Final Inspection

Hyundai Loses in Krafcik Departure

The departing U.S. CEO of the South Korean brand was devoted, passionate in his role.

The beginning of my tenure covering the Asian automakers at WardsAuto basically coincided with John Krafcik’s arrival at Hyundai Motor America.

I first met John in the fall of 2004. Hyundai was doing the media launch of the previous generation of its Tucson CUV in Portland, OR.

I was one month into my role, and John was six months into his stint as the vice president of corporate planning at Hyundai in the U.S.

Previously he had been an engineer at Ford, and I could tell during our first interview that he was more comfortable in an R&D center than being grilled by an inquisitive young journalist in a hotel conference room.

But he was very nice and answered all my questions, the latter a trait many other journalists came to discover as Hyundai embarked on what felt like double the media launches of any other brand, as it feverishly remade its lineup in an effort to become one of the auto industry’s key players.

Upon Krafcik’s arrival at Hyundai, the marque was the butt of many jokes in the U.S., largely due to its early focus on selling affordable, basic models, which didn’t always have the best quality and weren’t driven by what could be called the cream of society.

Hyundai sales were respectable, 418,615 units in 2004, but ambitions to grow to higher volumes had been in place for a while and the brand was stuck in neutral.

But Krafcik had incredible enthusiasm, telling me about what Hyundai could be, saying “every segment” of the market was being looked at; small, medium and large CUVs were being looked at; variants of the Sonata sedan were being looked at – “You could do a large sporty coupe; you could do a large sporty convertible; you could do a hatchback; you could do a wagon – you could do a (Dodge) Magnum-style wagon…there are all sorts of things that could be done,” he excitedly told me.

Hyundai never did make any Sonata variants, save for the hybrid, and its experiment with a large CUV, the Veracruz, was a dud. But the brand won more battles than it lost over the past nine years, and annual U.S. sales rose, to 500,000, 600,000, and then last year, 700,000 units.

All the while, John’s star rose, too. Although he wasn’t the brand’s official U.S. leader until 2009 it felt like he was, due again to his unwavering excitement for the job.

John finally, rightfully, ascended to the president and CEO roles in 2009 (from 2008 he was "acting" president and CEO), just before HMA embarked on the launch of its current-generation Sonata midsize sedan.

As the Koreans are a tough lot to work for, it was almost certain his tenure wouldn’t last much longer, especially as Hyundai U.S. sales have slipped from the double-digit-percentage growth seen a few years ago when the high-volume Sontata, as well as the Elantra compact, were all-new.

Never mind that no brand can keep up a high growth pace forever, especially with aging models and being capacity constrained, as Hyundai has been for years now. Hyundai/Kia leadership is notoriously aggressive, shall we say, and someone had to pay for the lackluster results.

It’s never easy to say a single person is responsible for an entire company’s success. And I wouldn’t say that about John. But it’s clear he loved his job and I don’t think Hyundai could have had the same level of success in the U.S. if it wasn’t for his enthusiasm for his role and love of and devotion to the Hyundai brand.

In this day of revolving auto-industry leadership, where for many executives a placement at one company is just biding their time until their placement at another, it could be awhile before Hyundai in the U.S. has a leader as passionate as John Krafcik.

cschweinsberg@wardsauto.com

Discuss this Blog Entry 1

on Dec 31, 2013

It would be ideal, and fair, if the selection of the CEO was just like the election of the president of a country (a DEMOCRATIC country, that is).
Let the owners of the company (shareholders) vote to elect such an official once every 4 or 5 years.

If he is good enough, elect him/her for a second term!

It is sad that a small number of rubber-stamp directors control the world economy by controlling these huge companies.
Many of them are actually not qualified to sit on the boards anyway.

I don't know much about John, but I'm speaking in general.

Now if that is how HMA folks treat their CEO's, a lot of good and qualified candidates for the post would think twice before joining the company.

They need to have a STRATEGIC, long-term eye rather than instant gratification.
This goes to reveal a great deal about the short-sightedness of this board of directors/owners!

If sales are not what they were expecting, isn't the Marketing guy (or the sales guy) the one to be put on the grill?
Just wondering!

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