Few have weathered an all-in-all forgettable 2010 better thanMotor America.
While most U.S. brands are stagnant or losing share, a new-product blitz has driven’s market share from 3.0% in 2008 to 4.2% in 2009 and to 4.7% so far in 2010.
Volume is up too, climbing 21.3% through the first 10 months, with Hyundai poised to break the 500,000-unit mark for the first time ever in a calendar year, a feat that should be accomplished this month.
HMA’s charismatic President and CEO John Krafcik thinks 2011 will offer even more opportunity for the brand, with the next-generation Elantra compact car, Accent subcompact and a number of other all-new or redone models on tap.
Krafcik talks with Ward’s about his outlook on the state of the North American auto industry, what he likes about his job and the not-so-little-matter of respect.
Ward’s: You have a new Elantra coming out in 2011, in the crucial compact-car segment that has been ruled by Civic and Corolla for years. Why should someone considering either of those cars get the Elantra instead?
Krafcik: Civic and Corolla are great nameplates with extraordinary heritage in the U.S. market. The Corolla has a legacy of fuel economy and quality, and the Civic a wonderful history of innovation. So it has always been a tough competitive situation for us with Elantra.
For the ’11 Elantra, we’re using the same game plan that has worked for us with Sonata – segment-leading fuel economy, class-above interior volume and great design.
Our 2.4L Sonata delivers 35 mpg highway (6.5 L/100 km) from GLS to Limited, and Elantra will deliver a 40-mpg (5.9 L/100 km) highway rating across the board, without the need for the low-volume, extra-cost “Special Fuel Economy” or “Eco” packages that are the current fashion.
Combine that fuel economy with our fluidic-sculpture design, a roomy midsize interior, some remarkable features and amenities and local U.S. production, and we think we’ll have a fairly strong appeal to compact car buyers.
Ward’s: What is the one sign you are waiting for before you declare the U.S. market ready to rock again?
Krafcik: There are really two key things we need – sustained improvement in employment (say three consecutive quarters of employment gains), and a significant uptick in housing.
New housing starts have pretty much flat-lined these last two years. Once we see new housing starts increase, we’ll have a sign that home equity and home ownership are back on the upswing. That should drive increasing consumer confidence and provide more of that retail boost we’ve all been looking for in the industry.
Ward’s: What's your best prediction at this point for Hyundai's 2011 U.S. sales/market share and industry volume?
Krafcik: We’ll break through the 500,000-unit mark for the first time in 2010, so we’ll begin our march toward 600,000 next year.
It’s unlikely we’ll have the production capacity we need to get there in 2011 though. The good news is we’ve now got about 400,000 units of U.S. capacity, with our three best-sellers built here (Sonata, the Santa Fe cross/utility vehicle, and Elantra).
We see the industry next year getting to about 12.3 million units, hopefully fueled by retail sales growth.
Ward’s: The Sonata has had an incredible year, with sales up 64.4% through October. Do you foresee a day when Sonata will best Camry’s 400,000-plus sales?
Krafcik: We have no goal or plan to pass Camry – our focus is delighting our customers with great quality, fuel economy and design.
And we’ve done a reasonable job there – we’ll sell about 200,000 Sonatas this year, a bit more than our own stretch targets. Our transaction prices in the segment are second only to Accord. And remarkably, Sonata consumers have a higher credit rating than all of the other top-six midsize competitors.
These are savvy shoppers. Now our challenge is to continue that momentum as some of the older models in the segment get refreshed. We’re sure that’s new Camry will be a terrific competitor and that GM will make the new Malibu an even more competitive midsize car.
Ward’s: What’s the most interesting/challenging part of your job?
Krafcik: I love everything about this industry, from the product to the design and manufacturing processes to the consumer touch-points in marketing, sales, and service.
So for me the most interesting part of this job is being able to work with talented people in all of these areas on a daily basis. There’s great esprit de corps here, and considering the size and scope of Hyundai, we’ve actually got a remarkably small-company point-of-view.
That point-of-view, and the tight relationships we have within the company and with our dealers, gives us an agility and speed-to-market that is exhilarating. We say that we work at a different clock speed here. We call it “HyundaiSpeed.”
Ward’s: If you couldn't work in the auto industry what would you be doing?
Krafcik: It’s hard to imagine working in another industry. But if I couldn’t work in autos, I’d want to be in a consumer-facing industry developing and marketing complex products and services.
The interface between consumer electronics and social media is an interesting space right now.
Ward’s: What are you looking forward to driving in 2011?
Krafcik: The ’12 Genesis R-Spec with our new 5.0L direct-injection Tau V-8 and our in-house 8-speed AT. It’s an amazing machine.
Ward’s: Do you think Hyundai finally has the respect it deserves in the U.S., especially among industry folks?
Krafcik: Respect is a two-edged sword, isn’t it? It’s true we’ve flown under the radar of some within the industry these past few years, but those days are probably gone.
More people are watching us, and that means we have to raise our game. It’s a function of what we’ve done these last five years or so.
We’ve transformed Hyundai from a company that was comfortable with a fast-follower mentality, to a company that now takes bold leadership positions in areas critical to the development of our brand, such as fuel economy, quality, and design.
But we’ve still got a lot of work to do, and a lot of consumer respect to earn. We’ve got a 5% retail-market share right now in the U.S., so it may seem enough that we’re on the shopping list of 33% of American car buyers.
But we’re not satisfied with that – we’ve still got a lot of room to grow our brand, and to improve our products and retail services. As we like to say at Hyundai Motor America – stay humble, stay hungry. There is no complacency here.
We’ve got a good trajectory, but there is still much to do.