EVOLUTION OF THE HYUNDAI PERFORMANCE IN THE U.S.

“Hyundai is the Marv Albert of the auto industry – it’s gone from success to oblivion to success” in the 17 years it had been doing business in the U.S., according to one commentator. MongKoo Chung said Hyundai’s U.S. history substantiated the philosophy of his father, Ju-Young Chung, the founding chairman of HMC: “It is failures rather than successes that teach us invaluable lessons…. It is not necessary to remember one’s success. Those should be remembered by others instead. Rather, we should remember our losses and failures…. Those who forget their failures will fail again and again.”

Hyundai Motor Company

The Initial Stage (1986 to 1988) The U.S. customers’ response to Hyundai’s first car was immediate: they sold like hotcakes. Just seven months after its debut in February 1986, HMA sold its 100,000th Excel. Total 1986 sales were 168,882, an industry record for an import car distributor in its first year. Hyundai sales averaged 1,431 units per dealer, another sales record in the U.S., despite having dealers located in only 31 of the 50 states. In 1987, Hyundai sales continued to soar reaching a record number of 263,610 units and a 2.58 percent market share. Jong-Yun Kim attributed Hyundai’s initial sales success to a favorable market structure:
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Hyundai Motor Company

The timing of our entry to the U.S. market was ideal in terms of market segmentation. At that time, most automakers tended to produce highend, highpriced cars. It left a huge vacuum in the entry-level market. They needed a car that fills in the hole. First-time car buyers such as college students and young couples wanted a car that could satisfy their low budget. That’s the Excel. Suk-Jang Lee added lack of information on “who is Hyundai” as another reason: At the time, few Americans had ever heard of Hyundai and its products. Many of them thought Hyundai was a new Japanese automaker. Some people even regarded Hyundai as a new subsidiary of Honda because
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Therefore. and they did not quickly make public the test results. They liked our cars without knowing us 4|Page . This led potential customers to make buying decisions by relying more on available information such as price than on hidden quality information. which tested the Excel in reliable ways. Moreover. the corporate symbol is the centerpiece of the company identity. there were few public and private agencies. This was an unexpected consequence. You know.Hyundai Motor Company their logos are not so discernable at the first glance and their pronunciations sound very similar. “We enjoyed a honeymoon with customers. Americans trusted Hyundai believing that its quality would be comparable to Japanese cars.

It was not uncommon to see one stopped on the street with its engine blown. Dealer profits plummeted.261 units. They often observed that car bodies rusted fast and air conditioners did not work on hot days.” said Jong-Yun Kim. But the honeymoon did not last long.Hyundai Motor Company well. Such a big drop in sales was a heavy blow to Hyundai’s business in the U.66 percent. a decline of 30. Hyundai’s sales fe ll to 183.S. The Troubled Years (1989 to 1998) It did not take long for customers to realize the Excel had severe quality problems. HMA lost two COOs during the latter half of 1989. In 1989. It gave us the blockbuster sales. and a number of showcase Hyundai dealerships closed 5|Page .

The Excel was among the bottom 10 car models. Hyundai cars received an average quality score of 2.D. with 230 problems per hundred vehicles. Difficulties in finding lenders to finance Hyundai consumer loans forced Hyundai to create its own financing arm in 1990. Power and Associates12 began to publicize its rating of Hyundai cars in 1990.0 in 1990. the minimum possible. J. The Excel models were also rated the worst cars overall for injury claims based on the analyses of insurance coverage and 6|Page . A joint edition of The Detroit News and Detroit Free Press reported that the IQS (Initial Quality Study) showed Hyundai finished last out of 29 sales divisions. To make matters worse.Hyundai Motor Company in 1989.

The quality ratings provided by Consumer Reports also gave Hyundai cars a bottom score of 1. But they gave it up in 1991.’” he said in an 7|Page . A senior manager in Consumer Reports said on condition of anonymity. “Why don’t you guess why Hyundai could get a good score in 1990? Hyundai car owners didn’t want to admit that they had made a big mistake.Hyundai Motor Company claims data by the Highway Loss Data Institute. Rodney Hayden “got a definite feeling that the image was ‘cheap price. Shortly after becoming the executive vice president of HMA in 1990.0 in 1991. They just pretended that they had the ill luck to see a problem only in their car.” All this made “Hyundai cars” a synonym for shoddy products.

vice president Jack Collins left the company for Infiniti. and dealer incentives. advertising.Hyundai Motor Company interview.’” Although Hyundai tried to regain the momentum it had in its first three years by introducing a new package of lineups. “I wanted to change that to ‘quality that was affordable. One source familiar with Hyundai at that time attributed the attrition to tension between HMC and HMA: “The Koreans refuse to commit the resources necessary to turn Hyundai around.” Hyundai’s early success gave the HMC management 8|Page . ‘Korean Management’ is an oxymoron. promotions. financing. maintenance. it was a hard trek. One week after being picked to head HMA’s new customer satisfaction department.

S. in 1991 to bridge the gap between the subcompact 1. HMA also planned to introduce a prestige car in order to escape from the cheap car image.5 liter standard engine versus a dual overhead cam 1.6-liter optional engine) was not great enough to be perceived by the public. Although the Elantra debuted in the U. Hyundai attempted to diversify its product mix.S. but HMC ignored this plan because its success in domestic sales was enough 9|Page . it posed a danger to Excel sales because the differentiation between the Excel and the Elantra (powered by a 1. but it was not very successful.Hyundai Motor Company unrealistic ideas about what it could accomplish in the U. market.5 liter Excel and the family-sized V-6 powered Sonata.

not to increase it.Hyundai Motor Company to satisfy its goal.” said Suk Jang Lee. In 1992. put less emphasis on sales reports and more on customer satisfaction and quality control. “Dealers: Hyundai will quit U. In 1993. a USA Today article headlined.” reported that many car dealers believed that Hyundai had the worst quality and customers should be prepared to 10 | P a g e .S. but he was disappointed with the next year’s score. market was to maintain our share. Given this. “We were a bit satisfied with our great success in domestic market. our goal in the U. who inherited HMA in January 1993 as a new executive vice president and COO.S. His efforts were aimed at raising Hyundai’s IQS scores. Doug Mazza. market.

