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IT IS 1am in a freezing cold Seoul and the traffic in the busy Gangham-gu business district is still jammed. Forget New York: Seoul is the city that never sleeps – not a surprise, given South Korea's economic growth miracle in the 1970s and subsequent integration into the global economy.
Koreans don't have time to sleep.
Eight out of 10 cars on Seoul's packed roads are made by Hyundai or Kia – the two pillars of the Hyundai Motor Company (HMC), founded in 1967 from the debris of the Korean War.
Though HMC already has an undisputed stronghold in the South Korean market, its current goal is more ambitious.
Hyundai – currently number four worldwide in terms of sales and number three in South Africa – is jostling for a bigger spot in the global automotive market.
Over the short term, HMC would like to overtake its current closest competitor in terms of sales, United States manufacturer Ford.
Over the long term, any of the big three – Toyota, General Motors and Volkswagen – could be fair game. Back in SA Hyundai is planning to control our passenger car market within five years.
That would be HMC's second big battle of the decade. The first was a private one, fought out by engineers behind closed doors in the company's five research and development centres located on three continents.
Ten years on, the majority of doubts relating to the quality of Hyundai's vehicles have been purged. It continues to invest 5% of its annual sales revenue in research and development each year, irrespective of actual sales numbers.
"It's the only way we can keep on improving our products," says Frank Ahrens, director of worldwide corporate affairs at HMC. "We don't want to grow too fast and let the quality slip."
So far, HMC is pushing the right buttons. A survey by ratings agency JD Powers last year placed Hyundai's cars above the industry average when it comes to quality and vehicle dependability.
What remains is a no holds barred attack – in the nicest way possible – on consumer sensibilities or, as HMC public relations manager Angela Hwang puts it: "We want to be loved."
But the big problem with the Hyundai brand is perception. By November last year HMC had sold more than 2.5m vehicles worldwide, 21% up on 2009.
The Hyundai Genesis (not available in SA) was named the North American Car of the Year in 2009. HMC is no longer just following benchmarks set by the German and Japanese heavyweights: it's making a few brave attempts at setting its own – as evidenced by the introduction of its Veloster coupe, inspired by a high-performance sports bike, at this year's Detroit Auto Show.
And still... the brand's South Korean heritage and relative youth cling like an unsavoury aroma, along with consumers' refusal to perceive Hyundai vehicles as luxury – the biggest obstacle to HMC's ambitions to grow its brand in non-Asian markets.
'Our battleground is customers' minds'
Hyundai ranked eighth in an automotive brands valuation survey conducted by international branding consultancy Interbrand – the same position it held last year.
Toyota remains in number one spot, quality furore of 2010 notwithstanding. "Our battleground is customers' minds," says Hwang.
HMC is attempting close the gap between its number four ranking in sales and number eight ranking in brand value through an aggressive new marketing campaign called the Modern Premium (also introduced at the Detroit Auto Show last month) and sexier vehicle designs.
New customer service habits have also been introduced, including a pre-sales service, in an attempt to improve satisfaction similar to the tactic employed by Toyota in the 1970s.
"We don't want to be Toyota," says Ahrens. "We don't have any targets against our competitors in terms of image: we want to be like Apple and set the premium."
The Hyundai brand does better in some regions – Asia, most notably – than others. Europe is one of the areas where sales growth is still hampered by its brand weakness, although that's a problem shared by many emerging Asian brands.
"I see a write-up on a new Hyundai car in the press and it's positive enough. But then there's usually a line at the end that says: 'But it's a Korean product'," says Alan Ross, CEO of Hyundai Automotive SA (Hasa). "I really hate that."
Hasa is part of the Imperial-controlled Associated Motor Holdings, which is responsible for importing and distributing Hyundai, Kia and a collection of other competitively priced Asian vehicles into SA.
The company is the notorious bugbear of the rest of the industry, due to its refusal to disclose sales figures – although Hasa marketing director Stanley Anderson will go so far as to say Hyundai ranked third in the combined light commercial and passenger car market in SA, behind Toyota and Volkswagen, and increased its market share by 45% in 2009.
"We're around 5% behind the market leader in market share right now," says Anderson. "I believe we can be number one in passenger cars in five years."
He'd like to see its market share grow by around 2% this year and sales volumes by 12%, in line with wider industry expectations. The launch of its Accent sedan towards the middle of the year and of the new Elantra in the third quarter 2011 is expected to move sales along.
The only question mark about Hyundai's ambition to topple Toyota and Volkswagen in terms of sales in SA is HMC's reluctance to invest in manufacturing facilities here.
Hyundai is the only major passenger car player that relies solely on imports and intends to do so for the foreseeable future. "I don't believe we'll ever produce in SA," says Ross.
"You need at least 25 000 vehicles on the line and I just don't see it."
William Lee, executive vice-president of HMC's Africa and Middle East division, says sales in Africa are growing but not fast enough to support any physical investment, and stronger sales on the continent would need to motivate a plant in SA.
HMC's main foreign market is China, where almost 20% of its total 2009 sales came from. Next in importance is the US, where Hyundai has a relatively strong brand showing due to its 25-year presence in that country.
Africa doesn't yet feature in the top six regions in terms of sales.
Hyundai currently has production plants in Korea, China, India, Russia, Turkey, the US and the Czech Republic and plans to open a plant in Brazil.
