Despite its success worldwide, when Hyundai first opened its doors in South Africa in the year 2000, it seemed unlikely that a Korean car brand could compete with the German and Japanese heavyweights already entrenched and well-loved in our market.
Today, with over a hundred dealerships in Southern Africa, Hyundai has an ever-increasing market share, spurred on by popular models such as the Elantra, the Sonata, the Accent, and i10, i20, and i30 series. The man leading Hyundai SA since inception, managing director (MD), Alan Ross, makes it clear that Hyundai SA in the beginning faced a set of hefty challenges.
Ross began his career in the SA Perm Building Society, where he spent three years gaining experience in various departments. Following this he joined Tanker Services as an accountant for two years. His next position was with Quattro Carriers, again as an accountant, and he was made managing director after eight years.
Quattro Carriers was bought by Imperial during his tenure as managing director. Following a consolidation of Imperial’s transport companies, he then joined Associated Motor Holdings – first looking after the Daihatsu brand and then Hyundai from 2000 till present.
In 2000 when Associated Motor Holdings, a division of Imperial Holdings, announced they had acquired the license to distribute Hyundai vehicles in South Africa, the wisdom of the acquisition was seen as dubious at best – Hyundai’s brand image had been shaken by the controversial collapse of previous distributors, Hyundai Motor Distributors. As MD, Ross had his work cut out.
"When Hyundai Automotive South Africa was formed in the year 2000 as a distributorship for Hyundai Motor Company of Korea, the Hyundai brand was still seen as a Korean upstart that builds cheap cars that are not really good looking and that do not offer particularly high quality.
“We also took on a brand that had a negative image in South Africa because of the way the business was run by our predecessors,” says Ross.
Under his leadership, the new distribution team quickly showed that Hyundai had a long-term future in the country, as they aimed not simply to grow market share, but to become a household brand in the motor industry.
Currently, Hyundai is the third largest passenger car provider in the South African market, with a slew of service and customer satisfaction awards to boot, while the Elantra has won Car of the Year awards both locally and internationally.
Ross, who takes little personal credit for Hyundai’s success story, says the turnaround can be put down, in business terms, to four key factors, involving innovation, marketing and service. But how did he manage to change perceptions and shift the mindset?
“The first area of improvement was the launch of new models which includes current model updates as well first-time launches of new models – such as the i30, H1 and Veloster. The second was aggressive advertising of our products using locally produced advertisements that spoke to the local target markets.
“The third was the sponsorship and association with the 2010 FIFA World Cup tournament that elevated the Hyundai brand as a true global player in the minds of the South African consumer. The fourth is a well-established dealer network of 108 dealers covering the national footprint providing world-class service to our customers,” Ross proudly told Leadership.
Hyundai, which, in Korean, means ‘modern era’, has grown, since its humble beginnings in 1946 in Seoul, South Korea, to become one of the global titans of the motor industry. In the world economy, it is truly a brand for the modern era.
Currently, the Hyundai group is involved in a wide range of industries, including oil rigs, electronics, ships and micro-chips. However, it is their motor division, founded in 1967, which has given them global brand recognition.
The Hyundai Motor Company, founded in 1967, produced Korea’s first locally designed car less than a decade later, and now produces over four million Korean cars a year, employing 68 000 people worldwide, with manufacturing plants in Europe, North America, Asia, Russia, and South America.
For Ross, the achievements of Hyundai SA are extensions of the essential Hyundai philosophy; “We have followed the global philosophy of Hyundai: Nothing is impossible. The Koreans believe that, even if you run into a real problem or difficulty, you try again – from a new angle, and with new thinking. That is where the Hyundai tag line, New thinking. New possibilities, comes from.
“This philosophy and approach has enabled Hyundai to build increasingly better and well-designed cars, of high quality, yet offering real value for money.”
But over and above the business strategy to increase market share, Ross is adamant that Hyundai SA has higher goals. “Although we run a business where the bottom line is selling cars, gaining market share and making a profit from it, our main aim is to become the most-loved car brand – here and in the global market.
“Inevitably such a status would result in bigger sales numbers. We have made big strides in this regard, and we are constantly working at becoming the most-loved brand. That involves more than mere sales numbers. We concentrate hard on achieving top marks in customer care and creating a complete, satisfying experience,” he says.
On the innovation front, Hyundai has further plans to increase competitiveness with luxury car manufacturers. “We are constantly expanding our range of cars in South Africa – either with new models or new derivatives. New, technologically advanced drivetrains and new engines enable us to offer a wider choice to customers.
“We are about to enter a new market segment in South Africa next year with the Hyundai Genesis, which would become our flagship sedan competing in the same segment as, among others, the Mercedes-Benz E-Class and BMW 5 Series.”
Such innovation, along with organizational intent to be loved by the customer, has ultimately secured Hyundai’s position in the national market.
