By on November 12, 2012

In a world obsessed with quantity, volume, economies of scale, speed, expedience and all that comes with it, wouldn’t it be nice if someone wanted to ease up a little and make sure things work?

A report by Reuters claims that Hyundai is doing just that, with a focus on quality rather than simply cranking out car after car.

“Our operations all over the world are calling for more cars. Executives tell the chairman that capacity should be expanded because they have to sell more cars,” a senior Hyundai executive in Seoul told Reuters.

“But the chairman says, ‘What are you talking about? We have enough capacity. What we need now is stability’,” he said, speaking on condition of anonymity due to the sensitivity of the issue.

Part of it stems from Hyundai’s desire to emulate Samsung. Once a premium brand, it is now seen as a legitimate rival to Apple in the top-tier category of consumer electronics. Hyundai is also apparently keen on avoiding some of the same mistakes made by its rivals as well.

“[This mandate is also] motivated by the chairman’s effort to keep Hyundai from making the mistake Toyota made”, another source said, referring to a perception that the Japanese automaker lost control of engineering discipline and manufacturing quality during the 2000s, as it expanded too aggressively and its global capacity climbed well above 8 million vehicles a year.”

Some analysts question whether the attempt at moving upwards will benefit Hyundai’s positioning in Europe at the expense of developing markets like India, where volume and low-cost cars are more important. A new facility in Indonesia, expected to be the next big market (and one that Toyota is betting on heavily) was scrapped due to the decree against over-expansion. But as we know from Volkswagen’s attempt at taking on luxury brands with the Phaeton, moving upwards in the eyes of consumers is very difficult. Better to move downwards when necessary.

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28 Comments on “Hyundai Brass Hungry For Quality, Rank-And-File Seek Quantity...”

  • avatar

    You can always trade quality for quantity and make quick money, but going the other way is like paying 20% interest with fees on top. The problem is that many managers realize they can leave with big bonuses and let their successors and stockholders pick up the tab.

  • avatar

    DID YOU KNOW: Samsung makes cars too, with Nissan. Funny.

    “Better to move downwards when necessary.”

    No doubt!

    • 0 avatar

      That’s Renault Samsung, 80.1% owned by Renault (which does own a controlling stake in Nissan).

      • 0 avatar

        Ah, yes…that came out of Samsung chairman Lee Kum-hee’s automobile fetish – he wanted to build cars. Well, his timing was really bad – the car venture came up just when the Asian financial crisis of 1997-1998 hit Korea really bad. But in retrospect, that probably was a good thing as it forced Samsung to dump the usual chaebol strategy of getting into many industries into focusing on electronics. They are now a much stronger company now.

    • 0 avatar

      And Hyundai makes electronics. Hynix (Hyundai Electronix) is the number 2 memory chip maker in the world just after Samsung.

    • 0 avatar

      In Korea, you can drive a Samsung (insured and financed by Samsung) from your Samsung apartment to go to a Samsung store to buy more Samsung. While talking on your Samsung phone.

  • avatar

    “But as we know from Volkswagen’s attempt at taking on luxury brands with the Phaeton, moving upwards in the eyes of consumers is very difficult. Better to move downwards when necessary.”

    Is this a deliberate mixing up “moving up quality” with “moving up market”? You do realize they mean different things, right?

    VW might as well make the Passat moving up the CR chart before trying the Phaeton.

  • avatar
    bumpy ii

    One thing to keep in mind is that said chairman ran the warranty claims department back in the bad old days of the ’80s and ’90s, when Hyundai’s first and only focus was to push volume out the door to keep the factories running. Once it was his company to run, he pushed hard to improve the build and design quality and never let up.

    • 0 avatar

      Did not know that. That is a cool factoid about the company.

    • 0 avatar

      Hyundai has invested a lot of time and money making cars that are well assembled, interesting to the masses, and now they offer reliability as well. This from a company that made junk 25 years ago, and made warranties that were better than the car could deliver 12 years ago. So, considering what has been put forth to date, pushing product without concerns about keeping quality and reliability (not the same thing) up to current levels could undo that entire investment in short order. I’d like to think the big H would not be so foolish. I would like to think that even the short-sighted American business model would also do the same but after seeing GM decontent the previous Malibu, I’m not so sure I would take that bet…

  • avatar

    Build quality, what a radical idea. Too bad we didn’t hire him to run GM after we were left owning it.

