Strategy – Building Capacity Key to Hyundai’s Turnaround

In the 1990s,  Hyundai was known for producing cheap cars.  In the 2000s,  Hyundai was seen as a Honda and Toyota “wannabe.”    In the late 80s,  Hyundai knew it needed to define its own destiny.   The executives determined that the company would become an automobile powerhouse.

What that meant was introducing a comprehensive warranty, and then making quality improvement its top priority.   It also meant enhancing its production design and marketing capabilities.

Hyundai has a typical Korean command and control culture.   However,  the company knew it needed to empower and encourage risk taking – so it could tap into American innovation.

Anyone looking for an explanation of the Hyundai Motor Company’s approach to the U.S. market—which has brought it from a near collapse in sales in 1998 to controlling 5 percent of the market today—might start with the third door on the Veloster hatchback. This sporty car, aimed at people under age 35, sells for a starting price of around US$20,000. It’s an idiosyncratic car, with the look of a sleek, friendly shark; it also has a single door on the driver’s side, but two doors on the right.  The third door, whose purpose was to improve access to the back seat for passengers or cargo, was originally conceived as a purely pragmatic feature. Then, as part of an internal face-off, two design teams—one at Hyundai’s design and engineering center in Ann Arbor, Mich., and the other at Hyundai Motor America headquarters near Los Angeles—were assigned to build prototypes. The Michigan team proposed two doors on the same side opening in opposite directions—an other worldly, appealing design. But as the California team pointed out, a passenger stepping out of the car would not see traffic coming up behind the door. The Californians bestowed the nickname “suicide doors” on their rivals’ offering, and suggested instead a more conventional parallel design, but one that placed the handle in an unusual corner position, which enhanced the car’s funkiness and flair.

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Strategy – Building Capacity Key to Hyundai’s Turnaround

Highlights provided by David Willden