By on September 16, 2017

Hyundai santa cruz concept

After Hyundai’s American division canned former CEO David Zuchowski for failing to meet internal sales targets last December, it’s no mystery what Job One is for the new guy.

Kyung Soo Lee, a 61-year-old veteran of the company who started his career back in 1982, takes the helm of a troubled ship next week, Hyundai announced Thursday. As president and CEO, Lee (Kenny to his friends) is responsible for reversing a dismal sales trend that sunk his predecessor, as well as the company’s U.S. fortunes.

Long gone are the rosy days following the recession, where Hyundai Motor America recorded skyrocketing sales growth as its rivals were still struggling to find their feet. Unfortunately, with too many cars and not enough hot-selling utility vehicles, the tide began turning in 2013. Growth that year was poor, and the years following saw the company’s sales trajectory follow that of an ice-laden jetliner with one engine set at idle.

Through August, the automaker’s 2017 U.S. sales are down 21 percent. The buying public’s rapid shift to trucks, crossovers and SUVs caught the company off guard, and plans were afoot to remedy the paltry SUV lineup even before Zuchowski was ushered out the door. Plans, it should be noted, that’ll take time to come to fruition.

Regardless of what might be keeping Hyundai execs up at night, the company’s public face is one of confidence and guarded optimism.

“Mr. Lee has an in-depth understanding of Hyundai Motor’s global operation, following nearly two decades in diverse markets around the world, including the U.S., Europe and Latin America,” said Won-hee Lee, president and CEO of Hyundai Motor Company, in a statement. (As of September 18th, interim CEO Jerry Flannery returns to his post as the company’s executive vice president, among other duties.)

It’s clear that Lee, who Hyundai calls “one of the most respected leaders” in its global operation, knows exactly what’s expected of him.

“I’m honored and motivated to have been selected to lead Hyundai Motor America in one of the most interesting times in the automotive industry’s history and to reinvigorate momentum in the strategically important U.S. market,” said Lee in a statement, adding, “We have significant opportunities ahead of us.”

Lee could just as easily replaced “opportunities” with “challenges.” Indeed, there are many.

2018 Hyundai Kona front - Image: Hyundai

With Chinese buyers turning away from the brand for geopolitical reasons, Hyundai needs a strong showing in traditionally strong markets. However, in May of this year, sister division Kia outsold Hyundai for the first time in America. The refreshed 2018 Sonata midsize sedan, while more attractive than its predecessor, faces an all-new Toyota Camry and Honda Accord in a shrinking segment. A hoped-for uptick in sales has yet to materialize.

Sending more sedans to fleet customers and boosting incentives has helped move some of the inventory backlog, but it’s cutting into the automaker’s profits. Meanwhile, dealers are becoming annoyed with the company’s sales tactics.

On the ground, the company faces rail-related distribution issues that continue to this day.

What Hyundai needs to prop up its U.S. operations is more utility vehicles. The Zuchowski-era plan calls for a revamp of the brand’s existing crossovers, plus the addition of new models. The small Kona crossover arrives in early 2018 to score some sales in the subcompact segment, while a long-rumored pickup truck has finally been given a green light — though when we’ll see it, and what form it will take, remains a mystery.

It will be an interesting first few months on the job for Lee.

[Images: Hyundai]

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43 Comments on “The Pressure’s On: Hyundai Motor America’s Newly Minted CEO Needs to Turn It Around...”

  • avatar

    “The Pressure’s On: Hyundai Motor America’s Newly Minted CEO Needs to Turn It Around”

    No he doesn’t.

    He just has to suck $5-100M of a paycheck and leave.

  • avatar

    Part of their problem is they are spreading themselves too thin and going into luxury brand car making without enough talent on the mainline vehicles.

    They hired all these expensive Euro talent who want to design luxury cars. The Sonata became boring. And by spending too much on making luxury vehicles, they don’t have as much resources left for trucks and SUVs.

    What they need is to go back to competing with Toyota instead of trying to compete with Lexus.

    • 0 avatar

      “The Sonata became boring.”

      I can’t think of anytime when the Sonata was anything but boring.

    • 0 avatar

      They’ve had four years to get a truck rolling and they kept sticking their thumbs where the sun don’t shine rather than raising them for that concept truck. Their sales would already be roaring along in utes if they’d just gotten up off the pot.

    • 0 avatar

      This stuff is simple (really), yet auto executive, consulting & thinktank wunder-brains can’t grasp it.

