Hanon Systems SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Shift towards electric and self-driving cars: Nowadays consumers around the globe, are moving towards sustainable and ecofriendly technology. This enthusiasm has led to the electrification of the automobile sector as well. Hanon Systems also, took a step forward to take up lead in the Electric Vehicle [EV] components sector. The company has been certified by the South Korean Industry Ministry for its water-cooled condenser designed for EVs. The ministry awarded New Excellent Technology [NET] certificate to the company for the condenser technology. The new condenser is believed to be 20% more efficient and lighter than the traditional condensers. It supports 800-volt rapid charging which is important for the future endeavors of EVs.

2. Expected growth in the automobile sector: As per a 2020 study conducted by McKinsey, it is estimated that demand for shared mobility would increase in the next decade till 2030. This could slightly affect the demand for personal vehicles. The study expects the demand for personal vehicle to grow but, at a lower rate. Nevertheless, increase in shared mobility would result in increasing demand for vehicles worldwide. This in return would imply to increasing production rate of automobiles globally. It is rather a purely win-win situation for Hanon Systems. Hanon Systems can still provide its energy management solutions to different vehicle types and in new market areas.

Threats

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Political

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Economic

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Social

1. Changing customer preferences and needs for automobiles: The automobile purchase patterns have changed with consumers' preferences wavering. In Jan 2021, the Korea Automobile Importers Association (KAIDA) released a report confirming that nearly 63% of total imported cars sold in Korea were bought by individuals. Of which the highest buyers were in their 30s followed by those in 40s and very few in 50s and 60s. In another research by Forst and Sullivan, the pattern of buying vehicles in India was driven by varying preferences and behaviors. The key finding included people of 35+ fancy personal cars, 85% on average prefer buying automobiles, 60% of millennials choose buying online and a minimum of 40% are looking forward to buying new vehicles by the end of 2021. Hence, such swaying customer preferences and advancing needs for automobiles are low hanging fruits for Hanon Systems.

2. Moving towards shared mobility services: The global Shared Mobility Market is expected to grow at a CAGR of 15.42% from 2019 to 2026 - As per a report by Facts and Factors. This growth is driven by various factors including increasing demand for personal mobility, rising fuel prices, urge amongst consumers to reduce environmental impact, urbanization, increasing use of smartphones, internet penetration, increasing cost of vehicle ownership, stringent targets to reduce CO2 emissions, and much more. This trend may dampen the growth of global vehicle sales but shall not reverse it.