Leadership key to Hyundai-Kia's success

The Korean industry has come a long way since the 1997-98 currency crisis. While many businesses went belly-up, some successfully replenished profit from losses by improving standards to compete and survive in the global market.

The rise of Korea's automotive industry is a case in point. And at the center is Hyundai Automotive Group, which controls Hyundai Motor Co. and Kia Motors Corporation.

The continued success of the country's leading carmaker is attributed to the aggressive "hands-on" leadership of Chung Mong-koo, chairman of the auto group, the company said. Chung has been heading Hyundai Motor and Kia Motors since December 1998, and he oversaw the launch of Hyundai Automotive Group in 2000.


Key to the sustainable growth of the world's sixth-largest car manufacturer is Chung's direct and on-site approach to management. Since Chung took the helm, he has focused on controlling quality by making frequent visits to manufacturing plants and monitoring operations, and meeting with employees. His visits are not limited to just the home market, but all the markets in which Hyundai operations have a presence. The auto group has four global production bases outside of Korea's Ulsan plant -- Alabama in the United States, Chennai in India, Beijing in China and Haos in Turkey.

It will soon enter Europe. Hyundai Motor has signed a memorandum of understanding to build a $1 billion plant in the Czech Republic by 2008. With the Czech plant, Hyundai-Kia expects their European production capacity to stand at 600,000 units by 2008.

In April Chung said his company is considering the establishment of manufacturing plants in Southeast Asia and South America.

Chung has recently been focused on finding a new growth model to overcome the challenges of chronic oversupply, slowing growth rate, and growing currency risks.

Amid such difficult business conditions, Chung believes direct on-site visits, which includes all divisions of his business worldwide, is all the more important, the company said. Automotive News, a globally leading U.S. auto trade publication, selected Chung as Asia's top auto industry CEO in 2005.

Hyundai Automotive Group has managed to achieve steady growth. Sales that totaled 3 million units in 2000 rose to 3.72 million units by 2005. The automaker projects this year's sales to surpass 4.27 million units. It also expects sales revenue to jump by 250 percent to total 106 trillion won this year from the 42.5 trillion won achieved in 2001.

Chung's key management philosophy has been "quality control management," the company said. This includes everything from the plant, production process, management, and after-sales service.

Compared to its global rivals, Hyundai's quality improvement rate averaged 50 percent since 2000, while Kia averaged 46 percent. Its competitors averaged 20 percent.

Last year, Hyundai and Kia together rolled out nearly 3.76 million vehicles -- 852,000 units at home and 2.91 million units abroad.

By Yoo Soh-jung

(sohjung@heraldm.com)