The outgoing marketing boss of Ford in Britain recently told me that
he now feared the Koreans more than the Japanese. Mark Simpson, who has just taken over as sales boss of Ford in Russia, is hardly going to get complacent and sneer at new Toyotas coming his way. But Hyundai and Kia, he now reckons, threaten sales of market leader Ford more than Toyota, Honda or Nissan.
A few years ago such a statement would have been risible. But, while the Japanese giants have lost their mojo, the two big Korean makers, both part of the mighty Hyundai chaebol, power ahead with consistency and purpose.
Hyundai Motor Company is now the world's fourth largest automotive maker after Toyota, GM and the Volkswagen group. In the first half of 2011 in Western Europe - the car market where Hyundai has historically been weakest - its sales grew by 9 per cent in a market that was down 2 per cent. Toyota's sales shrunk by 10.1 per cent, Honda's by 23.5 per cent. Kia and Hyundai both now outsell Honda in Britain.
Hyundai's surge in Europe has been a recent phenomenon, just as the Japanese makers' declines have been equally sudden. Unsurprisingly, it was led by improved product. The new 'i' range of cars, starting with the i30 in 2007 (and its Kia cousin, the Cee'd), were the first Korean cars recommended by critics on quality rather than price. They were also the first
to be built in Europe (Hyundai's cars in the Czech Republic).
Before their arrival, all Korean cars were sold on cheapness, aimed at impecunious buyers who preferred a new car to a used one. No wonder customer loyalty was poor, and that these were rock-bottom brands in any golf club kudos test.
The i30, the i10 and the new Mondeo-rivalling i40, change all that. They are, on balance, as good as most European or Japanese rivals and cost less, although they are no longer cut-price. Hyundai and Kia are moving gently upmarket, distancing themselves from the new wave of bargain-basement Chinese and Indian cars, yet maintaining a pricing cushion below Ford and Toyota. Being cheapest is never a good long- term competitive proposition.
The Koreans also capitalised on recent 'scrappage' schemes designed by many European governments to kick-start their local motor industries after last decade's downturn. The main beneficiaries, ironically, were Hyundai and Kia. Cheap cars did best from scrappage - few buyers traded in clapped-out old Escorts for new BMWs or Jaguars - and no one courted value-conscious buyers as solicitously as the two Seoul brothers. The market share
of both Kia and Hyundai exploded. They've stayed at an elevated level ever since.
Hyundai's European CEO Allan Rushforth cites a further reason for his company's rise: "We have delivered on our plan. Most car companies have not." Only BMW, we agree, has similarly matched expectation with results. He also claims that Korean culture is partly to thank: "They are quick to take and implement decisions." The Japanese, by comparison, have long consensual decision-making processes, although when they unite the results
can be awesome: the just-in-time production method, now copied by all carmakers, is not for nothing called the Toyota Production System.
Hyundai does not seek to overtake Toyota as the world's biggest carmaker. Rather, it seeks to consolidate itself as
a top four global player while pushing its cars' desirability
and profitability. The plan is for Hyundai to hit 5 per cent of Western Europe by 2015 - it's 2.8 per cent now - which puts it
in line with its global market share. That would also put it ahead of Toyota and the other Japanese carmakers in Europe. Few people, probably including Ford's new Russian sales boss, would bet against it.
Gavin Green is a motoring journalist and consultant
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