Warranty Helps Hyundai Post Biggest U.S. Sales Gain in 2001

Hyundai Motor America, which stumbled badly in its early years in the U.S. with a cheap car that sullied the image of South Korean vehicles for years, completed a turnaround effort in 2001 that gave it the biggest annual sales gain in the industry last year. Hyundai’s 42% jump to 346,235 cars and sport-utility vehicles also set a U.S. annual sales record for the company.

Analysts say Hyundai was helped by its strong 10-year powertrain warranty, the redesign and re-engineering of all existing cars in its lineup and the addition last year of a well-received SUV, as well as an upscale large car.

Hyundai rocked the U.S. auto industry when it first arrived in 1986 with a $2,995 economy car, the Excel, setting import sales growth records for several years because of its low prices. But as consumers became aware that older Excel models were prone to overheating, brake fade and breakdowns, they dropped Hyundai from the consideration list. From a then-record 264,000 sales in 1988, Hyundai fell to 100,000 in 1990 and stayed in that range throughout the decade.

A succession of aggressive U.S. management teams pushed for and won major quality improvements in the company’s Korean-built cars. And two years ago, the company instituted an unprecedented 10-year or 100,000-mile powertrain warranty. The plan, according to Finbarr O’Neil, president of the Fountain Valley-based U.S. import arm of Hyundai Motor Co., was to underscore Hyundai’s improved quality and new vehicles with a strong corporate guarantee.

The warranty program started showing results almost immediately: Hyundai sold 164,000 vehicles in the U.S. in 1999 and 244,000 in 2000.