Steve Wilhite, Hyundai's New COO, on the Tenacious Brand and the Car Biz

By Marty Bernstein

AIADA Contributing Editor

There is nothing shy or retiring or reticent about Steve Wilhite, who just three months ago was made the chief operating officer of Hyundai Motors America – a company that undeniably is the fastest growing car company in America today.

A California native, Wilhite has a first class, gold-plated, prestigious academic background that includes an undergraduate degree in psychology from Stanford University and a Master’s degree in business from University of California – Berkley. With his sheepskins in hand he moved to the business world of commerce and marketing.

His professional background and business successes could be the basis of B-school case history. Wilhite moved early in his career from the car business at Ford Motor Company and retail dealerships to Apple computers, where he was vice president for global marketing communications during the computer industry’s infancy and prior to its business puberty.

From Apple, he returned to the car industry as the head of sales at Volkswagen when it was in the 1990’s sales dumpster. He, then, moved to become the senior executive of VW’s marketing operations. Wilhite has been given credit for the VW turnaround with an aggressive marketing ad campaign coined, ‘Drivers Wanted,’ with just a few new models. Incidentally, he also was responsible for the launched of the new Beetle.

From VW, Wilhite went on to work under Carlos Ghosn (not known as the easiest guy to work for) as the vice president of marketing for Nissan North America, where he oversaw the brand’s marketing and sales surge. From here, he was promoted and transferred to Nissan’s headquarters in Tokyo, Japan, where he served as senior vice president of worldwide marketing for Nissan Motor Company.

Then, in late summer, the news hit – Steve Wilhite has joined Hyundai Motors America as chief operating officer. I’d known Wilhite and have interviewed him a couple of times. So, when I received an invitation to attend the launch of the new Hyundai Tiburon and Elantra, I requested an interview with him.

Literally, the moment I checked into the hotel began a series of on-the-record and off-the-record chats. Ask him a question, any question on any topic and you get a straight answer or an opinion that is thoughtful, incisive and always focused. Laser focused. His knowledge of the automotive business was expected, but his knowledge of Hyundai after such a short tenure was exceptional. Wilhite, you’ll soon learn, is experienced, enthusiastic and erudite.

MB: Congratulations on your new affiliation with Hyundai. Tell me about your professional career transition from CMO (chief marketing officer) to COO (chief operating officer) – was it at all daunting?

SW: I grew up in the sales end of the business – pretty traditional background with field sales positions, and then when I moved to Volkswagen in 1989, it was as sales manager for the organization. I’ve worked in the retail side of the business for three years, running a chain of dealerships. So, I’m versed in both sides of the business and it has not been as daunting, overwhelming or intimidating for me as perhaps it might be for others.

MB: Moving from one automotive company to another has become a common employment situation of late. You not only changed companies, you changed continents and cultures too. How challenging was this?

SW: It is and was challenging, but I’ve gotten a tremendous amount help from people in the organization. We’ve got an excellent team. Our executive vice president of parts, Frank Ferrara, is a top notch guy who has done really great work and is running an excellent organization. We recently hired Don Dees as vice president of service operations – he’s an A+ guy doing terrific work, who thinks very strategically about the business. John Krafcik, vice president of product development, was an Automotive News all-star this year and really has a clear perspective on product programs and where he thinks our opportunities lie. So, it’s been a blessing for me to come in and work with these and other great people.

MB: How would you describe your management role?

SW: My job is to provide a little bit of guidance and fine tuning. I believe we can do some extraordinary work over the next 3 to 4 years… and God knows we have to because our ambitions are pretty big.

MB: How ambitious are your ambitions and goals for Hyundai?

SW: We have stated publicly that by 2010 we wanted to do a million units in the United States. Recently though, we’ve backed off that a little bit. We still have very strong ambitions, but we are not going to compromise those ambitions by compromising on quality. The focus is: let’s make certain the product we bring to market is absolutely right. So, we will slow down our growth plans a little bit to get everything right.

MB: Do you feel some time you have to pull back to move forward?

SW: That’s interesting. Pulling back from almost a million unit projection – that’s after almost doubling sales in a short period of time to somewhere short of that, but that is not pulling back appreciably. I do think it is providing a little breather to say, “Let’s wait a second to make sure we’ve got everything buttoned-up, that we’ve got all the pieces in place to really make certain our foundation is strong.”

MB: Achieving sales number estimates these days has been, for most car companies, like trying to select a winning lottery number – the accuracy has not been too good. Why do you think this is happening?

SW: There is nothing worse in our industry than pulling out all the stops to hit a volume number and then realizing you don’t have the foundation in place. You may have over-invested in incentives; may have pushed the organization too hard and too fast; may have compromised in quality. The result is obvious.

MB: Who in the industry is doing the best job?

SW: The model you really need to look at is Toyota. They take what the market gives them. They don’t over-stretch. They’re very aggressive and tenacious, but it’s really steady, consistent growth over an extended period of time – not looking to get 20 percent growth in one year. You wind up building a great foundation and a great business that way.

MB: How does this translate or transfer to Hyundai?

SW: I think to some extent we’ve got to learn from what they [Toyota] do and say, “Let’s not be greedy, let’s be ambitious but let’s make sure we’re building a strong house and strong brand for Hyundai.”

MB: Hyundai’s share of market has grown, but the share of mind has not kept pace, can this be improved?

SW: That’s a very true statement. I look at the breakdown of the marketplace and ask, “How are people thinking about us?” Right now Hyundai has about 23 percent consideration among peer vehicles. This is a significant increase from where we were just one year ago. That’s a 40 percent growth in consideration, but still it’s 23 percent, which means 77 percent of the people out there that don’t know us don’t like us or don’t want us. And we do intend to improve this.

