The Land of the Morning Calm shakes things up
In Depth: The Rise of Hyundai
A number of years ago, a Hyundai Motor Company executive was quoted as saying something along the lines of, “We want Hyundai to make the kind of car you want to buy, not the kind of car you have to buy.” As a teen, I distinctly recall the emergence of the South Korean automaker’s first offering in 1986, the Excel. Of all the auto show brochure photos I’d throw on my adolescent bedroom wall, the Excel was one that I made sure never made the cut. I’m pretty sure my copy remained unclaimed. And I’m Korean.
The Excel was dirt cheap, accomplished in its unattractiveness (even for the ’80s) and boasting the kind of reliability that would make North Korean weapons testers blush. The Excel actually set records in the states in 1986 and sold a whopping 126,000 cars in its first year and 264,000 in its second year, largely due to its incredibly low introductory price of $4,995 (consider that a Chevrolet Cavalier cost $6,706 in 1986). But the quality of the cars were soon discovered to be, let’s say, less than stellar. Despite the colossal sales numbers, so poor was the build that the carmaker’s reputation suffered and virtually fricasseéd Hyundais second chance at making a first impression as a quality automaker. There’s a reason why first generation Excels were hard to find on the road even five years later. Fast forward nearly a quarter century and you’ll find a selection of cars that turns heads, drives well and even merits applause for great design. Add in the fact that Hyundai’s growth and popularity illicits widespread industry envy, and you have a magic combination. But the journey was not an easy one.
Our essay continues after the jump.
A Small Spark
Hyundai (Korean for “modern”) actually had its humble beginnings forty years ago, something most Americans would never know. Hyundai Founder Chung Ju-Yung, who died in 2001, had his own education cut short at the age of fourteen, when his father mandated that he work on the family farm at at other hard labor to take care of his younger siblings, not uncommon in Korean culture at that time. Shortly after his third (and successful) attempt at running away from home, Chung began his long and storied journey, propelled by the Japanese occupation that prevented him from operating his rice shop business, which he started at the age of 22. He moved on to driving trucks for a delivery service and learned the mechanics of truck and car repair that would one day lead to the modern success of the Hyundai Motor Company, which was established by Chung and his brother in 1967.
But before the modern automotive giant we know today, Chung forged ahead in his business pursuits by starting Hyundai Auto Service in Seoul in 1946, where he worked as a mechanic on American military trucks. Having enough cash to finance Hyundai Civil Works, later merging the Auto Service and Civil Works into Hyundai Engineering and Construction in 1950, Chung found great favor with the U.S. military and his construction company grew exponentially over the next 20 years. The list of Hyundais continued successes in major construction (Thailand expressway, Soyang River Dam), shipbuilding, chemicals, semiconductors, financial services, and heavy industry reads longer than your arm. So, what would be next on Mr. Chung’s agenda for his
blossoming gamma irradiated, mitosis rate, ever-expanding companies? Cars.
In response to the South Korean government’s 1975 order to four Korean companies to provide a detailed plan for development of a Korean built car, Hyundai complied. Alongside Hyundai were Daewoo (founder and chairman Kim Woo-Choong, a former fugitive, convict and now exoneree), Kia and Ssangyong. After Hyundai establishes relationships with no less than 26 firms in five different countries (for example: Japan and Italy for car design; the U.S and UK for integrated parts/components; and Germany for casting and forging), the Hyundai Pony was created.
With a body designed by Italy’s Guigario ItalDesign (shocking, we know) and the engine and transmission technology provided by Mitsubishi (ironically, now struggling to stay afloat here), the Pony made its international debut at the Turin International Motor Fair in 1974. Then, in 1975, production of the Pony commenced as the first Korean automobile, giving South Korea the title of the second asian country to manufacture its own car (next to Japan, of course). The Pony spawned no less than five iterations, including the basic 3-door hatchback, a 4-door sedan and a weird Asian El Camino-ish 2 door pickup. All versions “sported” a small displacement inline 4-cylinder engine. The car found success in Korea and was also exported to other countries such as Egypt, Greece and the UK. The next territory in Hyundai’s crosshairs would be America.
