How Hyundai Became The Third Largest Automaker In The World

Summary

Hyundai Motor Group's transformation from a low-quality copycat to the world's third-largest automaker is highlighted. The company's commitment to innovation in EVs, robotics, and autonomous driving is underscored, despite facing challenges like thefts, fire risks, and labor movements. Hyundai's impressive growth, EV sales, and advanced technology platforms like E-GMP are noted, showcasing its evolution and resilience in a competitive industry.

Takeaways

• 🏭 Hyundai Motor Group is the third largest automaker globally, having transformed from a low-quality copycat to a competitive brand.
• 🏆 Hyundai, along with its brands Kia and Genesis, is winning awards and gaining recognition, especially in the American market.
• 🚗 Despite Tesla's dominance in the EV industry, Hyundai and Kia are making significant strides in electrification with impressive products.
• 🛠️ Hyundai is not just focusing on EVs but is also investing in robotics, autonomous driving, and flying taxis, aiming to revolutionize the industry.
• 🔧 The company has faced setbacks including theft issues, vehicle fire risks, and labor union pressures, but remains committed to innovation.
• 📈 Hyundai Motor Company's revenue has significantly increased from $80 billion to an expected $124 billion, with record-breaking retail sales in recent years.
• 🥇 Hyundai has surpassed Stellantis in popularity in the U.S. and is now the fourth most popular brand, with strong EV sales despite not fully qualifying for federal tax credits.
• 🔋 Hyundai's E-GMP platform is a key technology, offering flexibility and rapid fast charging for a range of electric vehicles.
• 📊 Hyundai's sales of the fully electric Ioniq 5 increased by 90% in the U.S., and their hybrid and plug-in hybrid models also set sales records.
• 🔄 Hyundai's history includes learning from Toyota and other automakers, and adopting a fast-follower strategy to improve quality and safety.
• 🛡️ Hyundai has addressed quality issues and theft problems with significant investments, software updates, and by offering strong warranties to consumers.

Q & A

What is Hyundai Motor Group's current ranking among global automakers by volume?

Hyundai Motor Group is the third largest automaker in the world by volume.

How has Hyundai Motor Group's reputation evolved over the years?

Hyundai Motor Group was once considered a low-quality copycat, but now its three auto brands are challenging well-established competitors and winning awards.

What is Tesla's current status in the EV industry compared to Hyundai and Kia?

While Tesla still dominates the EV industry, Hyundai and Kia are inching closer with their electrification efforts and innovative products.

What does Hyundai aim to revolutionize beyond electric vehicles?

Hyundai aims to revolutionize manufacturing, invest in robotics, autonomous driving, and flying taxis.

How has Hyundai's revenue grown over the past decade?

Hyundai Motor Company, excluding Kia, has seen its revenue grow from about $80 billion to an expected 124 billion within a decade.

What was Hyundai's performance in the U.S. market in 2023?

In 2023, Hyundai had its third consecutive year of record-breaking retail sales, totaling more than 700,000 units in the U.S.

What is the significance of Hyundai's E-GMP platform?

The E-GMP platform, or Electric Global Modular Platform, is a flexible, cutting-edge chassis designed to underpin a wide range of vehicle shapes and is loaded with advanced technologies like rapid fast charging.

How did Hyundai's quality improve over time?

Hyundai adopted a fast-follower strategy, benchmarking its quality against Japanese automakers like Toyota and Honda, and implemented automation for quality checks, leading to significant improvements in quality.

What was the impact of the 1997 Asian financial crisis on Hyundai and Kia?

The 1997 Asian financial crisis led to the collapse of many companies, including Daewoo and Kia. Hyundai bought a 51% stake in Kia, which later reduced to about 33%, forming the Hyundai Motor Group.

How has Hyundai addressed the issue of vehicle thefts?

Hyundai has spent hundreds of millions of dollars addressing the crisis by developing a software update and providing clinics and parking lots with hired technicians to fix the issue.

What is Hyundai's stance on the recent U.S. trade policies affecting electric vehicles?