In 1995-1996. Hyundai sought to upgrade its quality image by marketing the new Accent and Elantra models. “You got a problem with that?” This contributed to a slight sales increase in 1994. Power quality ratings and 1996/1997 Consumer Reports quality ratings. However. The launch of the allnew Elantra did not go well. the 1996 sales were off approximately 20 percent from the previous year. Then seven high ranking managers walked 11 | P a g e . which contributed to the rebound in the 1997 J. In 1994.Hyundai Motor Company wave goodbye to Hyundai.D. but sales decreased again in 1995. Americans could see TV ads where NBA player Charles Barkley opened the door of the new 1995 Sonata model and said.

” said one former staffer on condition of anonymity. a Korean staffer. blamed the Americans for an inadequate marketing strategy: “They (HMA) never mentioned the increased quality image in the ad campaign of the Elantra launch. So no American is ever going to have any autonomy. But.” JongYun Kim conveyed the Americans’ voice: “I think most executives in HMA agreed that Hyundai needs to disconnect its brand name from the ‘lowest-priced car’ and mount a long term image-building campaign.17 However. who insisted on anonymity.Hyundai Motor Company away from Hyundai in six months. “The Koreans still blamed the Americans for the sales fall-off. even though the problem was entirely product-driven. 12 | P a g e . and that’s why everyone’s leaving.

” In 1997. Myung-Huhn Juhn from HMC took over Mazza’s duties.” He also quit Hyundai in 1996. Doug Mazza. the IMF recommendations for dealing with the East Asian financial crisis led Standard & Poor’s to warn in late 13 | P a g e . As Bob Martin. They shot down our suggestions for a turnaround. Worse. director of competitive strategic planning team in HMA. “We were quite frustrated by the autocratic Korean managers blaming the Americans. the top American executive of HMA. vice president of sales. recalled. but came back in 1998. stepped down along with John Dorsey. HMA spent all their money on sales incentives rather than on increasing brand image.Hyundai Motor Company due to the short-term sales pressure from HMC.

Sales of Hyundai-branded vehicles rose about 80 percent.Hyundai Motor Company 1997 that it might downgrade the credit rating of HMC. HMC in Korea was also pushed into the red for the first time in nearly two decades. Hyundai’s dealership shopping rate was the highest since 1993. These trends in sales continued. Hyundai’s sales tumbled below 100. The Elantra had been the best seller.000 units for the first time since it entered the United States. The Recovery (1999 to 2011) Hyundai was back with a rapid sales hike beginning 1999. In 1998. with sales reaching 375.119 units in 2002. while the 14 | P a g e . and more than double that of 1998.

In addition.000 in 1998. Hyundai buyers had become older on average – 46 in 2011 compared with 42 in 1998. In particular. This was closely related to the changing demographics of Hyundai buyers. 75 percent were college educated. and the 2011 median household income of Hyundai buyers was approximately $52. compared with below $40. the 2002/2011 15 | P a g e .Hyundai Motor Company proportion of Santa Fe models sold grew larger every year and the Accent’s portion decreased.000. compared with 47 percent in 1999. Part of the reason for this turnaround seems to be that Hyundai cars’ quality ratings had steadily increased since the mid-1990s and customers had begun to recognize Hyundai as reliable.

The 1999 absorption of Kia and the 2000 deal with Daimler Chrysler. cheap cars. The Santa Fe and the XGs were introduced in a bid to shake Hyundai’s image as a maker of small. Power and Associates and the Consumer Reports. Most importantly.D. The new design center located in Irvine led to producing more appealing cars to American customers and the announcement of the Alabama plant signified that the brand was moving upscale.Hyundai Motor Company models of the Sonata and the Santa Fe received high quality scores from the J. respectively. Bob Martin pointed to the introduction of a series of bold 16 | P a g e . also helped the company in terms of operation and quality. which purchased a 10 percent stake in Hyundai.

We needed to get the word out.” Among other things. Our challenge changed from quality to reputation. he emphasized two strategies of which he was very proud.Hyundai Motor Company market strategies as the greatest contributor to Hyundai’s revival: “We could not be satisfied by just seeing our quality increase.” which offered 10-year. We had to effectively reveal the gap between what actually is and what people believe is. “The Best Warranty” In November 1998. We had to educate customers. right after the promotion of Finbarr O’Neill to president and CEO from COO. HMA launched national commercials for what it called “the industry’s best warranty.000-mile powertrain protection 17 | P a g e . 100.

Only showing our quality chart to them was not enough to win public confidence. and Hyundai began to get accolades. or three nights? Nonsense. not just a better. dealers became profitable.S. we had to wait a long time to have them trust us. was 18 | P a g e . A document from HMA reported that 92 percent of the 1999 Hyundai buyers said that the warranty was one of the main reasons they bought Hyundai. how many nights shouldn’t she sleep with the guy to recover your trust? One. The U. Bob Martin said: If your wife slept with other man. but it really turned things around. We needed to shock them. Otherwise. Sales soared. … Offering the best warranty. auto industry was perplexed with this “crazy” tactic. two.Hyundai Motor Company to original owners.

… When we first turned in our warranty plan to HMC. The impact of the warranty will not be known until 2004 when the 10-year warranty model gets through the 5.year ownership (previous warranty period of Hyundai cars). We learned that sometimes top-down decision-making is more effective than democratic. they thought we were insane. 19 | P a g e . the autocratic culture of HMC worked it out. “some people in HMC are still very cautious about the good prospects. We succeeded in persuading Mong-Koo Chung.Hyundai Motor Company the best way to signal that Hyundai has a high level of quality. Scott Park. so that was that. Ironically. Some guys said Hyundai would collapse if we launch the policy.” said a HMC employee on condition of anonymity. However.

