CIA 3(B) Individual Assignment

A Study on
Latest trends in sustainability in Automobile Industry.

By

JYOTHISH J B

REGISTER NUMBER
2027718
SECTION : 2MBA J

OPERATIONS MANAGEMENT

SUBMITTED TO:
PROF: SHREEKANT DESHPANDE

MBA PROGRAMME
SCHOOL OF BUSINESS AND MANAGEMENT
CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE

December 2020

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S.No. Particulars Page No.

1 Introduction 3

1.1 Sustainability in Automobile industry 3

2 New emerging trends at Hyundai 4

3 The relevance of sustainability practices in Automobile industry 6

4 Organisational challenges faced by Hyundai 7

5 Managerial implications on these changing environments 7-8

6 Concept relevance and recency 8-9

7 Conclusion 10

8 Bibliography 11

Table of Contents

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 A study on the latest trends in sustainability
1. Introduction
Economic sustainability can be defined as the orientation of the company to use a
variety of strategies to use all the resources available to address current business
needs, maintain economic stability, and establish the foundations for the company's
further successful growth in the competitive environment. For any business to grow
and prosper, it is important to maintain and develop its potential sustain its action.
Sustainability in operation management includes mainly social sustainability,
economic sustainability and environmental sustainability. Social sustainability has
been about identifying and understanding company impacts on individuals, both
favourable and unfavourable (Mabe, 2016). The reliability of the relations and
collaboration of a company with its stakeholders is essential. The organisation has a
direct influence on its stakes like the employees, customers, the public, potential
stakeholders etc. (Corbett, 2009 ) . Economic sustainability facilitates the s a business
organization to deliver products and services that result in profit. Economical
sustainability eventually leads to organisational profitability (Caroline Rodrigues Vaz,
2017). Environmental sustainability helps a company, neither compromising nor
disturbing the ecological balance, to deliver products and services.
1.1 Sustainability in Automobile industry
With global climate changes and associated degradation increasing, sustainability has
become a necessity amongst the automotive organizations. Customers are also
changing. The costs associated with environmental damages engraved eco-
friendliness into the consumer’s purchase decisions with considerable amount of
weightage. Ethical consumerism is gaining traction, especially among millennials,
who are more eco-conscious. (Irani, 2017). Stakeholders, like government, customers
and even investors in these automotive organizations, are pushing them to offer
products that differ from the usual inconsiderate status quo. This had comprehensive
implications for the trade, that additionally must improve its property efforts whereas
creating vital progress. The automotive trade has been below huge pressure from
governments and society to follow a a lot of property model over the last few years

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2. New emerging trends at Hyundai
• Hydrogen-fuelled future:The climate change has become a worldwide threat,
greenhouse gas emissions and industrial waste are significantly affecting the Earth's
ecosystems. The issues of environmental degradation have led to rapid changes driven
by the goal of inhumane economic growth. Hydrogen is the extreme eco-friendly
energy that neither gets to be exhausted nor emits pollutants. The ‘FCEV Vision
2030’, which Hyundai Motor Bunch declared in 2018, is Hyundai’s guide for driving
a hydrogen-based society. Fuel cell electric vehicles (FCEVs) filter the air from fine
dust and other contaminants and more they are on the street.
• Solar powered automobile:
Across the world, the automotive industry faces strict environmental regulations.
Therefore, eco-friendly technology must be protected to ensure sustainable
development for businesses and society as a whole. In 2018, Hyundai created a solar
charging system marking a revolution that turned an environmental risk into means
for sustainable growth and progress. Solar charging system is a way of charging
batteries by using solar panels installed on the roof of vehicles. Although not used as
the vehicle’s main power, solar power is used in charging batteries of eco-friendly
vehicles or used as an auxiliary source of energy for internal combustion engine
vehicles (ICEVs).

Figure 1

For eco-friendly cars, Hyundai will begin mass-production of a first-generation

silicon-type solar roof, followed by a second-generation semi-transparent solar roof
for ICEVs and a third-generation lightweight solar-lid vehicle body system. Solar roof
systems will offer customers with benefits of another dimension, including not only

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 higher fuel efficiency and lower fuel consumption, but also driver convenience and
customer desire to be eco-conscious.
• Development of solar charging system
Hyundai unveiled its new solar charging technology in October 2018, installing solar
panels on vehicle roofs to charge batteries. This system offers auxiliary power to
charge the batteries of eco-friendly vehicles or boost the power of ICEVs, rather than
acting as the main power source.
• Reducing GHG Emissions
Hyundai is striving to reduce its GHG (full form) in cooperation with various
communities to counter the climate change. In addition to the development of
environmentally sustainable vehicles, energy consumption is decreased at all business
sites, in particular manufacturing facilities, including the construction of high-
performance infrastructure and increased efficiency at all business sites.
• Safety and Quality Innovation
Hyundai’s quality-centred strategy is based on manufacturing “zero-defect vehicles
with no breakdowns”, and customer-focused quality management focuses on this
objective. They have shaped a gather committed to safety features that plays an
important part, beginning with vehicle creation, within the implementation of
precautionary performance operations. With respect to primary avoidance, early
change, and early steps to be undertaken. This will lead to customer satisfaction
Hyundai also has aimed at providing security issue innovation by introducing a state-
of-the-art driver assistant that really senses the objects around the car and alerts the
driver to any vulnerable or possible dangerous incidents.
• Technologies that use renewable energy
Hyundai introduced photovoltaic power generation technology that could reduce the
Greenhouse gas emissions in their vehicle. Hyundai’s Sonata Hybrid 8th gen model,
impresses with a solar roof which facilitates the car to run for 1300 km and this
vehicle’s photovoltaic power also reduces considerable amount of greenhouse gas
emitants. Adding to this efficiency gain, the solar roof has led to a reduction of green
house has emissions by around 100kg of CO2eq on an estimated annual basis.
• Reducing the use of hazardous substances

