Steve Kelleher used to dread the cocktail party moment when people asked him what he did for a living.
"I'm a Hyundai cars executive," he'd reply. He might as well have mounted a bull's-eye on his forehead.
"I was the butt of every joke," says Kelleher, now president and CEO of Hyundai Canada. "It was open season.'
Kelleher will admit that his company once handed the comics some rich material - it made cars like the Stellar sedan, a Miami Vice -era concoction that looked like a Volvo slapped together in a back alley.
But forget all that. Today, Kelleher's company is producing cars that have silenced the critics. Good reviews and high scores in the prized J.D. Power reliability ratings are now the order of the day.
Last year, Hyundai sold more than 103,000 cars in Canada, an increase of 28 per cent. And as the icing on the cake, the company's Genesis sedan was chosen as 2009 North American Car of the Year.
"The champagne came out that day," Kelleher says.
For those who watched the early days of Hyundai, a Car of the Year award seemed about as likely as a Miss America win for Snooki from the reality show Jersey Shore .
"These were ugly little cars," says one former Hyundai owner. "You bought them because they were cheap."
No one knows that better than Kelleher, a car-industry veteran who has helped orchestrate Hyundai's rise from joke to respected player. He arrived at Hyundai in 1986 after a career at Ford, a Detroit powerhouse that made the South Korean upstart's North American operation look like a small-town farm implement dealership.
Although some doubted his sanity, Kelleher saw Hyundai as a company with tremendous potential, with nowhere to go but up. Established giants like Ford and GM, meanwhile, inched toward a yet-unseen downfall, with massive legacy costs and an addiction to their traditional tactic of selling poorly engineered cars with profit-padding option sheets that could run to a dozen pages.
"When you're that big and successful, some hubris can set in," he says.
Hyundai's specialty was low-cost vehicles. The first car they brought to Canada was the Pony, which arrived in 1984 with a sticker price of $5,795 - about the same as a snowmobile. Although it was crude in comparison to competitors like the Honda Civic, the Pony's low price made it a hit. The company expected to sell about 5,000 a year - within a year, it had sold over 50,000, the most successful launch by a foreign manufacturer in Canadian history.
Entering the North American car market can be compared with storming a heavily defended beach, and numerous foreigner manufacturers have been repelled in the past - Renault, Fiat and Lada are among those who were all forced to retreat. Hyundai faced the same problems they did: entrenched opponents, language barriers, differing tastes and a long supply chain - in this case, from South Korea.
Kelleher and his fellow Hyundai executives have studied the wax and wane of competitors such as Toyota and Chrysler. Each exemplifies a car-industry maxim. Chrysler shows what can happen when a storied brand loses its mojo. Toyota shows how manufacturing savvy and smart engineering can allow a former underdog to dominate an industry.
At the moment, Hyundai is in a position eerily similar to the one occupied by Toyota in the early 1980s, when it began to make the transition from purveyor of cheap transportation to industrial icon. Like Toyota in the 1980s, Hyundai has an improved product, and a market racked by recession.
"People are focused on value," Kelleher says. "And that's our specialty."
With rising sales, Hyundai wants to make the next step in its evolution, producing cars that will enhance its image, and entice drivers to pay more. "Last year, we turned the corner," Kelleher says. "We went from rational to aspirational."
The company's new Genesis sedan is a key weapon in this new battle. A two-week test drive showed how far Hyundai has come in its quest to be seen as a legitimate contender to luxury brands like Lexus and Mercedes. The Genesis's V-8 engine was silky smooth, and the leather interior had the expensive cocoon feel that well-heeled buyers love. There was the requisite GPS system and Bluetooth hands-free system, and the doors shut with an expensive, solid feel.
Its attention-getting qualities also seemed to be well tuned - more than once, I noticed people staring at me as I cruised in the Genesis, something that usually happens only when I'm in a proven head-turner like a Porsche or M-series BMW.
But the surest sign that Hyundai has crossed a threshold was my teenage son's reaction. When I told him my next test vehicle was a Hyundai, he gave me the kind of look you get when you tell a child that the family has fallen on hard times, and will be moving into a Scarborough motel. But the Genesis surprised him - he checked the badge to make sure it was really a Hyundai. After the first few days, he wanted me to buy it.
I was surprised myself. How did Hyundai suddenly get stylish? I spoke with Thomas Burkle, chief designer at Hyundai's European design bureau, who spoke eloquently about the "form language" of Hyundai's new vehicles. "Our concept is fluidic sculpture. Wavy, non-geometric shapes.
Burkle, who used to work for BMW, believes that Hyundais are becoming cars that people hunger for. "The value has always been there," he says. "Now we are working on the emotional part. People buy cars with their hearts even more than they buy with their wallets."
I don't think there was anyone like Burkle at Hyundai when I first encountered the brand back in the mid-1980s. If the Pony had a form language, I couldn't see it. It reminded me of a Lada or a Trabant. A flimsy plastic choke knob stuck out of the dash. The Pony perched awkwardly above its skinny tires, like a kneecapped horse, and the paint looked as though it had been applied with a prison floor mop. Against my advice, one of my friends bought one, lured by the super-low price - about a year later, it burst into flames on Highway 401 and burned down to its tires.
Most Ponys were actually fairly reliable, and some are still on the road today. And the ugly little car served its purpose. It made money for the company, and helped evolve its corporate and engineering culture - like an early, tail-dragging primate, the Pony was part of the evolution of the Hyundai species, which is now fully upright (with opposable thumbs and a full warranty.)
"The Pony was a first step," Burkle said. "We're a long way from that now."
Some wonder if Hyundai can make the transition into the upscale market. Will buyers accept an upscale Hyundai when the company has been perceived as the automotive version of Wal-Mart for so long? "If I'm going to spend serious money on a car, it has to be German," one tire-kicker opined after giving the Genesis a once-over at a gas station.
Not long ago, I might have agreed. There was a time when I would not have accepted a Hyundai if I won it in a contest. Now there are some models that I would actually consider buying. So would many of my car buddies. "This is a Hyundai?" one of them marvelled after a spin in the Genesis.
Which brings us back to the long-suffering Kelleher, who can finally hold his head up at a party - the Hyundai H-symbol, once the scarlet letter of the automotive world, now has some street cred.
"There are people who are proud to own a Hyundai," Kelleher says. "That's new, and it's good. People used to be ashamed to own a Hyundai. They didn't want one in their driveway."
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