How Hyundai Became ‘The Coolest Carmaker In The World’

It’s easy to make a great $300,000 car. It’s much harder to make a great $30,000 car. Hyundai just unveiled the 2024 Hyundai Santa Fe and it’s another reminder of how quickly the Korean automaker has radically transformed from a builder of mediocre cheap cars to a designer of great affordable ones. It’s Hyundai’s world, we’re just living in it.

On top of that, we’re going to look at how another automaker (from Romania!) is killing it, how the Range Rover maintains its popularity, and how a group of retired cops and firefighters from Detroit forced Tesla directors to cough up three-quarters of a billion dollars.

The Secret To (Hyundai’s) Success

One of the things you learn as a journalist after driving hundreds of cars at different price points is that there are two big ways to make a car better. Hyundai (inclusive of Genesis and Kia) is excellent at both.

As cliché as it might sound, the first and easiest step is good design. While nailing the design of a car takes time, once that cost is front-loaded and accounted for the great design lasts as long as the car does. Adrian, a car designer by trade, touched on this in his Kia Picanto review:

Selling cars to the terminally stingy is always a limiting strategy – by their very nature they don’t buy cars that often. Recognizing this Kia wanted to jazz their range up a bit to expand their customer base; in 2006 they hired in professional funky glasses wearer and ex-Audi chief crayon wielder Peter Schreyer (also a graduate of the Royal College of Art, like me) to be their new head of design. He introduced the ‘tiger nose’ as a visual brand identifier and has since ushered in a range of reasonably handsome, consistently designed vehicles that have helped the Hyundai/Kia megacorp to become by volume one of the five largest car companies in the world.

It wasn’t just Schreyer. The great Luc Donckerwolke, formerly of Volkswagen Group fame, came over in 2015 and helped continue the radical transition from meh to good to great.

The last few years have just been an unparalleled run of super interesting products and concepts, from the striking Hyundai Ioniq 6 to the wild Hyundai Vision 74 Concept. These are not the bland copies of European/Japanese designs the Koreans were known for, but unique designs that stand alone, even as they reference older vehicles.

It’s why the new, butch Santa Fe and some other cars have elicited tweets like these:

Every time I see pics of the new Hyundai Santa Fe I feel dirtier and dirtier for liking it. I feel shame for loving how the Ioniq looks, but loving how TWO Hyundais look? Is that even allowed for me?

— Andrea Petersen (@Neondancer) July 18, 2023

As a child of the ’80s, it’s hard to process the fact that Hyundai are making some of the coolest cars in the world now pic.twitter.com/pI6dKyIyjs

— ???????????????????????? ???????????????????? (@denialvibes) July 17, 2023

Hyundai’s design bravery here is incredible. Zero references to past (successful) generations in a class of SUVs known for iterative, safe designs like CR-V and RAV4.

I think this looks utterly fantastic, but it won’t be for everyone and I’m sure Hyundai is 100% okay with that. https://t.co/eUCM4hbxa7

— Chris Paukert (@CPAutoScribe) July 17, 2023

Design will only get you so far, of course. The other side of the coin is that there are plenty of expensive cars that drive poorly, actually. I’ll have a review of one soon enough. And there are a few cheap cars that feel great.

Hyundai and Kia products, for a long time, felt extremely “meh” to drive. The steering feel was never right. Even when they tried to make a sports car in the Hyundai Genesis Coupe it was just always slightly off in a way that was hard to ignore. 

Then Hyundai brought over Albert Biermann, the German engineer who helped make BMW M what it became. I remember the first time I drove the Veloster N. It was a revelation. Road & Track rightly named it the Performance Car of the Year. Then followed the Elantra N, the Genesis G70, the Kia Stinger, and a seemingly never-ending stream of good cars.

The Elantra N is a prime example of a car that’s maybe never going to be an insane volume seller but manages to be a great car that can be had for around $34,000.

If there’s a third aspect that makes the larger company successful, as evidenced by what you see above, it’s a melding of different business philosophies and cultures in ways the Japanese have been increasingly unsuccessful at (see Renault-Nissan.) Even the Germans, in my experience, tend to have a difficult time ceding control to regional units (DaimlerChrysler being a famous example of this, but it’s everywhere.)

This is a deep cut, but Hyundai Motor America’s CEO and President Jose Muñoz Barcelo–a nuclear physicist by trade–spoke to UC Berkeley’s California Management Review last year and gave some good insight into what’s going on (you’ll have to try and ignore the annoying academic business-speak):

One of Jose Munoz’s big discoveries at Hyundai was the lack of planning and concomitant “lack of alignment and integration amongst various business units.” When organizations get large, there is often a plethora of semiautonomous business units to integrate. CEO Hank Greenberg at AIG had over 100 (Hyundai Motor Company had scores). It’s often challenging to achieve alignment, since such units are often semiautonomous, yet they are often cospecialized and are codependent on other units. Alignment doesn’t happen naturally. It needs to be engineered, and Munoz did exactly that.

