Hyundai: Building A "Camry Fighter"

[Ming]

Building A "Camry Fighter"
Businessweek Online



Behind a cordon of tight security at Hyundai Motor Co.'s plant in Asan, about 100 kilometers southwest of Seoul, hundreds of identical sedans in muted silver, beige, green, and other colors are in the midst of nearly nonstop testing on a 3.2-km track. But few outside the plant -- Hyundai's most advanced facility -- have ever seen this model. The car, code-named NF, is the successor to the company's mainstay Sonata sedan, though it has been through a bumper-to-bumper remake, with a more powerful engine, a bigger cabin, and superior suspension.

Hyundai has a lot riding on this car. Execs are betting that the new Sonata -- to be launched in Korea on Sept. 1, and in the U.S. and elsewhere next spring -- will challenge Toyota's Camry, Honda's Accord, and Ford's (F ) Taurus for the hearts and wallets of U.S. drivers, and help catapult Hyundai into the ranks of the world's top carmakers. They aim to sell as many as 180,000 Sonatas a year at prices likely to top $22,000. "Our goal is not to make a one-off hit," says Choi Jong Min, the car's chief designer. "This will spearhead our efforts to boost our brand image and end Hyundai's reputation as a discount marque."

Hyundai hopes the new Sonata and a small SUV called the Tucson will be the first in a string of winners. They had better be. The company hasn't launched a new vehicle in the past two years, and its U.S. dealers are eager for that product drought to end. Over the next three years, Hyundai and its subsidiary, Kia Motors Corp., will introduce a dozen new models. The company wants to double group sales, to 5.5 million vehicles annually, by 2010, with much of that growth coming from new plants in the U.S., China, India, and Europe. Hyundai's aim: to leapfrog PSA Peugeot Citroën (PEUGY ) and Renault to rival Volkswagen as the fifth-largest carmaker on earth, up from No. 8 today. "Hyundai is gearing up to become a truly global player," says Lee Jae Wan, Hyundai's marketing chief.

It has been six years since late-night TV host Jay Leno compared a Hyundai to a luge sled (the car "has no room, you have to push it to get going, and it only goes downhill"). Rivals aren't laughing now. In 2000, Chairman Chung Mong Koo promised that Hyundai would rival Toyota in quality, reliability, and customer satisfaction. This year, he delivered. On Apr. 28, J.D. Power & Associates Inc.'s survey of initial quality -- measuring the number of complaints in the first 90 days of ownership -- showed Hyundai in a virtual dead heat with its Japanese rivals. Hyundai and Honda Motor Co. (HMC ) tied for No. 2 with 102 problems per 100 cars, just behind Toyota Motor Corp.'s 101. Hyundai's "momentum is significant," says John C. Humphrey, chief of international operations at J.D. Power. He says Hyundai's sales goal is "ambitious, but it's a doable target."

That quality improvement is showing up in Hyundai's results. Last year profits jumped 21%, to $1.51 billion, even as sales fell 5.2%, to $21.52 billion, because of a slump in Korean consumer spending. This year, Hyundai is on track to see profit growth of 23% as sales rise nearly 11%, according to Daewoo Securities Co. And in the first seven months of 2004, exports soared 36.5%, easily making up for a further 17.6% fall in domestic sales. "We're poised to have a record year," says marketing chief Lee.

Once the new Sonata hits the road, Hyundai wants to revamp its entire lineup. By 2008, Hyundai will replace its four other existing models, including the Elantra and XG 350 sedans, and add two new SUVs and a minivan. Kia, meanwhile, will revamp its Rio and Optima sedans, the Sportage SUV, and the Sedona minivan. That's one of the best pipelines in the industry, which should keep customers coming into the showrooms -- and allow Hyundai to bump prices up toward Toyota's levels. And each new Hyundai model will follow the Sonata's lead in styling, abandoning the exaggerated, muscular curves seen in the hood and door panels of its Santa Fe SUV for a simpler, more contoured look. "They'll all have common Hyundai DNA," says brand strategist Kim Young Il.

Above all, the Sonata needs to charm U.S. drivers. The new model -- the first vehicle to be built at a $1 billion plant in Montgomery, Ala. -- is vital in meeting the company's U.S. sales targets.