Hyundai has expressed disappointment with the U.S. trade policies that limit the federal EV tax credit to American-made cars. However, the company plans to double down on its investments in the U.S., hoping to qualify for the credits sooner rather than later.

Outlines

00:00

🚗 Hyundai's Transformation into a Leading Automaker

Hyundai Motor Group's journey from a low-quality copycat to the world's third-largest automaker by volume is highlighted. The company's transformation is underscored by its commitment to innovation, with Hyundai, Kia, and Genesis brands challenging established competitors and winning numerous awards. Hyundai's significant strides in electrification are noted, with the introduction of the E-GMP platform and its advanced technology, including rapid charging capabilities. Despite setbacks such as vehicle thefts, fire risks, and union pressures, Hyundai has shown resilience, with its U.S. sales surpassing those of American and Italian automaker Stellantis and becoming the fourth most popular brand in the U.S. by January 2024.

05:00

🛠️ Hyundai's Quality Improvement and Strategic Acquisitions

This paragraph delves into Hyundai's initial struggles with quality and its subsequent focus on improvement, leading to a 'fast follower' strategy that emulated the best practices of leading Japanese automakers. The introduction of a 10-year, 100,000-mile powertrain warranty was a game-changer in establishing Hyundai's commitment to quality. The acquisition of a stake in Kia during the 1997 Asian financial crisis and the subsequent formation of the Hyundai Motor Group allowed for technology and staff sharing, which significantly boosted Hyundai's reputation. The hiring of renowned designers and engineers from European brands further enhanced Hyundai's product lineup, although challenges such as the high-end Genesis brand's initial struggle and vehicle recalls due to fire risks were not overlooked.

10:01

🏭 Hyundai's Labor and Trade Policy Challenges

The third paragraph addresses Hyundai's labor movement challenges, with the United Auto Workers union targeting foreign automakers with nonunion U.S. factories. Hyundai's response to the union's activities and its plans to raise wages are discussed. Additionally, the impact of the Inflation Reduction Act's federal EV tax credit, which favors American-made cars, is examined. Hyundai's substantial investment in the U.S., despite the trade policy hurdles, is highlighted, along with its flexible approach to powertrain production and its commitment to hydrogen vehicles, which have been criticized by some industry figures.

15:01

🔧 Hyundai's Innovative Approach to Manufacturing and Distribution

The final paragraph outlines Hyundai's innovative manufacturing processes, such as its cell-based production system in Singapore, and its ventures into autonomous driving technology despite partner Aptiv's reduced investment. Hyundai's willingness to adapt to changing consumer preferences and market conditions is emphasized, as is its pioneering collaboration with Amazon for online car sales. The cultural shift within Hyundai's management under Chung Mong-koo is noted, with a focus on improving quality rankings and a top-down approach to achieving clear goals.

Keywords

💡Hyundai Motor Group

Hyundai Motor Group is the third largest automaker in the world by volume, which signifies its significant position in the global automotive industry. The company's transformation from a low-quality copycat to a reputable brand is a central theme of the video, highlighting its journey and achievements in the market.

💡Electrification

Electrification refers to the process of transitioning from traditional internal combustion engines to electric powertrains in vehicles. Hyundai's commitment to electrification is a key aspect of their strategy, as they aim to produce innovative electric vehicles (EVs) and invest in related technologies, as mentioned in the script.

💡E-GMP Platform

E-GMP stands for Electric Global Modular Platform, which is Hyundai's cutting-edge electric vehicle platform. The platform is designed to be flexible and capable of supporting a wide range of vehicle types, and it is central to Hyundai's EV strategy, as it exemplifies their technological advancements in the electric vehicle market.

💡Quality Improvement

Quality Improvement is a critical concept in the video, illustrating Hyundai's shift from producing low-quality vehicles to becoming a manufacturer of high-quality cars. The company adopted a 'fast follower' strategy, benchmarking its quality against leading Japanese automakers, which led to a significant turnaround in its reputation.

