Word: hyundai
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...should be easy enough for Cho to recognize the secret of Hyundai's success. The South Korean company is following much the same formula that Toyota used decades ago to overcome its "cheap Asian import" stigma and become one of the world's most respected brands. When Hyundai first entered the U.S. market in 1986, its Excel sedan?an econobox with a $4,995 price tag?was an instant hit with frugal buyers. But customers soon discovered they were getting what they paid for: Excels were prone to quality-control problems and frequently needed parts replaced. Sales tanked, and Hyundai...
...like Toyota, which overcame consumer prejudice in part by inventing kaizen, a manufacturing process and corporate mantra translated as "continuous improvement," Hyundai has rapidly built up regard for its products through an almost fanatical attention to Getting It Right. Consumer Reports magazine recently named the Sonata the most reliable car in the U.S. And Hyundai rose to second place in J.D. Power and Associates' 2004 survey of initial car quality, tied with Honda and trailing only Toyota. Six years ago, Hyundai ranked among the worst in terms of initial defects. The comeback "is astounding," says Chance Parker, executive director...
...architect of Hyundai's rise is Chung, who was named chairman in 1998. Although his father, Chung Ju Yung, founded Hyundai Motor in 1967, it was clear the son would not get a free ride. Shortly before his appointment, the Korean economy had been slammed by the 1997 Asian financial crisis and Hyundai was forced to lay off 25% of its staff. Complicating matters, Hyundai agreed in 1998 to acquire South Korean rival Kia Motors, which had to be assimilated. Chung had little experience with the automotive industry?he had spent most of his career managing a smorgasbord of affiliates...
...Revered by the staff as a member of the founding clan, he was able to gather information quickly and impose his will on the organization. After years managing the after-sales service operation, he concluded that quality problems were the crux of the company's ills. Suh Byung Kee, Hyundai's president, recalls Chung bursting into his office five years ago and saying: "Quality is crucial to our survival. We have to get it right no matter what the cost...
...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...