RENEE MONTAGNE, host:
Still, as Toyota struggles, one of its Asian rivals - Hyundai - is on a roll. Once the butt of jokes, the Korean carmaker is racking up awards and taking a bigger share of the American auto market in the middle of a deep recession. NPR's Frank Langfitt explains.
FRANK LANGFITT: In the early 1990s, Hyundai's image was so bad, the brand served as an insult in a Hollywood movie. The film was "Glengarry Glen Ross," David Mamet's tale of a down-and-out real estate office. Alec Baldwin played a highly paid corporate heavy. Here he is humiliating one of the agents he's come to fire.
(Soundbite of movie, "Glengarry Glen Ross")
Mr. ALEC BALDWIN (Actor): (as Blake) You drove a Hyundai to get here tonight, I drove an $80,000 BMW.
LANGFITT: He doesn't stop there.
(Soundbite of movie, "Glengarry Glen Ross")
Mr. BALDWIN: (as Blake) You see this watch?
Mr. ED HARRIS (Actor): (as Dave Moss) Yeah.
Mr. BALDWIN: (as Blake) That watch costs more than your car.
LANGFITT: Fast forward to last January. The scene is Detroit, the North American International Auto Show.
Unidentified Woman: And the winner of the 2009 North American Car of the Year Award is Hyundai Genesis.
(Soundbite of applause)
LANGFITT: Hyundai won the award with it's first luxury car, the Genesis. The automaker followed with a Super Bowl ad that played on it's underdog status. Actors playing executives at BMW and Lexus yell at their subordinates about Hyundai's improbable win.
(Soundbite of ad)
Unidentified Men: Hyundai! Hyundai! Hyundai!
Unidentified Man: Win one little award and suddenly everyone gets your name right.
LANGFITT: When Hyundai first came to the U.S. though, the name was synonymous with poor quality. Hyundai introduced the Excel, a small sedan in 1986, but within a few years the seat fabric was fraying and bodies were rusting out. John Wolkonowicz follows the car business for IHS Global Insight, the financial analysis firm.
Mr. JOHN WOLKONOWICZ (IHS Global Insight): Reliability and durability. It couldn't have been worse. It was one step ahead of a Yugo.
LANGFITT: Hyundai became a punchline on late night talk shows. Sales slid accordingly. The company spent the 1990s focusing on quality, and Wolkonowicz says it paid off.
Mr. WOLKONOWICZ: All along they have tried to model themselves after the best, which is Toyota. And they have been working on a plan of continuous improvement. And today they're among the best.
LANGFITT: But convincing consumers of that was another matter. By 1998, U.S. sales were headed for their lowest level ever, about 90,000. That year Finbarr O'Neill, an attorney, took over the American Operation.
Mr. FINBARR O'NEILL (J.D. Power): In September of 1998, we were on the precipice of oblivion really. We had to make a decision as to whether or not could profitably continue in North America.
LANGFITT: Hyundai bet on itself. The company offered a 10-year one hundred thousand mile warranty. The warranty essentially insured owners against most quality problems. Most analysts now consider it a pivotal marketing move. Hyundai also worked to improve exterior design and aimed to become the Target of car companies. Finbarr O'Neill, now president of J.D. Power, explains.
Mr. O'NEILL: To me, Target represented value delivered in a stylish way that you could be proud to own. You didn't have to explain that you shopped a Target because it was a smart buy.
LANGFITT: This year Hyundai has ridden its blend of quality and low prices through the recession. Like all car companies, its sales have fallen, but not as far as others. So Hyundai actually increased its overall share of the market. John Krafcik runs Hyundai's American division. He says Hyundai didn't target any single company, but he says that some of Hyundai's gains came from its higher-end Asian rival.
Mr. JOHN KRAFCIK (CEO, Hyundai Motor America): It's clear we've taken some share from Toyota.
LANGFITT: Hyundai doesn't emphasize it, but the rivalry with the Japanese automaker is natural and historic. After all, Japan ruled Korea during much of the first half of the 20th century. In the automotive world, Japan still holds the upper hand. Despite its losses in the U.S., Toyota still sells more than three times as many cars here as Hyundai.
Frank Langfitt, NPR News, Washington.
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