The rise of Korea

How Hyundai and Kia blind­sided the world to form an automotive su­per­power

Wheels (Australia) - - Redlind - ASH WESTER­MAN

COULD any­one who bought a Hyundai Ex­cel in 1986 – the first year a model from the Korean brand was of­fered in Aus­tralia – have pos­si­bly en­vi­sioned the tra­jec­tory this automotive jug­ger­naut would be on in 2017?

Fact was, the X1-gen Ex­cel was a fairly lam­en­ta­ble of­fer­ing, yet still a sig­nif­i­cant achieve­ment for a car com­pany that had re­ally only been build­ing cars for ex­port since the Pony of 1976.

To fully grasp the path of the Korean car in­dus­try, we need to un­der­stand that its rise was pre­or­dained, born partly from am­bi­tion, but mostly out of ne­ces­sity. South Korea is a small, pop­u­lous coun­try with lim­ited nat­u­ral re­sources and was once one of the world’s poor­est na­tions. In the early ’60s, the coun­try’s lead­ers knew that tran­si­tion­ing into a man­u­fac­tur­ing pow­er­house was the key to pros­per­ity.

Ma­jor Gen­eral Park Chung-hee (1917-1979) came to power via a mil­i­tary coup in 1961 and is the leader cred­ited as a piv­otal fig­ure for the Korean automotive in­dus­try. That was thanks, in part, to a five-year de­vel­op­ment plan that was to ef­fec­tively light a fire un­der the then-fledgling car­build­ing busi­ness. The im­me­di­ate ban­ning of im­ported cars (see side­bar p.21) would in­stantly make lo­cally as­sem­bled ve­hi­cles the de­fault choice for Kore­ans, while the drop­ping of im­port taxes on in­com­ing automotive com­po­nents gave a clear in­cen­tive to Korean com­pa­nies to be­come as­sem­blers of semi- and com­pletely knocked­down kits (CKD).

Hyundai was founded in 1946, but mor­phed into the automotive com­pany we know to­day in 1967, and quickly moved into a part­ner­ship with Ford to as­sem­ble Corti­nas. Gen­er­ous gov­ern­ment sub­si­dies were avail­able for com­pa­nies en­ter­ing into joint ven­tures with in­ter­na­tional part­ners in or­der to ac­quire tech­no­log­i­cal ex­per­tise. Kia – orig­i­nally a man­u­fac­turer of bi­cy­cle parts founded in 1944 – jumped into the cot with Honda, al­though Kia’s first pas­sen­ger car was the Mazda Fa­milia-based Brisa of 1974.

The foun­da­tion stone of Korea the Car Builder had been set.

But it was the heady, tur­bu­lent ’80s be­fore Aus­tralians were urged via an ad cam­paign to “say hi to Hyundai”. The brand’s lo­cal pres­ence had its be­gin­nings in West­ern Aus­tralia, thanks to Perth mo­tor body builder, Danny Fisher, who saw po­ten­tial in af­ford­able, well-mar­keted Korean cars for Aussies. Fisher con­vinced busi­ness ty­coon Alan Bond to bankroll the ven­ture. Bond agreed only if hugely suc­cess­ful WA used­car whizz John Hughes was on board. En­ter the 1986 Ex­cel. (John Hughes Hyundai in WA would go on to be the world’s biggest­selling Hyundai dealer for seven con­sec­u­tive years be­tween 1992 and 1999, out­selling ev­ery Hyundai dealer in the USA, Canada, UK, Europe, Asia, and South Amer­ica.)

By 1995, the third-gen X3 Ex­cel had be­come Aus­tralia’s favourite light car, woo­ing cus­tomers with its then-rev­o­lu­tion­ary ‘drive-away’ pric­ing and gen­er­ous war­ranty, rather than any dy­namic ge­nius.

It wasn’t un­til 2003 that Aus­tralia saw the ar­rival of a full fac­tory op­er­a­tion, which would see ini­tial an­nual sales of around 34,000 ac­cel­er­ate to 87,000 by 2011, and pass 100,000 in 2014.

It hasn’t been one big up­swing, of course. Kia was on solid ground in the late ’70s as­sem­bling, among other things, the 604 for Peu­geot and Fiat’s 132 sedan. But by 1981 the Korean Gov­ern­ment had in­tro­duced ‘ra­tio­nal­i­sa­tion mea­sures’ which as­signed spe­cific ve­hi­cle types to in­di­vid­ual com­pa­nies. The out­come of this, fol­lowed much later by the Asian eco­nomic cri­sis, would see Kia on its knees in bank­ruptcy by 1998. In came Hyundai to the res­cue, tak­ing a ma­jor­ity stake.

Surely Kia’s most sig­nif­i­cant di­rec­tional shift, though, came with the re­cruit­ing of Pe­ter Schreyer as de­sign chief in 2006.

This was the point when Kia made de­sign one of the real corner­stones of its brand, and set the course it’s now on, with the likes of Op­tima and of course, 2017’s Stinger.

But it hasn’t just been about the prod­uct. Skil­ful mar­ket­ing has also played a key part. In the USA, for ex­am­ple, Hyundai’s high­con­cept in­cen­tives – like buy­ing back your car if you lost your job – drew buy­ers in with­out cost­ing a for­tune. Kia’s mar­ket­ing in the US has been both per­plex­ing and, to many, an­noy­ing (Youtube the bril­liant rap­ping ham­sters TV ad for the Soul), but it’s done a great job at get­ting Kia no­ticed.

Veteran auto ex­ec­u­tive heavy­weight Bob Lutz had this to say: “Ja­panese ex­ec­u­tives, in my ex­pe­ri­ence, of­ten get tan­gled up in his­tory, tra­di­tion, and the sup­posed su­pe­ri­or­ity of their cul­ture, but I’ve found Korean lead­ers to be bold, tough, gre­gar­i­ous, and open to new ideas. This is in stark con­trast to the rows of stone-faced Ja­panese ex­ecs at in­ter­com­pany meet­ings, where lit­tle was ever said or ac­com­plished. The Kore­ans are not hung up on their cul­ture: They hire the best, Korean or not. It’s their strength. They ac­cept risk.”

On this lat­ter point, wit­ness the ar­rival of EX-BMW en­gi­neer­ing guru Al­bert Bier­mann to Hyundai (with in­flu­ence at Kia), who is set to trans­form the Kore­ans’ dy­namic abil­i­ties, launch Hyundai’s N Di­vi­sion, and move the mo­tor­sport op­er­a­tions up a gear.

As for Hyundai’s am­bi­tion, well, that’s en­cap­su­lated in one word: Ge­n­e­sis. Launch­ing a lux­ury brand at this tur­bu­lent stage of the automotive time­line, as al­ter­na­tive power sources, au­ton­omy, and dis­rup­tors like Google and Uber re­shape the busi­ness en­tirely, takes mas­sive com­mit­ment. Can the Kore­ans do it? Is the Ge­n­e­sis line-up – with no pre­mium SUV in sight un­til 2019 – strong enough? Is there enough time be­fore the automotive busi­ness as we know it is no longer recog­nis­able?

It’s a huge call, but don’t bet against the Kore­ans. Their pock­ets are as deep as their de­ter­mi­na­tion.

“This project is am­bi­tious, but we want as many peo­ple as pos­si­ble on board the elec­tric ve­hi­cle rev­o­lu­tion” Queens­land’s Act­ing Roads Min­is­ter Steven Miles on a new 1800km elec­tric charger net­work EV AV­ENUE

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