Mobis' plan was not enough to effectively compensate dealers or fundamentally improve transactions between the headquarters and the dealers.
It pointed out Hyundai Mobis had been informed that its excessive sales target is the root of the problem at previous meetings between headquarters and the dealers. It had suggested penalties on employees as the solution back then, but its unfair practices continued.
The FTC said Hyundai Mobis should analyze the fundamental causes and prepare comprehensive measures to improve.
Following the FTC rejection, however, Hyundai Mobis immediately suggested it would come up with better self-corrective measures. The FTC announced it has allowed Hyundai Mobis to submit improved plans by Oct. 27.
Hyundai Mobis is the world's sixth largest OEM parts suppliers as of 2015. It has over 25,000 employees in Korea and abroad.
Rooting out headquarters' abuse of dealers and franchise shops is one of the top priorities by FTC Chairman Kim Sang-jo. He also stressed the FTC will concentrate on rooting out unfair practices in the country's top four conglomerates, including Hyundai Motor Group to which Hyundai Mobis belongs.
Hyundai Motor Group also has to get rid of its circular shareholding system, in which Hyundai Mobis holds shares of Hyundai Motor, Hyundai Motor has shares of Kia Motors and Kia Motors has a stake in Hyundai Mobis.
The country's Fair Trade Commission (FTC) rejected Hyundai Mobis' self-corrective measures for fair trade with its dealers. The auto parts distributor will face regulatory sanctions if it fails to come up with better plans.
The FTC announced Monday it determined that the self-corrective measures submitted by Hyundai Mobis for its abuse of dealers are not effective enough.
The auto parts maker set up "excessive sales targets" between 2010 and 2013, and its employees unilaterally allocated or demanded dealers purchase more than they needed. The FTC determined it was a "forced sale."
To avoid the FTC penalty, Hyundai Mobis suggested it would submit self-corrective measures to compensate dealers and improve its trade practices. The FTC may close the case by accepting the proposal.
The auto parts maker had submitted its plan in June, in which it suggested compensation for the dealers. It included contributing an additional 10 billion won to the fund for mutual growth with dealers and expanding support for them such as helping in the operation of computer systems and providing management consulting.
It also suggested penalizing employees who forced dealers to increase their purchases.
The FTC, however, determined Hyundai Mobis' plan was not enough to effectively compensate dealers or fundamentally improve transactions between the headquarters and the dealers.
It pointed out Hyundai Mobis had been informed that its excessive sales target is the root of the problem at previous meetings between headquarters and the dealers. It had suggested penalties on employees as the solution back then, but its unfair practices continued.
The FTC said Hyundai Mobis should analyze the fundamental causes and prepare comprehensive measures to improve.
Following the FTC rejection, however, Hyundai Mobis immediately suggested it would come up with better self-corrective measures. The FTC announced it has allowed Hyundai Mobis to submit improved plans by Oct. 27.
Hyundai Mobis is the world's sixth largest OEM parts suppliers as of 2015. It has over 25,000 employees in Korea and abroad.
Rooting out headquarters' abuse of dealers and franchise shops is one of the top priorities by FTC Chairman Kim Sang-jo. He also stressed the FTC will concentrate on rooting out unfair practices in the country's top four conglomerates, including Hyundai Motor Group to which Hyundai Mobis belongs.
Hyundai Motor Group also has to get rid of its circular shareholding system, in which Hyundai Mobis holds shares of Hyundai Motor, Hyundai Motor has shares of Kia Motors and Kia Motors has a stake in Hyundai Mobis.
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