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Old 16th April 2012, 11:56   #1
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Default How Hyundai went from joke to contender in USA

Source & Full Article : How Hyundai went from joke to contender in US - Economic Times


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How Hyundai went from joke to contender in US: very interesting & thought provoking interview with John Krafcik (CEO of Hyundai American Operations)

Americans were laughing at Hyundai's Cars when John Krafcik joined the company eight years ago. The cars were ugly and often broke down. The only reason to buy one was because it was cheap. Comedian Jay Leno once joked that you could double a Hyundai's value by filling it up with gas.

No one's laughing now.

The Korean automaker's quality has improved, and it's among the leaders in fuel efficiency and styling. Sales are up more than 60 percent since 2008, the year Krafcik (pronounced KRAF-chick) became CEO of American operations. Hyundai's Elantra compacts and Sonata midsize sedans are in such demand that few discounts are offered. And although the company's U.S. sales are just a fraction of General Motors' or Ford's, they're growing so quickly that Hyundai is feared by every other carmaker.

Hyundai had already started to change before Krafcik arrived, offering a 10-year, 100,000-mile (160,000-kilometer) warranty with its cars. But the transformation from joke to juggernaut accelerated under his watch.
Krafcik, 50, is a Stanford-trained engineer and manufacturing expert. He began his career as a manufacturing engineer at a General Motors-Toyota joint venture factory set up so GM could learn how Toyota
made cars. While working for the venture in the early 1980s, he saw the gap in standards between Japanese and American plants. He has focused on quality ever since.
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Last edited by GTO : 16th April 2012 at 13:40. Reason: Keeping fair usage practices in mind, it is best to include an excerpt + link to full article
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Old 16th April 2012, 13:06   #2
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Default Re: How Hyundai went from joke to contender in US

Kudos to Hyundai for achieving such a feat in US market.
In India I remember Santro and Matiz were launched at a similar time frame, Hyundai raced to become one of the key players in Indian market and Daewoo locked their factory and went home. We have first 2000 model Hyundai Santro in our family and its still considered to be the second most reliable car, of course the first being the 2001 model M800.
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Old 16th April 2012, 14:05   #3
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Default Re: How Hyundai went from joke to contender in USA

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Hyundai had already started to change before Krafcik arrived, offering a 10-year, 100,000-mile (160,000-kilometer) warranty with its cars
How is something like this possible?!! Just because they've got better roads to run their cars upon?
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Old 16th April 2012, 14:36   #4
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Default Re: How Hyundai went from joke to contender in USA

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How is something like this possible?!! Just because they've got better roads to run their cars upon?
Hello Fine69,

Yes. That is possible. These are called Powertrain Warranties. They include coverage for items such as the engine, transmission and drivetrain, and not complete bumper-to-bumper coverage. The most expensive parts are typically in the powertrain, so having the long-term coverage is still a good idea.

In fact Chrysler also has Lifetime powertrain warranty, which offers lifetime coverage as long as you keep up with the warranty requirements including scheduled checkups that need to be performed every five years.

Take note: the longer powertrain warranties from Kia, Hyundai, Mitsubishi and Chrysler are only for new cars and original owners. They are not transferrable, meaning used cars unless they are part of a certified pre-owned program do not have the longer-term warranty and come with shorter-term powertrain coverages.

More on these warranties here:
What is a Powertrain Warranty?

New car warranties: Fact vs. hype - Oct. 3, 2007

Which cars have a 10-year/100,000-mile warranty? - Ask.cars.com

It would be great if in India we have Powertrain Warranties. Because people here generally keep a Car for more than 5 years, it would be genuinely useful.

Thanks,
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Old 16th April 2012, 19:51   #5
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Default Re: How Hyundai went from joke to contender in USA

Hyundai has been a fantastic rags to riches story in North America, no doubt.

In the month of March that just went by Hyundai had only 55000 cars available for its dealers but the dealerships had booked 70000. That would make a lot of automakers envious. Hyundai's inventory had come down to a 25 day supply, (industry average is 55) according to WardsAuto.com. They are selling like Chris Gayle bats...fast!

I remember in 2009 when I was in the market for a car in the US, the economic downturn had hit most if not all auto makers. The only two brands that were actually making good dough then were Hyundai and Subaru.
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Old 17th April 2012, 10:39   #6
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Default Re: How Hyundai went from joke to contender in USA

I would like to invite comments from other members who know about these extended (5+ years) warranties in other countries.

