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John Krafcik, former CEO of Hyundai Motor America (Hyundai)
John Krafcik, former CEO of Hyundai Motor America (Hyundai)

Driving It Home

Cato: How the car business has healed since 2009 Add to ...

John Krafcik, former CEO of Hyundai Motor America, offered prescriptions for change and improvement in a 2009 speech at the Chicago auto show. They are worth revisiting as 2014 begins.

Prescription No. 1: Build the highest quality vehicles possible. That’s happening. As David Sargent, vice president of J. D. Power and Associates, says, "Manufacturers keep improving product quality." The progress is obvious and real.

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Why does this matter? As Krafcik said, “We need to give people a real reason to buy a new car, and the best way to do that is to put more irresistible new vehicles in our dealer showrooms.”

Prescription No. 2: Embrace fuel efficiency “as an indisputable social good.” That’s accelerating as car companies ramp up to meet ever-stricter fuel economy standards. As Christopher Grundler, director of the Office of Transportation and Air Quality at the U.S. EPA, recently told Automotive News, “What is striking to us is how well the industry is doing. They are beating the standards, and they are well ahead of schedule.”

Prescription No. 3: Executive compensation. Krafcik suggested the auto industry might consider a “form of capitalism that voluntarily restrained executive compensation to a reasonable multiple of average employee salary” and no, that has not happened. But compared to the financial services industry, car executives are quite modestly paid.

Prescription No. 4: Safety is a priority. It is. Adrian Lund, president of the Insurance Institute for Highway Safety, recently noted, "Consumers who want both crash prevention technology and the latest in occupant protection have a fair number of vehicles to choose from."

Krafcik said in 2009 that the car business needs to be innovative and ingenious in facing the future. It has been and will need to be moving forward.

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