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Automotive Industry

Hyundai marches on: The Korean automaker's top U.S. product planners tell how their company is transforming its model range, manufacturing, sourcing and image

Automotive Industries, Dec, 2001 by Lora J. Bingham

Hyundai is pushing vehicles out its U.S. dealership doors in droves. October 2001 year-to-date sales hit 294,523 units, nipping at the heels of Volkswagen-Audi for seventh place overall in the U.S. market. And projected sales for 2002 are 370,000 units. How does the Korean automaker plan to keep up the momentum?

By continuing on its current course, says David Ossenmacher, director of product and strategic planning for Hyundai Motor America "We're going to continue to focus on meeting U.S. customer needs through product improvements," he explains. "We're going to continue to strengthen our partnership with our dealers. And we're going to continue executing marketing and product strategies that move our brand forward in the U.S. market."

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That could mean the introduction of more new models aimed specifically at the U.S. market The Santa Fe small SUV introduced in 2000 has proven very timely and successful. In fact, with 45,332 Santa Fe units sold so far this year, Ossenmacher says there is currently a 12,000-unit backlog on the vehicle, which shares its platform with the Sonata (the Elantra and Tiburon also share a platform). And Hyundai is using a strong price/value story to grab a slice of the reborn, hot hatchback segment with its $14,000 2002 Elantra GT. Moreover, the entire vehicle line-up appears to be coming into its own in terms of styling -- the cars no longer look like a conglomeration of the best features from a variety of marques.

It's quite a turn-around from just a few years ago. In 1998, Hyundai's U.S. sales were expected to hit just 90,000 units and the products suffered under a reputation for being cheap and unreliable. Hyundai actually debated pulling out of the U.S. market

But putting a gutsy 5-year/60,000-mile bumper-to-bumper warranty and a 10-year/100,000 mile limited powertrain warranty on its 1999 line-up helped boost buyer confidence. Three years later that strategy is working, though some auto analysts wonder whether "America's Best Warranty" will come back to bite Hyundai in the next few years.

Increasing the level of automation in its Korean assembly plants has helped boost quality tremendously, claims Chuck Strahm, Hyundai Motor America's product development manager. "At this point, we're still a budget-conscious purchase, so improving quality is our No. 1 manufacturing concern," he notes, claiming that more automation has greatly reduced the car-to-car, variation problems that plagued earlier Hyundais.

And improved quality through cost-saving measures is the key to Hyundai's relationship with its suppliers, Strahm reports.

Ossenmacher concurs: "We are working to leverage the best overall product value for the customer," he says. "The suppliers we use will be ones that can help us meet that goal."

As reflects an Asian automaker still emerging in the global auto industry Hyundai's supplier list is heavily laden with local Tier 1s. For example, seats for the XG350 and Sonata are sourced from Sungwoo Automotive Co. Ltd. Dashboards come from Duck Yang Ind. Co. Ltd. Suspension struts and shock absorbers are made by Mando Corp. But European and North American suppliers are showing up too, as Hyundai moves to boost quality and benefit from their technology. For example, the XG350's ABS system is by Continental-Teves.

The automaker is also investing millions in developmental facilities that will help improve its products, including an advanced wind tunnel in Korea Research in alternative powertrains and improvements in manufacturing processes, such as extensive use of tailor-welded blanks in vehicle bodies, also point the way forward. In the U.S., the company is building a new 90,000-square-foot research and design center in Irvine, Cal.

Meanwhile, Ossenmacher confirms that Hyundai is working on new platforms for future vehicles. Lie indicates, however, that the company may be having second thoughts about introducing a minivan into a slumping U.S. market segment. There's also an all-new Tiburon coming with a Porsche-designed 6-speed gearbox. Filling in its product gaps is an obvious move; exactly which gaps remains the question.

Automotive Industry

Hyundai marches on: The Korean automaker's top U.S. product planners tell how their company is transforming its model range, manufacturing, sourcing and image

Automotive Industries, Dec, 2001 by Lora J. Bingham

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