The much-anticipated spin-off to Hyundai Motor Company from the Hyundai Business Group will proceed soon following the announcement by the Business group that founder Chung Ju-Yung will sell a 6.1 per cent stake in the motor operation.

The Korean Government had blocked the spin-off until the founder reduced his shareholding in Hyundai Motor from 9.1 per cent to three per cent or less in line with regulations. The Government saw the holding by Chung Ju-Yung as being an undue influence following his retirement from day to day management of the Group and its businesses.

Following on last week's record half-year results, the announcement by the Hyundai Business Group that the spin off will proceed is seen as a major step forward in the motor operation's independence.

The Business Group also announced that in addition to Hyundai Motor, Kia Motors, Hyundai Precision Industries and Hyundai Capital Services, the new Hyundai Motor Group will include four other companies. Hyundai Pipe, Hyundai Aerospace and two internet companies will also be included in the spin-off.

The automotive-centered group will be headed by current Hyundai Motors chairman, Chung Mong-Koo who masterminded the acquisition of Kia Motors in late 1998 and has since re-structured the management and financing of the automotive companies.

Chairman Chung Mong-Koo also led the negotiations leading to a global alliance with Daimler Chrysler which was announced earlier this summer. That alliance included commitment to establish a commercial vehicle joint project and agreements to work together with Mitsubishi Motors – in which Daimler Chrysler holds a majority stake – to develop a new world car and to explore other product and commercial opportunities.

Following the announcement by Hyundai Business Group, Korea's Fair Trade Commission stated that it would process an application for the separation of Hyundai Motors from the conglomerate as quickly as possible and it is thought the spin-off could be completed within a month.

The spin-off will allow the company to focus on the development of its automaking activities in line with Chairman Chung Mong Koo's stated aim of taking Hyundai-Kia into the ranks of the world's top five automakers by 2010.