Especially T-BHPian's in other Countries kindly let us know the best available warranties in your country.

I guess 10 years (& 1,60,000 kms) is a fantastic warranty. Though these warranties are not on entire car, but on most crucial components. Still, that displays the committment of the Car Manufacturer to the market, their confidence in products & most important it displays the Manufacturing quality policy that they strictly adhere to.

We in India have mostly heard of 1, 2 or maximum 3 years warranties & further Extended warranties upto 2 years. Nothing more I believe.

Thanks,
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Old 17th April 2012, 12:19   #7
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Default Re: How Hyundai went from joke to contender in USA

Good thread. Well while in India Hyundai performed really well starting off with the Santro> Accent>Verna>i10 being some good sellers in the US they were being laughed at.

Things now changed. I have experienced the new Hyundai first hand so let me comment. The cars are well made, the design is Very Good. The warranty is good and last but not the least the most important factor - The sales staff are never snobbish! I say never after facing issues in both Honda and Toyota dealerships.

Some of the models which are giving the rest a good contest are
1) Elantra
2) Sonata

There are few models which are trying to break the mould are
1) Genesis Sedan
2) Genesis Coupe
3) Eqqus

I bought a Hyundai and till now am happy with my choice.
http://www.team-bhp.com/forum/test-d...sis-coupe.html (Trials and Tribulations of a first time buyer - Hyundai Genesis Coupe)

All the best wishes with them. They deserve the change of fate.
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Old 17th April 2012, 13:16   #8
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Default Re: How Hyundai went from joke to contender in USA

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Originally Posted by maddy42 View Post
All the best wishes with them. They deserve the change of fate.
Hello Maddy,

Your Car looks simply awesome. A very big Congrats from my side. No wonder why is Hyundai giving tough times to other Car Marketers in US.

What was the standard Warranty got with your car? Also any thoughts on why Hyundai or other Car Manufacturers are not offering Powertrain warranties (10 years) here in India?

Thanks,
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Old 17th April 2012, 14:10   #9
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Default Re: How Hyundai went from joke to contender in USA

I went through the link and found what I was looking for: This guy has been trained at the GM-Toyota centre. I have just been reading the book "The Toyota Way", and I can understand what change it can bring about in a manufacturing process.

Someone mentioned the Santro being #2 reliable, behind a M800. I would rate my Santro to be #1, ahead of the earlier M800, in terms of reliability. Why, the Santro is still selling, which talks volumes about its VFM proposition. And the biggest factor in any VFM is the quality has to be top-notch!
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Old 17th April 2012, 19:21   #10
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Default Re: How Hyundai went from joke to contender in USA

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Originally Posted by Jignesh View Post
What was the standard Warranty got with your car? Also any thoughts on why Hyundai or other Car Manufacturers are not offering Powertrain warranties (10 years) here in India?
Thanks,
I believe the reason is simple. In the American subcontinent, Hyundai is a catch up brand and it has to have a competitive edge over others, for which it uses its 10/100,000 powertrain warranty that portrays its approach on product quality and the self-confidence in their product.

In India Hyundai is a well (or better) established brand, so the strategies are bound to be different.

Also note that the 10/100K warranty is not bumper-to-bumper. It only covers some critical powertrain elements, and it is non-transferable beyond the original owner. Average ownership of a car in the US does not go much beyond 3/4 years and/or 35/40K miles (perhaps even less), so in most cases the 10/100K powertrain warranty only has to last 4 years or 40K miles at the most. Modern manufacturing makes it easily possible to build vehicles that can do 4 years and/or 40K miles without issues to the powertrain.

If I look back at this, Hyundai started offering the 10/100K warranty about 10/11 years ago. I do not think there are many first-owners of 2001 Hyundai's around as of today. Long story short, such warranties play well for both the manufacturer (enhanced image of quality) and the consumer (the selected few who decide to utilize the car for the entire period of the warranty end up extracting the full benefit of the warranty).
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Old 18th April 2012, 10:54   #11
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Default Re: How Hyundai went from joke to contender in USA

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Originally Posted by NinadJoshi View Post
In India Hyundai is a well (or better) established brand, so the strategies are bound to be different.

