(Adds details, Elliott holdings in last paragraph)
Nov 13 (Reuters) - U.S. hedge fund Elliott on Tuesday renewed pressure on South Korea's Hyundai Motor Group, urging it to return $10.6 billion of capital to shareholders and consider selling non-core assets, including costly land it bought in Seoul for new headquarters.
The call came after Hyundai Motor posted a sharp drop in third-quarter earnings in late October, hitting its shares and dashing hopes of better shareholder returns.
In May, Hyundai Motor Group, backed by founding family members, shelved an ownership restructuring plan that would have given the son of its aging chairman more control of the conglomerate, following opposition from Elliott.
In September, Elliott, run by billionaire Paul Singer, made a fresh proposal for Hyundai's ownership structure and suggested adding new independent directors to its respective boards.
In an open letter on Tuesday, Elliott called on Hyundai to return up to 8 trillion won ($7.1 billion), or 31 percent of its market value, and for its parts affiliate Hyundai Mobis to return 4 trillion won, or 22 percent of its market capitalisation, to shareholders, preferably by share buybacks.
Elliott said Hyundai Motor Group, despite having "excess capital," lagged behind peers such as General Motors and Toyota Motor in shareholder returns, citing a report by consultancy Conway MacKenzie.
Elliott asked Hyundai to review its non-core assets, "with an eye toward divesting assets that are either underutilized or contribute low returns."
It said the assets included land Hyundai bought in 2014 for 10.55 trillion won, more than triple the appraisal value, to build headquarters in the affluent district of Gangnam in Seoul.
"Given the cost of delay and the lack of progress made thus far, Elliott also reserved the right to put forward the various recommendations as shareholder resolutions in the next general meetings," it said.
Elliott, which challenged Samsung Electronics in 2016, called on Hyundai to join the South Korean electronics giant in diversifying its board, improving shareholder returns and addressing a complex shareholding structure.
"Hyundai Motor Group is now the only major corporate group in Korea with an unreformed legacy shareholder structure and no plan to address it," Elliott said in a statement on Tuesday, saying the group's "reform efforts have stalled."
Hyundai Motor could not immediately be reached for comment.
In April, Elliott said it owned more than $1 billion worth of shares in three Hyundai group companies - Hyundai Motor Co, Kia Motors Corp and auto-parts maker Hyundai Mobis Co Ltd.
Elliott said on Tuesday it held more than 2.5 percent of common stock in Hyundai Mobis, 3 percent in Hyundai Motor and 2.1 percent in Kia Motors. Shares of Hyundai Motor have slumped more than 30 percent this year.
$1 = 1,133.2800 won Reporting by Hyunjoo Jin in SEOUL, Sanjana Shivdas and Arunima Banerjee in Bengaluru; Additional reporting by Liana Baker in NEW YORK and Ju-min Park in SEOUL, Editing by Sai Sachin Ravikumar, Arun Koyyur and Mark Potter