John Krafcik, CEO of Hyundai Motor America since 2008, has overseen
fantastic growth, and now he has a different challenge: Keep the pot
boiling at a time when he can't count on the spotlight and dealer
enthusiasm that come with monthly sales records.
That's because Hyundai's rocket ride up the U.S. sales chart is over -- because it can't make cars any faster.
Hyundai is hitting full production capacity in South Korea, where
most models sold in the U.S are made, and is adding a third shift this
month at its Montgomery, Ala., plant that builds its two highest-volume
U.S. models, Sonata and Elantra.
of the momentum Krafcik inherited was his own doing. Before he became
CEO, Krafcik was vice president of product development and strategic
planning. When he took that job in 2004, Hyundai's share of U.S. new
vehicle sales was 2.5%, according to Autodata.
Now, it's 5% and
Hyundai is the seventh-biggest car company in the U.S., ranked by sales,
behind the Detroit Three and Japan's top trio, Toyota, Honda and
Krafcik is sure the production limits will give his rivals
advantages, especially in the midsize sedan segment, where seemingly
every brand has a new model or soon will.
"Competitors will take
some demand away" from the Hyundai Sonata, but he professes himself
"comfortable" with the sales he expects to get. And like all successful
sales folk, he sees an opportunity in a limited supply: "I'd rather be a
little bit short on production and long on quality," he says.
to crank out ever more vehicles can cause quality shortcuts, Toyota
Motor CEO Akio Toyoda explained in 2010 to a U.S. congressional
committee probing the company's sudden acceleration complaints, "I fear
the pace at which we have grown may have been too quick," he testified,
and it may have "confused" the company about its priorities.
session with USA TODAY reporters and editors, Krafcik offered a peek at
Hyundai's future beyond the explosive sales gains. He has some contrary
notions that'll keep Hyundai a very interesting company to watch.
What's in Krafcik's crystal ball, on big issues and some not so big:
will field some alternative-power models -- already it is selling a
gasoline-electric hybrid version of the Sonata, and a hydrogen-fueled
car is due in 2015, he says -- but the future belongs to the venerable
gasoline engine. It "will still be the majority (powerplant) in 30
years," he says.
Refined, evolved, downsized, engineered to a
fare-thee-well, for sure, but still the recognizable internal combustion
engine traceable to the first practical car, built by Karl Benz in
Even Hyundai's hydrogen car won't be exclusively an
alternative fuel model. "It would be a platform where we could also put
in internal-combustion" engines.
Nowadays the politically correct view is that non-petroleum power is the future. Nonetheless, others agree with Krafcik.
school of thought says that bio-fuels made from waste -- cornstalks or
wood chips, for instance, instead of feed corn as is done now --
eventually could be produced in such quantities that they could be sold
at the pump cheaper than gasoline.
"Suddenly you have the same old
engines but new environmentally acceptable fuels, and it's a whole new
game," says David Cole, chairman emeritus of the Center for Auto
Research and longtime observer of the auto industry.
A report this
month from the non-partisan Congressional Budget Office says lifetime
costs associated with electric cars are "generally higher than those of a
conventional vehicle or traditional hybrid of similar size and
performance." On average, CBO says, costs run $16,000 to $19,000 more
than a comparable gas-engine vehicle.
The CBO report says that an
electric or plug-in hybrid would "require a tax credit of more than
$12,000 to have the same lifetime costs" as a similar gas-only vehicle.
The government currently gives a federal tax credit up to $7,500 for
electric or plug-in hybrid vehicles for qualifying buyers.
was a pioneer of four-cylinder power when it introduced the redesigned
2011 Sonata midsize sedan only with four-cylinder engines, dropping the
V-6 option. They are more sophisticated fours that use high-tech direct
fuel injection for both better mileage and more power -- even though the
technology is costlier and noisier. Direct injection is making its way
into the mainstream, but when Sonata was launched it was mainly a
"Four-cylinders are absolutely the future,"
Krafcik says. Sonata's main rivals, Honda Accord, Toyota Camry and
Nissan Altima, all still have optional V-6s, though Ford and General
Motors are following the lead with only fours in the 2013 redos of their
Ford Fusion and Chevrolet Malibu.
"The Japanese have their V-6s
because they don't have the turbo fours ready. They fell behind" in
engine development, says Aaron Bragman, senior analyst at consultant IHS
Hyundai still has V-6s in the long-wheelbase version
of its Santa Fe SUV, as well as V-6s and V-8s in its upscale Genesis and
Equus models. Don't expect that to change immediately. In fact, the
Genesis coupe got a more-powerful V-6 as part of its 2013-model update.
Unique cars for unique markets
don't believe in one-car-for-the-world, as some of our competitors do,"
says Krafcik. "We view the American market as different from the
European market. Rear-seat packaging (for example) is more important in
That puts him head-on against his old employer, Ford
Motor, which has pushed hard for uniform global designs in its One Ford
strategy. That makes it possible to build any car at any of its
factories around the world and requires only relatively small changes to
suit various markets. Thus, it is cheaper and quicker to get models to
Cars as mobile Internet connections
This is one area where Krafcik agrees with the prevailing notions in the industry.
"Moving nodes," he calls cars of the future, and it's happening fast.
Continual weight loss
claims that as part of its Skyactiv suite of technologies, it will cut
vehicle weight 7% each time it renews a model. Hyundai cut about that
much from the Santa Fe SUV in the redesign for 2013, from 3,725 down to
Lighter cars take less energy to move, so use less
fuel. They also let automakers use smaller, lighter components, such as
brakes and suspension parts. If the government's new fuel-economy
standards remain set for 54.5 mpg in 2025, lightening will be
Ford is believed to be planning an
aluminum-bodied F-150 pickup for launch in 2014, which would cut about
700 pounds, or 15%, from the current model.
Names for vehicles, not letters or numbers
"We're not believers in alphanumerics," he says.
industry has moved toward such designations as a mark of prestige.
Lincoln MKZ, Cadillac XTS and Acura RDX, for example. Mainstream brands
are sticking with names, such as Sonata, Malibu, Fusion, Altima and
Shifting Hyundai from a low-price nameplate
Hyundai is "making the transition from a value brand to a valuable brand," he says.
the Elantra compact offers a heated steering wheel, heated front and
rear seats, back-up camera and other features generally reserved for
bigger, higher-priced cars. Of course, an Elantra compact so-equipped
has a midsize price: $25,000.
That's bad news for bargain-hunting
car shoppers, but probably inevitable -- features or not -- as a result
of Hyundai's maxed-out production. Anything in short supply gets more