SEOUL -- Hyundai Motor this week surprised investors with moves to diversify its executive leadership team in what some analysts hope may signal that pressure from activists to force change at the country's powerful chaebol conglomerates may be starting to have an effect.
South Korea's second-largest conglomerate has promoted a number of foreign executives to senior roles and trimmed the number of long-standing vice chairmen on the board.
Albert Biermann, the German born former head of Hyundai's high performance division, was named as head of the group's research & development division. It is the first time a non-Korean will head the Seoul-based company's research unit. Biermann had worked as vice president for BMW before joining Hyundai in 2015.
Luc Donckervolke, a Belgian auto designer, was promoted to chief design officer, while Thomas Schemera, a German engineer, was appointed to lead the company's product strategy division. Schemera moved to Hyundai earlier this year from BMW.
"Hyundai appointed foreigners to the heads of its R&D and strategy divisions. It was a very surprising decision," said Esther Yim, an analyst at Samsung Securities. "The generational shift in the management is also raising expectations for changes in strategy, including streamlining [Hyundai's] redundant business structure."
Yim suggested that the chaebol merge some affiliates that have similar businesses,
The changes come as U.S. activist Elliott Management, steps up its campaign for improved governance and restructuring at Hyundai. The U.S. hedge fund, which owns 3% of Hyundai Motor, demanded last month that Hyundai add new independent directors to the board. The fund has criticized the company for delivering insufficient shareholder value and earlier this year defeated company proposals for a restructuring that would have strengthened the hand of the company's heir apparent, Vice Chairman Chung Euisun, 48, the son of Chairman Chung Mong-koo.
Some industry analysts speculated that even though the changes announced this week signal a change of approach they could still enhance Chung Euisun's influence over the group by reducing the number of vice chairmen who served with his father.
"The shuffle shows that the company is now under Chung Euisun's leadership," said Park Ju-keun, head of CEO Score, a corporate analysis company. "The old boys are being replaced by young executives who are close to him."
But experts also say the automaker needs to suggest a new vision for a company whose business model to sell cheap cars by cutting costs is no longer working.
Earlier this week Hyundai announced it would invest 7.6 trillion won ($6.8 billion) in fuel cell electric vehicles. More was needed, analysts said.
"It's time for Hyundai to show a clear message to the market of what its next step is," said Park at CEO Score. "It has focused on lowering costs by simplifying value chains, but it has reached a marginal point now."
Yim at Samsung Securities said Hyundai should follow global rivals such as Toyota and General Motors, who are getting ready to streamline ranges and production lines as they prepare for next-generation vehicles, such as autonomous driving and electric cars.
"Hyundai Motor Group should downsize its businesses to reverse its [poor] earnings trend," Yim said.