Hyundai: the little carmaker that could be a world player

Hyundai Motor is merely the hottest major automaker on planet Earth. Not bad for a company that drew little but derision from car buyers after its poorly built, problem-plagued Pony subcompact made its debut in Canada in the early 1980s.

In 2009, while two of Detroit's Big Three carmakers -- General Motors and Chrysler -- were put on life support, Hyundai managed to rack up record profits, boosting its U.S. market share by more than a full percentage point, and securing its spot as the world's fifth-largest auto manufacturer, behind Ford.

Meanwhile, Hyundai's upper mid-priced Genesis model was named 2009 North American Car of the Year, the company's quality ratings continued to win acclaim -- it was the top-ranked nameplate last year among non-premium-priced vehicles, according to J.D. Power & Associates -- and it steadily expanded its global footprint.

In India, where Hyundai's wholly-owned subsidiary now produces some 600,000 vehicles a year, the South Korean company is the country's No. 2 automaker, and top vehicle exporter.

Many of the vehicles it makes are exported to Europe.

In China, where Hyundai's assembly plant in Beijing is owned on a 50/50 basis with a state-owned firm, the Seoul-based carmaker ranks as the country's largest non-domestic automaker. It sells all of its Chinese production in China itself, now the world's largest car market.

Elsewhere, Hyundai expects to complete construction of a new plant in Russia this year, and it will break ground soon on a plant in Brazil.

And in North America, Hyundai's 36-per-cent-owned affiliate, Kia Motors, will open a new plant in Georgia by the end of this month, complementing Hyundai's existing assembly plant in Alabama.

Add it all up, and the total worldwide production capacity of Hyundai and Kia is expected to soar to 6.5 million units by 2011, more than double last year's level.

That's plenty to brag about, especially in view of the troubles that Toyota and other competitors are facing these days. But apparently that's not Hyundai's style.

During an extensive interview at Hyundai's gleaming global headquarters in suburban Seoul, Chaz Lee, director of the automaker's overseas marketing group, takes pains to play down the company's recent ascent, while giving much of the credit to company chairman and CEO Chung Mong-Koo, who took over the top job in 1998.

"I think it was due to our long-term commitment about a decade ago when chairman Chung came into current management. He was very focused on improving our quality," he says.

At the time, Hyundai was still smarting from its initial foray into the North American market, where vehicles like the Pony were considered "a joke" and the company was seen as a bottom feeder.

"The first thing he did was invest in quality, all the processes and everything. So all the investment at that time I think now is paying off, it's been bearing fruit," says Lee.

"And also, the changing atmosphere in the auto industry and the world economy made people think differently and behave differently in their car purchasing. And we just happen to have the right product portfolio. They're looking for cars with good design, relatively solid sound quality, and at the same time, very affordable and very lean on fuel economy. So all these factors made us stand out a little bit. But I don't want to call it success."

A bit of false modesty, perhaps?

"No, no, no. Really, there are a lot of things to tackle and still there are a lot of tests we need to get done," Lee insists.

"Especially our brand, and our design compared to other products. Our brand reputation is not noticed as much or appreciated in the market. So we really need to have our brand image enhanced in the future."

Hyundai is working on that, too. It bought half a dozen ad spots for the recent Super Bowl game, it is spending big ad bucks on the Academy Awards broadcast in March, and it is a major sponsor for FIFA's 2014 World Cup of soccer event.

"We need to go big. Now, with Kia, together being the fifth-largest automaker in the world, we cannot be sitting in the back seat with the second-tier brands. We need to be, and we want to be, recognized as a main player," says Lee.

"And the recent opportunities for our marketing, I think it came to us because of the change of the world, really. We were able to efficiently manage our resources to grab those opportunities, by going to the Super Bowl with our first 30-second ad in 2007. And last year we really took a major part in the place of Buick. So all these things came to us because the world atmosphere has changed, and the industry."

Of course, Hyundai is hardly starting from square one.

It is already among the world's top brands, ranking 69th -- just behind names like Rolex and Avon -- in a recent BusinessWeek survey.

But at Hyundai, that's not good enough. The company exudes the same kind of restless, innovative, 'can do' spirit that seems integral to South Korea's DNA. This is a country that won't settle for second-best.

It's a nation that pulled itself out of abject poverty to become the world's 15th-largest economy, all within about 30 years. While China gets all the glory in the Western media as the global economy's rising new superpower, South Korea's story is no less dramatic.

In fact, since this tiny country of 49 million people is a thriving democracy -- unlike China -- with first-class educational institutions, a world-class high-speed rail system, and infrastructure that is the envy of many Western countries, it is now setting itself up as a model for less-developed Southeast Asian nations to follow, such as Vietnam.

"We just go for it. There is continuous challenge until we get things done. And that kind of philosophy is embedded inside us," Lee says.

Besides its primary auto-manufacturing unit, Hyundai operates dozens of subsidiary companies, from auto-parts makers to financial services, construction and information-technology firms.

It's also investing roughly $5 billion US to build its own steel mill in South Korea, so it can provide steel to its own plants. That includes Hyundai's massive complex at Ulsan, the world's largest auto-assembly operation, with annual capacity of more than 1.5 million units.

That's roughly the size of Canada's entire vehicle market, by way of comparison.

Hyundai's next big target: the upscale car market, where it intends to take aim at brands like BMW, Lexus and Mercedes-Benz this fall. That's when Hyundai plans to launch its much-anticipated premium-priced Equus sedan in the U.S. and Canada.

With its expanding market presence in the world's two fastest growing car markets -- China and India -- and its inexorable climb up the rankings in North America and Europe, plus its stranglehold on the South Korean market, Hyundai is in an almost unassailable position. Provided it doesn't lose sight of the things that got it to where it is today, that is.

Lee says Hyundai isn't about to fall down on the job anytime soon.

"We listen to customers and we try to design and build cars that people love. GM, Ford and Chrysler are big companies with a lot of know-how and a hundred years of experience. But in car design and making products, appealing products, I think we've done a little better job."

At Hyundai, that's as close to an outright boast as you're likely to hear.