SOUTH KOREA: Hyunda-Kia swaps volume goal for quality hike
Hyundai-Kia Automotive Group will give up its traditional volume-oriented strategy in search of better quality, according to a local newspaper.
This strategic change is expected to cause deep repercussions as it means a departure from Hyundai, which has been obsessed with raising its output to join the world's big five automakers, the Korea Times noted.
Citing a group spokesman, the paper said Hyundai Motor-Kia Motors has internally decided to no longer make a public commitment to becoming one of the five largest automakers in the world by 2010.
"We decided to put most of our energy into the quality of our cars and customer service,'' a spokesman reportedly said. "We will no longer look to join the world's top five.''
Since the automotive group ranked seventh in world automobile sales in 2004 and sixth in 2005, Hyundai-Kia has continued to say that it would realise the target of fifth, via press releases or remarks by managers, the paper said.
"We believe higher sales rankings will follow naturally when we put value on auto quality above anything else,'' the spokesman told the Korea Times.
The paper said Hyundai-Kia's shift of its global competition focus reflects the recent financial difficulties of US car makers, such as General Motors (first in 2006 ranking) and Ford Motor (third).
The US automakers' expansion strategies have produced a variety of loopholes in management and they have been placed into restructuring worldwide, while competitors, such as Toyota Motor and Volkswagen push for research and development (R&D) for better quality vehicles, the report said.
As a result, based on predictions by auto industry experts, Toyota is expected to overtake GM in sales as early as 2006 after its sales reached 4.36m units in the first half, up 7.1% from the same period of last year while those at GM stood at 4.6m, down 2.3%.
The gap between Toyota and Ford is widening as the years pass and Volkswagen is chasing aggressively after Ford, the Korea Times said.
The paper noted that, since 2001, Hyundai Motor has invested more than $200mn in design and testing facilities throughout the US - its investments include a $30m design center in Irvine, California, $60m in test courses, and a $117m technical centre in Ann Arbor, Michigan.
Hyundai officials reportedly say the automaker is aiming to be recognised as a maker of the world's finest vehicles with high-end technology.
"Quality is a top priority for Hyundai. I can assure you that the principle will never change,'' Hyundai-Kia chairman Chung Mong-koo told employees at the Alabama plant, the paper added.