Also note that the 10/100K warranty is not bumper-to-bumper. It only covers some critical powertrain elements, and it is non-transferable beyond the original owner. Average ownership of a car in the US does not go much beyond 3/4 years and/or 35/40K miles (perhaps even less), so in most cases the 10/100K powertrain warranty only has to last 4 years or 40K miles at the most. Modern manufacturing makes it easily possible to build vehicles that can do 4 years and/or 40K miles without issues to the powertrain.
True. This warranty is only for the first owner and not applicable after the vehicle is sold. They have taken a risk to gain an edge over competitors.

They are established in India and i dont think they would need to do something of this sort. But am sure its not far off when they would start doing the same in India.

One of the reason Hyundai had an advantage though is a typical query anyone in India asks. "Kitna Deti Hai". The Elantra and the Sonata are the bread and butter of the company. You do not get Any, trust me Any bargain with the on the elantra. And its also built in America(Alabama) to be exact.

Hope the company maintains the same momentum going forward.
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Old 18th April 2012, 11:08   #12
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Default Re: How Hyundai went from joke to contender in USA

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Originally Posted by Jignesh View Post

It is neither quality nor CEO who are responsible for the rise. Quality is a pre requiste, but doesn't by itself gain marketshare.

Right product at the right time does. And in that also Hyundai had less to do than the economic crisis - the products were all wrong but then the times changed 5yrs ago all of a sudden.

Petrol prices went 4x and incomes (1/4)x . Americans started buying cheaper fuel efficient cars.

Saying that it was brilliant strategy is as stupid as saying the Ford Fiesta is brilliant strategy.
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Old 18th April 2012, 11:44   #13
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Default Re: How Hyundai went from joke to contender in USA

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Originally Posted by NinadJoshi View Post
In India Hyundai is a well (or better) established brand, so the strategies are bound to be different.
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Originally Posted by maddy42 View Post
They are established in India and i dont think they would need to do something of this sort. But am sure its not far off when they would start doing the same in India.
Hello Ninad & Maddy,

I accept that Hyundai is now established in Indian Market & does need to offer PowerTrain Warranties to gain market share.

But When Hyundai introduced its Cars in Indian Market in 1998 (almost same time it entered USA Market) it never offered anything like this.

Also any new Car Manufacturer in India has never offered Warranties like this to gain Market Share. Not even Ultra Premium Car Manufacturers are offering something like this.

My point here is - Is it Manufacturer's confidence in their Products or Committment to the Market? May be socio-economic & political conditions in India are not condusive to automobile manufacturers to offer long-term warranties.

Quote:
Originally Posted by vina View Post
Saying that it was brilliant strategy is as stupid as saying the Ford Fiesta is brilliant strategy.
Hello Vina,

But Americans still have a choice. Other Car manufacturers in USA do have great Cars & fuel efficient also. Nobody forced them to buy a Car from Korean Manufacturer when Ford & Toyota were rulling the market.

Thanks,
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Old 18th April 2012, 12:04   #14
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Default Re: How Hyundai went from joke to contender in USA

I just love their superbowl commercial in the US from a few years ago.

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Old 18th April 2012, 12:47   #15
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Default Re: How Hyundai went from joke to contender in USA

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It is neither quality nor CEO who are responsible for the rise. Quality is a pre requiste, but doesn't by itself gain marketshare.
You should probably read the book "The Toyota Way" to understand how the philosophy of a company can make a difference. And what a difference!

To quote from the same book, when Toyota launched the Lexus brand in the US, it outsold the top three Mercedes models in the US in the first year itself. Remember that Lexus had just one model/variant initially, and till that point Toyota was known as the manufacturer of VFM cars, not luxury cars. The luxury car market was dominated by Mercedes, Audi and such.

There are several examples in this book of managers who switched from other auto manufacturers to Toyota and have been 'converted' to the Toyota philosophy. This wouldn't be possible if the top management didn't preach and practise it.

Or take "The Maruti Story" to understand how the top management of Suzuki brought about a huge cultural change in the way manufacturing was run in India. It isn't about using the latest technology, it's about setting up a whole new culture. If the top management isn't involved, it will never happen.

Last edited by honeybee : 18th April 2012 at 12:49.
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