Six years ago, Hyundai was a question to most buyers: questionable quality and questionable value. It built its sales surge by becoming an answer. As Hyundai marks its 25th anniversary selling cars in America, the brand that started out as a low-priced joke has become the fastest-growing automaker in the world, and it's poised to accelerate in 2011.
In the United States, where Hyundai began selling cars on Feb. 20, 1986, sales were up 24 percent in 2010 and another 22 percent in January. In the past five or six years, Hyundai 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 last month at the Chicago Auto Show.
Then, in 2008 and '09, people stopped buying cars for fear of losing their jobs in the recession. Hyundai had another answer: Hyundai Assurance, a guarantee that people who bought a Hyundai could return it — no questions asked, no damning credit reports — if they lost their job in the next year.
"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," IHS Automotive analyst Aaron Bragman said.
"Quality was our undoing in the early '90s. Now it's our strength," Krafcik said.
If Hyundai and its corporate partner Kia continue to grow, they could displace Nissan as the third-highest-selling Asian automaker in the United States this year. They shocked Toyota by becoming Europe's best-selling Asian automaker last year.
"Hyundai's timing was perfect," Bragman said. "They improved their quality, design and technology at the same time the Japanese manufacturers were declining."
When the rest of the auto industry slowed investment and new model introductions in 2008 and '09, Hyundai kept its foot on the accelerator.
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 the hit Sonata midsize sedan and Tucson crossover, its first hybrid, a turbocharged sedan that combines power and fuel economy, the 40-mpg Elantra compact, and a powerful new V-8 engine. The sporty Veloster compact, subcompact Accent and more are coming this year.
"Hyundai has the right vehicles, and they have their finger on the pulse of the market," said Bill Visnic, analyst and senior editor at Edmunds' AutoObserver.com.