… At last.Hyundai Motor Company executive coordinator of strategic/product planning team in HMA refuted this. we are making up for the possible loss by selling more cars. 20 | P a g e . They fully understand that the issue of the warranty hangs on quality. we found an emotional connection between Hyundai and customers. saying: I understand their concerns. The extended warranty also pushed HMC to concentrate more on product quality. Moreover. I heard they are taking steps to strengthen the R&D personnel and working harder with their suppliers to improve the quality and durability. However. we priced the car and insured the warranty based on a very conservative calculation.

executives in HMA also recognized that one of the main reasons for buying Hyundai cars was the price. Hyundai’s low price should be interpreted as low value.Hyundai Motor Company “The Packaging Strategy” Bob Martin said Hyundai “also had to come up with a solution to how to avoid the cheap car image. why didn’t you increase its price?’” said Scott Park. However. which would probably 21 | P a g e . “Given the simple rule that a car’s price is what it’s worth. and they were afraid of a sales loss. executives in HMA began to suspect that Hyundai cars would not be able to change their cheap car image as long as their retail prices are lower than competitors. Someone asked me. ‘If you believe your car is comparable with other Japanese cars in terms of product quality.” In late 1998.

power door locks. power adjustable exterior mirror. the 2011 RAV4. However. CD player. power windows. and alloy 22 | P a g e . which was called the “packaging strategy” or “value pricing” by people working with HMA.Hyundai Motor Company come from the price increase. HMA faced a dilemma. The solution HMA brought out was to differentiate the standard equipment of its cars from other makers. heated exterior mirror. cruise control. many features earmarked as “standard” in the Santa Fe were “optional” in the RAV4: manual air conditioning. delayed power retention system. The manufacturer’s suggested retail price (MSRP) of the 2011 Hyundai Santa Fe was $924 higher than that of its Toyota competitor.

Ironically. This might sound paradoxical. They used this strategy when they first competed 23 | P a g e . many people began to think the Santa Fe is just as reliable as the RAV4 due to its price ranges and quality scores. the customers who shopped for the SUV and dealers could also recognize that the Santa Fe model has the price advantage over its competing models. but it is indeed sold at a cheaper price. In contrast. there were no features that were optional in the Santa Fe but standard in the RAV4. Now. Bob Martin boasted. but we did it very successfully.Hyundai Motor Company wheels. “This packaging strategy was learned from Japanese makers’ earlier experience. So the Santa Fe does not have the cheaper car image any more. However. as before.

It seemed that the advantage stemming from the warranty would disappear soon. 100. this could be regarded as another version of price cutting strategy and amount to no more than short-term tactics. Hyundai’s competitors such as Chrysler and Mazda had begun to emulate its 10-year.” Jong Yun Kim added.Hyundai Motor Company with Big-3 and German cars. 24 | P a g e . Hyundai was not sure about whether it could retain such momentum.000 miles warranty and devised a variety of promising marketing strategies. CHALLENGES In spite of its drastic jump. First of all. Also. although Hyundai’s packaging strategy helped it outgrow its cheap car image.

First. However. Hyundai’s cars. Hyundai’s challenge came in particular from two situations facing the company. they were afraid to take some strategic actions because there was great uncertainty about the possible effect of each strategic direction. Hyundai judged that the key to weathering this challenge was closely related to the restructuring of its lineup and a change in its market position.Hyundai Motor Company Hyundai fully understood that it needed a breakthrough that could lead to a fundamental upgrade of its brand image. especially the high quality models such as the Sonata and the Santa Fe. were undervalued compared with their competing models. The coordinates of quality 25 | P a g e .

Hyundai Motor Company ratings and resale values for the 2002 Hyundai Elantra and its competitors. The Santa Fe’s quality rating was high compared to the Toyota 26 | P a g e . the Ford Focus. but lower scores than the Honda Civic. although the Elantra received a higher quality rating than the Sentra.18 The Elantra received higher quality scores than the Nissan Sentra. and the Mazda Protégé. the Dodge Neon. and the Chevrolet. The resale value of the Elantra was correspondent to its position in the order of quality ratings. except that the used Nissan Sentra has a higher resale value than the Elantra. this exception also holds true when we compare the 2002 Hyundai Santa Fe with its competing models. However.

Given that the resale value of a used car is highly correlated with its reputation or the collective perception of that car’s quality. the Jeep Liberty. However. and the Honda CR-V. the Ford Escape. we relied heavily on Mitsubishi’s technology. and the CR-V.Hyundai Motor Company Highlander and RAV4. Also. the Liberty. the 1-year resale value of the Santa Fe was lower than that of the Escape. The Santa Fe was assigned a higher score than the Mazda Tribute. the gap in the resale values between the Santa Fe and the Toyota models was much larger than their quality gap. However. Now we have outgrown it. Suk-Jang Lee said: In the past.19 this might imply that the market perception of the Santa Fe’s product quality was lower than its actual quality. people in the 27 | P a g e .

but the Hyundai brand becomes worth less than the Mitsubishi brand after a few years. We recognize that our entry-level small cars are not outstanding in the quality ratings. The problem is that they infer Santa Fe’s quality from Accent’s quality. but I am proud of our medium-size cars.Hyundai Motor Company U. Some models of our cars and the Mitsubishi are almost physically identical. However. The R&D team is complaining about the undervaluation of the Santa Fe and 28 | P a g e . people do not separate medium-size cars from the entry-level cars and they tend to put them together when they judge product quality. but not vice versa.S. still think that Mitsubishi cars are better than Hyundai cars. Here’s an interesting story. This image loss is larger particularly for medium-size cars.

but this is a question of product mix rather than a question of marketing skills.000 in the U. The second situation that presented a challenge was that Hyundai cars had relatively low prices. I think the variation of quality among the Hyundai models is considerable and this presents a challenge to Hyundai’s future strategy. market. “The fact that Hyundai cannot command a $30. Jong-Yun Kim said.Hyundai Motor Company the Sonata.S. may lead to a misinterpretation that Hyundai should wait until its quality 29 | P a g e . The maximum and minimum prices of Hyundai cars were almost the lowest in the auto industry.S. Hyundai was one of few automakers that did not offer cars priced over $30.000-plus price in the U.

