Hyundai Wia is reviewing a plan to sell its defense business to affiliate Hyundai Rotem, in a move aimed at streamlining Hyundai Motor Group’s defense operations and boosting competitiveness, industry sources said Thursday.
The deal would transfer Hyundai Wia’s defense unit — which produces large-caliber artillery systems and generates about 400 billion won ($272 million) in annual revenue — to Hyundai Rotem, the group’s defense vehicle arm.
“We are reviewing various measures to strengthen the company’s competitiveness, but no specific details have been decided at this time,” said an official at Hyundai Wia.
Hyundai Rotem also said in a regulatory filing Thursday that it is reviewing various option but no decision has been made.
Industry sources say Hyundai Wia recently began working-level preparations for the sale of the business to Hyundai Rotem, with the aim to complete the deal within this year.
The move would mark another major divestiture for Hyundai Wia following the sale of its machine tools business in July last year. The company spun off the division into a separate entity, Wia Machine Tools, and sold it to a consortium led by Rylson Private Equity for 340 billion won ($231 million)
The divesture was seen at the time as part of Hyundai Motor Group’s broader strategy to shed non-core businesses and sharpen its focus on mobility and electrification.
Hyundai Wia’s defense unit is one of the company’s oldest businesses, dating back to its founding in 1976, and considered one of its more profitable operations. The division produces large-caliber artillery systems, including barrels for Hanwha Aerospace’s K9 self-propelled howitzers and main guns for Hyundai Rotem’s K2 tanks.
For Hyundai Rotem, which manufactures K2 tanks and armored vehicles, the acquisition could bring Wia’s core artillery technology and production expertise, strengthening its defense business. The move is also expected to give the company better flexibility in meeting delivery schedules.
The consolidation could also help the auto conglomerate to sharpen its competitiveness in the defense sector by centralizing related operations under Hyundai Rotem.
If the transfer proceed, Hyudai Wia is expected to focus more on new growth businesses such as robotics and thermal management systems for electric vehicles.
“This potential sale should not be viewed merely as a disposal of non-core assets, but a strategic relocation of capital, exiting low-growth businesses to reinvest in medium-to long-term growth,”said Yoo Ji-woong, an analyst at Daol Investment & Securities.
Yoo added that the company has revealed plans to ramp up strategic investment over the 2026-28 period.
“Capital is likely to be directed primarily toward thermal management systems and industrial robotics,” he said, adding the divesture could fincance such investments.
sahn@heraldcorp.com
