Hyundai Cars

Chung Mong Koo, chairman of Hyundai Motor Co., made a decision to raise the quality of its cars from its
present ‘butt of talk show jokes’ image to the level that equals that of Toyota’s. While few people took him
seriously about this, he was able to pull the Hyundai car’s image from probably rock bottom to a level that is
occupied by the likes of Toyota and Honda. All this he did by concentrating on improving the quality (and
thereby improving the reliability) of the cars.

The result of Mr. Chung’s hardwork resulted to an increase in the net profit of the company by 21%, and the
improved reliability of the cars has caught the attention Daimler-Chrysler and Mitsubishi Motors to use a
Hyundai designed engine in their small and mid-sized cars line.

Insights:
What do car buyers look for when buying a car? Top answers would have to be reliability, looks (or aesthetics),
car features, and price. Of the ones enumerated, I would boldly declare that reliability is the number 1 factor
that determines the car buyer’s choice for buying a car (or at least for an average car buyer). For an average car
buyer, can they afford to waste their hard-earned money on a vehicle that would break down as soon as it
leaves the dealership? Or spend even more hard-earned money for repairs after just a few months of use?

In the case of Mr. Chung, he determined that he needed to raise the quality of the cars they were making. To
achieve this, he apparently put into place a short and long term plans. Plans that boosted the quality and
reliability of the cars they were making. He also had a quality-control team that had the ability to hold the
release of new models until quality-related problems were resolved. As a result, J.D. Power & Associates Inc.
has said that the Korean company had virtually caught up with Toyota. It may be hard to believe for a lot of
people but statistical reports prove that indeed, the quality of Hyundai cars have improved. Power’s 2004 initial
quality survey, reports only 9.6 problems in the area of faulty wiring lights and hard starting engines per 100
vehicles compared to the industry standard of 13.8.

Implications:
Good and firm management paired with like-minded personnel has resulted to the company’s rise from a
lagging and butt of joke car company to one that is at par with car company giants such as Toyota and Honda.

Another take-away from this success story is the role of changing the perception of the market about the
company. All the hardwork done by all the people involved in the company will be all for nothing if no one
recognizes them. Test statistics by reputable inspectors (or adjudicators), advertisements, and testimonials play
an important role in the journey of Hyundai Motor Co. to be recognized as a top quality car maker. All these
help paint a new picture of a new and improved car models by the Hyundai Motor Co., that is, cars that are of
high quality, dependable and at par with other car brands.