How Korea's Hyundai gamble hit jackpot

The president of Hyundai Motor Corporation Korea, Steve Yang, believes in the motto "stay humble, but stay hungry".

So when the financial meltdown of 2008 engulfed the motor industry, it was Yang's decision to send his men to every Hyundai dealership throughout the world to try to turn a potentially crippling situation into a positive.

It appears to have been a shrewd decision, and one which is paying off. "They came to us in 2008 and set us quarterly targets," explains Hyundai South Africa marketing director Stanley Anderson.

"If you met your target there would be a financial reward and in that period we actually increased our market share by 2-3%. The Koreans believe that the best time to get market share is in a recession.

"They are very aggressive," he adds.

With more than 50 different brands available to the South African consumer, Anderson realises the importance of being at the top of your game and it appears the company will not rest until it is the number-one-selling passenger car manufacturer in the country.

At present the company sits in the top five, but he doesn't like to give too much away about where exactly it is.

"Close to the top three," he says with a chuckle.

"When I tell people we can be number one they look at me funny. But you have to have a target.

"We have the vehicles to take the competition head-on. We've done very well when it comes to retail and rental, but it is the corporate market that we need to penetrate."

Not only will Anderson not be drawn on exactly where Hyundai sits in the pecking order of manufacturers, but he does a neat side-step when it comes to that other bane of many motoring journalists - how many vehicles a month does Hyundai sell exactly.

Whereas other manufacturers gladly supply Naamsa (National Association of Automobile Manufacturers of South Africa) with figures every month, Hyundai opts to keep its figures under wraps.

He assures me there is nothing sinister about this, but merely a business decision.

"I will get a bollocking if I give you those numbers," he says.

"The reason we don't give out figures is that I believe it gives us an advantage over our competitors. That's the only reason really."

Whereas brands such as Mercedes-Benz, Toyota, Nissan, Volkswagen and Renault have sunk billions of dollars into the local economy by building manufacturing plants in various provinces, Hyundai has opted not to, and imports its stock from a variety of sources.

There's no prize for guessing why countries such as Brazil, China, Russia and India produce a high percentage of Hyundai's vehicles.

On more than one occasion overseas manufacturers have questioned the wisdom of sinking money into South Africa, where strikes are often never far from unions' agendas.

"Africa would need to become a viable market for exports before we would consider manufacturing here," he explains.

"Another disadvantage would be our cost base.

"You have to look at labour costs and productivity. At this stage it is not an option."

That said, it is not a case of Hyundai coming to South Africa and making a small fortune that is sent back to Korea. Far from it.

All profits made in South Africa remain within the country, and there are a number of spin-offs from having such a large company operating here.

The 95 dealerships directly employ close to 4000 people, while secondary suppliers, such as tow-bar manufacturers and those fitting bull-bars, carpets, canopies etc, also create significant employment.

According to Anderson, Hyundai weathered the financial storm pretty well and he predicts a positive, if tough, future.

"It is tough all over. It is probably easier here than in many European countries.

"We have seen a 16% increase in profitable volumes whereas the global norm is 2-3%," he points out.

Hyundai also has a policy of ploughing back five percent of revenue from global profit into research and development.

"It is very expensive to bring out new models.

"For example the new Elantra cost us $240-million and the Accent $180-million."

And with new models constantly being launched, the capacity for after-sales service also needs to be increased.

Not only does this involve front-house staff, but also those behind the scenes, including mechanics.

Hyundai has taken the initiative of sponsoring five technical schools in Gauteng - with more around the country to follow - where students are taught the modern-day intricacies of servicing and fixing a vehicle.

"We are trying to change perceptions. This is not a grease monkey's job any more. We supply the schools with gearboxes, engines, vehicles, surplus materials and then offer students holiday jobs so they can get a feel for the industry.

"It takes them three-and-a-half years to qualify, but once that happens there will always be a job for them somewhere in the industry."

The "stay humble, but stay hungry", philosophy of Yang is obviously paying off.

This year will see Hyundai produce four million vehicles worldwide - up from 3.6 million for 2010.

Not bad for a company that started out in the construction industry just more than 60 years ago .