Rapid response to problems is paying off
Hyundai's best engineers were initially baffled by the reports.
Customers from Australia were complaining that the printing on interior door trim items such as window and lock controls was inexplicably smearing like wet paint.
It was 2009, and the South Korean automaker was well on its way to becoming a global powerhouse, thanks to huge strides in improving quality. Executive Vice President Shin Myeong-ki, chief of quality control, could ill afford any slip that would slow that momentum.
Tedious detective work uncovered the culprit -- and is an example of how an increasingly quality-conscious Hyundai Motor Co., fighting hard to bury memories of shoddily built cars, is sniffing out glitches one by one. There were only two cases from Down Under, but Shin ordered a full investigation.
"When the complaints came in, we were worried that it was a worldwide problem with the ink," Shin recalled in an interview at Hyundai's global headquarters here.
Engineers followed their noses: A certain perfume brand was reacting with the ink like solvent.
"But there are so many different perfumes, we had to buy boxes of different brands to test which one it was. Eventually we isolated it," says Shin, who politely declined to identify the offending fragrance. Hyundai changed the ink formula and today still tests cars for reactions to perfumes.
Sweating such details is one way Hyundai has transformed its image from a laggard in quality and reliability to an industry leader in 10 years. The work has paid off in top-tier recognition in assessments from J.D. Power and Associates, Consumer Reports and other third parties.
In 2011, Hyundai tumbled in the J.D. Power Initial Quality Study, falling to No. 11 from No. 7 in 2010 and No. 4 in 2009. The slips were attributed mostly to the launches of several new models over the past two years, including the Genesis Coupe in 2009 and the Elantra compact and Sonata sedan in 2010. But this year, Hyundai still cracked the top 10 for the first time in Power's Vehicle Dependability Study, edging Honda to rank third among nonpremium brands.
"This remains key for Hyundai's continued success as reliability/durability remains by far the most frequently mentioned factor by consumers when choosing a new vehicle," Raffi Festekjian, Power's director of automotive research, said of Hyundai's dependability study showing.
Hyundai's obsession with customer feedback highlights the growing importance of "soft quality," or customer perception of quality through touch and feel, fit and finish, and intuitive controls.
When Shin logs into e-mail each morning, the first thing he checks is a database of field complaints filed the previous day by customers and dealers worldwide.
Today's automakers generally are beyond bolts falling off or cars breaking down. The new frontier is perceived quality -- pre-empting costumer complaints or catching them before they multiply.
Failure to alert headquarters of trouble in the field is one reason Toyota Motor Corp. suffered last year's rash of recalls. The independent North American Quality Advisory Panel hired by Toyota to assess its problems zeroed in on that fact.
"Design quality issues, and drivers' complaints about them, will increasingly differentiate manufacturers in independent quality ratings," the panel warned in its May 23 report to Toyota.
"Avoiding these kinds of design problems is becoming more and more important to a vehicle's acceptability," the report said. "Avoiding such design quality problems requires monitoring systems to not only hear customers' voices but also to listen to them."
For Hyundai, that's preaching to the choir.
But it wasn't always that way. In the mid-1990s, Hyundai was nearly chased out of the United States because lackluster quality repelled customers otherwise won over by low sticker prices.
The road to redemption began in 1999, with the appointment of Chairman Chung Mong-koo.
Perception vs. reality
Chung put engineers, not businessmen, in charge. Quality task forces were set up in plants. The company focused on achieving top scores in the J.D. Power assessments.
It implemented the Motorola-pioneered Six Sigma business strategy for quality improvement. And Hyundai added more quality-control stations along assembly lines. Buffers at the end of lines provided room to adjust assembly speed and let workers fix problems.
The changes were a must for Hyundai to make good on the 100,000-mile powertrain warranty the company introduced in 1998 to lure customers and motivate its engineers.
The overhaul transformed Hyundai from a wannabe into one of the world's biggest manufacturers. Today, U.S. sales are booming, and the company has enough North American production capacity to lift 2011 sales above 600,000 units for a record.
But even Hyundai concedes its reputation for quality still trails the improvements.
"These days, many people say Hyundai's quality has improved," says Vice Chairman Shin Jong-woon, an aerospace engineer by training who oversees quality management and product planning at Hyundai and its Kia Motors Corp. affiliate. "But the perception has not quite caught up to the quality improvements."
Shin Jong-woon took over quality control at both brands in 2002, knowing he had to do something. So he began erecting a quality pyramid -- a kind of blueprint for building up the Hyundai brand.
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