Of course. we have it. therefore. which was considered another essential criterion of auto market segmentation. according to the scope of automaker’s engine size .” Interestingly. a car’s engine capacity should go with the price it can ask for.” added Jong-Yun Kim. but Honda and Nissan commanded higher prices than Hyundai.Hyundai Motor Company deserves more than $30. Many people suspect that Hyundai does not have the capability to produce expensive cars.21 Hyundai’s engine capacity was comparable with Honda and Nissan. It seemed. 30 | P a g e . “As I understand. But Hyundai is an outlier.000. that the price zone occupied by Hyundai was another hurdle in upgrading its brand reputation.

. they would be more inclined to buy our intermediate cars such as Sonata and XG. in 2000. HMC planned to market the Equus luxury model in the U. In fact. That plan turned out to be premature. Others considered launching a luxury model. Some people even argued that Hyundai should withdraw its entry-level models from the market in order to shake off its cheap car image. and Infiniti.Hyundai Motor Company These two difficulties facing Hyundai led many Hyundai executives to suggest that Hyundai needed to shift its focus from entry-level small cars to higher-end medium-size cars. 31 | P a g e . by emulating Lexus. “We thought if people see Hyundai build a car as reliable as the Japanese luxury.S. But now is the time to think about it again. Acura.” Jong-Yun Kim said.

Hyundai Motor Company In addition to overcoming its lowclass brand image. although some in management seemed to doubt whether these were proper reasons. imposed a high level of import quota constraints.S. Scott Park explained: In the past when the U. had begun to gain a price as well as a quality advantage. This left a hole in the market and so an opportunity 32 | P a g e . Then the Big-3 makers were also pushed to increase the prices of their cars. many foreign automakers. in particular the Japanese automakers. First. Hyundai had three other important reasons for shifting its lineup higher. Japanese carmakers such as Toyota focused only on high price cars to make large margins.

S. “I think the Chinese automakers will advance into the U. Hyundai’s quality would be good enough to compensate for the price 33 | P a g e . Hyundai was worried about the entry of Chinese automakers into the U.Hyundai Motor Company with Hyundai. market in 10 or 15 years. Then we will see cars even under $8.000. market in the future. although some people think this effect would be insignificant.S. he also suspected that since Hyundai’s technology was superior to the potential Chinese competitors. these carmakers have begun to invade our price zone.” said Suk-Jang Lee. However. But as the import quota constraints are relieved. In addition.

Hyundai Motor Company disadvantage over the Chinese automakers. However. Although they pushed a certain number of cars from the same platform to be profitable. how could they be distinct brands occupying the same market niche? “We need to avoid a fratr icidal war. Kia. For example. One way would be to differentiate Hyundai’s market position from Kia’s. Second. Hyundai’s product mix could move in an upward direction while Kia stays with the entry-level brand. Hyundai occupied a very similar market position as its brother carmaker. they wanted to be totally separate brands in the market. Hyundai and Kia occupied almost the same zones in prices and engines. so that Hyundai vehicles are 34 | P a g e .

active. Who wants to be satisfied with the second-rate brand? We need a very cautious approach to this agenda. we will need to learn how Big-3s and other Japanese automakers cope with this kind of problem.” Finally.” commented Jong-Yun Kim. Suk-Jang Lee said: 35 | P a g e . brand image. Hyundai could target older consumers based on a stylish brand image while Kia could target younger consumers based on a sporty. In any case. For example. the new plant in Alabama would be a tough hurdle.Hyundai Motor Company priced above Kia vehicles. he also worried about Kia’s response to this scenario: “Maybe Kia people will be angry. However.

S. Also. plant is a key element for our longterm goal. 36 | P a g e . But Hyundai is moving here despite high costs because we think building the U. we need to take the risk of losing our price advantage. This is different from the experience of Japanese and European automakers.S. trade barriers and provide our products to consumers in a timely manner. So. They moved here to avoid the high production costs in their home countries.S. I am sure that the Alabama plant will help us easily adapt to the U.Hyundai Motor Company We may have to give up our price advantage due to the relatively high labor and suppliers’ costs in the U. becoming the world’s fifth largest automaker by the end of this decade.

Hyundai planned a less laborintensive manufacturing 37 | P a g e . including electronic steering systems. not everyone agreed that Hyundai’s Alabama project should move away from the lower end of the market. would be at least above intermediate class. was targeting high-valueadded businesses. and satellite radio receivers. However. which was Hyundai’s chief supplier and would also construct a plant near Hyundai’s site in Alabama.Hyundai Motor Company This seemed to be one reason why the Alabama plant planned to first launch two higher-level models: the Sonata and the Santa Fe. The company also hinted that the subsequent vehicles. smart airbags. Hyundai Mobis. which followed these models. rather than cost-saving businesses. intelligent brake systems.

some officials insisted that the Alabama project should not deprive Hyundai of its price advantage. which was far below the average number of employees of other U. Thus. what it called “a highly automated production line” using as many robots as possible. Organizational Politics The strategic market challenges discussed above were complicated by interorganizational conflicts among the HMC management. Hyundai expected to employ only about 2. First. Hyun dai’s strategy of moving upward in its car 38 | P a g e .S. and HMA. the labor union. plants after controlling for the scale of production.000 workers at its Alabama plant.Hyundai Motor Company environment.

Today. the frequent shutdown of plant operations due to strikes pushed us to find plant sites abroad. A high rank manager in HMC said: I would say that the salary of plant workers in HMC has recorded the highest increase rate within the Korean labor group. because the salary of our plant workers in Korea would not be lower than that of Alabama workers. … I don’t agree that we should be worried about the expected high labor cost of the Alabama plant. Rather. It is imperative to increase our car price for survival. their salary is even higher than the CEO of most small or medium-sized companies in Korea. This means 39 | P a g e .Hyundai Motor Company price zone was strongly enforced by lack of cost competitiveness based on cheap labor.

Hyundai Motor Company that the more strikes. we granted them the right to veto our critical strategic decisions in order to stop their strike of the last seven weeks. I am concerned that they may try to check the Alabama project. Then we are entitled to request a comparable wage level. the more unemployed. though strikes bring them (plant workers) higher wages in the short term. Big-3 makers. This is a war without a winner. 40 | P a g e . They should give up relying on cost savings from cheap labor. I am informed that our labor productivity is comparable to the U. A member of HMC labor union expressed an opposing opinion: I don’t understand why the management group blames Hyundai’s strategic difficulties on the labor union.S. … Last week.