💡Warranty

A warranty in the automotive context is a guarantee offered by the manufacturer to cover repairs or replacements for a certain period or mileage. Hyundai's introduction of a ten-year, 100,000-mile powertrain warranty was a bold move that signaled their commitment to quality and reliability, as highlighted in the script.

💡Hyundai Ioniq 5

The Hyundai Ioniq 5 is a fully electric vehicle that has been praised for its superior quality compared to competitors like Toyota's Bz4x. The Ioniq 5's success, with a 90% increase in US sales in 2023, exemplifies Hyundai's advancements in the EV market and its ability to compete with established brands.

💡Historical Irony

Historical irony in the script refers to the transformation of Hyundai from a company that was once known for imitating Toyota to one whose products, like the Ioniq 5, are now considered superior. This concept underscores the dramatic shift in Hyundai's position within the industry.

💡Chaebols

Chaebols are large family-controlled conglomerates in South Korea, and Hyundai Motor Group is one such example. The script mentions Hyundai's origins from a Chaebol, which provides context to the company's growth and influence in the automotive industry.

💡Innovation

Innovation is a recurring theme in the video, as Hyundai is portrayed as a company that is not just focused on current automotive trends but is also investing in future technologies such as robotics, autonomous driving, and flying taxis. This demonstrates Hyundai's forward-thinking approach and commitment to being a technology company.

💡Trade Policies

Trade policies are government regulations that affect international commerce. The video discusses how Hyundai has been impacted by the US's Inflation Reduction Act, which limits the federal EV tax credit to American-made cars, posing a challenge for Hyundai's market strategy in the US.

💡Flexibility

Flexibility in the context of the video refers to Hyundai's ability to adapt to changing market conditions and consumer preferences. The company's willingness to shift production towards hybrids or other powertrains if demand arises showcases their strategic adaptability in the face of evolving industry trends.

Highlights

Hyundai Motor Group is the third largest automaker in the world by volume, having transformed from a low-quality copycat to a strong competitor.

Hyundai's three auto brands are winning awards and challenging established competitors.

Tesla dominates the EV industry, but Hyundai and Kia are making significant progress in electrification.

Hyundai is expanding beyond EVs with ambitions in robotics, autonomous driving, and flying taxis.

Hyundai considers itself a technology company, with projects that resemble science fiction.

The company has faced setbacks including car thefts, fire risks, and union pressures.

Hyundai Motor Company's revenue grew from $80 billion to an expected $124 billion in a decade.

Hyundai achieved record-breaking retail sales in 2023, with over 700,000 units sold in the U.S.

Hyundai surpassed Stellantis in U.S. popularity, becoming the fourth most popular brand.

Hyundai Kia and Genesis led in EV sales despite not fully qualifying for federal tax credits.

Hyundai's lease rates increased from 2% to 30% due to attractive discounts on their vehicles.

The E-gmp platform is considered one of the best EVs on the market, featuring rapid fast charging.

Hyundai Ioniq 5 sales in the U.S. increased by 90% in 2023, outperforming Toyota's Bz4x.

Hyundai Motor was founded in 1967 and has grown to become a global automotive giant.

Hyundai's first car, the Pony, was designed by Giorgetto Giugiaro, ensuring a modern look.

The Excel, Hyundai's first car sold in the U.S., was a success due to its low price and iconic design.

Hyundai implemented a fast-follower strategy, adopting best practices from leading car manufacturers.

Hyundai introduced a 10-year, 100,000-mile powertrain warranty to signal its commitment to quality.

The acquisition of a stake in Kia helped Hyundai boost sales and repair its image.

Hyundai brought in experts from respected European brands to transform its product lineup.

Hyundai's high-end Genesis brand initially struggled due to a focus on sedans in a market shifting toward SUVs.

Millions of Hyundai cars were recalled over fire risk, impacting the company's reputation.

Hyundai addressed car theft issues by developing a software fix and providing support to dealers.

Hyundai is facing a labor movement with the United Auto Workers union showing interest in its nonunion U.S. factories.

