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Great Leaps, Persistence, and Innovation: The Evolving Story of Hyundai

04/08/2009 3:00 PM Bartos theater
John Krafcik, SM '88, President and CEO, Hyundai Motor America

Description: In 1986, Hyundai's first export to the U.S, the $4995 Excel, developed embarrassing quality problems, and the company found itself grist for late night talk shows. But John Krafcik recounts with pride Hyundai's turnaround, from laughingstock of the American auto market back in the 1980s, to seventh best"selling brand in the U.S., and fifth largest car maker in the world.

By 1998, Hyundai's name was so tainted in the U.S. that its market share fell to .4%, and the company was on the verge of pulling out altogether. But instead, says Krafcik, Hyundai determined to redeem itself, and win back car buyers with a focus on quality design and manufacturing, and with "America's best warranty." The 10 year, 100 thousand mile power train guarantee the company put in place, says Krafcik, was "an incredible clarifier for the engineering team," forcing them to design systems for "infinite life." Hyundai's "top down, hierarchical management approach" proved critical, too. Chairman Chung Mong Koo combines "Bill Gates, Barack Obama and the Pope," and "when he says we must do something, the company aligns well around that goal." In 2001, Chung declared that Hyundai needed to beat Toyota's quality standards in five years.

Unlike BMW's approach of challenging the car owner, says Krafcik, the more "humble" Hyundai engineers focused on ergonomic engineering. An "obsessive customer focus" meant getting cars at early stages in the hands of real drivers, and using feedback to improve designs. Indeed, unlike Toyota, which imposes an engineering freeze at a certain point in development, Hyundai resolved to adapt to suggestions even late in the car development game: "If there's an imperative for a late quality change, the system is adaptable to that change." Also, Hyundai chose to design and build cars where it sells them. The result speaks for itself, say Krafcik: Hyundai's achieved strong, consistent quality performance, rivaling the industry leaders globally.

Current challenges for the company involve developing a proprietary hybrid solution (with a novel lithium polymer battery) to achieve 35 mpg by 2015; and confronting "residual brand issues." The economic crisis, which has reduced the world's appetite for cars, could prove advantageous for "agile" Hyundai, believes Krafcik, which has been positioning itself prominently in the downturn, by, for instance, saturating the Super Bowl and Academy Awards with ads. Huge recent gains in "brand perception" have "Hyundai on a roll", and Krafcik expects that the company's persistence and passion will pay off, despite the grim times.

About the Speaker(s): John Krafcik previously served as Vice President of Product Development and Strategic Planning for Hyundai. Krafcik joined Hyundai in April, 2004. Prior to that position, he had worked at Ford Motor Company.

Krafcik holds a B.S. in Mechanical Engineering from Stanford University and earned a Master of Science degree in Management from the MIT Sloan School of Management in 1988. Krafcik began his career in the auto industry at the GM/Toyota joint"venture NUMMI, and later became an industry consultant on lean production.

Host(s): School of Engineering, Engineering Systems Division

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MIT World — special events and lectures

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