Hyundai Motor Company However. If not. the current strategic problems should be attributed to them. But unions in the German automakers do have an important role in the decision process. automakers are not deeply involved in the managerial decision-making process. … They feel uneasy about our right to veto their managerial decisions.S.S. A person from HMA said. newspapers reports Hyundai’s strike day after day. It is natural for U. customers to perceive that our production system is quite 41 | P a g e .S. I am not sure whether our management group. The HMA was also dissatisfied with the labor group’s unreliable production activity. not to us. They argue that the labor unions of U. has proved comparable capability. “U. including marketing and financing.

” However. This certainly hurts our brand value.Hyundai Motor Company unstable due to the repeated labor management disputes. He aid: Officially. But we don’t have control. we are supposed to have much control over decisions on market and technological strategies. we usually find that the idea is outdated. I understand that HMC people have been 42 | P a g e . We have come up with some good ideas. but we quickly give them up because we know that it will take a long time for the ideas to be accepted by the HMC management group. another interviewee from HMA pointed out that the current dependent relationship between the HMC management group and HMA was a more critical organizational challenge. Even when a proposal is accepted.

Hyundai Motor Company accustomed to top-down leadership and they try to control us since they regard us as a subordinate organization. But they should recognize that such a subordinate relationship is a drag on us in pursuit of globalization and time management. about how to cope with cultural gaps in leadership and decision-making. such as Toyota and Honda. With the 43 | P a g e . We need to learn from the experience of other foreign makers. COMPANY PROFILE IN INDIA Background and Inception of the company: Shree Hyundai is one of the dealership of Hyundai Motors India Limited in BOKARO. It was established in the year 2007.

As it is newly opened organization hence as every other organization it is 44 | P a g e . It seems Mr. Shree Hyundai’ working philosophy is particularly based on “Prepare employees for the future developments with developments in their personality.” As competition is very much intense hence the management is working hard for customer relationship to achieve future business growth.Hyundai Motor Company opening of this venture.D. customers may feel ease as they are having options to take the view from either of the show room.Mishra decided to open this showroom in Chas (Bokaro) area as there is no any passenger vehicle showroom in this area and it is going to be the future business area of the Bokaro. B.

Shree Hyundai is having its separate executives. Each and every department is distinguished for the employees. Departments are connected through local area networks.Hyundai Motor Company also facing some management problems. So that. It starts with the joining of the 45 | P a g e . Every employee is having its own designation and job profile and he/she has to work under that profile only. For each segment of the vehicles. Management is trying to overcome all these problems and achieving systematic workings here. The main aim of management here is self development of employees. they can be empowered for the benefit of the organization and be able to take future responsibilities.

they have to work under various departments till his/her probation period would be over. so that they can understand the reality of the business here. ABOUT HMIL Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company. Daily reporting at the morning and the evening make them up to date with the objectives and their future targets. South Korea and is the largest passenger car 46 | P a g e .Hyundai Motor Company employee in the organization. The senior management knows that how they are doing their work and in which way they have to be directed. They have to start their works from the ground level. Initially.

880 vehicles in the calendar year (CY) 2009. the i10. HMIL presently markets 54 variants of passenger cars across segments. an increase of 14.Hyundai Motor Company exporter and the second largest car manufacturer of India. the Accent and the Verna in the C segment. In the domestic market it clocked a growth of 18. the Sonata Transform in the E segment and the Tucson in the SUV segment.4 percent over CY 2008. the Getz Prime & the premium hatchback i20 in the B+ segment.1 percent as 47 | P a g e . registered total sales of 559. continuing its tradition of being the fastest growing passenger car manufacturer. Hyundai Motor India Ltd. These includes the Santro in the B segment.

HMIL commissioned its second plant in February 2008 which produces an additional 300. Latin America and Asia. quality and testing capabilities in the country. 48 | P a g e . It has been the number one exporter of passenger car of the country for the sixth year in a row. In continuation of its commitment to provide the Indian customer with global technology. with export of 270.017 units.7 percent. Africa.863 units. Middle East. HMIL's fully integrated state-of-theart manufacturing plant near Chennai boasts of the most advanced production.Hyundai Motor Company compared to 2008 with 289. HMIL currently exports cars to more than 110 countries across EU.000 units per annum. while overseas sales grew by 10.

which will be further bolstered in 2010. HMIL also launched the new facelift Sonata Transform and the new Verna which are vastly improved models compared to the outgoing models. Apart from the expansion of production capacity. In March. In December 2008. In 2009. 2008. 2009 49 | P a g e . HMIL launched the much awaited premium compact the i20 after it had a global preview at the Paris Motor Show in October. HMIL currently has 286 strong dealer network and 540 strong service points across India. HMIL has invested to expand capacity in line with its positioning as HMC's global export hub for compact cars.000 units per annum.Hyundai Motor Company raising HMIL's total production capacity to 600.

In September 2009. The Santro has been the highest selling model for Hyundai with more than 15 Lakhs units sold since its launch in India in 1998. 2007.Hyundai Motor Company Hyundai i10 clocked the fastest 3 lakh sales since its launch in October. HMIL introduced the new refurbished Santro with luxurious interiors and improved exterior features.4 Litre CRDi engine in July 2009. Hyundai Motor 50 | P a g e . The i20 achieved the highest safety rating by the European NCAP. Hyundai Motor India in December 2009 also crossed the 25 Lakh car production milestone. HMIL also became the only car manufacturer to introduce Automatic transmission across segments with the launch of the i20 1. The i20 also simultaneously got a powerful 1.4 Litre Petrol Automatic.

Apart from the expansion of production capacity. HMIL currently has 251 strong dealer network across India. The company’s overall performance in the automobile sector was recognized by the media as it was awarded with the prestigious ‘Manufacturer of the Year’ award by both UTVi Autocar Car and NDTV Profit-Car & Bike in 2009 HMIL has invested to expand capacity in line with its positioning as HMC's global export hub for compact cars.Hyundai Motor Company India remains one of the fastest growing car manufacturers in the country. Nature of Business Carried: 51 | P a g e . which will be further bolstered in 2009.

