Hyundai is adding a sporty compact, the Velostar, to its lineup this year. (Hyundai)
Three of Hyundai's top sellers were recently redesigned. From left to right: The subcompact Accent, the Tucson crossover and the Sonata sedan.
As Hyundai celebrates its 25th anniversary selling cars in the United States, the brand that started out as a low-priced joke has become the fastest-growing automaker in the world.
In the U.S., where Hyundai began selling cars on Feb. 20, 1986, sales were up 24 percent in 2010 and 11 percent over the first half of 2011 compared with the same period the previous year.
Over the past five or six years, the South Korean automaker has steadily improved its quality and fuel economy and has become a leader in design and technology.
First, its marketing team made a promise it wasn't sure its engineers could keep. To ease concerns about reliability, the company introduced an industry-leading 10-year/100,000-mile warranty on engines and transmissions.
"It drove our engineering teams to improve quality, or it would have driven us into bankruptcy," Hyundai Motor America President and CEO John Krafcik said at the Chicago Auto Show in February.
Then, when people stopped buying cars in 2008 and '09, Hyundai made another big move: It came up with the Hyundai Assurance plan, which guaranteed that anyone who bought a Hyundai could return it -- no questions asked, no damning credit reports -- if they lost their job in the next year.
Ties to Kia
- Hyundai and Kia share platforms, engines, some factories and more, but they treat each other as competitors due to a combination of antitrust laws and tradition.
- Kia was a fiercely competitive Korean automaker that went broke and came under Hyundai control in 1998.
- Hyundai and Kia's U.S. units were already incorporated as separate businesses that could not share much information without being guilty of collusion. Most of their U.S. employees are contractually forbidden from talking to each other about vehicles or strategy.
"Hyundai has performed one of the most amazing brand transformations I've ever seen, and they've done it the right way: with great products," says IHS Automotive analyst Aaron Bragman.
"Quality was our undoing in the early '90s. Now it's our strength," Krafcik says.
If Hyundai and its corporate partner Kia continue to grow, they could displace Nissan as the third-highest-selling Asian automaker in the U.S. this year. They shocked Toyota by becoming Europe's best-selling Asian automaker last year.
"Hyundai's timing was perfect," Bragman says. "They improved their quality, design and technology at the same time the Japanese manufacturers were declining."
"They obviously have a lot more mojo today than Honda or Toyota," adds Bill Visnic, analyst and senior editor at Edmunds' AutoObserver.com.
Hyundai also kept its foot on the accelerator as the rest of the auto industry slowed investment and new-model introductions in 2008 and '09. The result: a flood of new cars and crossovers in 2010 and '11.
When most other automakers had relatively little new to sell, Hyundai introduced an extremely successful all-new Sonata midsize sedan, as well as all-new versions of the Tucson crossover, the 40-mpg Elantra compact and the subcompact Accent (also rated at 40 mpg highway). The company also released a hybrid Sonata, the Genesis coupe and the luxury Equus sedan.
A sporty Veloster compact, unveiled at the Detroit auto show in January, is expected out soon.
"Hyundai has the right vehicles," Visnic says, "and they have their finger on the pulse of the market."
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