As mentioned before, the Excel nearly cemented America’s view on Hyundai, and that wasn’t a good thing. Even with successive models, Hyundai struggled to establish itself. Korean cars, as a result, were continually viewed as cheap, poorly designed and the go-to-car for those who couldn’t afford something better. Even my die-hard Korean loyalist friends avoided the cars like Keith Richards avoids rejuvenating facials. Let’s take the mid-sized Sonata as an example of Hyundai’s rags to riches transformation. Originally introduced in the states in 1988, the Sonata would never win any design awards (despite being penned by, again, Guigario’s ItalDesign). It was slab-sided, underpowered (2.0 liter) and about as exciting as novocaine. Successive models, though marginally improved in design and build quality, appeared to struggle in finding a clear design language (the Nissan Maxima still carries that torch, mind you).
“We want Hyundai to make the kind of car you want to buy, not the kind of car you have to buy.”
And though names like the Sonata and the Accent sounded good enough, Hyundai emerged with some off-beat and bizarre titles for their “sports coupes” — the awful Scoupe (1991) and its aquatic themed successor, the Tiburon (1996). Neither car performed particularly well, nor were they head-turners, though the Tiburon was at least a bit more sporty looking and well received by the likes of Top Gear. Neither car saw much success on the American market, since their competitors looked better, had more power and better overall quality. In 2001, Hyundai wisely introduced their hugely successful Santa Fe mid-sized SUV. And though the messy conglomeration of lines and sub-par power didn’t do the Santa Fe any favors, it sold in decent numbers. Quality and amenities, however, were still lacking compared to most of its competitors. Nevertheless, people were starting to take notice and over the next decade, Hyundai would never again brush the nadir of automotive quality that seemed all too familiar in the early days.
The fifth generation Sonata bowed in 2004, and it marked a significant change for Hyundai, bringing better quality, better design (though still arguably ho-hum-ish) and more power, along with the first American built Hyundai in the company’s history. The car garnered good reviews and excellent crash test ratings. Thought the design was nothing earthshattering, Hyundai was starting to break away from their less-is-more mentality. Their industry-first 10-year, 100,000 mile powertrain warranty was hugely significant in what it was intended to communicate (“our cars are made well, contrary to what you might believe”) and helped contribute to the company’s growth.
Fast Moves and Giant Leaps
The design of the sixth generation Sonata changed everything. The new and somewhat adventurous styling of the mid-sized car made people and the industry take notice. The Sonata had never been seen as a compeititor to the establishment — the Honda Accord and the Toyota Camry — until now. Not only were the fit and finish incredibly good, the car actually looked far better than its mainstream brethren. Rather than plague-like boil-like head and taillamps, slab-sided body and overall questionable design of the Japanese sedans, the new Sonata was refreshing, with taut character lines and a swoopy, sexy body. Hyundai dealerships couldn’t keep them on the lots. What was taking place behind the scenes, however, was what was truly remarkable.
Conventional wisdom about Hyundai’s approach to the automotive market by the general public couldn’t be more wrong. What we mean by that is the levels of aggressiveness and speed by which the Korean automaker operates is nothing short of remarkable. It’s not some humble, sideline observer that by chance has done a few things right. Take a look at their current line of cars. Nearly every car is new or completely redesigned and nothing close to resembling the old models. The Genesis Coupe and sedan, the premium Equus, Accent, Elantra, Sonata, Tucson, Veloster, Azera and an all-new Santa Fe and a Veracruz replacement just around the corner. You’d be hard pressed to find a mainstream manufacturer’s model line as attractively designed. With a design theme that pervades the lineup, even their compact Elantra and sub-compact Accent sport sexy sheet metal bodies and interiors that make their predecessors look like your unwelcomed, alcoholic, toothless uncle at the family reunion.
With a design theme that pervades the lineup, even their compact Elantra and sub-compact Accent sport sexy sheet metal bodies and interiors that make their predecessors look like your unwelcomed, alcoholic, toothless uncle at the family reunion.
