How Did Hyundai Get So Cool?
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How Did Hyundai Get So Cool?

Korean carmaker known for budget brands becomes EV innovator; sets sights on Tesla

By SEAN MCLAIN
Tue, May 23, 2023 8:46amGrey Clock 6 min

Hyundai Motor was dreaming up an answer to Tesla when the company’s top executive sent its lead designer a photo of a bizarre-looking car that last rolled off assembly lines more than 70 years ago.

The Stout Scarab, manufactured in Michigan in the 1930s and 1940s, looked like an outlandish cross between a bus and a pontoon.

“Let’s face it, 10 years ago, our design strategy was all about the fast follower,” said SangYup Lee, the Hyundai designer. He said Euisun Chung, executive chair of Hyundai and its affiliate Kia, who sent the photo, wanted to stop imitating and get ahead of rivals.

“The message was: Inspiration can come from anywhere,” said Lee.

The Hyundai electric car that drew inspiration from the Scarab’s eye-catching streamline design, the Ioniq 6, has been a hit with critics. At the New York auto show in April, it was voted World Car of the Year.

Hyundai and Kia, the sibling Korean carmakers, have long had a reputation for making inexpensive, uninspiring cars. Over the past few years, though, they have become one of the leaders in the electric-vehicle race, with models that are turning heads at rival car companies—and among car buyers.

Asked last year about competition in the EV sector, Ford Motor Chief Executive Jim Farley said: “The ones I’m paying the most attention to are Hyundai/Kia, the Chinese and Tesla. That’s my list.”

Behind the push has been Chung, 52 years old, who has pressed for investment in EVs and moonshot technologies such as flying cars and robots. In 2020, he took control of the Hyundai Motor Group,one of Korea’s largest family-run conglomerates, from his father, Chung Mong-Koo.

Last year, Hyundai became the world’s third-largest automaking group, with 6.85 million vehicles sold, behind only Toyota Motor and Volkswagen. Now, the company, currently the third-largest seller of EVs in the U.S., is setting its sights on Tesla.

Tesla’s enormous success with its Model 3 showed the industry that the EV market was much bigger than many people thought, spurring Hyundai and Kia to move faster, said Michael O’Brien, a former vice president at Hyundai. “Hyundai leadership realises that the EV market is a jump ball,” he said.

Chung, whose grandfather founded the business 76 years ago, has told employees repeatedly that the company needs to be more forward-leaning. “We will not fear risks and only be reactive,” he told workers in January.

Hyundai and Kia have gone on a hiring spree, luring high-profile designers from other carmakers, including from German luxury brands. Their aim is to make their vehicles look and feel more luxurious.

Ford’s Farley lauded Hyundai’s Ioniq 5, which came out 2021, noting that some software features were better than Ford’s own. “That company has really found their stride with electric vehicles,” he said.

Tesla’s Elon Musk said last summer in a tweet about the EV market: “Hyundai is doing pretty good.”

Hyundai and Kia are a part of a conglomerate that also owns steel mills, shipyards and construction firms. It is largely controlled by Chung’s family through their shareholdings in the motor company and other affiliates.

The company got started in the auto business in 1967, when the country was still recovering from the Korean War, at first doing contract work for Ford. Its first in-house vehicles, the Pony and Excel, were inexpensive and so prone to quality problems that they became fodder for comedians on late-night TV.

Kia began in 1944 as a manufacturer of metal parts and bicycles, and a decade later, licensed versions of Honda motorcycles and Mazda trucks and cars. After it declared bankruptcy in 1997, Hyundai purchased a controlling stake. It now owns nearly 34%.

Hyundai entered the U.S. car market in 1986, followed by Kia in 1993. Both were budget brands. When Chung’s father took over in 1996, he made solving quality woes a priority, overhauling manufacturing operations.

Decisions were made mostly by executives in Seoul, far from the U.S. market that was driving the bulk of profits, former executives said. “Hyundai was always known in Korea as the most conservative and the most militarylike,” said Frank Ahrens, Hyundai’s former head of communications. He likened directives from the chairman to imperial decrees. “If you want a pyramid, that’s a way to do it—get a whole bunch of people pushing in the right direction,” he said.

Both Hyundai and Kia were slow to react to the SUV boom in the U.S., despite pleas from stateside executives, the former executives said. For years, they didn’t do much to expand their U.S. factories, leaving them struggling to build enough vehicles when demand surged for popular models such as the Hyundai Santa Fe and Tucson.

Another embarrassment was a surge in auto thefts following a social-media challenge that targeted certain Hyundai and Kia models as easy to steal. Several states and insurers have sued the companies over the thefts. On Thursday, Hyundai and Kia agreed to pay up to $200 million to owners of stolen cars to settle a class-action lawsuit.

When the Korean leadership takes notice, though, decisions are fast-tracked and change can come swiftly, former executives said. “They’ll throw a new engine in whenever the engine is ready,” said JP Garvey, a Hyundai and Kia dealer in New York. “They constantly make tiny incremental changes, and they don’t stop.”

At the New York auto show in April, Hyundai’s luxury brand, Genesis, showed off a sportier version of its new GV80 SUV. The vehicle was a concept car—not one Genesis intended to make.

It was such a hit that the bosses in Korea decided that night to put it into production, said José Muñoz, Hyundai’s president and chief operating officer, whom Chung hired from Nissan Motor in 2019. “There are no arguments,” Muñoz said. “Once the decision is made, execution is very fast.”

Chung has installed overseas executives in key management positions. He hired designer Peter Schreyer from Volkswagen, where he had helped redesign the iconic Beetle, then promoted him to president, the first non-Korean to reach that level in Hyundai’s history.

