Taking on the worldNumber 4 and counting

  • Hyundai ix35
  • Hyundai ix35
Date:30 May 2010 Author: Anthony Doman Tags:,

There recently was an opportunity to revisit familiar territory. No, I don’t mean the luxury train travel, boutique accommodation and all-round pampering that makes this job so thoroughly bearable.

Instead of giving the usual overview of current trading conditions with some crystal-ball gazing, Hyundai Motor South Africa CEO Alan Ross looked back, providing some insight into Hyundai’s rise and rise. That took me back a little.

On my first trip to South Korea to drive a new Hyundai in the mid-1990s, I was struck by the immense clout wielded by Hyundai. You could see the name on everything from supertankers to nuclear power stations. It symbolised everything good about the rise of the Koreans as an industrial powerhouse. A car manufacturer then just 30 years old, it had a range of humdrum product, but the new Accent, standing in endless rows on the export quay next to a waiting ship transport, looked like a feisty little gamebreaker.

Just a few years later, like the rest of Korea, Hyundai was in the doghouse. The company, and the country, tottered in the throes of financial meltdown and allegations of corruption and mismanagement.

Here we are, 2010, and Hyundai is a partner in the FIFA World Cup, riding the crest of a wave. It is the world’s fourth-biggest car manufacturer. According to the statisticians, it’s the world’s largest car manufacturer by profit and is also the world’s fastest-growing.

In South Africa, a quiet beginning here turned into an enthusiastic response. There was a range of competent products, and innovations such as after-hours servicing.

But the honeymoon came to an abrupt end. Local boss Billy Rautenbach, who’d had drawn flak for taking advantage of a tax regime loophole to open an assembly plant in Botswana, turned fugitive from justice. For a while, Hyundai South Africa bobbed in the doldrums.

Then, in 2000, the giant Associated Motor Holdings group took over the local operation. Hyundai don’t make their sales figures public (though they will make their satisfaction public). Privately, they’ll give more than a hint of how surprisingly well things are going.

Which is not to say they’re under any illusions. For instance, Ross is quite candid about the reputation for poor quality that dogged the company in the early days. But, he says, they’ve vowed that putting quantity above quality is a mistake they won’t make twice.

The company’s goal is encapsulated in the abbreviation “GQ 3-3-5-5”. What this means is the intention to reach the top 3 in actual quality within 3 years, and to be among the top 5 in perceived quality within 5 years.

They’re not sitting still as regards innovation, either: Hyundai expects to turn over its entire product line within the next four years. They also have to increase market share by 3,5 per cent in the USA.

That means they’ll have to increase production. Currently, Hyundai’s annual production capacity is 5,8 million; their actual yearly production total is 5,2 million. Plans are in motion to increase production to 6,5 million by 2012, Ross says. Of course, ramped-up production is only part of the story: they have to stay ahead of the game, too. So, spending on research and development is up to R9,35 billion (53 per cent up vs 2008).

In South Africa, Hyundai’s year-on-year growth of 64 per cent is significantly better than the average of 20 per cent. There’s a thoroughly new product line-up, with more to follow soon.

Don’t bet against them achieving their objectives.

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