Aiming not to be the world’s biggest car company

“OUR GOAL is not to become the biggest car company. Our goal is to become the most-loved car company and a trusted lifetime partner of our owners.” This, for me, was the most significant statement uttered at Hyundai’s press conference in Dubai a week ago before motoring journalists from seven countries including the Philippines set out to test-drive the 2011 Hyundai Accent over a 380-kilometer diversified driving course.

That statement dovetails with the Korean motor giant’s strategy of tailoring cars from country to country to accommodate local driving habits, consumer needs and weather conditions. Hyundai individualizes its approach to each country in a new global policy aimed at localization. This includes product development, design, sales, marketing and consumer services to satisfy local customers’ tastes as well as that of the global market. As the president and CEO of Hyundai Motor America said, “Hyundai’s philosophy is to build our vehicles where we sell them.”

This localization strategy seems to be working since Hyundai, with three plants in Korea and six overseas plants (in the United States, India, China, Turkey, the Czech Republic and Russia,) sold about 3.6 million cars worldwide in over 186 countries in 2010, up 16.3 percent from 2009. In global sales ranking in 2009, the Hyundai Motor Group (including 34 percent-owned Kia) was No. 5 after Toyota, General Motors, Volkswagen and Ford. Today, Hyundai has a combined global production capacity of about 3.91 million units a year with 1.86 million in Korea and 2.05 million overseas.

TARGET

Including 330,000 built at its US plant, Hyundai is targeting US sales of 590,000 vehicles this year, up from 425,000 last year. Sales of the fluidic sculptured Sonata were up 45 percent in 2010 in the US but are being held back by lack of supply. In China, the world’s biggest car market, Beijing Hyundai’s sales rose 23.3 percent to 704,441 units in 2010 compared with 2009. Hyundai began production in China only in 2003 where its bestseller is the compact Yuedong (Joyful Movement) a.k.a. the Elantra in Korea and other markets.

Gearing up to surpass Ford Motor Co. in Brazil, where auto sales surged to 3.5 million vehicles in 2010, Hyundai began construction of a $600 million plant in Piracicaba, Sao Paulo, state last month. The addition of production facilities in Brazil will complete Hyundai’s presence in the BRIC (Brazil, Russia, India and China) economies although Hyundai was already focusing on them before the BRIC acronym was coined by a Goldman Sachs analyst in 2001 and the global financial crisis in 2007 shifted sales growth potential to these emerging markets.

In Brazil, Hyundai will localize by producing, for the first time in its history, flex-fuel subcompact cars that run on gasoline and ethanol since the entire Brazilian market is flex-fuel. Hyundai expects to catch up quickly with competitors who arrived earlier when its production begins in two years and the manufacture of larger flex-fuel vehicles in three years.

In Russia, where Hyundai opened a plant last January, accommodation has to be made for Russian driving habits and the country’s cold climate that requires a higher ground clearance for the Hyundai Solaris, which is basically the same as the Accent subcompact in Korea and elsewhere.

GLOBAL HUB

Hyundai’s two factories in Chennai, India, produce 600,000 vehicles a year, mostly the i10 and i20 minicars, half of which are sold in India and the rest exported mainly to Europe. While India is Hyundai’s global hub for small-car production, it also hosts Hyundai’s US$25 million R&D center that was opened in Hyderabad in 2009 to serve as a platform for the development of compact cars and to enable Hyundai to respond more quickly to changing customer needs across the world,

Aside from the R&D center in India, Hyundai has a $30 million design studio in Irvine, California, a $60 million proving ground in the Mojave desert in California and a $117 million technical center in Ann Arbor, Michigan, enabling Hyundai to bring vehicles to life from design and engineering, to testing and finally to production in the US. The 2012 Elantra, which is rated by The Wall Street Journal motoring columnist as the best compact car except for the dual-clutch, 6-speed AT 2012 Ford Focus, was designed in Irvine, California, and built at Hyundai’s $1.1-billion factory in Montgomery, Alabama. Hyundai also has a 50-million- euro European Design and Technical Center in Russelsheim, Germany, where the i30 was designed.

RISING

Hyundai’s sales are expected to continue rising in key overseas markets due to its growing global reputation for quality, dynamic styling, advanced technology and broad lineup of fuel-efficient compact cars now being supplemented by higher-end models like the Genesis and Equus. In the Philippines in 2010, Hyundai Asia Resources Inc. reported an 82 percent increase in sales to 20,172 vehicles to keep its No. 3 ranking in the auto industry.

Looking to the future, Hyundai began mass production of hybrid cars in 2009 and introduced the world’s first hybrid vehicle fueled by liquefied petroleum gas (LPG) that was also the world’s first car to use lithium-ion polymer rechargeable batteries. In 2009, Hyundai launched its eco-friendly Blue Drive sub-brand editions that deliver outstanding fuel economy but are priced lower than other models. This year, Hyundai will begin testing the Tucson (ix35) Fuel Cell Electric Vehicle (FCEV) that can travel 650 km on a single charge and get gasoline equivalent fuel efficiency of 31 km per liter. Hyundai plans limited manufacture of the Tucson (ix35) FCEV in 2012 followed by mass production in 2015.

Given Hyundai’s phenomenal progress over the years, consumers hope that, to maintain the high quality of its products, it will stick to its localization strategy and mission/vision of becoming the world’s most loved and trusted car company—not the biggest.