Accelerating Past Excel : With New Accent, Hyundai Aims to Earn Some Respect
Auto writers describe the car as roomy, with seamless bodywork and high-tech steering and braking systems.
Loaded with safety features, it “seems to be a solid, modern piece of work that fully belongs in today’s car market,” AutoWeek magazine reported. “One of the most refined and pleasant cars in its price range,” another reviewer wrote.
The plaudits, surprisingly, are going to the subcompact Accent, the newest car from South Korea’s Hyundai Motor Co. After nearly a decade as the Rodney Dangerfield of the import car market, Hyundai is finally getting some respect.
The Accent replaces the Excel, which established Hyundai as a serious competitor in this country when it was introduced in 1986 but was plagued with problems that gave it a bad reputation among motorists and dealers. Later models had problems too.
“When they first came here their products were touted as being as good as the Japanese made, but that clearly wasn’t the case,” said analyst Chris Cedergren of AutoPacific Inc. in Santa Ana.
“They had to go back and decide what they did wrong and how to get out of the hole. That’s what they’ve been doing for the past few years, and now they are introducing products that are light-years ahead of where they used to be in terms of fit and finish and overall quality.”
But rehabilitating its image will take time, the company acknowledges, for it must win back people like Richard and Carla Salvi. The Trabuco Canyon couple bought a new Hyundai Sonata sedan--the company’s largest car--in 1991 and have had trouble ever since.
“It was $6,000 less than a Toyota Camry,” Carla Salvi says, “but I think we would have been better off with the Camry. I’d never buy another Hyundai.”
The company, the first Korean auto maker to enter the U.S. market when it introduced the low-priced Excel, learned a hard lesson from its early sales push. Quality control failed to keep pace with the speeded-up factory production needed to meet U.S. demand.
The result was cars with brakes that wore out quickly, air conditioners that didn’t cool well and engines that overheated. Customers complained loudly, and the auto maker’s image was tarnished.
“That’s why we decided to replace (the Excel) with an entirely new car with a new name,” said N. Douglas Mazza, chief operating officer of Hyundai’s U.S. import and distribution arm, Hyundai Motor America Inc. in Fountain Valley.
“Otherwise, no matter what we did, we were dragging the Excel’s reputation along with us. We were the Excel company.”
Under Mazza and former President D.O. Chung, just returned to South Korea, the company instituted programs to turn things around. Mazza says Hyundai, South Korea’s biggest auto maker and part of one of the world’s largest manufacturing conglomerates, can afford to take the time to rebuild its reputation in the United States.
To help win back disaffected customers like the Salvis, Hyundai has bolstered its warranty programs and targeted special rebates and above-market trade-in allowances at Hyundai owners who replace older cars with new ones.
More important, the company has reworked its entire lineup, re-engineering each model to get rid of the bugs. A new mid-size Sonata was introduced in 1994, and the Accent, just introduced on Feb. 15, is this year’s offering.
For 1996 the company plans a new compact that will keep the name of the company’s current Elantra but be based on an entirely new platform. In 1997, Hyundai will bring out a new sports coupe based on the eye-catching HCD-II concept car designed in its Fountain Valley advanced styling studio. And it might soon enter the sport-utility or minivan market.
For now, Hyundai is concentrating on the curvy Accent, which comes in Southern California-inspired hues like metallic mauve and mint green. The company will devote half of its modest 1995 advertising budget to promoting the Accent and won’t even begin running ads for its other models until July.
The Accent has been available at dealerships only since Feb. 15 and in limited supplies, so the public’s reception is not yet clear. But Mazza says internal projections have Accent accounting for 5,300 of a total of 10,000 Hyundai sales this month.
“We’re on track,” he said. “Our goal is for Accent to account for 55% of all sales this year.”
The company seems to have convinced its dealers that the car is a winner, and turning dealers’ attitudes around is critical to Hyundai. Michael Luckey of Luckey Consulting Group in Woodcliff Lake, N.J., said Hyundai’s dealers “soured as sales went south,” and a number of the early Hyundai dealers gave up their franchises. in disgust.
The problem was especially acute in Southern California, where Hyundai made its U.S. debut and where many of its quality problems first surfaced. “They sold a lot of cars here at first,” said Mike Shepard, owner of Santa Ana Hyundai, “so their problems affected more people here than in the Midwest or South.”
Shepard said he is selling an average of seven Hyundais a month. That compares to a 1994 U.S. dealership average of 21 Hyundais a month.
One of Hyundai’s happiest dealers these days is Rick Case, who purrs like a well-tuned sports car when he talks about his three Hyundai outlets, in Cleveland, Atlanta and Fort Lauderdale, Fla. Sales since the Accent introduction “have just exploded,” he said.
The economic profile of Hyundai buyers has gone up as well, Case said. “In the beginning, Hyundai was selling a car that attracted people who never could have bought a new car,” Case said, noting that the first Excel was priced at less than $5,000.
Overall, Hyundai Motor America has been selling more than 100,000 cars a year here during the 1990s, despite the unnerving skid of the late 1980s. Last year, with 126,095 sales, it outperformed all European imports and--benefiting from the sharp price increases forced on Japanese makes by the weak dollar--beat out seven of the other dozen Asian nameplates.
For this year, Mazza is projecting 130,000 sales and says Hyundai could do even better if the company’s two passenger-car factories at Ulsan, in the southeastern part of the Korean peninsula, made more U.S. models.
Still, the company “has a tough job,” said David Hillburn, a former industry consultant who helped Hyundai get started in the United States and now is a strategic planner with the Detroit office of public relations and advertising giant Young & Rubicam.
“This is an unforgiving market,” Hillburn said. “Even if they do everything right, it will take many years to climb to the next tier.”
Meanwhile, memories of the now-defunct Excel will continue to haunt Hyundai. In its current April auto issue, Consumer Reports magazine rates it as one of the worst used-car buys in the nation.
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Picking Up Speed Again
Hyndai Motor America’s U.S. sales increased in 1994 after a six-year slowdown, but the total was less than half that for the country’s best year, 1987. Cars sold in the United States, in thousands:
1987: 263.6
1994: 126.1
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Satisfaction Not Guaranteed
Hyundai’s efforts to satisfy its dealers and customers have been mixed. Its relations with dealers are similar to the average for all auto makers, but customer satisfaction, though recently improved, remains well below average. Independent survey results show how Hyundai compares with the rest of the industry:
Dealer Index
Hyundai Industrywide 1992 96 99 1993 97 100 1994 106 100
Customer Index
Hyundai Industrywide 1992 96 129 1993 96 129 1994 110 135
Sources: J.D. Power and Associates
