Evolution of The Hyundai Performance in The U.S

EVOLUTION OF THE HYUNDAI PERFORMANCE IN THE U.S.
Hyundai is the Marv Albert of the auto industry its gone from success to oblivion to success in the 17 years it had been doing business in the U.S., according to one commentator. MongKoo Chung said Hyundais U.S. history substantiated the philosophy of his father, Ju-Young Chung, the founding chairman of HMC: It is failures rather than successes that teach us invaluable lessons. It is not necessary to remember ones success. Those should be remembered by others instead. Rather, we should remember our losses and failures. Those who forget their failures will fail again and again.
Hyundai Motor Company
The Initial Stage (1986 to 1988) The U.S. customers response to Hyundais first car was immediate: they sold like hotcakes. Just seven months after its debut in February 1986, HMA sold its 100,000th Excel. Total 1986 sales were 168,882, an industry record for an import car distributor in its first year. Hyundai sales averaged 1,431 units per dealer, another sales record in the U.S., despite having dealers located in only 31 of the 50 states. In 1987, Hyundai sales continued to soar reaching a record number of 263,610 units and a 2.58 percent market share. Jong-Yun Kim attributed Hyundais initial sales success to a favorable market structure:
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The timing of our entry to the U.S. market was ideal in terms of market segmentation. At that time, most automakers tended to produce highend, highpriced cars. It left a huge vacuum in the entry-level market. They needed a car that fills in the hole. First-time car buyers such as college students and young couples wanted a car that could satisfy their low budget. Thats the Excel. Suk-Jang Lee added lack of information on who is Hyundai as another reason: At the time, few Americans had ever heard of Hyundai and its products. Many of them thought Hyundai was a new Japanese automaker. Some people even regarded Hyundai as a new subsidiary of Honda because
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their logos are not so discernable at the first glance and their pronunciations sound very similar. You know, the corporate symbol is the centerpiece of the company identity. Therefore, Americans trusted Hyundai believing that its quality would be comparable to Japanese cars. This was an unexpected consequence. Moreover, there were few public and private agencies, which tested the Excel in reliable ways, and they did not quickly make public the test results. This led potential customers to make buying decisions by relying more on available information such as price than on hidden quality information. We enjoyed a honeymoon with customers. They liked our cars without knowing us
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well. It gave us the blockbuster sales. But the honeymoon did not last long, said Jong-Yun Kim. The Troubled Years (1989 to 1998) It did not take long for customers to realize the Excel had severe quality problems. It was not uncommon to see one stopped on the street with its engine blown. They often observed that car bodies rusted fast and air conditioners did not work on hot days. In 1989, Hyundais sales fe ll to 183,261 units, a decline of 30.66 percent. Such a big drop in sales was a heavy blow to Hyundais business in the U.S. HMA lost two COOs during the latter half of 1989. Dealer profits plummeted, and a number of showcase Hyundai dealerships closed
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in 1989. Difficulties in finding lenders to finance Hyundai consumer loans forced Hyundai to create its own financing arm in 1990. To make matters worse, J.D. Power and Associates12 began to publicize its rating of Hyundai cars in 1990. Hyundai cars received an average quality score of 2.0 in 1990, the minimum possible. A joint edition of The Detroit News and Detroit Free Press reported that the IQS (Initial Quality Study) showed Hyundai finished last out of 29 sales divisions, with 230 problems per hundred vehicles. The Excel was among the bottom 10 car models. The Excel models were also rated the worst cars overall for injury claims based on the analyses of insurance coverage and
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claims data by the Highway Loss Data Institute. The quality ratings provided by Consumer Reports also gave Hyundai cars a bottom score of 1.0 in 1991. A senior manager in Consumer Reports said on condition of anonymity, Why dont you guess why Hyundai could get a good score in 1990? Hyundai car owners didnt want to admit that they had made a big mistake. They just pretended that they had the ill luck to see a problem only in their car. But they gave it up in 1991. All this made Hyundai cars a synonym for shoddy products. Shortly after becoming the executive vice president of HMA in 1990, Rodney Hayden got a definite feeling that the image was cheap price, he said in an
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interview. I wanted to change that to quality that was affordable. Although Hyundai tried to regain the momentum it had in its first three years by introducing a new package of lineups, promotions, advertising, maintenance, financing, and dealer incentives, it was a hard trek. One week after being picked to head HMAs new customer satisfaction department, vice president Jack Collins left the company for Infiniti. One source familiar with Hyundai at that time attributed the attrition to tension between HMC and HMA: The Koreans refuse to commit the resources necessary to turn Hyundai around. Korean Management is an oxymoron. Hyundais early success gave the HMC management
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unrealistic ideas about what it could accomplish in the U.S. market. Hyundai attempted to diversify its product mix, but it was not very successful. Although the Elantra debuted in the U.S. in 1991 to bridge the gap between the subcompact 1.5 liter Excel and the family-sized V-6 powered Sonata, it posed a danger to Excel sales because the differentiation between the Excel and the Elantra (powered by a 1.5 liter standard engine versus a dual overhead cam 1.6-liter optional engine) was not great enough to be perceived by the public. HMA also planned to introduce a prestige car in order to escape from the cheap car image, but HMC ignored this plan because its success in domestic sales was enough
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to satisfy its goal. We were a bit satisfied with our great success in domestic market. In 1992, our goal in the U.S. market was to maintain our share, not to increase it, said Suk Jang Lee. Given this, Doug Mazza, who inherited HMA in January 1993 as a new executive vice president and COO, put less emphasis on sales reports and more on customer satisfaction and quality control. His efforts were aimed at raising Hyundais IQS scores, but he was disappointed with the next years score. In 1993, a USA Today article headlined, Dealers: Hyundai will quit U.S. market, reported that many car dealers believed that Hyundai had the worst quality and customers should be prepared to
