Stopping Hyundai’s success? Not likely
The Hyundai phenomenon ranks as one of the most impressive business turnarounds of the past quarter century.
The company went from being both a punch line and punching bag to slugging it out for supremacy in the United States market.
Itâ€™s a symbol of how far the company has come that the compact Elantra sedan was voted North American Car of the Year for 2011, and Hyundai was No. 6 in US car and light truck sales last year. If you combined Hyundai and sibling Kiaâ€™s sales last year, theyâ€™d have been No. 4 overall behind Ford, Chevrolet, and Toyota, all of whom have pickup trucks as significant parts of their sales portfolios.
And thereâ€™s more growth in sight. Earlier this month at the Chicago Auto Show, Hyundai president and CEO John Krafcik introduced two variations of the Elantra sedanâ€”a two-door coupe and five-door GT (hatchback).
Joe Weisenfelder, executive editor of Chicago-based Cars.com, boils the Hyundai success story into a simple explanation.
â€œHyundai encapsulates the saying that industry executives always use; namely, â€˜Itâ€™s all about Product.â€™ They use Product in the singular and say â€˜Thereâ€™s no problem that Product canâ€™t solve.â€™ They always use that line, then they throw lots of money into the marketing budget instead,â€ he says.
â€œAnd Hyundaiâ€™s product has become very good. They worked relentlessly on their shortcomings and got to where they were doing pretty well with quality and features, but they still were a little behind on things like fuel efficiency and crash tests.â€
â€œLook at the most recent products, the Sonata and Elantra. Theyâ€™ve got good crash test results, and fuel efficiency is quite high. We can argue EPA ratings but the Elantra is rated at 40 miles per gallon on the highway with either manual or automatic transmission. Some of their competitors are advertising that 40 mpg, too, but often itâ€™s with a special version such as the Cruze ECO or Focus SFE,â€ says Weisenfelder.
Krafcik, the CEO, addressed those mpg figures in Chicago, calling attention to a Popular Mechanics test of the Elantra and Focus. â€œAt 55 mph the Elantra achieved 47.6 mpg and the (Ford) Focus 47.5,â€ he said. â€œThen, at 70 mph, the Elantra got 39.3 mph and the Focus 33.5.â€
While introducing the coupe and GT, Hyundaiâ€™s Michael Oâ€™Brien, vice president of product (that word again) and corporate planning, said that as American consumers consider downsizing for fuel economy, they still want premium content and choices.
Why a coupe? â€œSingles donâ€™t want a sedan because that screams â€˜family,â€™ â€ he says. â€œand driving enthusiasts will be attracted to the GT because it has European driving characteristics, emotional and streamlined styling and more interior space than competitors for an active lifestyle.â€
Krafcik didnâ€™t seem fazed by President Obamaâ€™s fleet goal of 54.5 mpg by 2025, noting that Hyundai had a 36.1 fleet average in 2011, a number that rose to 36.7 this January. â€œWeâ€™ve got six variants with 40 mph ratings,â€ he said, enumerating them: the Accent sedan and five-door, the Veloster, Elantra coupe and sedan, and Sonata hybrid.
It seems that Hyundai (thatâ€™s Hyundai-as-in-Sunday) has supplanted Honda as the reigning mpg champion.
Cars.comâ€™s Weisenfelder has an explanation.
â€œHyundai is keeping weight down. As a result, their vehicles tend to be a bit noisier inside. When Honda was the undisputed fuel efficiency leader, their vehicles had the same issue. They tended to favor fuel efficiency over noise reduction. The simple fact is that you have to add weight to cancel noise.â€
Some Hyundai news of note:
â€¢ The company last month announced a lifetime hybrid battery guarantee for the 2012 Sonata hybridâ€”an industry first. Itâ€™s reminiscent of the 10-year, 100,000-mile warranty the company used to attract buyers as it originally climbed back from irrelevancy. Says Hyundaiâ€™s Oâ€™Brien, â€œEven with all the hybrid vehicle options on the market today, there is still limited demand for these vehicles because of barriers to customer adoption such as uncertainty about the technology and performance. By offering this guarantee, Hyundai is addressing customer concerns and demonstrating our confidence in the durability of our product.â€
â€¢ Hyundai has been the presenting sponsor of the Tournament of Champions golf tournament in Maui for two straight years. The Hyundai Tournament of Champions is the PGA Tourâ€™s season-opening event. Important? Golf attracts an upscale viewer. The sponsorship tells where Hyundai is headed.
â€¢ Could it be more racing? Hyundai is in rallycross and drifting and had an electronic racing game in big lights in Times Square this winter.
â€¢ Upgraded dealership facilities? That is a major issue for the National Automobile Dealers Assn. Last week, the industry publication Automotive News reported Hyundai was said to be considering having its dealer network make room for a â€œGenesisâ€ sub-brand area in showrooms for the upscale Genesis and high-end Equus.
â€¢ Super Bowl ads. The best had Elantra â€œtooting its own hornâ€ on a joyride, but others touted the performance (power and handling) of Genesis and Veloster and employee togetherness.
Local dealer Herb Chambers has two Hyundai dealerships.
â€œHyundai is really doing well.
Weâ€™ve been with them since the beginning. In the beginning they were cheapâ€”both in price and the way they were made.
Over time, theyâ€™ve brought quality up to be comparable to everyone, including the domestics.
It used to be Honda and Toyota, and everyone else wasnâ€™t quite as good. That delta has closed.â€
Is that just dealer-speak?
â€œNo,â€ says Herb Chambers.
â€œThe domestics are as good. I know because we sell both and the residual values of American cars have gone up. Theyâ€™re holding their value much better. Before, we could give you a great deal on buying them new, but they werenâ€™t worth as much when it was time to trade. Now thatâ€™s turned around. Itâ€™s a level playing field. And Hyundai now matches them all.â€
And what about that Hyundai styling? Herb Chambers keeps an eye on whatâ€™s passing on the roads outside of his dealerships.
â€œI really like the styling of Hyundaiâ€™s cars, but sometimes Iâ€™ll see one and ask, â€˜Whatâ€™s that? A Mercedes?â€™ Then I realize itâ€™s a Hyundai.
Mercedes must be ready to strangle these guys because theyâ€™re interesting-looking cars.â€
Posted by Bill Griffith – Article Courtesy of:Â Boston.com