      Hyundai (and Kia) have flatlined and lose market share for the following reasons:

      1) They are no longer competitive to Japanese & American makes/models in terms of price. PRICE MATTERS. When Hyundai was 86% as reliable, well trimmed, assembled and finished, with MORE standard features as Toyota, Honda (though Honda,’as I learned yesterday, has dropped like a rock in terms of reliability rankings), Mazda, at 70% of the segment-competing price, with a 10 year/100,000 mile warranty to help ease reliability doubts, their market share grew.

      Now that a Sonata is as much or more than an equivalently equipped Camry, Accord, etc., and the same is true of an Elantra, a Santa Fe, a Tucson, an Azera, to the competitor in the Toyota/Honda ranks, where’s the competitive advantage?

      2) Hyundai/Kia still can’t properly manage suspension geometry/tuning for whatever reason. Their vehicles are harsh when they shouldn’t be, wallow when it’s inappropriate, are floaty when it’s untimely, and have discordant suspension behavior between the front and rear wheels.

      3) The design and exterior aesthetics strides that Hyundai made from the 99s to late 2000s has either stopped, or in some cases, reversed course with some truly bizarre styling elements (one could plausibly argue that in other cases, such as the nee Sonata, the current gen is worse than the last gen, which managed to clearly leapfrog the Accord and Camry).

      4) Not only has Hyundai reliability not improved, on a relative basis, since the late 2000s, Hyundai and Kia have earned a popular perception of giving owners a hard time on honoring warranty claims.

      This $hit is not complicated. I realize Hyundai (and Kia, owned in part by Hyundai) is a large bureaucratic Chaebol, but it can’t possibly be slower and more layered than Toyota in terms of decision-making.

      Now pay me 11 million per year, plus large stock grants annually, and a huge pension plan/golden parachute, and require all underlings to bow deeply to me before and after each discussion, and I will grow Hyundai’s market share rapidly.

      • 0 avatar

        p.s. – Even if Hyundai did what I recommend, time is not on their side — we peaked in terms of real, sustainable economic growth in August of 2015, and a huge % of investment, corporate and consumer spending since then has been at much higher costs, and in a diminishing returns on investment or purchase type way (and massive misallocation of capital, also – you now see it showing up in grocery store deflation, higher incentive spending by many automakers, a shake-out in now oversaturated restaurant, hotel and other discretionary sectors), and the next recession is drawing near and will be close in form to that which was experienced in the staglationary 1979-1983 one (key difference will be interest rates are now lower and will remain lower, suppressed by central banks of the U.S., EU, China, Japan, England, Canada, Australia, Switzerland, etc, purchasing massive amounts of bonds, sovereign and corporate, in a massive and coordinated global QE program that has massively inflated their balance sheets, in an unprecedented manner in history; the unwind may be very unkind).

      • 0 avatar

        Spot on. These are the primary reasons I don’t even consider buying Korean these days.

      • 0 avatar

        Not surprisingly, DW’s account of Hyundai’s reliability not improving is WRONG.

        Hyundai is at the top of Auto Bild’s Reliability Report for Germany once again (Kia has been at the top as well) and is 6th in the latest JD Power VDS (ahead of Honda which is 9th) and 7th in Consumer Reports Reliability Rankings (again, ahead of Honda at 10th).

        And it’s not like automakers are static in these rankings – Hyundai has risen and dropped depending on when they launched new powertrains (such as turbo engines, DCTs, etc.) and worked out the kinks.

        That’s the reason why Honda has fallen and Acura had plunged to below the industry average and why Toyota has managed to stay near the top (haven’t made any significant changes to powertrains in a long time; while that is good for reliability rankings, hurts in “keeping up with the Joneses” as seen in Lexus sedans not being competitive against the Germans when it comes to powertrains).

    • 0 avatar

      Not true at all.

      They have seen some of their strongest growth in the luxury segment and that’s w/ no crossovers to speak of yet.

      What Hyundai did wrong was inexplicably be slow in expanding its crossover lineup in NA, as well as supplying enough of the Tucson (were also slow in expanding production of the Santa Fe Sport) and focused too much into the China market which is biting them in the rear right now.

      Aside from focusing on expanding production in China, Hyundai developed a subcompact for China and the other BRIC markets years before developing one for the developed markets.

      A change in leadership for Hyundai USA is going to do little to nothing to reverse course and increase sales.

      That’ll come with the new product- starting with the Kona, the new and re-oriented Santa Fe Sport, a larger CUV to replace the 3-row Santa Fe, the Santa Cruz, etc.

      But despite the struggles in the US and China, there are some bright spots – India, Mexico (despite having only recently starting sales across the border, H/K have already surpassed Toyota in sales) and Europe.