Again, using the new Sonata as an example of the speed by which Hyundai operates, the car was brought to market a full two-months ahead of schedule in 2011, something not often heard of in the bureaucratic heavy automotive industry. And the growth they’ve experienced is astounding. In 2010, for example, when automotive sales were as sluggish as an overweight basset hound in the summer heat, Hyundai posted record sales and also became the fastest growing automotive manufacturer in the world. In China, for example, where the money flows and cars are going like hotcakes, Hyundai is second only to mammoth Volkswagen in sales. In Korea, combined with its sister company, Kia, Hyundai’s sales exceed 80% of overall new car purchases in the country.
So, what precipitated this shift? You don’t simply see a bargain basement product undergo a radical transformation and suddenly find a loyal fanbase overnight. It’s like seeing Beverly Hills residents suddenly flock to Wal-mart when it starts selling Gucci. Well the entire mindset of Hyundai shifted starting in 1999 when leadership changed hands from Chung Ju-Yung to his son, Chung Mong-Koo and Hyundai started focusing a bit less on quantity (though the Ulsan, South Korean factory can churn out 1.6 million vehicles per year) and significantly more on quality. And that quality has made itself evident. Case in point, the Hyundai Genesis sedan. Though when the rumors of this luxury sedan hit the web-waves, it was viewed as a bit laughable. The market’s cold reception the failed Volkswagen Phaeton, more or less, set the mold for mass market success of a bargain luxury sedan.
But Hyundai proved everyone wrong. With the BMW 5-Series as the Genesis’ inspiration, Hyundai sought sports sedan performance with high-end luxury amenities at a sub-$40K base price point. Not only did they succeed, they impressed. It garnered enough attention, rave reviews and votes to win the coveted North American Car of the Year in 2009. With astounding performance from its first V8 engine (0-60 in 5.3 seconds at a weight of over 4,000 lbs), German-inspired (okay, so it looks
a bit a lot like a Merc S-Class, so what?) and five-star NHTSA crash test ratings, the Genesis sedan put the other automakers on edge. Hyundai had produced a remarkable luxury sedan at just a tad over half price of the Germans. And their flagship Equus raised the bar even higher, aiming for the S-Class, 7-Series, A8 crowd with a industry-leading technology, amenities and a ridiculously low sub-$60K starting price.
The company has risen stratospherically in quality, technology, reliability and safety across the board. But it hasn’t simply covered the staples well, it’s revolutionized perception of its brand. Hyundai cars are viewed as desirable, attractive and extremely well-built, and rightly so. Look at the recent introduction of the family of handsome Elantra cars in their lineup. First, the hugely successful sedan and now the sporty Elantra coupe and the Elantra GT (the “touring” model, or wagon). This line of compacts is part and parcel of how Hyundai is doing things, incredibly well, at that.
Excellent design for economy cars is no longer hard to find, largely due to Hyundai. But it’s not just design, it’s also efficiency. The Sonata Hybrid, though late to market, sports a light, high-efficiency battery and has a lofty 500,000+ sales goal. Plus, no fewer than six Hyundai models get 30+ mpg. And what was once an automobile manufacturer that studied the Toyota brand with religious fervor has surpassed the Japanese automaker in J.D. Power’s ranking of automotive initial quality (new vehicles within the first 90 days of ownership), giving it the highly respected position of the best initial quality cars by a mass-production automaker in the world, behind only luxury brands Porsche, Cadillac and Lexus. This industry transformation is undisputedly the most significant brand perception change in automotive history.
It’s a story most businesses covet, and we certainly haven’t seen the end of Hyundai’s global surge. Now, when I see a Hyundai car on the road, I no longer shake my head in painful disappointment. Frankly, it makes me swell with pride. Plus, when I visit the Chicago Auto Show, I make sure I visit their gorgeous display and get my hands on their brochures. And though I can barely believe it myself, that Genesis Coupe is looking awfully tempting as a next purchase. Yes, folks. You read it here.
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