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wave goodbye to Hyundai. In 1994, Americans could see TV ads where NBA player Charles Barkley opened the door of the new 1995 Sonata model and said, You got a problem with that? This contributed to a slight sales increase in 1994, but sales decreased again in 1995. In 1995-1996, Hyundai sought to upgrade its quality image by marketing the new Accent and Elantra models, which contributed to the rebound in the 1997 J.D. Power quality ratings and 1996/1997 Consumer Reports quality ratings. However, the 1996 sales were off approximately 20 percent from the previous year. The launch of the allnew Elantra did not go well. Then seven high ranking managers walked
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away from Hyundai in six months. The Koreans still blamed the Americans for the sales fall-off, even though the problem was entirely product-driven. So no American is ever going to have any autonomy, and thats why everyones leaving, said one former staffer on condition of anonymity.17 However, a Korean staffer, who insisted on anonymity, blamed the Americans for an inadequate marketing strategy: They (HMA) never mentioned the increased quality image in the ad campaign of the Elantra launch. JongYun Kim conveyed the Americans voice: I think most executives in HMA agreed that Hyundai needs to disconnect its brand name from the lowest-priced car and mount a long term image-building campaign. But,
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due to the short-term sales pressure from HMC, HMA spent all their money on sales incentives rather than on increasing brand image. In 1997, Doug Mazza, the top American executive of HMA, stepped down along with John Dorsey, vice president of sales. Myung-Huhn Juhn from HMC took over Mazzas duties. As Bob Martin, director of competitive strategic planning team in HMA, recalled, We were quite frustrated by the autocratic Korean managers blaming the Americans. They shot down our suggestions for a turnaround. He also quit Hyundai in 1996, but came back in 1998. Worse, the IMF recommendations for dealing with the East Asian financial crisis led Standard & Poors to warn in late
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1997 that it might downgrade the credit rating of HMC. In 1998, Hyundais sales tumbled below 100,000 units for the first time since it entered the United States. HMC in Korea was also pushed into the red for the first time in nearly two decades. The Recovery (1999 to 2011) Hyundai was back with a rapid sales hike beginning 1999. Sales of Hyundai-branded vehicles rose about 80 percent, Hyundais dealership shopping rate was the highest since 1993, and more than double that of 1998. These trends in sales continued, with sales reaching 375,119 units in 2002. The Elantra had been the best seller, while the
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proportion of Santa Fe models sold grew larger every year and the Accents portion decreased. This was closely related to the changing demographics of Hyundai buyers. Hyundai buyers had become older on average 46 in 2011 compared with 42 in 1998. In addition, 75 percent were college educated, compared with 47 percent in 1999, and the 2011 median household income of Hyundai buyers was approximately $52,000, compared with below $40,000 in 1998. Part of the reason for this turnaround seems to be that Hyundai cars quality ratings had steadily increased since the mid-1990s and customers had begun to recognize Hyundai as reliable. In particular, the 2002/2011
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models of the Sonata and the Santa Fe received high quality scores from the J.D. Power and Associates and the Consumer Reports. The 1999 absorption of Kia and the 2000 deal with Daimler Chrysler, which purchased a 10 percent stake in Hyundai, also helped the company in terms of operation and quality, respectively. The Santa Fe and the XGs were introduced in a bid to shake Hyundais image as a maker of small, cheap cars. The new design center located in Irvine led to producing more appealing cars to American customers and the announcement of the Alabama plant signified that the brand was moving upscale. Most importantly, Bob Martin pointed to the introduction of a series of bold
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market strategies as the greatest contributor to Hyundais revival: We could not be satisfied by just seeing our quality increase. We had to educate customers. We needed to get the word out. We had to effectively reveal the gap between what actually is and what people believe is. Our challenge changed from quality to reputation. Among other things, he emphasized two strategies of which he was very proud. The Best Warranty In November 1998, right after the promotion of Finbarr ONeill to president and CEO from COO, HMA launched national commercials for what it called the industrys best warranty, which offered 10-year, 100,000-mile powertrain protection
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to original owners. The U.S. auto industry was perplexed with this crazy tactic, but it really turned things around. Sales soared, dealers became profitable, and Hyundai began to get accolades. A document from HMA reported that 92 percent of the 1999 Hyundai buyers said that the warranty was one of the main reasons they bought Hyundai. Bob Martin said: If your wife slept with other man, how many nights shouldnt she sleep with the guy to recover your trust? One, two, or three nights? Nonsense. Only showing our quality chart to them was not enough to win public confidence. We needed to shock them. Otherwise, we had to wait a long time to have them trust us. Offering the best warranty, not just a better, was
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the best way to signal that Hyundai has a high level of quality. When we first turned in our warranty plan to HMC, they thought we were insane. Some guys said Hyundai would collapse if we launch the policy. Ironically, the autocratic culture of HMC worked it out. We succeeded in persuading Mong-Koo Chung, so that was that. We learned that sometimes top-down decision-making is more effective than democratic. However, some people in HMC are still very cautious about the good prospects. The impact of the warranty will not be known until 2004 when the 10-year warranty model gets through the 5- year ownership (previous warranty period of Hyundai cars), said a HMC employee on condition of anonymity. Scott Park,
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executive coordinator of strategic/product planning team in HMA refuted this, saying: I understand their concerns. However, we are making up for the possible loss by selling more cars. Moreover, we priced the car and insured the warranty based on a very conservative calculation. The extended warranty also pushed HMC to concentrate more on product quality. They fully understand that the issue of the warranty hangs on quality. I heard they are taking steps to strengthen the R&D personnel and working harder with their suppliers to improve the quality and durability. At last, we found an emotional connection between Hyundai and customers.
