Toyota union puts productivity first; Hyundai Motor union demands bigger share of profits

Toyota and Hyundai Motor face mounting pressure from Chinese automakers and Tesla

Toyota cuts this year's operating profit outlook by more than 20%

Hyundai Motor's global sales fell in the first four months of this year

South Korean and Japanese automakers' unions diverge sharply in how they respond to the industry's transition

Toyota union emphasizes quality, productivity and AI capabilities

Hyundai Motor union clashes with management over bonuses, hiring and robot deployment

A Toyota logo is displayed at a Toyota Mobility Tokyo showroom in Tokyo on May 18. [Reuters]

As the competitive landscape of the global auto industry shifts rapidly, the unions at South Korea's and Japan's flagship automakers are diverging starkly in how they respond. Facing a common set of pressures — an aggressive push by Chinese automakers and Tesla, rising raw material costs, and the twin transitions to electrification and AI — Toyota's union has led with calls for productivity gains and operational reform, while Hyundai Motor Co's union has put bonus increases, higher allowances and new hiring at the top of this year's wage negotiations.

According to a report titled "Implications of Toyota's Labor-Management Relations" released Sunday by the Korea Employers Federation, Toyota's labor and management held four joint council sessions this year to discuss how the company can survive a period of sweeping change in the auto industry.

At the first of those sessions, Toyota union chief Keisuke Kito said frequent production stoppages and project delays caused by quality problems "have been causing enormous trouble not only to our customers but to the 5.5 million people working in the automotive industry." He said the union must "break free from the way things have always been done and change on our own."

Toyota confronts the crisis: earnings and quality under pressure at once

Toyota, long regarded as a profitability powerhouse, is under pressure on multiple fronts. Last year its sales rose 5.5 percent from the previous year to 50.68 trillion yen, but operating profit fell 21.5 percent to 3.77 trillion yen. The company has since cut its operating profit outlook for this year by 20.3 percent to 3 trillion yen.

Monthly sales declined for three consecutive months through April, partly due to disruptions in the Middle East, where exports plunged more than 90 percent. U.S. tariffs, rising raw material costs, exchange rate swings and the financial burden of investing in electrification and software have added to the strain. A string of certification fraud cases — involving compact car approval tests, diesel engine certification, crash tests and a Prius recall — has also weighed on the company's quality reputation.

Rather than placing the blame for these problems solely on management, the union said delivering good products to customers on time is the very essence of the company's survival.

Hyundai Motor Group Chairman Euisun Chung and Toyota Motor Chairman Akio Toyoda greet each other at the Hyundai N x Toyota Gazoo Racing Festival held at a speedway in Yongin, Gyeonggi Province, in 2024. Both Hyundai Motor and Toyota are grappling with sales and profitability pressures during the global auto industry's transition, but analysts say their unions are responding in very different ways. [Hyundai Motor]

Productivity over distribution: the union that put reform on the table first

Productivity improvement was a central theme throughout the sessions. At the fourth joint council meeting, union chief Kito said the union was "resolved to fundamentally raise productivity, translate daily actions into tangible results, and build competitiveness for the future." He added that continuing with current practices would only push fixed costs higher, and acknowledged that "we have lacked the resolve to change ourselves and make our own decisions."

The Korea Employers Federation described this as a declaration by Toyota's union to improve inefficiencies in its own working practices — prioritizing productivity gains and cost reduction before making any demands for profit sharing. The federation said the stance reflects a shared understanding that a high-cost structure unsupported by productivity ultimately burdens both labor and management.

The two sides also took a notably different view of AI. Toyota union Vice Chairman Daiki Akiyama said workers should not treat AI merely as a tool, but should "confront it with the resolve to reinvent everything — asking what skills I can offer and what my own added value is." The message went beyond concern about job displacement: union members must build individual capabilities and create value that machines cannot replicate.

Bonuses, hiring, working hours: Hyundai Motor's wage talks widen in scope

In South Korea, meanwhile, Hyundai Motor's labor and management have been locked in a tug-of-war over bonuses, pay structure, shorter working hours and job security. The union is demanding a monthly base pay increase of 149,600 won (about $100), a performance bonus equal to 30 percent of last year's net profit, and a raise in allowances to 800 percent of monthly base pay. The union has also called for a full monthly salary system, a four-and-a-half-day workweek, a retirement age extension tied to the national pension eligibility age, and new hiring to fill vacant positions.

Management has pushed back on the allowance increase and the demand for shorter working hours. The company says expanding allowances would create significant ripple effects across its affiliates and raise broader social concerns, and that a four-and-a-half-day workweek could disrupt production of roughly 160,000 vehicles a year. With the company also navigating the shift to electric vehicles, factory restructuring and the introduction of robots, management says it cannot simultaneously accept new full-time hiring, a retirement age extension, shorter working hours and higher fixed pay.

Hyundai Motor union members hold a rally to kick off this year's wage negotiation campaign on the lawn in front of the main building of the Ulsan plant on the afternoon of May 13. [Yonhap]

Slowing sales, tariff burden: Hyundai Motor also fights to defend profitability

Hyundai Motor's global sales fell 3.9 percent in the January-to-April period compared with the same period last year. The earnings outlook is also challenging. According to Kiwoom Securities, sales this year are expected to reach 188.74 trillion won (about $126 billion), up 1.3 percent from last year, but operating profit is forecast to slip 2.2 percent to 11.21 trillion won (about $7.46 billion). Even as sales slow, the company faces overlapping pressures — the cost of transitioning to electric vehicles, U.S. tariffs, investment in new businesses and rising labor costs — making the defense of profitability a central challenge.

Job security in the era of new technologies is another flashpoint. The union argues that as the company shifts toward electrification, software-defined vehicles, AI and robotics, the employment and working conditions of existing union members must be protected. Management counters that it cannot guarantee job security without first securing competitiveness and profitability in new businesses. As Hyundai Motor Group expands its use of automation technologies including humanoid robots, the gap between labor and management over how to reassign and retrain existing workers is widening.

Hyundai Motor's labor and management representatives sit across from each other at the opening session of this year's wage negotiations at the Ulsan plant on May 6. [Hyundai Motor]

Cooperation, not confrontation: employers' federation urges 'productivity first'

The Korea Employers Federation said South Korea's labor-management relations are too focused on short-term profit sharing, and called on domestic unions to learn from Toyota's example of putting productivity first before making distribution demands.

As Toyota's joint council sessions wrapped up this year, both labor and management agreed to move away from the traditional "shunto" — the annual spring wage offensive — toward what they called "shunko," a model in which labor and management share common challenges and work through them together. Toyota Executive Vice President Yoichi Miyazaki said: "What we are doing is not shunto — fighting over wages every spring — but shunko, where labor and management share challenges, engage in thorough dialogue, and push through together."

Korea Employers Federation Senior Vice President Lee Dong-geun said cases of labor demanding excessive profit sharing — such as a fixed percentage of operating or net profit — are on the rise in South Korea. "The fact that even the world's undisputed No. 1 automaker by sales and operating profit has seen its union step forward, amid unprecedented crisis, to commit to thinking through a survival strategy first — that carries significant implications for labor-management relations in South Korea," he said.

Hyundai Motor's union has demanded the company hire more full-time workers instead of deploying robots, a position that has put employment structure alongside wages as a central issue in this year's negotiations from the outset. Management has rejected the union's demand for an 800 percent allowance and warned that a four-and-a-half-day workweek would cause production shortfalls of 160,000 vehicles annually. The two sides have also failed to narrow their differences over the union's demand that 30 percent of net profit for the period be distributed to members, with management citing concerns about shareholder backlash.