THE AUTOEXTREMIST

April 21, 2010

On the verge of greatness, or just on the verge?

By Peter M. De Lorenzo

(Posted 4/20, 11:00AM) Detroit. Last week, in looking for the next great car companies and assessing what it will take for those automakers to succeed going forward, I suggested that in Hyundai/KIA’s case, “…as long as they don’t get caught up in their own press clippings, which they’re already displaying signs of doing…” they might have a real shot.

There’s no question that Hyundai - which is the lead dog in the Hyundai/KIA group – is displaying definitive signs of becoming The Next Automotive Juggernaut. Hyundai has finally shaken off the doldrums brought on by its previous infatuation with the Humdrum and Mundane School of automotive design, actually venturing out of their comfort zone by embracing outside designers with real points of view. Just recently, in fact, Hyundai grabbed a designer away from GM by the name of Phil Zak – the man who designed the highly-regarded Chevy Equinox – to run its California-based studio in hopes that he can continue the product momentum and newly found design perspective that Hyundai calls “Fluidic Design,” which is aimed at elevating and giving true substance to the Hyundai brand around the world.

And Hyundai has also decided that its previous take on vehicle dynamics – which seemed to combine tactile numbness with the built-in maneuverability of a barge – will simply not cut it if it aims to be taken seriously as a global automaker of substance, integrity and quality.

And that’s all well and good, because whether it’s urban electric pod cars or super sports cars, great design will remain the Ultimate Initial Product Differentiator in this business, and if Hyundai grasps that they will at least be in the game. And if Hyundai can embrace the inherent goodness of responsive vehicle dynamics and build that in to their upcoming vehicles, that will be even better.

But as you might expect, it’s not that easy and those two mitigating factors won’t be nearly enough to take Hyundai where they want to go. Success in this business is never a finger-snap away; rather, it’s a day-in, day-out slog that’s filled with setbacks and small gains – sometime in the same week, if not the same day – and it requires a relentless will and a focused consistency to make progress, let alone excel.

Up until this point, Hyundai and its Korean overlords have succeeded only in fits and starts. It’s only recently that they discovered that the revolving door school of management when it comes to their U.S. operations was a complete fiasco, and with John Krafcik at the helm – and no rumblings of turmoil or impatience looming – it appears that Hyundai’s Korean managers - who are notoriously stubborn, intransigent and impatient – are finally focusing on what it takes to succeed in this business instead of constantly trying to manipulate the players on the chessboard.

Finally coming to terms with what it takes to succeed in this business is one thing, but now the real hard part begins for Hyundai. This company has to decide who it is and what it wants to be in the global automotive scene, because being the cut-rate value (aka the “deal”) in this or any other market will only carry them so far. For instance, it isn’t going to be enough that the new Equus premium luxury sedan heading for U.S. dealers this summer is “a Lexus for $20,000 less.” That’s not a product positioning - it’s a commodity play. And Hyundai’s dreams of global automotive domination will have to encompass far more than that in order to get where they want to go.

No, Hyundai has to put a stake in the ground and let the world know what it stands for. Are they going to out-BMW BMW? Is that how far they’re going to take their new-found infatuation with vehicle dynamics? Or are they going to go for the anesthetized school of automotive dynamics, a la Lexus? Are they going to try to out-Audi Audi with a seductive combination of engineering and breathtakingly gorgeous design? Will they go the safety with luxury route? How about the environmental leader persona? Or how about taking to the racetracks of the world in order to prove their engineering and technical mettle in hopes of setting the tone and creating a new image for the entire company? Or will they just throw up their hands and just continue to hammer home their warranty and push the whole durability/reliability/quality premise for a lack of a better idea?

That’s a boatload of choices, and I’m not sure that Hyundai or its management team has the first clue as to what will work, or what would be best suited to their capabilities, or what they really want to be when they grow up into a serious global automotive powerhouse.

Make no mistake, Hyundai is at a crossroads. As a matter of fact the company’s fundamental raison d’etre is on the line right now as we speak. The heretofore “chippy” (and gimmicky) TV commercials and cheap leases were fine for what Hyundai set out to do with them, but Krafcik & Co. have to be well aware that it won’t sustain Hyundai, let alone get them to the next level.

It’s gut-check time for Hyundai. It’s not enough that they have the capability to do almost anything they want to do, now it becomes a question of who they are, what they want to be, and what they’re going to stand for from this point on.

Basically, the future of the whole damn company is at stake.

Hyundai is either on the verge of greatness, or it’s on the verge of going somewhere down the road to Not Good.

And that’s the High-Octane Truth for this week.

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