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The Packaging Strategy Bob Martin said Hyundai also had to come up with a solution to how to avoid the cheap car image. In late 1998, executives in HMA began to suspect that Hyundai cars would not be able to change their cheap car image as long as their retail prices are lower than competitors. Given the simple rule that a cars price is what its worth, Hyundais low price should be interpreted as low value. Someone asked me, If you believe your car is comparable with other Japanese cars in terms of product quality, why didnt you increase its price? said Scott Park. However, executives in HMA also recognized that one of the main reasons for buying Hyundai cars was the price, and they were afraid of a sales loss, which would probably
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come from the price increase. HMA faced a dilemma. The solution HMA brought out was to differentiate the standard equipment of its cars from other makers, which was called the packaging strategy or value pricing by people working with HMA. The manufacturers suggested retail price (MSRP) of the 2011 Hyundai Santa Fe was $924 higher than that of its Toyota competitor, the 2011 RAV4. However, many features earmarked as standard in the Santa Fe were optional in the RAV4: manual air conditioning, power windows, power door locks, delayed power retention system, cruise control, CD player, power adjustable exterior mirror, heated exterior mirror, and alloy
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wheels. In contrast, there were no features that were optional in the Santa Fe but standard in the RAV4. Bob Martin boasted, Now, many people began to think the Santa Fe is just as reliable as the RAV4 due to its price ranges and quality scores. However, the customers who shopped for the SUV and dealers could also recognize that the Santa Fe model has the price advantage over its competing models, as before. So the Santa Fe does not have the cheaper car image any more, but it is indeed sold at a cheaper price. This might sound paradoxical, but we did it very successfully. Ironically, This packaging strategy was learned from Japanese makers earlier experience. They used this strategy when they first competed
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with Big-3 and German cars, Jong Yun Kim added. CHALLENGES In spite of its drastic jump, Hyundai was not sure about whether it could retain such momentum. First of all, Hyundais competitors such as Chrysler and Mazda had begun to emulate its 10-year, 100,000 miles warranty and devised a variety of promising marketing strategies. It seemed that the advantage stemming from the warranty would disappear soon. Also, although Hyundais packaging strategy helped it outgrow its cheap car image, this could be regarded as another version of price cutting strategy and amount to no more than short-term tactics.
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Hyundai fully understood that it needed a breakthrough that could lead to a fundamental upgrade of its brand image. Hyundai judged that the key to weathering this challenge was closely related to the restructuring of its lineup and a change in its market position. However, they were afraid to take some strategic actions because there was great uncertainty about the possible effect of each strategic direction. Hyundais challenge came in particular from two situations facing the company. First, Hyundais cars, especially the high quality models such as the Sonata and the Santa Fe, were undervalued compared with their competing models. The coordinates of quality
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ratings and resale values for the 2002 Hyundai Elantra and its competitors.18 The Elantra received higher quality scores than the Nissan Sentra, the Dodge Neon, and the Chevrolet, but lower scores than the Honda Civic, the Ford Focus, and the Mazda Protg. The resale value of the Elantra was correspondent to its position in the order of quality ratings, except that the used Nissan Sentra has a higher resale value than the Elantra, although the Elantra received a higher quality rating than the Sentra. However, this exception also holds true when we compare the 2002 Hyundai Santa Fe with its competing models. The Santa Fes quality rating was high compared to the Toyota
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Highlander and RAV4. The Santa Fe was assigned a higher score than the Mazda Tribute, the Ford Escape, the Jeep Liberty, and the Honda CR-V. However, the 1-year resale value of the Santa Fe was lower than that of the Escape, the Liberty, and the CR-V. Also, the gap in the resale values between the Santa Fe and the Toyota models was much larger than their quality gap. Given that the resale value of a used car is highly correlated with its reputation or the collective perception of that cars quality,19 this might imply that the market perception of the Santa Fes product quality was lower than its actual quality. Suk-Jang Lee said: In the past, we relied heavily on Mitsubishis technology. Now we have outgrown it. However, people in the
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U.S. still think that Mitsubishi cars are better than Hyundai cars. Heres an interesting story. Some models of our cars and the Mitsubishi are almost physically identical, but the Hyundai brand becomes worth less than the Mitsubishi brand after a few years. This image loss is larger particularly for medium-size cars. We recognize that our entry-level small cars are not outstanding in the quality ratings, but I am proud of our medium-size cars. However, people do not separate medium-size cars from the entry-level cars and they tend to put them together when they judge product quality. The problem is that they infer Santa Fes quality from Accents quality, but not vice versa. The R&D team is complaining about the undervaluation of the Santa Fe and
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the Sonata, but this is a question of product mix rather than a question of marketing skills. I think the variation of quality among the Hyundai models is considerable and this presents a challenge to Hyundais future strategy. The second situation that presented a challenge was that Hyundai cars had relatively low prices. The maximum and minimum prices of Hyundai cars were almost the lowest in the auto industry. Hyundai was one of few automakers that did not offer cars priced over $30,000 in the U.S. market. Jong-Yun Kim said, The fact that Hyundai cannot command a $30,000-plus price in the U.S. may lead to a misinterpretation that Hyundai should wait until its quality
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deserves more than $30,000. Many people suspect that Hyundai does not have the capability to produce expensive cars. Of course, we have it. Interestingly, according to the scope of automakers engine size , which was considered another essential criterion of auto market segmentation,21 Hyundais engine capacity was comparable with Honda and Nissan, but Honda and Nissan commanded higher prices than Hyundai. As I understand, a cars engine capacity should go with the price it can ask for. But Hyundai is an outlier, added Jong-Yun Kim. It seemed, therefore, that the price zone occupied by Hyundai was another hurdle in upgrading its brand reputation.