  • avatar

    “Broadsword calling Kyung Soo Lee. All Hyundai sins forgiven if you produce that spectacular pickup truck from the picture.”

  • avatar

    My friend (a lady} drove a bought new ,2015 Elantra, base model.. I spent a little time behind the wheel. I came away with a good impression. I thought, for the money, it was pretty nice car. As a die hard domestic fan,and former UAW?CAW member its hard for an import to impress me.(.I also kinda like Hondas.)

    Anyway, she took in for an oil change..A good salesman convinced her to trade it in on a loaded , all the bells and whistles, Tuscon. I shudder to think of how many years she will make payments.

    The Tuscon is nice enough..I’m not crazy about the feel of it. I didn’t come away with the same positive view, that I experienced with the Elantra.

    For that money I could of done a” friends and family” discount and got her a nicely done Equinox .

    Hey, its not my money, and she seems quite happy with her purchase. I have to say,the whole sales experience was done quite well…The salesman didn’t talk down to her..A couple of times he looked at me. I give him the universal “talk to my hands” gesture. Im sure he spotted my GM service ring.. He was cool, and smooth, and treated my friend, and myself with respect..I see a young fellow that will have a future in the car business .

    She knows that she will be driving it for quite some time…I hope it works out well for her

  • avatar

    It’s dog eat dog at Korea’s largest automaker.

    • 0 avatar

      amazingly, even sister company Kia is eating their lunch and good reason…

      i priced competition like for like and Kia gives more stuff and more warranty for the same or lesser

      Kia should actually make that trucklet….

  • avatar
    Dave M.

    1. MSRP your cars 20% less than Toyota.
    2. Maintain and honor your 100k warranty.
    3. Demand your dealers maintain decent facilities. It’s spotty here in Houston – one dealer has a gleaming, spacious retail space, the next looks like a BHPH lot….

  • avatar

    “Kyung Soo Lee, a 61-year-old veteran of the company who started his career back in 1982, takes the helm of a troubled ship next week, Hyundai announced Thursday. ”

    I’m surprised Hyundai was so blunt about the status of their u.s. operations.

  • avatar
    Pete Zaitcev

    I don’t quite understand how the brand that sells cross-overs such as Tucson and Santa Fe can be poorly positioned to reap benefits from the move to cross-overs. All they need is padding at the low end and the high end, and just refresh the main duo just like Toyota does with RAV4 and Highlander, or Honda with CR-V and Pilot. There’s no way for the trouble at Hyundai to stem from their product mix. Steph Williams is much too quick to blame “paltry SUV lineup”.

    • 0 avatar

      100% agreed. The Santa Fe was one of the earliest and most successful crossovers, debuting around the same time as the Ford Escape (2000). The Tucson was just a few years later.

      I don’t think a lack of entries into the utility segment is their problem. Yeah, they needed a subcompact offering, but even Ford and Toyota don’t sell one here yet.

      And yes, it (Toyota and Ford’s entry) is coming, but the point is, nobody is screaming how late Ford and Toyota are to the segment. Its not like the Trax and HR-V have been around for decades, either. This is clearly a burgeoning slice of the utility segment, and I just don’t see Hyundai as being any further “behind” than Ford, Toyota, etc.

      Also, the massive sales of pickup trucks is hardly new. Ford’s, GM’s and Dodge/RAM’s fullsizers have dominated sales charts for decades. F-Series has been the country’s best selling vehicle (car or truck) for how long? With Silverado/Sierra right there with it? Yeah, this “sudden” rise of the sales of pickup trucks is just SO surprising! Because it hasn’t been going on for literally all my life (35 years)?

      And didn’t we just have an article telling us midsize trucks (which Hyundai is likely to enter, if not a true compact, which is such a hot segment that it hasn’t existed here since 2011) are slowing while full-size trucks (the segment Hyundai is least likely to enter) continue to sell like crazy?

      This guy needs to get his facts straight. There is so much misinformation and misplaced blame in this article, along with previous declining Hyundai sales articles that also blame a “lack of crossovers” as their issue, its just amazing. This isn’t The Bull§hit About Cars, is it?

  • avatar

    The Kona is as ugly as some of our Polynesian tiki figureheads.

  • avatar

    I don’t know why it caught them off guard. Even I knew that as soon as gas prices dropped, so would car sales. Americans love their big whompin trucks and SUVs.

    • 0 avatar

      Allow me to correct that, JK:

      “SOME Americans love their big whompin trucks and SUVs.”

