Hyundai Rotem to Make K2 Main Guns In-House, Acquires Hyundai Wia Defense Business for KRW 358.4 Billion

Unifying Tank and Main Gun Production...Strengthening Export Competitiveness
Assuming K9 Gun Barrel Supply Contract...Diversifying Defense Business
Retaining All Employees...Acquisition to Be Completed in the First Quarter of Next Year

Hyundai Rotem is acquiring Hyundai Wia’s defense business for approximately KRW 358.4 billion, bringing production of the K2 tank under a unified system, from its hull to its main armament, the main gun. The strategy aims to strengthen export competitiveness by improving cost competitiveness through in-house production of key components and expanding the range of items localized overseas. At the Hyundai Motor Group level, the move signals the start of a full-scale business reorganization to concentrate defense capabilities currently spread across affiliates at Hyundai Rotem.

The Middle Eastern variant of the K2 tank, currently being modified and developed by Hyundai Rotem in cooperation with its partners. Hyundai Rotem

Hyundai Rotem disclosed that its board of directors met on October 19 and decided to acquire the entire business of Hyundai Wia’s Special Business Division, including its assets, liabilities, employees and intellectual property rights, for KRW 358.386 billion. The acquisition price represents the division’s business value of KRW 480 billion, excluding real estate such as land and buildings. Hyundai Wia plans to complete the transaction by the first quarter of 2027, following a shareholders’ meeting in November 2026.

The key to the acquisition is the vertical integration of the K2 tank production system. Hyundai Rotem has been responsible for developing and manufacturing the K2 tank, while sourcing its 120-mm main gun, a key weapon system, from Hyundai Wia. Once the acquisition is complete, a single company will be able to manage everything from production of the completed tank to manufacture of its main gun.

Unifying tank and gun production is expected to improve efficiency in coordinating production schedules, quality control and cost reduction. In particular, as overseas export volumes increase, a stable supply of key components and cost competitiveness are major factors that will determine whether the company secures additional orders. Hyundai Rotem plans to strengthen its competitiveness in the global market by securing cost advantages through the acquisition and expanding the range of items localized overseas.

Another notable aspect is that Hyundai Rotem will add artillery manufacturing to its existing tank business. Hyundai Wia’s Special Business Division produces not only the main gun for the K2 tank but also 155-mm gun barrels for Hanwha Aerospace’s K9 self-propelled howitzer and naval guns for ships. A Hyundai Rotem official said the company plans to assume all of the division’s contractual obligations, including its existing gun-barrel supply agreement with Hanwha Aerospace.

As a result, Hyundai Rotem will supply main guns for the K2 tanks it manufactures while also securing a business supplying artillery to other defense companies. If overseas exports of the K9 self-propelled howitzer expand, the gun-barrel supply business could also present further growth opportunities.

The profitability of the business being acquired is also worth noting. Industry estimates put the annual revenue and operating profit of Hyundai Wia’s Special Business Division at approximately KRW 400 billion and KRW 40 billion, respectively. With an operating margin of about 10%, the business will give Hyundai Rotem a stable revenue base. However, revenue from K2 main guns previously supplied to Hyundai Rotem will become intercompany sales after the acquisition, so the division’s total revenue will not translate into an equivalent increase in consolidated revenue.

At the Hyundai Motor Group level, the division of responsibilities between the defense and future mobility businesses is expected to become clearer. Hyundai Wia’s Special Business Division has been the company’s founding business since its establishment in 1976. The sale will allow Hyundai Wia to focus its resources on future businesses such as automotive thermal management systems and robotics, while Hyundai Rotem pursues vertical integration and business diversification in its defense business.

Hyundai Rotem plans to retain all employees of the Special Business Division and relocate its production facilities after the acquisition process is complete. The company intends to reorganize its production system following the integration to improve operational efficiency. However, the additional investment required for the factory relocation and the specific relocation schedule have not yet been disclosed.

The acquisition is also significant because it comes as Hyundai Rotem continues to grow on the back of defense exports. Hyundai Rotem’s cumulative revenue for the first three quarters of 2026 was KRW 4.6842 trillion, up 11.2% from the same period a year earlier. Its total order backlog stood at KRW 29.142 trillion at the end of the third quarter.

The company also has ample financial resources. Hyundai Rotem had KRW 1.8787 trillion in cash and cash equivalents at the end of the third quarter, more than five times the acquisition price. Its borrowings amounted to KRW 145 billion.

A Hyundai Rotem official said, “Through this acquisition, we plan to strengthen cost competitiveness through vertical integration of our defense business and boost export competitiveness by expanding the range of items localized overseas.”

This content was produced with the assistance of AI translation services.