hankyoreh

By Kim Jin-cheol, staff reporter

“We realize that Hyundai Motor still has a way to go before becoming South Korea’s flagship company,” said Hyundai Motor President Kim Choong-Ho.

Kim was speaking during a media event at the Busan International Motor Show on May 29. “All of the executives have a lot to think about as we reflect on the past. We will accept your valued opinions with an open mind and humble attitude,” Kim said while bowing his head. While competitors were busy boasting about the new automobiles that they were launching, Kim focused on reading a message of contrition with a grave expression on his face.

This was a highly unusual move. Each company at the Busan International Motor Show only had 17 minutes on media day, and it was extremely important for Hyundai to present the Grandeur Diesel and the AG, a new car that falls between a Grandeur and a Genesis in size. Never before had the company reflected on its shortcomings at a showcase for a new car, not to mention a motor show.

What could Kim mean by Hyundai’s shortcomings, when, along with Samsung, the company is one of South Korea’s best-known global corporations? Hyundai Motor’s true feelings could be seen in the discomfort about so-called haters expressed by Kwak Jin, vice president of Hyundai Motor, on the same day. “Every brand has its haters, but I sometimes feel that Hyundai Motor has an unusually large number of them,” Kwak said.

There are not a few consumers who bear ill will to Hyundai Motor. In fact, it is quite normal for online articles about Hyundai Motor to get critical comments sarcastically asking how much money the reporter received from Hyundai.

More than anything else, many South Korean consumers express their doubt about the quality of the automobiles that Hyundai Motor puts on the domestic market. These critics allege that domestic vehicles are often of worse quality, and sold at a higher price, than vehicles exported to the US and other overseas markets.

Indeed, after the recent launch of the LF Sonata, a new model by Hyundai Motor, it was alleged that the vehicle’s price had gone up even though the features remained largely the same, an example of the unverified attacks that are made upon the release of each Hyundai vehicle. The fact that there was some discrepancy in the steel plates used in vehicles in the past left a lasting impression in the minds of consumers.

Because of this, Hyundai Motor has recently been putting major emphasis on the fact that it is charging fair prices. In the case of the new Sonata and Genesis, both the domestic and export models not only are sold at the same price (after accounting for various options and add-ons), but if anything the domestic model is a little cheaper, Hyundai Motor explains. Some specifications such as airbags or safety belts may vary because of differences in safety regulations in South Korea and other countries, but there is no reason to deliberately mistreat domestic consumers, the company says.

The sense of crisis felt by Hyundai Motor is borne out by figures on market share. Statistics provided by the Korea Automobile Manufacturers Association show that Hyundai and Kia Motors’ share of the South Korean car market was 76.8% in 2009, but this has been gradually slipping, reaching 71.4% in 2013. As of April, this had dropped to 70.5%, with 70% representing dangerous territory. Some analysts in the automobile industry are expressing doubt that Hyundai Motor will maintain a 70% market share for the year.

Imported vehicles are making stunning inroads on the South Korean market. Importers only had a 4.2% share in 2009; as of 2013, this had risen to 10%, and importers recorded a 11.5% share in April of this year. There are even some observers who project importers’ share of the market will surpass 12% over the course of the year.

This is also the reason that Kim Choong-ho came forward to speak about Hyundai’s failings. As recently as two months ago, Kim responded to concerns about the rise of anti-Hyundai sentiment in South Korea with the irrelevant observation that labor relations are the primary reason for various problems that Hyundai Motor faces each year.

But at the Busan Motor Show, the same Kim bowed his head to say, “I cannot say with confidence that our performance is living up to the encouragement and support of our customers. I would rather show our sincerity with one vehicle than a hundred words. We will bring about customer satisfaction through actions rather than words.” Kim also described the AG and the Grandeur Diesel, new cars released at the motor show, as being “products into which we incorporated the opinions and desires of our customers.”

“If Hyundai and Kia lose out to imported cars in the domestic market, it is obvious that they will also suffer in the overseas market. We have to release a new car that can beat our global competitors, leading domestic consumers to choose Hyundai Motors once more,” said Hyundai Motor Chairman Chung Mong-koo during a meeting about strategies for increasing exports in March.

Hyundai Motor also asked labor unions at the company to join forces to address the issue of Hyundai critics. One of the three requests that Hyundai Motor delivered to labor union before this year’s negotiations between labor and management about wages and collective agreements, which are taking place on June 3, was promotional activities for customers. “We asked the union to join us in promotional activities to expand domestic sales,” said a representative from Hyundai Motor.

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