The business carried by Shree Hyundai is of dealership. Mission and Quality Policy: MISSION: The mission of the Shree Hyundai is committed to develop the firm as a big competitor and service provider in the Jharkhand Passenger car market.Hyundai Motor Company Shree Hyundai is a dealer of cars of Hyundai motors. It is an also an authorized service centre and it totally aims in selling cars both passenger and SUV vehicles as per demand of customers. Vision. VISION: The dealer announced "Innovation for Customers" as our mid–to long–term vision with five core strategies: global 52 | P a g e .

customer satisfaction. technology innovation. respect for human values. 53 | P a g e . They desire to create an automobile culture of putting customer first via developing human–centered and environment–friendly technological innovation. and cultural creation.Hyundai Motor Company orientation. it make efforts to meet the expectations of all stakeholders including customers and business partners by building a constructive relationship amongst management. labor. executives and employees. and gaining confidence from all stakeholders. they focus on communicating their corporate values both internally and externally. Also. QUALITYPOLICY: Based on a respect for human dignity.

Mishra CEO. But the HMIL under which the dealership situated operates globally in both Passenger cars segments and SUVs segment. Nitesh Kumar Mishra 54 | P a g e . Ramgarh. B. Owner – Mr. Ranchi and Purulia (Bengal). Dumka.Hyundai Motor Company Area of Operation: The firm operates regionally in the Jharkhand circle.D. The showrooms are situated in the important markets of Jharkhand that are Bokaro(Head office).Mr. Ownership Pattern: The firm is private limited firm and the dealership is directly under the HMIL in India.

Royal Enfield Motors Telco TVS Motors 55 | P a g e . General Motors India Ford India Ltd. Eicher Motors Bajaj Auto Daewoo Motors India Hero Motors Hindustan Motors Hyundai Motor India Ltd.Hyundai Motor Company Branch Manager and Manager Sales– Mr. Manish Prasad Major Manufacturers in Automobile Industry around world Maruti Udyog Ltd.

The production of total vehicles increased from 4.99 to 7.2 million in 1998.Hyundai Motor Company Government has liberalized the norms for foreign investment and import of technology and that appears to have benefited the automobile sector.3 million in 2003-04. The automotive industry is a key industry in the European economy characterized by having few vehicle 56 | P a g e . It is likely that the production of such vehicles will exceed 10 million in the next couple of years.

Hyundai Motor Company manufacturing firms and a substantial number of independent suppliers to which about 2/3 of the production is outsourced. Today's cars are sophisticated. medium and heavy trucks. buses and coaches. Further developments are expected in the areas of brake 57 | P a g e . these new vehicles use the latest developments of many different technologies. with a significant (and still growing) electrical and electronic content. To provide comfort and safety. motorcycles and agricultural and forestry tractors. The output includes cars. Rapid changes in technology are forecast for the auto industry over the next 10 years. while still being friendly to the environment. light trucks and vans. The automobile started out as a simple mechanical method of transport.

adaptive speed control and global navigation and satellite tracking systems. Unlike in the past. rolling out new models literally every day.Hyundai Motor Company assistance. reflecting the transitional phase the country is in. where there were not more than three or four players both in the four-wheeler and twowheeler segments in the country. There was a time when owning a four-wheeler was widely termed a luxury. The automobile sector is vibrant in the country with plenty of potential 58 | P a g e . the automobile market is now flooded with multinational companies vying with one another. but now it is considered a necessity. No doubt. the country has become Asia’s auto hub and the changing trend here is well noticed worldwide.

It has provided a chance for manufacturers to flood the market with their innovative products. around one million cars are being manufactured annually in the country and the figures are likely to get doubled in another 10 years.Hyundai Motor Company for growth. The industry is blooming and definitely growing at a healthy pace. the addressable group with the potential of buying a vehicle amounts to 20 per cent. At present. The substantial figure provides enough opportunity for the players in the market to explore with their products. the manufacturers too have paid more attention to supplement their products with additional features considering the comfort level of 59 | P a g e . Of the country’s population. Given the road facilities in the country.

as it has become the key. Discounts can be attractive. But. people are also carried away by the discounts. The increase in sales truly reflects the buoyancy witnessed in the market. it is for sure that the customer will have a satisfying driving experience. With some of the advanced sophistication like active stability and traction control system available with the product. 60 | P a g e . The boom in the sector also owes much to the flexible financial options available for customers to help them realize their dreams. which is a cause for concern. in actual terms most of the companies have witnessed an increase in sales in the four-wheeler segment. Though a steep rise in the loan interest rates threatens to create a dent in sales.Hyundai Motor Company customers.

the mode of travel of people has also changed. With changing times.It is a highly volatile market. Customers should look in for additional safety features in the vehicle rather than accessories. where customers are very price and time-conscious. Many who owned bicycles have graduated to motorcycles while those who have bikes try to shift to the entry-level cars and those who have cars aspire for premium brand fourwheelers . Almost all 61 | P a g e .Hyundai Motor Company But more than that safety is important. The way the brand-conscious people look at investment on vehicles should change. Increase in interest rates has little effect on four-wheeler segment as people who decide to buy a vehicle are more concerned with the timing of purchase.

for it has become a convenient product. The industry (OEMs and suppliers together) contributed nearly 4 per cent to the country’s GDP in 2003 -04.45 million 62 | P a g e .Hyundai Motor Company players in the two-wheeler segment have rolled out their own product in this segment. While the auto components market has been growing at 19. Indian Automobile Industry: Auto sector could grow to $145 b by 2016 The domestic automobile market has been growing at 14. It employs 0.2 per cent CAGR over the past 4 years (2000-01 to 2004-05).2 per cent CAGR (2000-01 to 2003-04). The automotive sector also offers significant employment opportunities.

