Hyundai Motor looks to quality, not quantity

Seoul May 11, 2005; Kim So-hyun writinfg for the Korea Herald reported that Hyundai Motor Group said yesterday that it aims to become the world's sixth-largest carmaker in the next four or five years by concentrating on enhancing productivity and quality.

President Choi Han-young, in charge of the group's strategic planning and marketing, told reporters yesterday that his company plans to develop high value-added cars and improve product durability and organizational strength.

"We out did Toyota in the U.S. in initial quality surveys last year, but we still have a long way to go to rival their model diversity and brand value," said Choi, referring to what he called "overestimation" by the U.S. media.

Media coverage of the Korean carmaker has increased as U.S. makers face soaring health care costs for employees and greater competition. The credit ratings of General Motors Corp. and Ford Motor Co. fell to junk bond status last week.

According to researcher Global Insight, Hyundai Motor Group sold 3.36 million cars last year, ranking eighth after GM, Ford, Toyota, Renault-Nissan, Volkswagen, DaimlerChrysler and PSA Peugeot-Citroen.

Hyundai's sales of 49 trillion won were fewer than Honda's 72 trillion won.

Hyundai's productivity, or sales divided by the number of employees, is less than 30 percent of that of Toyota's.

The Korean carmaker's sales growth during the past three years was 7.3 percent, far behind Toyota's 10.5 percent.

Choi stressed how difficult it is for an automaker to enter the top five group.

"While the world's five largest makers sell at least 3 million cars at home, the total demand in Korea is a mere million units," Choi said.

The Korean motor group sells almost 80 percent of its cars abroad - an unusually high portion among global carmakers.

In contrast to its heavy dependence on sales abroad, the overseas production rate of Hyundai is only 14.5 percent whereas that of bigger players such as Volkswagen, Honda and Toyota are 62.7 percent, 60.9 percent and 41 percent, respectively.

(sophie@heraldm.com)

By