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These two difficulties facing Hyundai led many Hyundai executives to suggest that Hyundai needed to shift its focus from entry-level small cars to higher-end medium-size cars. Some people even argued that Hyundai should withdraw its entry-level models from the market in order to shake off its cheap car image. Others considered launching a luxury model. In fact, in 2000, HMC planned to market the Equus luxury model in the U.S., by emulating Lexus, Acura, and Infiniti. We thought if people see Hyundai build a car as reliable as the Japanese luxury, they would be more inclined to buy our intermediate cars such as Sonata and XG. That plan turned out to be premature. But now is the time to think about it again, Jong-Yun Kim said.
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In addition to overcoming its lowclass brand image, Hyundai had three other important reasons for shifting its lineup higher, although some in management seemed to doubt whether these were proper reasons. First, many foreign automakers, in particular the Japanese automakers, had begun to gain a price as well as a quality advantage. Scott Park explained: In the past when the U.S. imposed a high level of import quota constraints, Japanese carmakers such as Toyota focused only on high price cars to make large margins. Then the Big-3 makers were also pushed to increase the prices of their cars. This left a hole in the market and so an opportunity
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with Hyundai. But as the import quota constraints are relieved, these carmakers have begun to invade our price zone, although some people think this effect would be insignificant. In addition, Hyundai was worried about the entry of Chinese automakers into the U.S. market in the future. I think the Chinese automakers will advance into the U.S. market in 10 or 15 years. Then we will see cars even under $8,000, said Suk-Jang Lee. However, he also suspected that since Hyundais technology was superior to the potential Chinese competitors, Hyundais quality would be good enough to compensate for the price
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disadvantage over the Chinese automakers. Second, Hyundai occupied a very similar market position as its brother carmaker, Kia. Hyundai and Kia occupied almost the same zones in prices and engines. Although they pushed a certain number of cars from the same platform to be profitable, they wanted to be totally separate brands in the market. However, how could they be distinct brands occupying the same market niche? We need to avoid a fratr icidal war. One way would be to differentiate Hyundais market position from Kias. For example, Hyundais product mix could move in an upward direction while Kia stays with the entry-level brand, so that Hyundai vehicles are
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priced above Kia vehicles, commented Jong-Yun Kim. However, he also worried about Kias response to this scenario: Maybe Kia people will be angry. Who wants to be satisfied with the second-rate brand? We need a very cautious approach to this agenda. In any case, we will need to learn how Big-3s and other Japanese automakers cope with this kind of problem. For example, Hyundai could target older consumers based on a stylish brand image while Kia could target younger consumers based on a sporty, active, brand image. Finally, the new plant in Alabama would be a tough hurdle. Suk-Jang Lee said:
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We may have to give up our price advantage due to the relatively high labor and suppliers costs in the U.S. This is different from the experience of Japanese and European automakers. They moved here to avoid the high production costs in their home countries. But Hyundai is moving here despite high costs because we think building the U.S. plant is a key element for our longterm goal, becoming the worlds fifth largest automaker by the end of this decade. Also, I am sure that the Alabama plant will help us easily adapt to the U.S. trade barriers and provide our products to consumers in a timely manner. So, we need to take the risk of losing our price advantage.
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This seemed to be one reason why the Alabama plant planned to first launch two higher-level models: the Sonata and the Santa Fe. The company also hinted that the subsequent vehicles, which followed these models, would be at least above intermediate class. Hyundai Mobis, which was Hyundais chief supplier and would also construct a plant near Hyundais site in Alabama, was targeting high-valueadded businesses, including electronic steering systems, smart airbags, intelligent brake systems, and satellite radio receivers, rather than cost-saving businesses. However, not everyone agreed that Hyundais Alabama project should move away from the lower end of the market. Hyundai planned a less laborintensive manufacturing
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environment, what it called a highly automated production line using as many robots as possible. Hyundai expected to employ only about 2,000 workers at its Alabama plant, which was far below the average number of employees of other U.S. plants after controlling for the scale of production. Thus, some officials insisted that the Alabama project should not deprive Hyundai of its price advantage. Organizational Politics The strategic market challenges discussed above were complicated by interorganizational conflicts among the HMC management, the labor union, and HMA. First, Hyun dais strategy of moving upward in its car
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price zone was strongly enforced by lack of cost competitiveness based on cheap labor. A high rank manager in HMC said: I would say that the salary of plant workers in HMC has recorded the highest increase rate within the Korean labor group. Today, their salary is even higher than the CEO of most small or medium-sized companies in Korea. It is imperative to increase our car price for survival. I dont agree that we should be worried about the expected high labor cost of the Alabama plant, because the salary of our plant workers in Korea would not be lower than that of Alabama workers. Rather, the frequent shutdown of plant operations due to strikes pushed us to find plant sites abroad. This means
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that the more strikes, the more unemployed, though strikes bring them (plant workers) higher wages in the short term. This is a war without a winner. Last week, we granted them the right to veto our critical strategic decisions in order to stop their strike of the last seven weeks. I am concerned that they may try to check the Alabama project. A member of HMC labor union expressed an opposing opinion: I dont understand why the management group blames Hyundais strategic difficulties on the labor union. They should give up relying on cost savings from cheap labor. I am informed that our labor productivity is comparable to the U.S. Big-3 makers. Then we are entitled to request a comparable wage level.