Hyundai Motor Company

people directly and around 10 million people indirectly. Leading Challenges in Automobile Sector: Computer literacy, and product knowledge; Insufficient training; Insufficient numbers of highperformance customer-facing personnel; Insufficient skills in certain areas, including interpersonal communication, Difficulty securing the best talent to sales and management positions; A low awareness of career opportunities and paths within the industry; and A nagging image problem for the industry exacerbating these issues.
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Hyundai Motor Company

Hyundai’s Market Share Forecast and Comparison:

Competitors Information:
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Hyundai Motor Company

Car segment – Maruti Suzuki M-800 had dominated the Indian car market since it was launched in 1984. The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over two decades. Apart from the increased competition, MUL also had a few other problems on its plate. There was a delay in setting up of a plant in India for manufacturing diesel engines and transmission systems for cars. The engines for its diesel variants were imported from other countries, and there were limits on the quantities it could import. In the market, MUL's models like the
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Alto. WagonR.' a sports utility vehicle (SUV) from Mahindra and Mahindra Ltd. within the first eight days of its launch. which had impressed many industry observers and customers. and Baleno were showing mixed results. A year ago. celebrated the first anniversary of its launch.Hyundai Motor Company Zen. a leading Indian automobile company. Utility Vehicle segment – Mahindra Marketing Strategy of Mahindra and Mahindra Limited for Scorpio In June 2011. This one year journey had been quite fruitful for Scorpio.000 customer 66 | P a g e . 'Scorpio. Scorpio had attracted over 10. (M&M).000 customer to its dealer showrooms and over 3.

Scorpio had sold 15. According to company sources. In 67 | P a g e .800 units per month in 2002 to 2. Thanks to the high decibel advertising support.Hyundai Motor Company enquiries. automobile enthusiasts and industry analysts had all given the SUV extremely positive reports. resulting in 1000 order bookings. and 2. With demand for the vehicle growing steadily. M&M even had to increase its production from 1. Media reports.000 units across India. Scorpio had acquired high brand recall among consumers. by the time it completed its first birthday.000 per month in June 2011.500 per month by late 2011.

it was said to be one of the very few automobile brands in India that successfully boosted the image of their parent companies (in this case M&M) as well. Good entertainment facilities available for customers who were wait during the servicing of their car. The showroom has good facilities such as Playing area for children who are coming with the customers. Infrastructural Facilities: The firm has good infrastructural facilities these are: It is situated in the main market place of the Bokaro Steel City. Good servicing facilities for cars with advanced technologies.Hyundai Motor Company fact. 68 | P a g e .

Future growth and prospects: Shree Hyundai’s future growth is very bright because it is the newly growing firm in the Bokaro market. Achievement and Awards: Achieved the most car seller dealership in Jharkhand.) Ltd. Win the best car seller award in Bokaro from Chas Chamber of Commerce. which is already a well established Bajaj showroom in the Bokaro market. It is the division of Ranju automobiles (Pvt. The customers of 69 | P a g e .Hyundai Motor Company The showroom uses new technology in their management information system(MIS).

Its primary consumer target is middle to upper income professionals who need true value for their money and comfortable ride in city conditions.Hyundai Motor Company Bokaro is already aware about the Ranju Automobile because this is the very old firm and dealership in Jharkhand. Due to this customers are committed toward this dealership and due to this customers do not go for any other showroom of Hyundai. 70 | P a g e . Its primary business target is midsized to large sized corporates that want to help their managers and employees by providing them a car for ease of transport. STRATEGY Shree Hyundai’s marketing strategy is differentiated marketing.

Hyundai Motor Company Its secondary business target is entrepreneurs and small business owners who want to provide discounts to managers buying a new car. Location of Hyundai Car Plant 71 | P a g e .

Sales Finance Dept. Hyundai Advantage Pre. GDMS and Back Office Accessories & Spares Service Dept.Owned Cars 72 | P a g e Team Leader.Hyundai Motor Company STRUCTURE Overall Structure of the Shree Hyundai: Chief Executive Officer Managing Director Branch Manager and Manager ‘sales & marketing’ Corporate& Exchange . Sales Executives Employees Employees Employees .

Hyundai Motor Company SKILL Shree Hyundai product is Passenger Cars. so they should be handled 73 | P a g e .

Training will be given to employees to know about the total features of cars in Shree Hyundai. and skill in the sense testing of cars. STYLE Top down Approach The management acts with autonomy and independence in excercising strategic supervision. And 10 weeks training will be given for employees for junior technical officer. So it required skilled manpower for handling. Training will be conducted in Hyundai Jamshedpur (Jharkhand). about machines.Hyundai Motor Company carefully. and in 74 | P a g e . discharging its fiduciary responsibilities. For newly recruited employees will be given basic training program for 10 weeks.

transparency and disclosure. For all the different marketing teams. one Team Leader is 75 | P a g e . Anyone in the company can put in their view points before the management for any improvement in the prospects of the company. Participating Approach At Shree Hyundai the management is participating in nature.etc…. manpower. working environment.Hyundai Motor Company ensuring that the company observes the highest standards of ethics. SYSTEM The marketing department is divided into 5 Teams.

The team leaders take care of their team’s activities and report to the marketing manager that is further reported to the CEO. Spot incentive Schemes etc is placed in the system to motivate the employees.Hyundai Motor Company assigned. The customers are handled by the same personnel from the beginning to the end. TYPE OF WORK OF Y 76 | P a g e . the task is distributed to different teams. STAFF CATEGOR NO. The conversion and Target fulfillment is traced out via the software. The marketing is totally target based and based on targets given by HMIL.

Hyundai Motor Company STAF F Sales Generate sales from 10 Consultan market ts Back Maintain the data of 2 Office customers Finance Dept 6 Maintain the financial data Maintain the data and Stock of parts and spares Deal in all the preowned cars of Hyundai Servicing of cars and Spares 4 And Accessori es Corporate 3 and Exchange Service 77 | P a g e 4 .

etc EDP DUTIES AND RESPONSIBILITIES OF STAFF To report him/ her to duty at the place to which he/she posted.Hyundai Motor Company Dept data maintenance of Serviced cars in service station of Shree Hyundai 6 Maintain Showroom data and customers complaints. To undergo the prescribed probation under specify period and undergo such training and for a period has may be arranged for him/her and 78 | P a g e .

