Hyundai becoming a valuable brand, says CEO John Krafcik

Article by Christian Andrei, on April 16, 2012

Hyundai Motor America is undergoing many changes, according to Jesse Snyder, a senior writer for Automotive News. The blog pointed out that CEO John Krafcik has been talking about making the transition from a "value brand to a valuable brand." Hyundai has the lowest cash incentives among automakers and it also offers the second lowest discount from sticker prices.

However, Snyder says that there is one other transition in how Hyundai’s business is being run. Hyundai grew by as much as 15 times in 15 years, from 0.7 percent in the U.S. in 1996 to 5.1 percent in 2011. Nevertheless, Snyder regards Hyundai’s behavior to be “staid,” showing a preference for “basic blocking and tackling over trick plays.” In 1986, Hyundai entered the U.S. market with the very affordable Excel.

It instantly got a 1.1 percent share in the U.S. market in the first year. However, Excel sales dropped radically the next year as owners reported their Excels to have defects. When the crisis arrived about 10 years later, banks wouldn’t approve of Hyundais since so many of their customers stopped paying when their powertrains failed on the second year.

Hyundai embarked on a quest to achieve top quality to defend itself but it turned out to be its greatest strength. Whether by luck or with amazing foresight, it also didn’t commit the mistakes that others made. For example, Hyundai didn’t over-expand capacity too much like what Daewoo had done.

It also didn’t jump onto the big U.S. pickup problem like what Nissan Titan represents. It didn’t do the premium channel overreach for which examples are plenty: Mazda Amati, Daimler Maybach, Ford Jaguar/Land Rover/Aston Martin, etc. Some believe that Hyundai, a small-vehicle value specialist, was lucky since it moved up and beat the Japanese brands when the economy declined and fuel prices rose.

But there are those who give Hyundai management more credit, saying that it saw where the market was headed. Hyundai is now the most fuel–efficient U.S. brand and to do that, it stepped away from old-technology powertrains. Snyder attributes Hyundai’s growth to its being able to set and pursue consistent goals. [source: Autonews]

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