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However, I am not sure whether our management group, including marketing and financing, has proved comparable capability. If not, the current strategic problems should be attributed to them, not to us. They feel uneasy about our right to veto their managerial decisions. They argue that the labor unions of U.S. automakers are not deeply involved in the managerial decision-making process. But unions in the German automakers do have an important role in the decision process. The HMA was also dissatisfied with the labor groups unreliable production activity. A person from HMA said, U.S. newspapers reports Hyundais strike day after day. It is natural for U.S. customers to perceive that our production system is quite
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unstable due to the repeated labor management disputes. This certainly hurts our brand value. However, another interviewee from HMA pointed out that the current dependent relationship between the HMC management group and HMA was a more critical organizational challenge. He aid: Officially, we are supposed to have much control over decisions on market and technological strategies. But we dont have control. We have come up with some good ideas, but we quickly give them up because we know that it will take a long time for the ideas to be accepted by the HMC management group. Even when a proposal is accepted, we usually find that the idea is outdated. I understand that HMC people have been
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accustomed to top-down leadership and they try to control us since they regard us as a subordinate organization. But they should recognize that such a subordinate relationship is a drag on us in pursuit of globalization and time management. We need to learn from the experience of other foreign makers, such as Toyota and Honda, about how to cope with cultural gaps in leadership and decision-making. COMPANY PROFILE IN INDIA Background and Inception of the company: Shree Hyundai is one of the dealership of Hyundai Motors India Limited in BOKARO. It was established in the year 2007. With the
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opening of this venture, customers may feel ease as they are having options to take the view from either of the show room. It seems Mr. B.D.Mishra decided to open this showroom in Chas (Bokaro) area as there is no any passenger vehicle showroom in this area and it is going to be the future business area of the Bokaro. Shree Hyundai working philosophy is particularly based on Prepare employees for the future developments with developments in their personality. As competition is very much intense hence the management is working hard for customer relationship to achieve future business growth. As it is newly opened organization hence as every other organization it is
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also facing some management problems. Management is trying to overcome all these problems and achieving systematic workings here. Each and every department is distinguished for the employees. Every employee is having its own designation and job profile and he/she has to work under that profile only. For each segment of the vehicles, Shree Hyundai is having its separate executives. Departments are connected through local area networks. The main aim of management here is self development of employees. So that, they can be empowered for the benefit of the organization and be able to take future responsibilities. It starts with the joining of the
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employee in the organization. Initially, they have to work under various departments till his/her probation period would be over. They have to start their works from the ground level, so that they can understand the reality of the business here. Daily reporting at the morning and the evening make them up to date with the objectives and their future targets. The senior management knows that how they are doing their work and in which way they have to be directed. ABOUT HMIL Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company, South Korea and is the largest passenger car
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exporter and the second largest car manufacturer of India. HMIL presently markets 54 variants of passenger cars across segments. These includes the Santro in the B segment, the i10, the Getz Prime & the premium hatchback i20 in the B+ segment, the Accent and the Verna in the C segment, the Sonata Transform in the E segment and the Tucson in the SUV segment. Hyundai Motor India Ltd, continuing its tradition of being the fastest growing passenger car manufacturer, registered total sales of 559,880 vehicles in the calendar year (CY) 2009, an increase of 14.4 percent over CY 2008. In the domestic market it clocked a growth of 18.1 percent as
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compared to 2008 with 289,863 units, while overseas sales grew by 10.7 percent, with export of 270,017 units. HMIL currently exports cars to more than 110 countries across EU, Africa, Middle East, Latin America and Asia. It has been the number one exporter of passenger car of the country for the sixth year in a row. HMIL's fully integrated state-of-theart manufacturing plant near Chennai boasts of the most advanced production, quality and testing capabilities in the country. In continuation of its commitment to provide the Indian customer with global technology, HMIL commissioned its second plant in February 2008 which produces an additional 300,000 units per annum,
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raising HMIL's total production capacity to 600,000 units per annum. HMIL has invested to expand capacity in line with its positioning as HMC's global export hub for compact cars. Apart from the expansion of production capacity, HMIL currently has 286 strong dealer network and 540 strong service points across India, which will be further bolstered in 2010. In December 2008, HMIL launched the much awaited premium compact the i20 after it had a global preview at the Paris Motor Show in October, 2008. In 2009, HMIL also launched the new facelift Sonata Transform and the new Verna which are vastly improved models compared to the outgoing models. In March, 2009
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Hyundai i10 clocked the fastest 3 lakh sales since its launch in October, 2007. HMIL also became the only car manufacturer to introduce Automatic transmission across segments with the launch of the i20 1.4 Litre Petrol Automatic. The i20 also simultaneously got a powerful 1.4 Litre CRDi engine in July 2009. The i20 achieved the highest safety rating by the European NCAP. In September 2009, HMIL introduced the new refurbished Santro with luxurious interiors and improved exterior features. The Santro has been the highest selling model for Hyundai with more than 15 Lakhs units sold since its launch in India in 1998. Hyundai Motor India in December 2009 also crossed the 25 Lakh car production milestone. Hyundai Motor
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India remains one of the fastest growing car manufacturers in the country. The companys overall performance in the automobile sector was recognized by the media as it was awarded with the prestigious Manufacturer of the Year award by both UTVi Autocar Car and NDTV Profit-Car & Bike in 2009 HMIL has invested to expand capacity in line with its positioning as HMC's global export hub for compact cars. Apart from the expansion of production capacity, HMIL currently has 251 strong dealer network across India, which will be further bolstered in 2009. Nature of Business Carried:
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Shree Hyundai is a dealer of cars of Hyundai motors. The business carried by Shree Hyundai is of dealership. It is an also an authorized service centre and it totally aims in selling cars both passenger and SUV vehicles as per demand of customers. Vision, Mission and Quality Policy: MISSION: The mission of the Shree Hyundai is committed to develop the firm as a big competitor and service provider in the Jharkhand Passenger car market. VISION: The dealer announced "Innovation for Customers" as our midto longterm vision with five core strategies: global
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orientation, respect for human values, customer satisfaction, technology innovation, and cultural creation. They desire to create an automobile culture of putting customer first via developing humancentered and environmentfriendly technological innovation. QUALITYPOLICY: Based on a respect for human dignity, it make efforts to meet the expectations of all stakeholders including customers and business partners by building a constructive relationship amongst management, labor, executives and employees. Also, they focus on communicating their corporate values both internally and externally, and gaining confidence from all stakeholders.