[…]

It took a Spaniard Jose Munoz to convince the Hyundai leadership in Korea that greater localization was necessary to achieve success. Localization has different meanings to different people: to Jose Munoz it meant basically a “less Korean-centric” approach. “Take the best from Korea and blend it with the best from America… whether its technology or management practices.” This also meant expanding the production footprint in America, something Munoz had championed.

Hyundai isn’t perfect and it’s having to deal with the challenges created by its poor labor practices and the Inflation Reduction Act, but it’s been aggressive in setting up an infrastructure in North America to support its EV expansion plans.

It’ll be interesting to see if buyers embrace the 2024 Santa Fe when it comes to market, because that design is really something but it may not be for everyone. 

Renault’s Dacia Is Killing It Because People Still Need Cheap Cars

I’m a big Dacia fan. The Romanian offshoot of Renault is another company that’s good at making extremely cheap but still attractive cars, from the back-shelf-of-the-bargain-basement Dacia Sandero to the almost-good-enough-to-be-upstairs Dacia Duster crossover.

It turns out, while everything else is getting expensive, there’s still a place for affordable cars. Per Reuters:

Dacia, which boasts best-sellers such as the Sandero and is expanding its range of electric vehicles (EVs), sold 345,432 vehicles between January and June, the Dacia unit said in a statement.

That compares to 277,885 units in the same period of 2022, which was heavily impacted by COVID-19 and component shortages.

Dacia’s four main models all recorded growth in the first six months of the year, with sales of the hybrid Jogger model growing by 130% and accounting for over one in four customer orders.

Hell yeah, cheap hybrids. I love it. A Dacia Jogger is a weird little seven-seater that costs about $30,000 and delivers more than 50 mpg (on the admittedly more generous European cycle.) 

Retired Detroit Police And Firefighters Force Tesla Directors To Give Back $735 Million In Stock Options

Man, that’s a fun subhead to write. While Elon Musk seems to have mostly skated on a lot of his recent legal troubles, the compensation-related issues do seem to be harder for Tesla to deal with as evidenced by the company settling a lawsuit from 2020 brought forth by the Police and Fire Retirement System of the City of Detroit.

Here’s the wrap-up from Bloomberg via MSN:

The directors — including Oracle Corp. founder Larry Ellison; James Murdoch, son of media mogul Rupert Murdoch; and Musk’s brother, Kimbal Musk — agreed to hand over the stock grants and cash for already exercised options, along with making corporate-governance changes to the way board-level compensation issues are reviewed, according to court filings.

The Tesla directors denied wrongdoing as part of the accord, but said they agreed to settle the case “to eliminate the uncertainty, risk, burden, and expense of further litigation,” according to the July 14 filing in Delaware Chancery Court.

In this kind of case, the money doesn’t go back to investors directly. Instead, it goes back to the company. As Bloomberg points out, this isn’t the end of it:

The settlement comes as McCormick also is expected to rule in another case filed by a Tesla shareholder over a $55 billion executive-compensation plan for Elon Musk. The suit says that the approval of the pay package, the largest in US corporate history, was marred by conflicts of interest and improper disclosures about performance benchmarks.

::Grabs popcorn::

No One Is More Model Loyal Than Land Rover Range Rover Fans

I had to clarify in the subhead that Land Rover Range Rover buyers are model loyal because, well, I am not qualified to speak to any other loyalties. Still, it’s kind of impressive how many buyers of the big SUV immediately come back and buy the exact same vehicle. Global intelligence firm S&P Mobility has the numbers in their latest mini-report:

The Land Rover Range Rover led all models with a 41.1% cumulative year-to-date model loyalty rate through April, for models with more than 350 return-to-market households, according to S&P Global Mobility analysis. That gave it a narrow edge over the Ford F-Series full-size pickup line at 41.0% and the Tesla Model Y at 40.0%. The industry average year-to-date model loyalty rate was 25.1% through April.

Since Range Rover is a relatively low-volume vehicle, metrics such as loyalty can swing more sharply than those of a huge seller like F-Series, said Tom Libby, associate director for loyalty solutions and industry analysis at S&P Global Mobility. Still, there are plenty of lower-volume vehicles that do not attract this sort of model-line loyalty when they are redesigned.

The Range Rover loyalty rate helped hoist parent Land Rover brand loyalty to 38.9% year-to-date – a 9.5 percentage-point increase year-over-year. For reference, Tesla led luxury brands with 68.0 percent loyalty.

There are many great, big SUVs, but if you want a Range Rover it’s true that there’s nothing really quite exactly like a Range Rover. (Editor’s Note: I tend to think the Mercedes S-Class and Range Rover are among the very, very best cars in the world whenever they’re released. Say what you want about JLR these days, but there’s no going wrong with their big SUV if you can afford one. -PG)

The Big Question

Kind of off-topic today. We’re obviously doing a big membership drive, and with the introduction of the Cloth Tier we want to add more member-only posts. Our sort of guiding principle is that any member-only post is additive and doesn’t fall under regular coverage (i.e., we wouldn’t paywall a review or news). Here are the questions:

For Non-Members: What would you be upset to be put behind the Member Wall?

For Members: What are more post types you’d like to see? What kind of behind-the-scenes info do you want?