Hyundai's investment plans in the U.S. have grown to $12.6 billion, focusing on a new plant in Georgia.

Hyundai is committed to maintaining flexibility in its production to adapt to changing consumer demands.

Hyundai claims the world's largest share of hydrogen vehicles, despite skepticism from industry figures.

Hyundai is pioneering a new factory and innovation center in Singapore with an advanced production system.

Hyundai is exploring new distribution methods, including a pilot project with Amazon to sell cars online.

Hyundai's culture has evolved, moving from a top-down management style to a more flexible and innovative approach.

Transcripts

Hyundai Motor Group is the third largest automaker in

the world by volume.

This is no mean feat for a company that just some

years ago was considered a low quality copycat.

Now, the three auto brands in Hmg's stable are

nipping at the heels of well-established

competitors and winning award after award.

The Hyundai that we see today, especially from an

American perspective, um, would surprise people if

they remember the Hyundai that first entered the

American automobile market years ago.

While Tesla still dominates the EV industry,

Hyundai and Kia are inching closer so far.

On the electrification side, you know, Hyundai

has done a really great job.

They've put some some fantastic products out

there.

But the company doesn't stop at EVs.

It wants to revolutionize manufacturing, invest in

robotics, autonomous driving and flying taxis.

Many of the bold ambitions other automakers

have stepped back from Hyundai remains committed

to.

I think we are a technology company.

When you look at everything we're doing,

we're doing things that that are almost science

fiction.

But the company has faced plenty of setbacks, a

plague of thefts so bad some insurers refused to

cover their cars, millions of vehicles at

risk of catching fire, a looming union push and a

snub from the US government on top of it.

In this time of tremendous change, there

are no proven strategies for success.

Everything is a gamble and Hyundai is a player.

In just one decade.

Hyundai Motor Company, which excludes Kia, went

from about $80 billion in revenues to an expected

124 billion.

Sales dipped slightly in 2020, but by 2021, more

than recovered. 2023 was Hyundai's third

consecutive year of record breaking retail

sales, this time totaling more than 700,000 units,

about eight times Hyundai's total sales in

the late 1990s.

Of course, several automakers reported large

gains in what economists called a surprisingly good

year, but Hyundai did surpass American Italian

automaker Stellantis.

As of January 2024, Hyundai is now the fourth

most popular brand in the U.S., behind Ford, GM, and

Toyota. The Hyundai Kia Duo, along with Hyundai's

premium brand Genesis, beat all of those

companies in EV sales.

This is despite the fact that its vehicles didn't

fully qualify for the federal tax credit.

Customers can get discounts if they lease

Hyundai vehicles, which has sent the company's

lease rates from 2% to 30.

They're generally widely considered some of the

most advanced vehicles, especially their electric

vehicles. The E-gmp platform and some of the

stuff that's coming in the next few years is

considered some of the some of the best EVs on

the market.

E-gmp stands for Electric Global Modular Platform.

The skateboard like chassis is meant to be

extremely flexible enough to underpin a wide range

of vehicle shapes.

It is loaded with cutting edge tech, among other

things, rapidly fast charging.

I want to just call the attention to what happened

recently in Chicago when the temperatures were

extremely low, right? So thankfully our cars have

different technology, different system, and then

had no issues with the charges or with the

vehicles.

2023 US sales of its fully electric Ioniq five were

up 90%.

The hybrid Tucson and plug in hybrid Santa Fe

both set sales records.

In a bit of historical irony, the Hyundai Ioniq

five by every by basically everyone's

standards, is a far, far superior product to

Toyota's comparable competitor, which would be

the Bz4x's.

It is a historical irony because you could argue

Hyundai got to where it is today, in part by

imitating Toyota.

Hyundai Motor was founded in 1967, growing out of

one of Korea's massive, typically family run

conglomerates known as Chaebols.

Its first assembly plant in Ulsan, Korea, is still

one of the world's largest factories, capable

of making 1.6 million vehicles a year.