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Area of Operation: The firm operates regionally in the Jharkhand circle. The showrooms are situated in the important markets of Jharkhand that are Bokaro(Head office), Dumka, Ramgarh, Ranchi and Purulia (Bengal). But the HMIL under which the dealership situated operates globally in both Passenger cars segments and SUVs segment. Ownership Pattern: The firm is private limited firm and the dealership is directly under the HMIL in India. Owner Mr. B.D. Mishra CEO- Mr. Nitesh Kumar Mishra
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Branch Manager and Manager Sales Mr. Manish Prasad Major Manufacturers in Automobile Industry around world Maruti Udyog Ltd. General Motors India Ford India Ltd. Eicher Motors Bajaj Auto Daewoo Motors India Hero Motors Hindustan Motors Hyundai Motor India Ltd. Royal Enfield Motors Telco TVS Motors
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Government has liberalized the norms for foreign investment and import of technology and that appears to have benefited the automobile sector. The production of total vehicles increased from 4.2 million in 1998- 99 to 7.3 million in 2003-04. It is likely that the production of such vehicles will exceed 10 million in the next couple of years. The automotive industry is a key industry in the European economy characterized by having few vehicle
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manufacturing firms and a substantial number of independent suppliers to which about 2/3 of the production is outsourced. The output includes cars, light trucks and vans, buses and coaches, medium and heavy trucks, motorcycles and agricultural and forestry tractors. Rapid changes in technology are forecast for the auto industry over the next 10 years. The automobile started out as a simple mechanical method of transport. Today's cars are sophisticated, with a significant (and still growing) electrical and electronic content. To provide comfort and safety, while still being friendly to the environment, these new vehicles use the latest developments of many different technologies. Further developments are expected in the areas of brake
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assistance, adaptive speed control and global navigation and satellite tracking systems. Unlike in the past, where there were not more than three or four players both in the four-wheeler and twowheeler segments in the country, the automobile market is now flooded with multinational companies vying with one another, rolling out new models literally every day. There was a time when owning a four-wheeler was widely termed a luxury, but now it is considered a necessity, reflecting the transitional phase the country is in. No doubt, the country has become Asias auto hub and the changing trend here is well noticed worldwide. The automobile sector is vibrant in the country with plenty of potential
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for growth. Of the countrys population, the addressable group with the potential of buying a vehicle amounts to 20 per cent. The substantial figure provides enough opportunity for the players in the market to explore with their products. At present, around one million cars are being manufactured annually in the country and the figures are likely to get doubled in another 10 years. The industry is blooming and definitely growing at a healthy pace. It has provided a chance for manufacturers to flood the market with their innovative products. Given the road facilities in the country, the manufacturers too have paid more attention to supplement their products with additional features considering the comfort level of
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customers, as it has become the key. With some of the advanced sophistication like active stability and traction control system available with the product, it is for sure that the customer will have a satisfying driving experience. The increase in sales truly reflects the buoyancy witnessed in the market. The boom in the sector also owes much to the flexible financial options available for customers to help them realize their dreams. Though a steep rise in the loan interest rates threatens to create a dent in sales, in actual terms most of the companies have witnessed an increase in sales in the four-wheeler segment. But, people are also carried away by the discounts, which is a cause for concern. Discounts can be attractive.
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But more than that safety is important. Customers should look in for additional safety features in the vehicle rather than accessories. The way the brand-conscious people look at investment on vehicles should change. Increase in interest rates has little effect on four-wheeler segment as people who decide to buy a vehicle are more concerned with the timing of purchase. With changing times, the mode of travel of people has also changed. Many who owned bicycles have graduated to motorcycles while those who have bikes try to shift to the entry-level cars and those who have cars aspire for premium brand fourwheelers .It is a highly volatile market, where customers are very price and time-conscious. Almost all
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players in the two-wheeler segment have rolled out their own product in this segment, for it has become a convenient product. Indian Automobile Industry: Auto sector could grow to $145 b by 2016 The domestic automobile market has been growing at 14.2 per cent CAGR over the past 4 years (2000-01 to 2004-05), While the auto components market has been growing at 19.2 per cent CAGR (2000-01 to 2003-04). The industry (OEMs and suppliers together) contributed nearly 4 per cent to the countrys GDP in 2003 -04. The automotive sector also offers significant employment opportunities. It employs 0.45 million
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people directly and around 10 million people indirectly. Leading Challenges in Automobile Sector: Computer literacy, and product knowledge; Insufficient training; Insufficient numbers of highperformance customer-facing personnel; Insufficient skills in certain areas, including interpersonal communication, Difficulty securing the best talent to sales and management positions; A low awareness of career opportunities and paths within the industry; and A nagging image problem for the industry exacerbating these issues.
