Headquarters of Hyundai Motor and Kia in Seoul / Courtesy of Hyundai Motor Group

Tier 1 suppliers, otherwise known as direct suppliers to Hyundai Motor and Kia, achieved combined sales of 90 trillion won ($63.45 billion) in 2023, which the automakers hailed as a landmark contribution to boosting the sluggish domestic economy, according to data from both firms released on Tuesday.

Despite this record-breaking performance, the figure for 2024 is expected to reach new heights, driven by the carmakers' strong export growth during that period.

The data was compiled from a total of 237 tier 1 vendors who supply Hyundai Motor and Kia directly. The total figure is expected to exceed 100 trillion won once earnings from the carmakers' tier 2 (suppliers' suppliers) and tier 3 suppliers (suppliers/subcontractors of tier 2 suppliers) are combined.

“The parts suppliers for Hyundai Motor and Kia have been able to increase their earnings on the solid sales growth of the two carmakers,” an official from Hyundai Motor Group said. “They also succeeded in diversifying their sales channels to other overseas markets by leveraging their status as key partners of the automakers.”

According to the carmakers, around 70 of the 237 Tier 1 suppliers are listed on the local stock market, and their combined market capitalization is gradually rising, now exceeding 17 trillion won.

Hyundai Motor Group highlighted their significant social and economic contributions, estimating that they generated production-related economic effects totaling 237.8 trillion won and helped create around 600,000 jobs.

The group manages a 2.37 trillion won co-prosperity fund to support its partners. For example, the company operates a 100 billion won supply chain stabilization fund for its tier 2 and tier 3 partners.

The Korean automaker is also supporting the aggressive expansion of its partners into overseas markets by building manufacturing facilities in key strategic territories, such as the United States, Europe, India, Brazil and Mexico.

In 2023, a total of 690 tier 1 and tier 2 suppliers of Hyundai Motor Group were doing business abroad.

“We have played a pivotal role in helping our partners operate their stable business in overseas markets by supporting consulting services, so they can gain permission for business operation abroad,” the official said.