Full Article Here

[awalbert88]

Originally posted by Ming@Aug 27 2004, 11:54 AM
Execs are betting that the new Sonata -- to be launched in Korea on Sept. 1, and in the U.S. and elsewhere next spring -- will challenge Toyota's Camry, Honda's Accord, and Ford's (F ) Taurus for the hearts and wallets of U.S. drivers, and help catapult Hyundai into the ranks of the world's top carmakers.

Challenge the Taurus? Not hard, but by the time this vehicle launches, Ford will have had the Five Hundred out, and I think (hope) it will leapfrog the competition in terms of overall quality, roominess, interior design, and luxury/comfort. But we'll see .

Also, they didn't meet the goal to "rival Toyota in quality, reliability, and customer satisfaction". They may have the initial quality numbers, but reliability is not there yet. It's not even close. Also, Hyundai's engines (at least the 4cyl ones) are a bit noisy and feel unrefined in my experience. Granted, I've only ever had much time with a Sonata, but I was thoroughly unimpressed with it.

All that being said, Hyundai is a car maker to watch out for. They've had the most impressive turn-around of any auto manufacturer ever, going from absolute worst in the late 1980's (Yugi's had better quality!) to near-world-class just 15 years later.

[zaxxis]

Originally posted by Ming@Aug 27 2004, 04:54 PM

So lets count how many cars Hyundai is going to copy for this new car. I see Acura TL and a little Mazda... I'm sure there are more.

Now if Ford was making this, all you would hear is "...copying of Audi/BMW/Chevy/Etc"

But you have to admire that they are a scrappy little company that is trying to build the best car they can.

-Z

[mbukukanyau]

Originally posted by awalbert88+Aug 27 2004, 05:11 PM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (awalbert88 @ Aug 27 2004, 05:11 PM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-Ming@Aug 27 2004, 11:54 AM
Execs are betting that the new Sonata -- to be launched in Korea on Sept. 1, and in the U.S. and elsewhere next spring -- will challenge Toyota's Camry, Honda's Accord, and Ford's (F ) Taurus for the hearts and wallets of U.S. drivers, and help catapult Hyundai into the ranks of the world's top carmakers.

Challenge the Taurus? Not hard, but by the time this vehicle launches, Ford will have had the Five Hundred out, and I think (hope) it will leapfrog the competition in terms of overall quality, roominess, interior design, and luxury/comfort. But we'll see .

Also, they didn't meet the goal to "rival Toyota in quality, reliability, and customer satisfaction". They may have the initial quality numbers, but reliability is not there yet. It's not even close. Also, Hyundai's engines (at least the 4cyl ones) are a bit noisy and feel unrefined in my experience. Granted, I've only ever had much time with a Sonata, but I was thoroughly unimpressed with it.

All that being said, Hyundai is a car maker to watch out for. They've had the most impressive turn-around of any auto manufacturer ever, going from absolute worst in the late 1980's (Yugi's had better quality!) to near-world-class just 15 years later. [/b][/quote]
Not to mention GM is on a serious roll. I think at least the Malibu is going to be king of Quality. It already is.

[gmwsag]

GM isn't building cars that have good enough quality, a good interior that has a navigation system, or a car that is cheap, yet practical. Everyone will rush and say that the General has the most J.D. Power awards, but can't we realize J.D. is bias. I bet a Japanese source would rate Toyota, Honda, and Nissan the best, as a German source would rate BMW, Porsche, and Benz the best.

Actually, I would buy that Hyundai over a Malibu....GM is trying to come back. They're not on a roll, when Toyota is selling more vehicles than them. They are not on a roll, when there stock keeps on falling, and falling and falling...

[Ming]

Originally posted by gmwsag@Aug 27 2004, 12:59 PM
GM isn't building cars that have good enough quality, a good interior that has a navigation system, or a car that is cheap, yet practical. Everyone will rush and say that the General has the most J.D. Power awards, but can't we realize J.D. is bias. I bet a Japanese source would rate Toyota, Honda, and Nissan the best, as a German source would rate BMW, Porsche, and Benz the best.

Actually, I would buy that Hyundai over a Malibu....GM is trying to come back. They're not on a roll, when Toyota is selling more vehicles than them. They are not on a roll, when there stock keeps on falling, and falling and falling...

I'm not sure how JD Power can be biased. I did one of their surveys a while back, and if that is what they base their scores on, why would a Honda owner down the street's opinion be counted any less than mine?

