How Hyundai Rose from Laughing Stock to No. 3 in the U.S.

      May 27, 2011 08:54

      Hyundai Motor suffered such a poor reputation for vehicle quality at an early stage of its advance into the U.S. market that it was often made a laughing stock. The Excel compact, the first Hyundai to be exported to the U.S. in 1986, became synonymous with quality problems. U.S. media satirized the Hyundai name by saying it stood for "Hope You Understand Nothing's Driveable And Inexpensive."

      Things have changed dramatically since then. U.S. automotive news website TrueCar.com reported on Wednesday that Hyundai-Kia Automotive Group are expected to outperform Toyota and Honda this month with sales of 115,434 cars, accounting for 10.9 percent of the market and ranking No. 3 behind Ford and General Motors. For the first time since it started selling cars there 25 years ago, Hyundai-Kia are poised to become the best-selling imported carmaker in the U.S., beating all the top names such as Mercedes-Benz, BMW and Toyota.

      This achievement is largely due to Hyundai chairman Chung Mong-koo's dedication to quality. Since he took the position in 1999, Chung has been focused on improving quality, holding exclusive meetings on the matter. He even delayed the launches of new cars until he was satisfied with their quality.

      This decade-long drive has led to major changes. In 2004, Hyundai beat Toyota for the first time in an auto quality survey by marketing information services firm J.D. Power and Associates. For four straight years since 2008, the Hyundai Elantra (Avante in Korea) has been named the best compact car in the U.S.

      Radical design changes also accelerated Hyundai's growth. In 2006, the group hired renowned designer Peter Schreyer, who used to head the design team at Audi. He has restyled Hyundai and Kia models to critical acclaim.

      But experts say Hyundai could easily slip back to fourth or fifth place once Toyota, Nissan and other Japanese automakers return their production lines to full capacity in the second half of this year following the setbacks caused by the earthquake and tsunami in March.

      Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics and Trade said, "Hyundai-Kia will only be able to emerge as a truly global company if it establishes a global management system, boosts R&D investment and improves its relationship with its labor unions."

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