  • avatar

    Banners hung throughout the Hyundai assembly plant in Montgomery, Alabama proclaim that their goal is nothing less than to build the world’s highest quality cars. And the army of clean-cut employees running around in matching golf shirts says that they believe it.

    We’re been a Hyundai family for five years, and find the vehicles more robustly built than previous Nissans and Hondas.

    • 0 avatar

      “An army of clean cut employees in matching golf shirts”??

      SOLD now I know they must be a good car to buy

      • 0 avatar

        I think the point was that when workers on the shop floor take some care in personal grooming and the employer has some expectations of appearance standards, there is a greater sense of pride in how the rank-and-file perform their jobs.

      • 0 avatar

        just because it is dictated by company policy.

      • 0 avatar

        My buddy worked in the Ford plant one summer- employees were slovenly, drug use was rampant, and when he complained about transmissions that failed QA, but were allowed to pass anyway, he was told to “shut up”.

        So, yes, how you dress and look, even if mandated by the company, IS important, both for morale, and for self-image.

        As any US Marine will tell you, it is all about “character discipline”.

        Maybe we should have the Marines run GM and Ford?

      • 0 avatar

        Yes, JD-Shifty, the matching golf shirts are dictated by company policy. That’s where quality and consistency come from.

    • 0 avatar

      A friend(a poverty-stricken lesbian who worked for a Honda supplier) introduced me to her new roomate. An overweight, wiccan man who lives in a mobile home with crate-wood floors, no stove, no power to half of it’s outlets and which smelled of ferret. He carried-on an extra-marital affair.

      He worked as a supervisor at a BMW/MB/VW supplier.

      Everyone knows someone that knows someone that isn’t worth knowing.

    • 0 avatar

      As a tie-in to don1967, in my area and others as well, the dealers could sell more Hyundai products if they could get more in. It is not unusual for people to have to wait for the Hyundai vehicle of their choice because there is that much demand for them.

      And while the Camry remains the best-seller in that class, more people are seriously looking at a Sonata to replace their old Camry because the Sonata gives a lot more for the money and is often several thousand dollars lower in price than a Camry.

      The Elantra continues to amaze and is surpassed only by the Mazda3 in fun-factor and bang for the buck. The Accent continues to be the commuter of choice in many Western states and epitomizes the “throw-away” car with its outstanding warranty.

      If Hyundai management relents and quality becomes a casualty to accommodate quantity, I have no doubt that Hyundai will lose customers because of that. Hyundai should continue to focus on quality. Their buyers will wait for them.

  • avatar

    I would think Hyundai had this internal discussion long ago, just before they started offering the 10/100 warranty in 1999.

    You can’t offer such a warranty for so many model years (while maintaining profitability) if you’re building junk. Even the transferrable 5/60 warranty exceeds many mfr’s OEM warranty terms.

  • avatar

    Oh, the Phaeton was a fine idea, a fine idea indeed. Volkswagen just shouldn’t have charged Americans $75K for it. I understand that it was a limousine, but when your limousine costs as much as your own luxury-brand’s flagship sedan (the A8), or those of your nearest competitors (the 7-Series and S-Class), you look pretty silly, especially in the eyes of Americans, who are very concerned with badges and blingage. If I’d had to pay that for a Volkswagen, I’d have just gone all out and gotten the Bentley Continental Flying Spur, which uses the same platform and the same (optional) W12 engine. Why not!

  • avatar

    Good that they are focused on quality . But Hyundai/Kia should also focus on the vomit inducing smell of their new car interiors . New car smell is one thing , the interior smell of these cars is like the rubbery smell some U.S. brands had back in the 1960s that made me carsick as a kid . Get your act together Hyundai/Kia !

  • avatar

    I’ve worked for a few companies that talked quality, but at the end of month it was all about the dollars. It took us holding up a job that would have made our month to put on hold to make sure it was right before anyone on the floor believed that quality was the real priority. By all accounts it seems that Hyundai is getting better so I’m inclined to believe them.

  • avatar

    I believe in press releases as much as I believe in the tooth fairy.
    WOW the chairman says he wants to “slow down and build a better car”
    This is something I could imagine coming from ‘firesign theater”…if they were into automobile B.S.

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