In the 1960’s the phrase ‘Made in Japan’ was not a positive one. At the time Japanese manufactured products such as televisions and transistor radios were known to be cheap and likely to break or break down. The Japanese worked hard to change that perception by making quality goods and imbuing the latest technology in their manufacturing processes.
South Korea’s Hyundai Motor Company http://www.hyundaiusa.com was founded in December of 1967 – a fact that actually surprised me since I only recall hearing of Hyundai when it introduced the Hyundai Excel in 1986 (I was actually also surprised it has been twenty-five years already). The early Hyundai Excels were a slight step up from the horribly rated Yugo which was introduced in 1985, but in my mind they were pretty much lumped together as cars that were cheap, and ones that I would never purchase.
By 1988 the Yugo had virtually ceased being sold in the United States. Today Hyundai is one of the world’s more trusted automobile brands. In my mind it is one of the more impressive brand story turnarounds in history. Hyundai’s Elantra and Sonata are so popular that there are actually backlogs of several months for certain colors of those models.
Hyundai accomplished this by focusing on making reliable, smart looking vehicles that were affordable to the American public. Now people spend more than $ 30,000 for some Hyundai Sonatas and are happy to do so. The expectation is that when purchasing a Hyundai you are getting a reliable near-luxury vehicle at less than luxury car prices. Additionally Hyundai is not falling into the trap by attempting to churn our cars faster and faster to take advantage of its now positive market perception. In fact Hyundai appears to be doing the opposite, holding back production to be sure it maintains its new image for quality while creating an even greater demand for its cars.
To me Hyundai’s restraint is one of the most interesting things. Too often investors in companies once they smell an opportunity to cash in, push their limits, and in so doing create more problems than they solve and actually commoditize their own efforts (think flat screen televisions for example).
I don’t drive a Hyundai but have rented one and would consider it for a future purchase. I hope Hyundai can stick to its current conviction.
It’s difficult for me to recall another brand story turnaround quite like Hyundai. If you have any please share them.