Steve Kelleher is trying his best not to gloat and to strike down even the slightest suggestion of complacency.
It’s not easy.
The president and CEO of Hyundai Auto Canada is looking at company sales that are up 9.2 per cent on the year in a market where sales overall have increased just 1.7 per cent. With 8.5 per cent of the Canadian market (up from 7.9 per cent at the same time last year), Hyundai is now No. 5 in sales in Canada, barely trailing the Toyota brand (with 8.9 per cent market share) and well ahead of Honda Canada, where sales have slumped 14.9 per cent and market share is down to 6.2 per cent from 7.5 a year ago.
“It wasn’t that long ago when Toyota/Lexus was threatening to take over the third position in the market. Now they are a distant fourth and threatened by Hyundai who are only a few thousand units behind Toyota [year to date] Hyundai now outsells Honda/Acura month in and month out,” notes auto analyst Dennis DesRosiers of DesRosiers Automotive Consultants in a note to clients.
Whew! Are we seeing a changing of the guard? Has Hyundai formally arrived among the very elite car companies in Canada?
Look at the facts: at the start of September, the No. 1 selling subcompact car in Canada was the Hyundai Accent. The No. 2 compact in Canada, the Elantra, trails the perennial No. 1 Honda Civic by just a handful of units.
The Hyundai Sonata was the No. 2 intermediate car to Sept. 1, and while among compact SUVs the Hyundai Santa Fe trails the Ford Escape by some 12,000 in sales, the Santa Fe is still No. 2 in the segment. Throw in sales of the Hyundai Tucson small SUV and Hyundai Canada’s combined compact SUV lineup trails the Escape by a relatively modest 3,000 units or so.
“I remember when we’d launch a new model and I’d think, ooh, I don’t know,” says Kelleher, grimacing.
Kelleher is a 25-year Hyundai Canada veteran who would rather not dwell on quality laggards from Hyundai’s history – cars like the rusty Pony of the 1980s, the unreliable Stellar of the late 1980s, the sad sack Sonata of the early 1990s and the almost embarrassing Scoupe of the 1990s and the 2000s. Why dwell on the past when the present looks good and the future is so promising?
Yes, Hyundai tumbled in the latest 2011 J.D. Power Initial Quality Study, falling to No. 11 from No. 7 in 2010 and No. 4 in 2009. That ranking pushed below the industry average, but was still ahead of BMW, Lincoln, Audi, Ford, Nissan and Volkswagen among others.
But Hyundai officials say the slip in ranking can be attributed to launches of several new models over the past two years. Those include the Genesis Coupe in 2009 and the Elantra compact and Sonata sedan in 2010.
The bigger picture, they argue, shows that Hyundai ranks among the top 10 in Power’s Vehicle Dependability Study. In fact, Hyundai stands third among non-premium brands, ahead of Honda and Ford for mainstream brands and Infiniti, a premium brand.
Over at Consumer Reports, seven best-value models come from Hyundai and its Kia brand in this year’s rankings. Both brands have been producing a string of newer models that score well in CR’s testing and have average or better predicted reliability. The best CR value among luxury sedans: Hyundai Genesis 4.6.
Perhaps more important, the Hyundai Elantra, redesigned for 2011, tops CR’s list in the small car category. Indeed, the previous Hyundai Elantra SE was CR’s top pick for small sedans for the past three years.
“With its makeover, this well-rounded sedan is now more stylish and engaging to drive,” notes CR, adding, “The Elantra provides fairly nimble handling; a decent ride, a smooth, responsive powertrain; a well-finished interior; and a relatively roomy rear seat. … Reliability for the redesigned model is expected to be as good as the previous one.”
Cam Stuart of Calgary seems fairly representative of the new breed of Hyundai owners – converts from other brands who have found value in the latest Hyundai models.
“My wife and I went out to buy an Elantra in Calgary recently, but only top-end models were to be found, or a demo,” he notes. “We ended up choosing and buying a new Accent sedan – amazing car for the price.”
Stuart continues: “By the way, we traded in a Honda Civic for the Accent. I used to be a die-hard Honda owner, (but) the new Civic is boring, overpriced and under-contented.
“We did look at Ford, Kia and Chevy, but I felt the Accent was the best car for the price. … Love my new Accent so far, still, [and]can't get over all the features and trip computer and GDI [gasoline direct injection]for just over $16,000. Don't know how they make money on that.”
Such comments are music to the ears of a Kelleher who heard plenty of boos during the years when Hyundai was a quality laggard. There was a time when Hyundai could only move the iron off dealer lots with cut-rate pricing and heavy discounting.
Today, Hyundai is No. 1 in passenger car sales in Canada, says Kelleher, though Ford of Canada will end the year having sold twice the number of passenger vehicles based on the popularity of Ford’s light trucks, including the F-Series pickup and Escape small SUV.
Hyundai, of course, believes there is something to be gained by doing head-to-head comparisons against the leading car companies in Canada – at least where a direct comparison tells a healthy Hyundai story.
Thus, Kelleher drags out a chart comparing the new Accent to the Ford Fiesta. The Fiesta is very fuel-efficient, but to get the most fuel-thrifty model – and one with comparable fuel economy to every Accent – Kelleher points out a buyer would need to purchase the Fiesta SE with a fuel economy package and automatic transmission. Extra cost: $5,455, or $18,049 for the Ford versus $13,100 for the Accent L.
He has a similar chart matching up the Elantra L ($15,849) with the Chevrolet Cruze Eco ($19,495). The Elantra L, Kelleher says, still gets better city fuel economy (6.8 litres/100 versus the Cruze’s 7.2) despite listing for $4,500 less.
“We’re the only car company with direct fuel injection across the line,” he says, pointing out that this is the sort of engine technology that is core to Hyundai’s fuel economy and performance story.
As is always the case when a car company is on the upswing, the challenge for Hyundai is to maintain the momentum and not suffer the complacency Kelleher says will not and cannot happen. Key to that effort is Hyundai’s Global Quality Management System, which was established in 2004. It logs complaints from customers and dealers worldwide.
As Automotive News recently noted, “The reports are processed daily and sorted by problem and model, then sent to the appropriate engineers. For executives on the quality team, reviewing the totals is a morning ritual.”
Kelleher confirms this, saying the feedback drives quality improvements. Keeping on top of things “gone wrong” is, of course, essential, but growth will be equally driven by features and designs that appeal to buyers – buyers whose passion for the product translates into higher transaction prices and greater profits.
Here Hyundai is making great strides. In the latest J.D. Power Automotive Performance, Execution and Layout (APEAL) Study, Hyundai jumped to above average after ranking near the bottom in vehicle appeal in the 2010 study. The APEAL research focuses on performance, interior styling and features.
Kelleher says Hyundai is now zeroing in on steady and sustainable growth and while Toyota and Honda seem vulnerable for the first time in decades, he’s not commenting on that rivalry at all – except to say the “Beat Toyota” sign that once adorned the company’s headquarters in Markham, Ont., is no longer in sight.
“We don’t bring that out any more,” he says with a big grin, one suggesting Hyundai is more concerned with beating the world than just a big Japanese car company.