* This article first appeared in Finweek.
* To read more Finweek articles, click here.
Koreans don't have time to sleep.
Eight out of 10 cars on Seoul's packed roads are made by Hyundai or Kia – the two pillars of the Hyundai Motor Company (HMC), founded in 1967 from the debris of the Korean War.
Though HMC already has an undisputed stronghold in the South Korean market, its current goal is more ambitious.
Hyundai – currently number four worldwide in terms of sales and number three in South Africa – is jostling for a bigger spot in the global automotive market.
Over the short term, HMC would like to overtake its current closest competitor in terms of sales, United States manufacturer Ford.
Over the long term, any of the big three – Toyota, General Motors and Volkswagen – could be fair game. Back in SA Hyundai is planning to control our passenger car market within five years.
That would be HMC's second big battle of the decade. The first was a private one, fought out by engineers behind closed doors in the company's five research and development centres located on three continents.
Ten years on, the majority of doubts relating to the quality of Hyundai's vehicles have been purged. It continues to invest 5% of its annual sales revenue in research and development each year, irrespective of actual sales numbers.
"It's the only way we can keep on improving our products," says Frank Ahrens, director of worldwide corporate affairs at HMC. "We don't want to grow too fast and let the quality slip."
So far, HMC is pushing the right buttons. A survey by ratings agency JD Powers last year placed Hyundai's cars above the industry average when it comes to quality and vehicle dependability.
What remains is a no holds barred attack – in the nicest way possible – on consumer sensibilities or, as HMC public relations manager Angela Hwang puts it: "We want to be loved."
But the big problem with the Hyundai brand is perception. By November last year HMC had sold more than 2.5m vehicles worldwide, 21% up on 2009.
The Hyundai Genesis (not available in SA) was named the North American Car of the Year in 2009. HMC is no longer just following benchmarks set by the German and Japanese heavyweights: it's making a few brave attempts at setting its own – as evidenced by the introduction of its Veloster coupe, inspired by a high-performance sports bike, at this year's Detroit Auto Show.
And still... the brand's South Korean heritage and relative youth cling like an unsavoury aroma, along with consumers' refusal to perceive Hyundai vehicles as luxury – the biggest obstacle to HMC's ambitions to grow its brand in non-Asian markets.
'Our battleground is customers' minds'
Hyundai ranked eighth in an automotive brands valuation survey conducted by international branding consultancy Interbrand – the same position it held last year.
Toyota remains in number one spot, quality furore of 2010 notwithstanding. "Our battleground is customers' minds," says Hwang.
HMC is attempting close the gap between its number four ranking in sales and number eight ranking in brand value through an aggressive new marketing campaign called the Modern Premium (also introduced at the Detroit Auto Show last month) and sexier vehicle designs.
New customer service habits have also been introduced, including a pre-sales service, in an attempt to improve satisfaction similar to the tactic employed by Toyota in the 1970s.
"We don't want to be Toyota," says Ahrens. "We don't have any targets against our competitors in terms of image: we want to be like Apple and set the premium."
The Hyundai brand does better in some regions – Asia, most notably – than others. Europe is one of the areas where sales growth is still hampered by its brand weakness, although that's a problem shared by many emerging Asian brands.
"I see a write-up on a new Hyundai car in the press and it's positive enough. But then there's usually a line at the end that says: 'But it's a Korean product'," says Alan Ross, CEO of Hyundai Automotive SA (Hasa). "I really hate that."
Hasa is part of the Imperial-controlled Associated Motor Holdings, which is responsible for importing and distributing Hyundai, Kia and a collection of other competitively priced Asian vehicles into SA.
The company is the notorious bugbear of the rest of the industry, due to its refusal to disclose sales figures – although Hasa marketing director Stanley Anderson will go so far as to say Hyundai ranked third in the combined light commercial and passenger car market in SA, behind Toyota and Volkswagen, and increased its market share by 45% in 2009.
"We're around 5% behind the market leader in market share right now," says Anderson. "I believe we can be number one in passenger cars in five years."
He'd like to see its market share grow by around 2% this year and sales volumes by 12%, in line with wider industry expectations. The launch of its Accent sedan towards the middle of the year and of the new Elantra in the third quarter 2011 is expected to move sales along.
The only question mark about Hyundai's ambition to topple Toyota and Volkswagen in terms of sales in SA is HMC's reluctance to invest in manufacturing facilities here.
Hyundai is the only major passenger car player that relies solely on imports and intends to do so for the foreseeable future. "I don't believe we'll ever produce in SA," says Ross.
"You need at least 25 000 vehicles on the line and I just don't see it."
William Lee, executive vice-president of HMC's Africa and Middle East division, says sales in Africa are growing but not fast enough to support any physical investment, and stronger sales on the continent would need to motivate a plant in SA.
HMC's main foreign market is China, where almost 20% of its total 2009 sales came from. Next in importance is the US, where Hyundai has a relatively strong brand showing due to its 25-year presence in that country.
Africa doesn't yet feature in the top six regions in terms of sales.
Hyundai currently has production plants in Korea, China, India, Russia, Turkey, the US and the Czech Republic and plans to open a plant in Brazil.
* This article first appeared in Finweek.
* To read more Finweek articles, click here.