Ulsan's first project was making a car for for the

Cortina. What it learned led to its first car, the

pony. It then made a move it would repeat in the

future recruit a talented outsider, in this case

Giorgetto Giugiaro.

One of the most iconic names in car design, and

he was the one that that styled the original pony's

exterior. And that helped ensure that, you know,

this car coming from a nation that was not known

for building cars, um, had a car that looked

modern and contemporary and all that.

The Giugiaro designed successor, the Excel, was

the first car sold in the US in 1986.

They were cheap and, you know, I mean literally

cheap in in every sense of the word.

You got what you paid for.

Its low price iconic designer and the fact that

it was from an Asian country at a time when

Americans were besotted with the Japanese

reputation for quality and reliability made it a

staggering success.

It sold 100,000 units in the first seven months,

nearly 169,000 for the full year, probably the

strongest US launch by an import carmaker ever.

But pretty quickly, customers realized

Hyundais weren't built to the standards of Japanese

cars. By 1998, Hyundai's annual US sales had

dropped to about 90,000 vehicles.

The top management realized about how

important quality and safety was, and there was

a huge focus on improving the quality.

Hyundai's chairman and CEO at that time, Chung Mong

koo, adopted a fast follower strategy adopt

the best practices of leading car manufacturers,

which at the time meant Japanese automakers like

Toyota and Honda.

Under him, Hyundai ruthlessly benchmarked its

quality against its neighbors.

Then they designed a lot of automation in the at

the end of the assembly line to do quality checks.

They were keeping good records on quality

defects, which let them diagnose stuff.

In early 2000, actually, their quality level became

very comparable to US big three cars and the

Japanese cars. Even though their brand value,

it was still lower than their competitors.

The next step was to put its money behind its new

claim by launching a ten year, 100,000 mile

powertrain warranty.

That was a real headline grabber.

It certainly helped communicate to consumers,

to American consumers that Hyundai was actually

serious about quality.

Now they were no longer the purveyor of cheap, um,

uh, poorly made cars.

Um, no, they were now cars that were well built

enough to be backed by, uh, one of the strongest

warranties that anybody had ever heard of.

The 1997 Asian financial crisis led to the collapse

of many companies in South Korea, including car

makers. Daewoo was a casualty, and so was Kia

until Hyundai bought a 51% stake in hopes it

would boost sales in Europe and the US and

repair its image problem.

Over time, the stake has been reduced to about 33%.

Hyundai offered $886 million, and proposed

creditors forgive 80% of Kia's more than $7 billion

debt. The two combined formed the Hyundai Motor

Group. The arrangement is complex, but allows the

two companies to share technology platforms and,

crucially, top staff.

They brought in heavy hitters from respected

European brands Peter Schreier from Volkswagen

Group and Luc Donckerwolke previously at

Bentley, Lamborghini, Audi and Skoda engineer

Albert Biermann came from BMW high performance M

division.

That really started to transform the way people

thought about products from this company.

Suddenly you had cars like the Veloster N and

then, you know, their SUVs. You start to see

really interesting design across all three of these

brands. You know, they didn't look like anything

else. You know, they were they were really

attractive. And each each brand had its own unique

signature to it.

There have been missteps and obstacles.

Its high end Genesis brand struggled at first,

despite critical acclaim.

This is primarily because its lineup for the first

six years of its existence was made up of

sedans in a market that was turning toward SUVs.

More alarmingly, millions of Hyundai cars have been

recalled over fire risk.

The company's reputation took a hit after a rash

of. Thefts, the.

Cars lacked engine immobilizers, a mechanism

that renders the engine useless in the event of a

theft.

These are just some of the wild videos posted on

TikTok. The cars stolen in just seconds.

Despite the fact that, you know, they have a much

better quality reputation today than they did 25 or

30 years ago, there's still things that keep

popping up here and there.

Hyundai has spent hundreds of millions of dollars

addressing the crisis, both in developing the

fix, a software update, and providing clinics and

stadiums and parking lots with hired technicians to

avoid overwhelming dealers.

