Back to basics value proposition

Auto sales were one of the first hit by the economic crisis in 2009 and even such well known for their quality brands like Toyota and Honda were not exempt. The only company out of the top 5 car manufacturers not to follow this trend is Hyundai Motor, a company that only few years ago was mainly known for its so-so but affordable cars. The mere fact that Hyundai is in the top 5 speaks volumes about their commitment to succeed and to quality in particular.

 

When I first arrived in the US in 1997 the automobile landscape was very different from what I was used to seeing in Europe. Cars were bigger, more powerful and it seemed like American consumers were very demanding. I did not see any Fiats, Renaults, Peugeots or Citroens on the road and was told by locals that these cars did not have enough appeal for American consumers. Both Fiat and Peugeot tried it out in the US market but retreated amid quality, service and other issues. Considering all this it was very surprising was to see little Hyundai cars now and then. Several months later one of Chevy dealers in the area where I live split his shop and started selling Hyundai cars.

 

Hyundai picked my interest when they started offering 100000 miles warranty on its cars, best on the market at the time. Yet my perception of the company was still set as a maker of inexpensive cars suited for bargain hunters that did not mind cheap materials and noisy drive. It totally changed one day when a friend took me for a 160 miles trip in his new Hyundai XG 350. The drive was very quiet, the finish in the cabin was clean and pleasant, it certainly did not feel at all like an econobox I had in mind. And when some time later I had a chance to rent Azera, another mid size sedan made by Hyundai, I had a really positive experience, quite close to the one of Lexus. It looked like the company made real commitment to quality and was following through with concrete offers you can’t just dismiss.

 

Over the last few years Hyundai’s reputation changed drastically. In 2001 J.D. Power and Associates ranked Hyundai at number of 32 out of 37 brands considered. In 2004 the rank was 7. And in 2009 Hyundai was at 4th place after Lexus, Porsche and Cadillac, replacing Toyota. From the market share standpoint the brand went from obscurity to be in the top 5.

 

So how did the Korean company do it? In the interview with Fortune magazine Hyundai’s CEO Mong-Koo Chung  attributes Hyundai success to investments in improving the company products.  Mr. Chung took over from his father in 1999 and pushed the company hard to get to the top in quality. He pushed for cross functional approach to quality, implemented 6 Sigma and made the ranks active participants in product improvement and innovation. Judging by the results it definitely paid off.

Comments: 0; Published: January 20, 2010; Permalink

Tags: Suppliers,supply chain,transportation