Word: chungs
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...Though Chung's revelation might seem obvious, it wasn't to Hyundai's staff. A premium had always been placed on making cars quickly and cheaply. Even Suh, who is in charge of Hyundai's quality-improvement efforts, admits, "When I first came to Hyundai, I, too, didn't think quality cars were important." But the new chairman made blemish-free manufacturing the top priority. To break down interdivisional barriers, Chung forced designers, engineers and factory managers to work as a team by creating joint committees to examine blueprints of new models and weed out potential defects. Twice a month...
...short run, Chung's obsession with quality can be costly. Last year, he delayed the launch of a new Sonata in Korea for two months while engineers cleaned up 50 minor defects. In 2003, he asked Lee, the senior R&D executive, to get rid of an annoying noise made by grinding gears in the transmissions of Kia Amanti sedans. Lee worried that he'd have to shut down production entirely to work on the problem. "I told him that we'd lose two months of sales," he recalls. "The chairman said: 'If it's for quality...
...course, quality isn't everything. Chung has also ramped up efforts to ensure Hyundai is competitive with Japanese benchmarks in technology and styling. Hyundai's R&D budget has expanded 110% since 1999, to $1.6 billion this year. Hyundai invested $200 million to open or expand research-and-design centers in California, Michigan, and near Frankfurt, Germany; a $60 million proving ground in California's Mojave Desert opened in January. In South Korea, Chung expanded his R&D headquarters, adding a new design center last year complete with a 3-D cinema for viewing virtual models of new cars...
...With some of its biggest rivals in disarray, Hyundai sees an enticing opportunity to build on its progress overseas. Slammed by rising costs and slumping sales, General Motors recently shocked investors by predicting a first-quarter loss, and Ford followed this month by downgrading its 2005 profit forecast. Chung is determined to keep the pressure on. He's moving Hyundai's product line away from its traditional small cars into larger, higher-profit vehicles. In October, Hyundai unveiled a small sport-utility vehicle, the Tucson, and later this year, the company will launch a new high-end sedan...
...After all, Hyundai's road trip is really just beginning. Despite its impressive winning streak, the company is still only the world's seventh largest carmaker, with 3.3 million vehicles sold globally?and that includes sales by its Kia subsidiary. But Chung has grand ambitions. "We will make ourselves an invincible competitor," he says. Hyundai's larger rivals should mark those words whenever they check their rearview mirrors for overtaking traffic...