It's been a huge success, and then we see a lot of

positive sentiment and definitely a decline in

the number of anti-theft cases, right?

Like its peers, Hyundai is also facing a labor

movement. Emboldened by exceptionally successful

negotiations with Detroit automakers, the United

Auto Workers union has turned its attention

toward foreign automakers with nonunion US factories

as of February 2023.

The union says more than 30% of workers at

Hyundai's Montgomery, Alabama, plant have signed

union cards. Hyundai says it plans to raise wages by

25% through 2028.

We don't have facts to justify or to confirm that

they have 30%.

We will just stay the course.

We'll offer our employees the very best.

We have support from our management in the plant,

from the local authorities, from the

state authorities. And then, you know, if one day

we have to make an election, okay, let's go

and get the workers to to choose.

So far, they've chosen not to be unionized.

And let's see what happens.

It is also hampered by trade policies.

The federal EV tax credit through the Inflation

Reduction Act is only fully available to

American made cars.

When a President Biden visited a South Korea back

in 2022, and then our executive chair, Mr.

Chung presented to him the investment plans in

the United States, which at the time were $10

billion. Now we're more than 12.6 billion and

probably growing, right.

So the president said, no worries.

We appreciate your investment. We won't let

you down. That was made in August.

We saw IRA and all of a sudden our cars would not

qualify for the so-called IRA, which in our view was

a not good.

We, uh, were not happy, but we said we'll double

down so that we will hopefully qualify sooner

rather than later.

The $12.6 billion is going to a plant near Savannah,

Georgia. It's a site that will include both vehicle

assembly and two battery manufacturing plants, both

in partnership with Korean battery tech

makers. Nevertheless, Hyundai has kept up with

investments in hybrids, plug in or otherwise a

powertrain. Automakers such as Toyota have argued

are a better solution for electrification in the

short terms.

But also I've mentioned to to the dealers that we

will be ready to react and be flexible should the

conditions change. So, for example, what if

consumers want more hybrids?

Okay, then we'll produce more hybrids.

We'll bring more hybrids to the market.

We want it to be always flexible, but in principle

we still see the great opportunity on the

battery. It is.

But it is also publicly boasted it has the world's

largest share of hydrogen vehicles, a powertrain

that has not taken off in passenger cars and has

been ridiculed by the likes of Tesla CEO Elon

Musk. Hyundai makes the Nexo fuel cell vehicle and

teased the hydrogen powered N vision 74

concept. A new factory and innovation center in

Singapore is highly automated and uses what it

calls a cell based production system.

Cars are assembled at stations rather than on

the conveyor that dominates the industry.

This is where Hyundai is working on many of its

newest ideas. These are the ones Munoz grows most

excited about. He uses the terms science fiction

frequently.

Some people criticize the company because, you know,

those areas are too much advanced so that you know

those each of those areas has a high level of

uncertainty, a.

Partner supplier, Aptiv, said on a recent earnings

call it would begin reducing its investment in

motional, a joint project that makes autonomous

driving technology another once hyped area

that other automakers such as Ford, have backed

away from. Hyundai has not.

So technology is something good and we are fully

committed to that. So one of the partners, which we

appreciate very much, they decide to to reduce

or to exit, okay, that's that's fine.

Hyundai is also taking risks in distribution.

The automaker is also the first to collaborate with

Amazon on a pilot project selling cars through its

platform.

The online sales are going to happen no matter what,

with and or without Amazon, and with and or

without Hyundai, because definitely this is the

trend for everybody.

You know, they don't imitate. To Tesla.

They don't imitate the Toyota.

They don't imitate US companies.

Because in this new industry, new game board,

there is no leader, which is totally different from

past industry.

This has changed the culture.

Management under Chung Mong koo was top down,

laser focused on a clear goal improve Hyundai's

status in quality rankings.

Five years ago, if I thought I would be where

we are today, well, I was not as optimistic.

I thought we were going to make progress, but I

think we made way more progress than everybody

expected.