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Hyundais Market Share Forecast and Comparison:
Competitors Information:
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Car segment Maruti Suzuki M-800 had dominated the Indian car market since it was launched in 1984. The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over two decades. Apart from the increased competition, MUL also had a few other problems on its plate. There was a delay in setting up of a plant in India for manufacturing diesel engines and transmission systems for cars. The engines for its diesel variants were imported from other countries, and there were limits on the quantities it could import. In the market, MUL's models like the
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Zen, Alto, WagonR, and Baleno were showing mixed results. Utility Vehicle segment Mahindra Marketing Strategy of Mahindra and Mahindra Limited for Scorpio In June 2011, 'Scorpio,' a sports utility vehicle (SUV) from Mahindra and Mahindra Ltd. (M&M), a leading Indian automobile company, celebrated the first anniversary of its launch. This one year journey had been quite fruitful for Scorpio, which had impressed many industry observers and customers. A year ago, within the first eight days of its launch, Scorpio had attracted over 10,000 customer to its dealer showrooms and over 3,000 customer
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enquiries, resulting in 1000 order bookings. According to company sources, by the time it completed its first birthday, Scorpio had sold 15,000 units across India. Media reports, automobile enthusiasts and industry analysts had all given the SUV extremely positive reports. With demand for the vehicle growing steadily, M&M even had to increase its production from 1,800 units per month in 2002 to 2,000 per month in June 2011, and 2,500 per month by late 2011. Thanks to the high decibel advertising support, Scorpio had acquired high brand recall among consumers. In
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fact, it was said to be one of the very few automobile brands in India that successfully boosted the image of their parent companies (in this case M&M) as well. Infrastructural Facilities: The firm has good infrastructural facilities these are: It is situated in the main market place of the Bokaro Steel City. The showroom has good facilities such as Playing area for children who are coming with the customers, Good servicing facilities for cars with advanced technologies, Good entertainment facilities available for customers who were wait during the servicing of their car,
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The showroom uses new technology in their management information system(MIS). Achievement and Awards: Achieved the most car seller dealership in Jharkhand. Win the best car seller award in Bokaro from Chas Chamber of Commerce. Future growth and prospects: Shree Hyundais future growth is very bright because it is the newly growing firm in the Bokaro market. It is the division of Ranju automobiles (Pvt.) Ltd. which is already a well established Bajaj showroom in the Bokaro market. The customers of
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Bokaro is already aware about the Ranju Automobile because this is the very old firm and dealership in Jharkhand. Due to this customers are committed toward this dealership and due to this customers do not go for any other showroom of Hyundai. STRATEGY Shree Hyundais marketing strategy is differentiated marketing. Its primary consumer target is middle to upper income professionals who need true value for their money and comfortable ride in city conditions. Its primary business target is midsized to large sized corporates that want to help their managers and employees by providing them a car for ease of transport.
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Its secondary business target is entrepreneurs and small business owners who want to provide discounts to managers buying a new car.
Location of Hyundai Car Plant
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STRUCTURE Overall Structure of the Shree Hyundai: Chief Executive Officer

Managing Director
Branch Manager and Manager sales & marketing Corporate& Exchange , Hyundai Advantage Pre- Owned Cars 72 | P a g e Team Leader, Sales Finance Dept. GDMS and Back Office Accessories & Spares Service Dept.
Sales Executives
Employees
Employees
Employees
SKILL Shree Hyundai product is Passenger Cars, so they should be handled

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carefully. So it required skilled manpower for handling, and skill in the sense testing of cars. Training will be conducted in Hyundai Jamshedpur (Jharkhand). For newly recruited employees will be given basic training program for 10 weeks. And 10 weeks training will be given for employees for junior technical officer, about machines. Training will be given to employees to know about the total features of cars in Shree Hyundai. STYLE Top down Approach The management acts with autonomy and independence in excercising strategic supervision, discharging its fiduciary responsibilities, and in
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ensuring that the company observes the highest standards of ethics, transparency and disclosure. Participating Approach At Shree Hyundai the management is participating in nature. Anyone in the company can put in their view points before the management for any improvement in the prospects of the company, manpower, working environment,etc.
SYSTEM The marketing department is divided into 5 Teams. For all the different marketing teams, one Team Leader is
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assigned. The team leaders take care of their teams activities and report to the marketing manager that is further reported to the CEO. The marketing is totally target based and based on targets given by HMIL, the task is distributed to different teams. The customers are handled by the same personnel from the beginning to the end. Spot incentive Schemes etc is placed in the system to motivate the employees. The conversion and Target fulfillment is traced out via the software. STAFF CATEGOR NO. TYPE OF WORK OF Y
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STAF F Sales Generate sales from 10 Consultan market ts Back Maintain the data of 2 Office customers Finance Dept 6 Maintain the financial data Maintain the data and Stock of parts and spares Deal in all the preowned cars of Hyundai Servicing of cars and
Spares 4 And Accessori es Corporate 3 and Exchange Service

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Dept
data maintenance of Serviced cars in service station of Shree Hyundai 6 Maintain Showroom data and customers complaints, etc
EDP
DUTIES AND RESPONSIBILITIES OF STAFF To report him/ her to duty at the place to which he/she posted. To undergo the prescribed probation under specify period and undergo such training and for a period has may be arranged for him/her and
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acquit him/her self creditably in the training imported to him/her. To obey and abide the rules, regulations, service conditions and standing orders which they may adopt, prescribe, frame are issue from time to time to govern its employees.