MB: Result?

SW: The upside potential for us is pretty dramatic. And we are moving in the right direction. The metrics are positive. We just need to accelerate that a bit and make sure we’re in focus.

MB: Recently, auto pundits have forecasted there will be 70+ crossover models in the marketplace in the next couple of years. That seems like a lot, doesn’t it?

SW: There are 37 or 38 franchises and when you look at all their models permutation options there are over 600 vehicles in the marketplace – holy cow! So, the question is: what’s a crossover today? A crossover five years ago could be explained a little easier: it’s a vehicle that had some of the characteristics – interior functionality, all-wheel-drive capability of the traditional 4 x 4 SUV. But now it’s built on a unibody frame with some of the creature comforts and driving functionality of a passenger car. OK. I get it.

MB: Does it become more confusing?

SW: Well now, the world is filled with crossovers. With 600+ different configurations, you’ve got to say, “My goodness, what do you call a sport wagon?” It’s sort of a crossover between a station wagon and a sport sedan. But that sounds suspiciously like a crossover vehicle that combined two previously distinct segments.

MB: Do you have other examples of potential model proliferation confusion?

SW: The new Porsche 4-door. What’s that going to be? Is it going to be a traditional sedan? I don’t think so. You know, it’s going to have the performance characteristics of a Porsche, and, yet, it’s going to have four-passenger seating. So, what’s that going to be? Well, it’s probably going to be a pretty small segment with very few competitors.

MB: Can the industry meet the challenges you’ve detailed?

SW: I think the interesting thing one is seeing today is a lot of people trying to understand how the market is evolving, and how to give customers better functionality, and, at the same time, provide better fuel economy, environmental friendliness, and drive-ability for real world driving conditions. I think manufacturers are trying to find interesting solutions for changing driving dynamics and family conditions, and sometimes it’s very tough. All of a sudden, crossover is a nice term that allows you to put a lot of product into this category and say, “Ok, I get it! I can define a segment around this.” But really it is greater proliferation of product, and consumers remain confused.

MB: Can the industry negate this confusion?

SW: I think in every industry there is a herd mentality – going for the next great thing. You remember when, in the retail side of the car business, everybody was worried about automotive brokers and it was going to be the death of the franchise dealer. And then you worried about mega-dealers, the very well capitalized, entrepreneurs that were gobbling up all the small mom and pop stores. Then, it was public capital. And then it was, “Oh, my god the Internet – it’s going to takeover the business.” What’s really happening to us is simple: there are more and more choices in the world for people. There is not one patch that is moving forward, there are just more and more choices.

MB: Who do you feel has done it or is doing it correctly? Can it be accomplished?

SW: Yes. And now, you’re seeing a lot of interesting, terrific products – everything from the RAV4 to Nissan’s Murano to the Scion xB – they’re all new and targeted.

MB: What categories will accelerate Hyundai’s growth in the next three to five years?

SW: Our growth is going to be in more traditionally defined segments the public understands. Right now, we are an excellent manufacturer of very affordable passenger vehicles from entry-level sedans and hatchbacks up to near-luxury sedans. And in crossover SUVs, we’ve got some new product coming, but it is fundamentally extensions of these segments.

MB: Could that include a halo car?

SW: (laughing) Not that I’d want to talk to you about today. I don’t think the answer for Hyundai is an iconic car. For us, we must tell our brand story a lot more clearly. Look at all the segments we compete in. Gosh we’ve got wonderful industry recognition – wonderful awards. We are clearly moving in the right direction and we offer great value. Generally, our price position is 90 percent to 93 percent of facing competitive models, and on top of that we’ve got active safety value features and awards. I believe our interior quality and tactile qualities are exceptional, and on top of all of that we’re backed by America’s best warranty. Our job is to get the message out in a compelling, relevant way.

MB: Is this your biggest challenge at Hyundai?

SW: No, I think we have three challenges: First, to clearly define the brand and have our senior executives and our sales people, dealers and field sales organization be able to give you an answer and information with a high-level of consistency. Today, if you were to go out in the street and ask sales people or our dealers or our staff – “Tell me what Hyundai stands for?” – I’m afraid you won’t find a consistent reply. But we should all be moving down the same superhighway: Without message consistency it‘s tough to have a compelling communication plan, a compelling sales training plan or the ability to deliver a compelling customer experience

MB: The second?

SW: The second issue for Hyundai is convincing our dealers and helping them understand the customer experience is going to be a huge differentiator in the marketplace, that doing business the way we did 15 or 20 years ago just isn’t going to cut it. There are not enough people in the industry – dealers, sales managers, general managers, sales people, service advisors – that really seem to embrace that in their daily activities. Sure, they pay lip service to it but when the rubber meets the road, when they’re faced with the moment of truth with the customer, they don’t necessarily behave in alignment with customers’ expectations. I think that Hyundai, like every manufacturer, has a responsibility to work to improve this situation.

MB: And the third?

SW: We have to work on improving dealer profitability. It’s no secret in this business that if your dealers are not making what they consider a reasonable return on sales, or invested capital, it is very tough for them to make the investment we’d like them to make on behalf of customers or on behalf of the franchise. We’ve really got to work with them to improve profitability.

As the new COO of Hyundai Motor America, Wilhite has many varied responsibilities; among them, the company’s strategic development, sales, marketing, communications, parts and service. Hyundai’s growth is tribute to the fact that the global automobile company is never satisfied with the status quo.

This, in my opinion, is an appropriate description of Steve Wilhite too. It is going to be interesting and fun to watch what happens in the future. So, stay tuned.