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 Hyundai is designing cars that can be operated safely by consumers without thinking
about toxic chemicals. they are improving the inspection at each point so that the
customers are protected from the hazardous vehicles while they are inside the car
• Recycling waste resources
Hyundai is developing a recycling system for the recycling of resources to allow the
reuse of parts used in products and to generate additional value. It is created by an
eco-friendly processing/reusing network of end-of-life vehicles in which recyclable
components are collected from end-of-life vehicles and subjected to an eco-friendly
method of recycling so that they can be used in the production of new vehicles. This
system is currently limited to iron and non-ferrous metals, but are extending its scope
to include non-recyclable items, including plastics, rubber, glass, and seats.

3. The relevance of sustainability practices in Automobile industry

Sustainability can be defined as a growth which would meet the needs of today
without sacrificing the needs of the future generation. Sustainable development
requires fulfilling a number of conditions: sustainability of the overall balance,
protection for the environment and prevention of the loss of natural resources. (Cioca,
Ivascu, Rada, Torretta, & Ionescu, 2015). Automotive industry could be associated
with the large workforce involved, overcapacity in production, high penetration of the
sector, huge fixed costs along with the need to continuously manufacture and provide
necessary services.
Hyundai aims to adapt to strict environmental policies across the country and to the
rapid development of the environmentally friendly automotive industry. Automobile
producers use a huge amount of energy and emit high amounts of greenhouse gases
(GHG) because of the nature of the automotive industry. Therefore, by speeding up
the production and development of environmentally friendly vehicles and by
improving the fuel productivity of fuel cells and minimising the ecological
consequence of the cars. (Lucian-Ionel Cioca, 2019) The Global Management Center
for Energy and Greenhouse Gas was formed and it is confronting the constant
fluctuations in the businesses that includes renewable energy and developing and
expanding the hydrogen infrastructure.

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4. Some of the organisational challenges faced by Hyundai are:
• Technical problems:
Inventing and implementing suitable technologies that allow for greater control or
mitigation of GHG emissions, thereby mitigating environmental damage even in
times of high economic development and growth. And, develop technologies that will
enable industry to move significantly from non-renewable to renewable resources for
energy and materials. (Paulos, June 2008)
• Legislation and rules problems:
Challenge of having a voice on international stage while balancing industry and
regional government resistance to aggressive climate policy. Growing environmental
issues have reflected increased pressure from a range of groups of stakeholders:
• Regulators: Regulators are implementing more rigorous steps globally to reduce the
effect of cars on the environment. An rising number of cities are banning the entry of
high-emission vehicles.
• Investors and institutions of finance Financial companies are targeting sustainability
and climate change as corporate strategies in order to identify target companies.
• Lack of capital
Even though sustainability is desirable, it requires huge amounts of investment. The
automotive industry is complex in scale and, leading to its growing large-scale
production, can be identified by its vertical integration of supply chains and increased
efficiency. Many vehicles on the road are quite old, inefficient, and/or in poor repair
• Insufficient qualification and training
With the advancement on the technology, it is important to improve the technical
skills of the employees and the workers and help them to adapt to the changing
environment.

5. Managerial implications on these changing environments:

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• Managers struggle to promote sustainability in terms that are understood by the
organisation. Understanding sustainability in terms of marginal potential value,
controlled costs, or achieved efficiencies may help with the strategic plan.
• Short-term business planning and investment are frequently mis-matched with the
longer terms that sustainability strategies.
• There might be negligible or marginal support from the top management senior for
day-to-day sustainability managers and a lack of understanding of achieving
sustainable change needs transparency, authority and input on strategy.
• The managers may not be able to completely evaluate the operational efficiencies dur
to the changing technologies and also the division of the work
• Professional expertise and development: instructional methods, adequate training
budgets or career development strategies are often lacking among managers.
• It is based not only in a conceptual definition of value, but also in a variety of other
underlying problems., including:
ü Fear of transition
ü Inability to consider the potential impacts of inaction
ü Lack of awareness, expertise and ability of organisations