[Darc Requiem]

I thought it ws interesting that Hyundai's two engines are supposedly putting out more HP than tht of their competitors. If that REALLY is the case there 2.4liter 4 cylinder would have to be putting out more than 170hp and there new 3.3 liter V6 would have to be putting out around 250hp. I did leave a few engines off...but you get the gist of things.

GM 2.4 Liter ECOTEC 170hp 170lbs of torque
3500 V6 200hp 200lbs of torque
3.6 Liter VVT V6 260hp 252lbs of torque

Mitsu 2.4 Liter MIVEC 162hp 162lbs of torque
3.8 V6 230hp 250lbs of torque

Toyota 2.4 Liter 160hp 163lbs of torque
3.3 Liter V6 225hp 240lbs of torque

Mazda 2.3 Liter 160hp 150lbs of torque
3.0 Liter 220hp ?lbs of torque

Ford 2.3 Liter 151hp 154lbs of torque
3.0 Liter 201hp 207lbs of torque

Nissan 2.5 Liter 175hp 185lbs of torque
3.5 liter 250+ 249+lbs of torque

Honda: 2.4 Liter *160hp *161lbs of Torque
3.0 Liter V6 240hp 212lbs of Torque
3.2 Liter V6 270hp 238lbs of Torque

*engine outputs 200hp and 166lbs of Torque in the TSX (Wow a Honda engine with torque....this engine should be in the Civic and RSX)

Darc Requiem

[New_Mexico_Sunset_on_Rt66]

yea, I can see a Camry/Accord owner buying one of these. Especially someone sold on "Asian quality".

[GotAWD]

Originally posted by gmwsag@Aug 27 2004, 12:59 PM
GM isn't building cars that have good enough quality, a good interior that has a navigation system, or a car that is cheap, yet practical


Actually, I would buy that Hyundai over a Malibu.

guess you havent sat in a malibu yet, they have the nicest interior in GM's lineup. ive seen the interiors of a hyndai tiburon, and they are pretty nice too. but i would by the malibu over a hyndai anyday.

i can name 2 cars in GM's lineup that have navigation as an option. the pontiac Vibe and the Buick Rendezvous. of course im not counting the caddies cause there in a bigger league.

[giagastormer]

For 2005/2006 the Grand Prix is supposed to get a navigation system. The Saab 9-3 has an optional navigation system, so does the CTS. I dont see the point of having a $2,000 nav system in a $24,000 car, but that's just me. All the nav system does is drive the price up even more. I highly doubt people in the market for a $20,000-$25,000 really care whether the vehicles they are looking at have a nav system or not.

[nc0775]

I doubt they can succeed at raising prices near or equal to Toyota. I think American car buyers have long memories and are very image-conscious. Hyundais still mainly sell because of lower price, with the log warranty making it seem like less of a long-term risk (since you'll have to drive the thing a long time with poor resale value). Even if their quality does truly come to equal Toyota, both initially and long-term, I think that at the same price, most people would still choose a Toyota because there is not (and never was) any negative quality or bargain basement stigmas associated with the Toyota brand image.

[R.E Sanchez]

I can't remember where I read this. But I think they said power output for the V6 would be from 220hp to 240hp.

[jro4566]

Originally posted by mbukukanyau@Aug 27 2004, 12:40 PM
I think at least the Malibu is going to be king of Quality. It already is.

Umm, no it's not. It's a great, dependable car no doubt about that...but the "king of quality"? - you're stretching it a little bit too far...

[jro4566]

Originally posted by GotAWD@Aug 27 2004, 01:36 PM

guess you havent sat in a malibu yet, they have the nicest interior in GM's lineup. ive seen the interiors of a hyndai tiburon, and they are pretty nice too. but i would by the malibu over a hyndai anyday. [/quote]
You think the Malibu is the nicest interior in GM's lineup!?! The Equinox, STS, CTS, SRX, etc. have better interiors BTW.

As for choosing a Malibu over a Sonata or likewise, I'd have to wait and see the new Sonata in person. I'm not biased like that...

[tgagneguam]

...In 2000, Chairman Chung Mong Koo promised that Hyundai would rival Toyota in quality, reliability, and customer satisfaction. This year, he delivered. On Apr. 28, J.D. Power & Associates Inc.'s survey of initial quality...

Hyundai matched Toyota in initial quality (for this one year), so I guess they're 1 for 3, which is fine. But I have to wonder, is beating Toyota in customer satisfaction all that hard; they score below average. Perhaps they should have aimed higher, like choosing a GM division to match!