Ross notes; “We are currently in a very strong third position in the passenger car market and the number one spot remains in our sights.”
It must also be noted that Hyundai SA differs from most of its South African competitors in that it is a distributor of a Korean brand, with none of the tax benefits of being a local manufacturer of an overseas multi-national.
“As an importer we do not have the benefit of the rebates on import duties that automotive brands enjoy who manufacture or assemble in South Africa. As with all importers, we are prone to movements in the exchange rate of the rand versus major global currencies, such as the dollar and euro. A negative exchange rate inevitably erodes profit margins,” says Ross.
Despite the challenges arising from the situation, Ross believes Hyundai has proven its ability to manage and overcome such challenges.
“There are times that we cannot avoid a price increase for our cars, yet we still manage to stay true to our philosophy of presenting a complete, inclusive motoring package at a very competitive price to our customers.
“We have weathered exchange rate storms such as the present one before, and we are confident that we will maintain our market share and even increase it despite these challenges.”
Despite the benefits associated with local production, Ross points out that Hyundai SA has a distribution agreement with Hyundai Korea. “Local production would have financial benefits, but one has to bear in mind the particular relationship between Hyundai Automotive SA and Hyundai Motor Company (HMC) of Korea.
“As a subsidiary of Associate Motor Holdings we have a distributorship agreement with HMC. It is a little different from the relationship of other manufacturing car companies in South Africa with their mother companies overseas.”
The Korean relationship is clearly at the heart of Hyundai SA’s vision. Not only does Ross cite Hyundai’s Korean founder as his personal model, but he argues that South Africa could learn much about national development from South Korea as a country.
Hyundai was founded in 1946 by the late Chung Yu Yung, previous chairman of the Hyundai Group in Korea. Chung himself was born in 1915 as the eldest son of a peasant family. After numerous attempts to leave a life of peasantry behind – attempts such as selling wood and rice - Chung became an auto mechanic, ultimately beginning Hyundai in a bid to be a part of national industrialization after the end of World War II and Japanese occupation.
Despite enduring the North Korean invasion and subsequent Korean War, Chung became one of the great Korean industrialists who helped turn an impoverished country into one of the most dynamic economies in the world.
For Ross, the man exemplifies business success. “Chung was not only an incredibly hard worker, but also had an irrepressible entrepreneurial spirit and a philosophy to ‘Just do it!’ long before Nike made it their tag line.
“As a leader he instilled the qualities of creativeness, thrift and diligence in his workers. Ironically Yung had no formal education, but this never prevented him from finding solutions to daunting problems in his quest to build and expand the Hyundai Group.”
As for Ross’ personal leadership philosophy, he describes his personal style as “participative management” - a style he imbues with a great sense of confidence.
“I believe in training and growing my people. The result is that I now have a very strong executive team, all of which have been with me since the start in 2000 - people who helped me drive the business.
“I have an open door policy and believe in participative management. I will always acknowledge when I’ve made a mistake – thankfully there have not been many.”
As for the South African economy as a whole, Ross believes that our leaders must learn from the Korean success story. For Ross, the key is “education, and once more, education” – an area which our country has criminally neglected, according to him.
“It is through relentless focus on and attention to quality education that the Koreans managed to build one of the most successful economies in the world from the ruins that was left to them after the Korean War in the early 1950s.
“South Korea is no bigger than the Free State, yet it has delivered industrial giants such as Hyundai and Samsung. This has been achieved not only through education, but also encouragement and incentives for entrepreneurship from the Korean governments over the past decades.
“The South African government displays a shocking disregard for the need of our youth to be properly educated and equipped to make a meaningful contribution to the growth of our economy. To be employable, one needs the correct education at a certain minimum standard.
“And to become a successful entrepreneur, one has to learn certain skills and have a proper level of education. Quality education creates the foundation for all of this.”
In closing, Ross asserts once again the single focus of both his and Hyundai SA’s future goals; “To see Hyundai as not only as number one in sales, but also as the most loved brand in South Africa.”
Both Hyundai’s South African and Korean stories provide meaningful lessons for leadership in business. As Ross correctly notes, if companies take care of customer service and delivery, profits and market share will naturally follow.
Of more cogent relevance to the wider South African economy is the story of Hyundai’s rise in the midst of war and a new political settlement. This is equally reflected in Alan Ross’ reclamation of the Hyundai brand in the past decade after prior collapse.
The lesson Hyundai teaches us is that massive obstacles can truly be overcome through envisioned, accountable leadership; leadership that measures itself on the creation of value – be it in technological innovation, customer service or brand management; and leadership that adopts a single-minded focus in the pursuit of its goals.
South Africa would do well to take heed of such success stories, and thus set about creating the correct climate for a multiplication of such success within our own economy.