    • 0 avatar

      JK is probably right, low gas prices equate to big truck sales. It would explain why small car sales are down across the board. I’ve also heard about widespread distaste with Hyundai’s DCT, so maybe this could also be a factor? I’ve driven the Sonata Eco & Tucson with said transmission, I thought they shifted awesome – unsure of long-term reliability with the unit however.

      • 0 avatar

        Long term reliability is a Hyundai sore spot anyway, and not with only transmissions. Its usually their engines that take a royal dump not long after the 100k warranty expires. Good luck getting them to cover it if it happens before then.

        I saw an ad on craigslist for a Kia with a failed Theta-II engine the other day. This was not an old, high mileage car. In the ad, you could feel the owner’s frustration, having been unable to get them to cover the engine. He also stated that this model was recalled for engine failures, only not his particular year was included, despite the fact that it’s the same engine and clearly suffered the same defect.

        Hyundai tip-toed around, recall this model, but not that one, and these years, but not all years that had the defective engine. They were forced to expand the recall, but obviously they still want to play games, trying to replace as few as possible.

        I remember when Ford’s rotten egg engine, the horrible 3.8L V-6, was dealt with (by extension of the warranty on the engine). They didn’t skip models or years when they finally did do something about it. No, they didn’t put in lifetime warranties, but they did make an effort to right the situation. It sure as hell wasn’t “Oh, yes, the Thunderbird is covered, but not the Cougar. And the Windstar and Sable, but not the Taurus.” Yet Hyundai steadily gets away with that §hit.

        Yes, lots if car makers have laid some rotten eggs, but few try to weasel out of their responsibility like Hyundai. They even fired the guy who ratted them out as knowing that more vehicles than just the Sonata had the defective engine, yet only issuing a recall for it alone.

        Many have also stated that getting them to honor their much-ballyhooed warranty is like getting a wild tiger to lay there calmly and let you pull its tail.

        Despite the fact that I do genuinely like the Kia Soul, and it would be a fantastic Uber vehicle that is very cheap, I decided there is little to no chance that I’d risk owning it due to the company’s reputation.

        When I worked, quite a while ago, as a service advisor for a Lincoln-Mercury dealer, we had no problem honoring the warranty, unless there was a legitimate reason to believe the issue was due to abuse or neglect. We did everything we could to make the customer happy, there was no incentive to try to deny warranty work and force the customer to pay for it. Very few times I can remember getting a call back from Ford about a warranty claim we submitted. Usually they just wanted confirmation of the diagnosis, and often times I just put the tech on the phone with them, and that was it.

        Now, aftermarket warranty companies? Polar opposite. They would fight us down to the last penny. But, WE (service advisors) stayed on their @$$es to make them honor it (again, when it wasn’t clearly due to abuse or neglect).

  • avatar
    CKNSLS Sierra SLT

    Their dealer network is terrible. I just bought my wife a 2017 Santa Fe extended wheelbase-7 passenger. Fully loaded. I guess you would call us “upscale buyers”. Finalized everything with the salesman-then walked in to finance and without explanation they tried to charge us $300.00 for “lost key insurance” and $200.00 for “Nitrogen”in other words “air”.

    They need to fix issues like these-it’s no wonder their upscale (Genesis) line is going no where. I had similar things happen to a good friend who bought the Geneses model about a year ago. And he could afford any car he wanted.

  • avatar

    Anecdotally, I’ve seen about 10 times as many Niros as I’ve seen Ioniqs in San Diego. Both are getting good reviews, but I’d go for a Niro myself because of what looks like better storage capacity.

  • avatar

    Honestly, I think that the problem is still brand image–Hyundai, rightly or not, still says “cheap” before anything else in most of the public’s minds. I’m still amazed at how sloppy most people are in the car-buying mindset.

    For most people, if you want a reliable car, you buy a Honda or Toyota. If you truly don’t care and just want to buy what you want, you buy a Chevy or Ford, because these are the only two names you even know. If you want to buy something to impress people, you buy something expensive and German.

    Since about the 1990’s, only Hyundai has been able to affect a large change in market share, and it seems to have been temporary ; I slightly suspect Subaru’s recent surge will end the same way. I’m not sure what’s caused American consumers’ mindsets to change–or stop changing–these past few decades, but my personal hunch leans on socioeconomic changes exogenous to the auto industry.

    • 0 avatar
      CKNSLS Sierra SLT

      Subaru has been on a record sales pace for the last six years. It’s a little more than a “fluke” at this point. And coming out with the new Atlas-in theory that vehicle will stop those who leave the brand for something bigger.