6. Concept relevance and recency

• Recycled EV waste battery ESS
Hyundai formed an alliance with the Korea Hydro & Nuclear Power (KHNP) to
develop and jointly manage a recycled waste battery energy storage system (ESS).
Hyundai and KHNP expect this partnership to build a cycle of eco-friendly energy,
from EV manufacturing to waste battery recycling.
• Establishing Mocean,
Mocean, the modern subsidiary of Hyundai Motor Group, is offering "Mocean Smart
Solution," an in-house integrated fleet management system developed by a smart
compact arrangement company in Korea. The new solution is an integrated solution
that aims to increase the operational efficiency of rental car companies based on
interfaces and driver assist management systems. The aim is to facilitate the logistics
industry by building a brand-new cooperative model with car rental companies and
firms, majorly the business firms that indulge in mobility businesses.
• Empowered employees

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 Hyundai focuses on creating a sound organisational culture, focusing on empowering
the primary asset and growth factor with greater work and responsibilities for
independence, as well as on communication for effective communication and growth.

• Next-generation weight reduction technology

Weight reduction is vital in the automotive industry for a vehicle’s weight has a
significant impact on engine performance and fuel efficiency. With the recent
introduction of eco-friendly vehicles and the increased use of new materials, the
emphasis is now increasing on weight reduction through the use of trying to cut
materials such as efficient solar steel, aluminium and reinforced plastic carbon fibre
(CFRP). They have applied advanced high strength steel to 53% of the car body, and
use aluminium in major parts such as the hood, tailgate, and chassis; this has resulted
in a reduction in the weight of the car and outstanding fuel efficiency of 22.4 km per
litre. Hyundai will continue to use new materials in its vehicles, and reduce their
weight in order to enhance eco friendliness.

4 Areas of Sustainability Management Commitments

1. Smart Mobility-based Customer • Improve user convenience and
Experience Innovation accessibility through car-to-life
technologies
2. Eco-friendly Value throughout the • Reducing the level of greenhouse
Entire Value Chain gases in production processes
3. Creating a Sustainable Supply Chain • Establish a sustainable business
ecosystem by managing ESG risks
throughout the supply chain
4. Building a Healthy Corporate Culture • Create a work environment which
strikes the right balance between work
and personal lives at all business sites

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Conclusion:

Sustainability de facto has become rooted in the decision making process of the automotive
industry majorly due to the rising threats and imputed future costs if they ignore the
environmental sustainability. Governments, customers and shareholders are now pushing
automobile companies to change their ways of living, community and commodities. This
would have much further effects for the industry. Increased demand has led to crop failures,
soil pollution, water contamination and large-scale environmental degradation, along with
weak environmental regulations (Srinivasan Krishnaswami, September 2013). A major
contribution to landfills, soil toxification, and water contamination has been rendered by non-
biodegradable waste from end-of-life use and production waste. Automobile industry requires
large quantities of electricity, water, and capital, thus raising the carbon footprint. It also
needs to step up its progress while making considerable progress (Rodríguez-Olalla &
Avilés-Palacios, 2017). Hyundai strives to improve the livelihoods of people around by
building itself to a smart, adaptive and sustainable company which does not fail to achieve
eco-friendly goals, not only in their end product and services, but throughout the entire
production process and by doing this they achieve a balanced corporate culture, where
attention is paid to both to its growth and progress and the welfare of the society in which
they interact.. Moreover, they have developed distinctive values and continue to drive
innovation towards a sustainable future, based on the unique shared value creation strategy
(CSV).

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References
1. Caroline Rodrigues Vaz, T. R. (2017). Sustainability and Innovation in the Automotive Sector:
A Structured Content Analysis.

2. Cioca, L.-I., Ivascu, L., Rada, E., Torretta, V., & Ionescu, G. (2015). Impact on CO2 Reducing
Conditions in Romania. Sustainability .

3. Corbett, L. M. (2009 ). Sustainable operations management: a typological approach. Journal

of Industrial Engineering and Management.

4. Irani, A. G. (2017). Sustainable Operations Management: design, modelling and analysis.

5. Lucian-Ionel Cioca, L. I. (2019). Sustainable Development Model for the Automotive Industry.

6. Mabe, D. S. ( 2016). Sustainable Development for Automobile Industry. International Journal

of Engineering Science and Computing.

7. Paulos, A. B. (June 2008). Futures of automobile industry and challenges on sustainable

development and mobility.

8. Rodríguez-Olalla, A., & Avilés-Palacios, C. (2017). Integrating Sustainability in Organisations:

An Activity-Based. Sustainability.

9. Srinivasan Krishnaswami, A. B. (September 2013). Sustainability in Automotive Industry.

10. https://www.capgemini.com/in-en/research/the-automotive-industry-in-the-era-of-
sustainability/
11. ukessays.com/essays/marketing/socially-responsible-practices-hyundai-motors-and-
tata-motors-marketing-essay.php
12. https://www.aiag.org/corporate-responsibility/environmental-sustainability
13. https://automotive.basf.com/news/read/3-automotive-sustainability-challenges-facing-
the-industry
14. https://www.hyundai.com/content/dam/hyundai/ww/en/images/company/sustainabilit
y/about-sustainability/hmc-2020-sustainability-report-en-v2.pdf

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