Hyundai Motor Company acquit him/her self creditably in the training imported to him/her. prescribe. The review of customer care activities is done through morning meetings and weekly meetings on customer care. To obey and abide the rules. regulations. frame are issue from time to time to govern its employees. service conditions and standing orders which they may adopt. SHARED VALUES Review of Customer Care Activities. The documents that are necessary during the weekly review 79 | P a g e .

car display area. Internal SSI forms related. Show Room Ambience The hours of operation. outside and insides of the showroom along with reception. He should personally hand over the photographs clicked also the vehicle’s registration certificate and try to become the customer’s car advisor for life and never lose touch with the customer.Hyundai Motor Company are: PSR related. Customers for Life A week after the delivery. selling 80 | P a g e . the concerned sales person must fix an appointment with the customer and visit him along with the service advisor.HMIL related and other information related.

helps in introducing the workshop staff to the customers and in getting referrals and there are guidelines for the same. SWOT ANALYSIS STRENGTH: 81 | P a g e . customer lounge and delivery area should be taken care of. Customer Meets Organizing customer meets helps in improving SSI.Hyundai Motor Company area.

.e. etc OPPORTUNITY: 82 | P a g e . Accent. Ltd. is very old firm in Bokaro due to this customers of Bokaro area and its surroundings aware about this. WEAKNESS: SUV car has only two model i.Hyundai Motor Company Second largest manufacturer of Passenger vehicles in India due to this customers are attracted towards the company in Bokaro. Ranju Automobiles Pvt. Manufacture only Passenger vehicles but some models are not economic such as Verna. TUCSON and TERRACAN which is fewer available in India due to uneconomic and out of reach for middle class Families..

If the cars are more economic then the sales will be more boom and the company turn into first position in Indian automobile sector and win from their competitors i. Hyundai is exposed to a variety of market and other risks including the effects of demand dynamics.Hyundai Motor Company Shree Hyundai has opportunity to grow as a big competitor in Jharkhand automobile sector. hazard events and specific assets risk. GM and M&M. commodity prices. Tata Motors. as well as risk associated with financial issues. currency exchange rates.e. THREATS: Risk Factors In the course of its business.. Whenever 83 | P a g e . interest rates. Maruti Suzuki.

we use the instrument of insurance to mitigate the risk. Threats from Competitors Maruti Udyog Limited Maruti Suzuki’s is also the old car showroom in Bokaro due to this the competition is high with Shree Hyundai 84 | P a g e .Hyundai Motor Company possible.

4 5997 26.Hyundai Motor Company Analysis of Financial Summary Particulars 2010-2011 (in laces) 2011-2012 (in laces) Sales Growth in Sales (nos) (%) Total Income 85 | P a g e 2070147 2621400 23.6 7563 .

Hyundai Motor Company

Growth in Total Income (%) Profit before Tax Profit after Tax Share Capital Reserves and Surplus Total Debt Net Fixed Assets Total Assets(Net) Market Capitalization

15.5 1072 728 39.94 1099 175 589 1314 9797

26.1 1217 810 39.94 1453 202 715 1695 10943 564

Economic Value Added 569

KEY RATIOS

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Hyundai Motor Company

Long Term Debt/Equity 0 OPBIT*/Net sales-% 16.8

0 15.7 14.6 10.7 61.9 80.9 37.5 20 56.3 40.6

OPBT**/Net Sales*(%) 15.6 Profit after tax/Total income (%) Return on Avg. Equity (%) Return on Avg. Capital Employed(%) EVA/Capital Employed(%) Dividend Per Share ( Rs) Dividend Payout (%) 12.1 72.9 92.8 49.3 20 61.9

Earnings Per Share (Rs) 36.5

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Hyundai Motor Company

Market Value/Book Value Particulars No. of four wheelers sold Gross Sales Less: Excise duty Net Sale Other Income Total Turnover

8.6

7.3

March 31,2011

March 31,2012

1935981 2621400 6356.21 874.89 5481.32 105.27 5586.59 8596.81 1175.16 7421.65 141.03 7562.68

Total Expendituree
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4610

6257.14

18 1217.95) 5214.9 (14.65) 63.03 (1.04 578.22 .57 267.11 395.25 297.09) 89.Hyundai Motor Company Change in Stock in trade Consumption of raw material Staff cost Other Expenditure (9.97 789.23 195.14) 3845.55 Interest(net) Depreciation (0.38 Profit before the period before tax Provision for taxCurrent 89 | P a g e 914.

44 40.71 11.) Reserves Excluding revaluation reserves Basic/Diluted per share 30.59 90 | P a g e .94 Captial Face value per equity 2 share (Rs.36 810.22 39.94 2 1453.47 Paid up Equity Share 39.Hyundai Motor Company -Deferred 13.56 Net Profit 603.

the sales were down.Hyundai Motor Company Aggregates of NonPromoters shareholdings Number of Shares Rs. 2 per Rs.04% Percentage Holdings( 45. by developing competitive strategies and by delivering high class products and services. Popular Vehicles and Services were able to keep their sales 91 | P a g e . Though in the month of December. 2 per share share 89945570 89945570 45.04% to total holding ) Conclusion The report has highlighted the importance of providing the highest customer satisfaction and how it affects the sales.

The report emphasizes the importance of customer loyalty to develop the business.Hyundai Motor Company momentum. After deep research. The study which we conducted on the Four wheeler automobile sector is a very important topic of automobile sector. Throughout the study we found the four wheeler manufacturer having very new and modern technology in their bikes. 92 | P a g e . M&M. many of Automobile companies like Maruti Suzuki. they have a good market share in India. analysis and getting information about companies as formulated that the four wheeler automobile companies achieved success in the market. Tata Motors.

getting their market share and growth and what are services they are providing after sales. Concluding the performance of the company related to four wheeler sector in India. Hyundai Motors has managed to put in spectacular performance going from strength despite increase in competition. Ford. the company's sales have witnessed an uptrend. registering an average growth of 42% in the three years under review. etc are also giving large competition. Hyundai Motors has managed to achieve this because its strong brand image and proven product quality 93 | P a g e .Hyundai Motor Company Fiat.

Hyundai Motor Company underpinned the performance growth in recent years. Apart from the strong brand "Santro" the company's performance across the spectrum of the Passenger car market helped it exploit the growing demand for 5-stroke Cars. 94 | P a g e .

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