SHARED VALUES Review of Customer Care Activities. The review of customer care activities is done through morning meetings and weekly meetings on customer care. The documents that are necessary during the weekly review
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are: PSR related, Internal SSI forms related,HMIL related and other information related. Customers for Life A week after the delivery, the concerned sales person must fix an appointment with the customer and visit him along with the service advisor. He should personally hand over the photographs clicked also the vehicles registration certificate and try to become the customers car advisor for life and never lose touch with the customer. Show Room Ambience The hours of operation, outside and insides of the showroom along with reception, car display area, selling
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area, customer lounge and delivery area should be taken care of. Customer Meets Organizing customer meets helps in improving SSI, helps in introducing the workshop staff to the customers and in getting referrals and there are guidelines for the same. SWOT ANALYSIS
STRENGTH:
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Second largest manufacturer of Passenger vehicles in India due to this customers are attracted towards the company in Bokaro.. Ranju Automobiles Pvt. Ltd. is very old firm in Bokaro due to this customers of Bokaro area and its surroundings aware about this. WEAKNESS: SUV car has only two model i.e., TUCSON and TERRACAN which is fewer available in India due to uneconomic and out of reach for middle class Families. Manufacture only Passenger vehicles but some models are not economic such as Verna, Accent, etc OPPORTUNITY:
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Shree Hyundai has opportunity to grow as a big competitor in Jharkhand automobile sector. If the cars are more economic then the sales will be more boom and the company turn into first position in Indian automobile sector and win from their competitors i.e., Maruti Suzuki, Tata Motors, GM and M&M. THREATS: Risk Factors In the course of its business, Hyundai is exposed to a variety of market and other risks including the effects of demand dynamics, commodity prices, currency exchange rates, interest rates, as well as risk associated with financial issues, hazard events and specific assets risk. Whenever
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possible, we use the instrument of insurance to mitigate the risk. Threats from Competitors Maruti Udyog Limited Maruti Suzukis is also the old car showroom in Bokaro due to this the competition is high with Shree Hyundai
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Analysis of Financial Summary
Particulars
2010-2011 (in laces)
2011-2012 (in laces)
Sales Growth in Sales (nos) (%) Total Income

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2070147 2621400 23.4 5997 26.6 7563
Growth in Total Income (%) Profit before Tax Profit after Tax Share Capital Reserves and Surplus Total Debt Net Fixed Assets Total Assets(Net) Market Capitalization
15.5 1072 728 39.94 1099 175 589 1314 9797
26.1 1217 810 39.94 1453 202 715 1695 10943 564
Economic Value Added 569
KEY RATIOS
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Long Term Debt/Equity 0 OPBIT*/Net sales-% 16.8
0 15.7 14.6 10.7 61.9 80.9 37.5 20 56.3 40.6
OPBT**/Net Sales*(%) 15.6 Profit after tax/Total income (%) Return on Avg. Equity (%) Return on Avg. Capital Employed(%) EVA/Capital Employed(%) Dividend Per Share ( Rs) Dividend Payout (%) 12.1 72.9 92.8 49.3 20 61.9
Earnings Per Share (Rs) 36.5
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Market Value/Book Value Particulars No. of four wheelers sold Gross Sales Less: Excise duty Net Sale Other Income Total Turnover
8.6
7.3
March 31,2011
March 31,2012
1935981 2621400 6356.21 874.89 5481.32 105.27 5586.59 8596.81 1175.16 7421.65 141.03 7562.68
Total Expendituree
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4610
6257.14
Change in Stock in trade Consumption of raw material Staff cost Other Expenditure
(9.14) 3845.23 195.04 578.9
(14.95) 5214.57 267.97 789.55
Interest(net) Depreciation
(0.65) 63.03
(1.09) 89.38
Profit before the period before tax Provision for taxCurrent

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914.18
1217.25
297.11
395.22
-Deferred
13.71
11.56
Net Profit
603.36
810.47
Paid up Equity Share 39.94 Captial Face value per equity 2 share (Rs.) Reserves Excluding revaluation reserves Basic/Diluted per share 30.22
39.94 2
1453.44
40.59
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Aggregates of NonPromoters shareholdings Number of Shares
Rs. 2 per Rs. 2 per share share 89945570 89945570 45.04%
Percentage Holdings( 45.04% to total holding )
Conclusion
The report has highlighted the importance of providing the highest customer satisfaction and how it affects the sales. Though in the month of December, the sales were down, by developing competitive strategies and by delivering high class products and services, Popular Vehicles and Services were able to keep their sales
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momentum. The report emphasizes the importance of customer loyalty to develop the business. The study which we conducted on the Four wheeler automobile sector is a very important topic of automobile sector. After deep research, analysis and getting information about companies as formulated that the four wheeler automobile companies achieved success in the market. Throughout the study we found the four wheeler manufacturer having very new and modern technology in their bikes, they have a good market share in India, many of Automobile companies like Maruti Suzuki, Tata Motors, M&M,
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Fiat, Ford, etc are also giving large competition. Concluding the performance of the company related to four wheeler sector in India, getting their market share and growth and what are services they are providing after sales. Hyundai Motors has managed to put in spectacular performance going from strength despite increase in competition; the company's sales have witnessed an uptrend, registering an average growth of 42% in the three years under review. Hyundai Motors has managed to achieve this because its strong brand image and proven product quality
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underpinned the performance growth in recent years. Apart from the strong brand "Santro" the company's performance across the spectrum of the Passenger car market helped it exploit the growing demand for 5-stroke Cars.
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EVOLUTION OF THE HYUNDAI PERFORMANCE IN THE U.S.

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