  • avatar

    Mr. Lee should probably rent and not buy just in case.

  • avatar

    A coherent design would be a start. the 2010-2012 designs all had a consistent style, then the 2013 Santa Fe came and started the de-evolution. Now it is a mishmash of design cues.

    Next, why does Kia get all the cool stuff? Genesis gets stuck with the new G70, while Kia gets the GT Stinger. Hyundai gets the Ioniq sedan while Kia gets the Niro crossover. Kia has been beating Hyundai to the punch on luxury features in their cars for years.

    Hyundai should have had a subcompact crossover – the ix25 – in showrooms 3 years ago, but chose to design the Kona instead and lose time.

    It’s a mess

  • avatar

    Purchase Ram from FCA.
    Build the Santa Cruz.
    Engineer a sell a great electric SUV.

  • avatar
    87 Morgan

    Hyundai’s problems are self all 100% self inflicted wounds. A lot of time, effort, and expense has been expended by Hyundai to prove to the world they could be something that I think is not going to be a reality, which is Hyundai being a luxury car maker. Stop with the Genesis business.
    No one cares they can build a nice luxury car; so does Lexus, BMW, Audi, etc. and they have been doing it for a lot longer with far better results.
    I seriously doubt a well healed buyer is going to cross shop an A8 with a Genesis whatever.
    CUV’s are what is needed. The Santa Cruz is cute, will bring people in who would otherwise never enter a Hyundai dealership, but as the only increased offering would not dramatically change their current sales trends.

    As mentioned prior, I think the best bet for Hyundai is to have a conversation with Sergio.

  • avatar

    Reportedly it was the US arm that warned the home office that the redesigned Sonata styling was too boring but they we’re ignored. Seems like they’re firing the very people who actually understand the US market.

  • avatar
    el scotto

    Yeah, Hyundai/Kia has conquest sales. Other people didn’t buy them because of “bought by the credit-impaired” or the “thrifty” Some in those two somewhat negative categories talked up their “sizzling good deal” or “it was so much cheaper than the Japanese one”. Throw in some adversarial customer support and salespeople leaving oil slicks of sleaziness in their wakes and you have some problems. So these people bought a Hyundai/Kia; H/K’s conquest sales are people buying a second one.

  • avatar

    Aside from doing more to improve long-term reliability, and to actually honor their damn warranty, I think Hyundai could diversify their lineup here by introducing the commercial van they sell elsewhere.

    Mercedes-Benz and Nissan have found the commercial van segment in this country viable enough to submit entries. Why not Hyundai? Is it worse than dumping their sedans into rental fleets? They have an American manufacturing presence, the plant in Alabama could be expanded to build it for this market.

    While they’re at it, they could design and build a traditional-style truck off the same platform (perhaps to coincide with the next generation of the van?), something to complement their upcoming crossover-style truck as a heavier duty alternative.

    If that platform wouldn’t support it, maybe base it off the platform that underpins their Porter truck? I doubt the forward-control style Porter would pass North American safety standards as it is, but again, this could be rectified with designing the next-generation of this vehicle with those standards in mind (as well as supporting a non-COE type truck that would likely sell much better here).

    On another note, I also could see them getting back with Chrysler (now FCA), since Sergio seems so intent in partnering up with another automaker. They still sell products elsewhere badged as Dodges, the Accent in Mexico, and that van I showed above is also sold as a RAM. Why couldn’t the next-gen 300/Charger share a platform with the Genesis large sedan (G90 I think it is)? The Giulia platform could still be used for a smaller RWD Dodge or Chrysler. It would seem both companies have a lot to offer each other, with platform sharing of their FWD cars as well.

    This wouldn’t necessarily impact Hyundai brand sales here in the U.S. per say, but it could give them more channels with which to sell their increasingly less popular cars. Rebadging the Elantra to become an FCA compact to replace Dart (and the Tipo/Neon elsewhere), for example, could help keep the factory running and help justify development of future generations.

    Just a few ideas. Perhaps they’ve already studied them in some form, and decided against them for whatever reasons, but as I said, just a few ideas I had.

    • 0 avatar
      el scotto

      oh!Oh!Oh! Have H/K merge with Chrysler. Butt-ugly, ill handling small cars and SUVs/Cuvs with bad engines and/or transmissions. A true chance to be a turd harpooner in an ocean of craptastic vehicles. John might have Sergio pull the trigger on a deal like that. Jeep would be the tethered goat H/K couldn’t resist. Or Chrysler may be (probably) sold to the Chinese.

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