“The chairman wanted something new, and the focus was on good styling,” said Ray Ng, a former Kia designer who worked closely with Schreyer.

Chung’s biggest push has been with EVs, a sector Hyundai and Kia entered in 2010 when Hyundai released the Blueon in Korea. Kia followed with the Ray EV in 2011. A second model, an electric Kia Soul, went on sale in the U.S., Europe and South Korea in 2014, two years before General Motors released its rival Chevy Bolt.

The EV market presents unique challenges. Nearly all Hyundai and Kia EVs are built outside the U.S. Recent revisions to the $7,500 federal tax credit in the U.S. for EV purchases have made foreign-built EVs ineligible for the subsidy. Sales in the U.S. of Hyundai and Kia EVs have been declining since the tax revisions.

A new $5.5 billion factory complex is in the works for both Hyundai and Kia to build EVs in Georgia, but it won’t open until the end of next year, at the earliest.

Tesla’s success with the Model 3, which came to market in 2017, opened eyes at Hyundai, said O’Brien, the former vice president. “Everyone saw they went from a niche player to a core player in one model,” he said. “People in Korea, and Hyundai, saw Tesla as a tech company rather than a car company. Rather than focusing on four wheels, oil and brakes, they were focused on technology, and that was very appealing in Korea.”

While other automakers dithered about whether the batteries were too expensive and short on range, Chung was undeterred, O’Brien said.

After Chung became executive chairman in 2020, Hyundai and Kia announced plans to introduce 31 battery-powered models. The companies aim to become the third-largest seller of EVs globally by 2030. Tesla and China’s BYD are the current global leaders.

That the Hyundai Ioniq 6 took inspiration from the Stout Scarab is one example of how the company is leaning on design to set it apart from rivals. Lee, the designer, said the streamlined shape recalls the period in the 1930s and 1940s when car design borrowed from the aerospace industry.

The design has the added benefit of tacking on miles to the car’s range, giving it one of the lowest drag coefficients in the industry—a measure of how aerodynamic a shape is.

When interest in EVs surged during the pandemic, Hyundai and Kia were among the few car companies that had a selection of electric and hybrid models on dealership lots. On top of that, the companies had stockpiled semiconductors, allowing them to avoid the worst of the supply-chain related shutdowns in recent years, giving them more stock to sell, dealers said.

Hyundai and Kia have said that most of their EV customers are coming to the brand for the first time. They also tend to be wealthier than customers of the companies’ other models. Last year, the biggest cohort of Hyundai Ioniq 5 and Kia EV6 buyers earned more than $250,000 a year, compared with between $50,000 and $75,000 for all models, according to data from S&P Global Mobility.

Andrew Mancall, a doctor from Portland, Maine, is among the Hyundai converts. A former Audi owner, he wanted to buy an EV for his next car and put himself on a number of waiting lists, including for the Ford Mustang Mach-E.

When his number came up for the Mach-E, he passed on it and bought the Hyundai Ioniq 5. He said he was sold on the driving dynamics and what he described as better technology than on the Ford. After a nine-month wait, he took delivery of his Hyundai.

“Am I a Hyundai person? A couple years ago, I probably would have said no,” he said. “I guess the answer now is, yes.”

—Mike Colias contributed to this article.



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A Killer Golf Swing Is a Hot Job Skill Now

Companies are eager to hire strong players who use hybrid work schedules to schmooze clients on the course

By CALLUM BORCHERS
Fri, Jun 14, 2024 5 min

Standout golfers who aren’t quite PGA Tour material now have somewhere else to play professionally: Corporate America.

People who can smash 300-yard drives and sink birdie putts are sought-after hires in finance, consulting, sales and other industries, recruiters say. In the hybrid work era, the business golf outing is back in a big way.

Executive recruiter Shawn Cole says he gets so many requests to find ace golfers that he records candidates’ handicaps, an index based on average number of strokes over par, in the information packets he submits to clients. Golf alone can’t get you a plum job, he says—but not playing could cost you one.

“I know a guy that literally flies around the world in a private jet loaded with French wine, and he golfs and lands hundred-million-dollar deals,” Cole says.

Tee times and networking sessions have long gone hand-in-golf-glove. Despite criticism that doing business on the course undermines diversity, equity and inclusion efforts—and the fact that golf clubs haven’t always been open to women and minorities —people who mix golf and work say the outings are one of the last reprieves from 30-minute calendar blocks

Stars like Tiger Woods and Michelle Wie West helped expand participation in the sport. Still, just 22% of golfers are nonwhite and 26% are women, according to the National Golf Foundation.

To lure more people, clubs have relaxed rules against mobile-phone use on the course, embracing white-collar professionals who want to entertain clients on the links without disconnecting from the office. It’s no longer taboo to check email from your cart or take a quick call at the halfway turn.

With so much other business conducted virtually, shaking hands on the green and schmoozing over clubhouse beers is now seen as making an extra effort, not slacking off.

Americans played a record 531 million rounds last year. Weekday play has nearly doubled since 2019, with much of the action during business hours , according to research by Stanford University economist Nicholas Bloom .

“It would’ve been scandalous in 2019 to be having multiple meetings a week on the golf course,” Bloom says. “In 2024, if you’re producing results, no one’s going to see anything wrong with it.”

A financial adviser at a major Wall Street bank who competes on the amateur circuit told me he completes 90% of his tasks by 10 a.m. because he manages long-term investment plans that change infrequently. The rest of his workday often involves golfing with clients and prospects. He’s a member of a private club with a multiyear waiting list, and people jump at the chance to join him on a course they normally can’t access.

There is an art to bringing in business this way. He never initiates shoptalk, telling his playing partners the round is about having fun and getting to know each other. They can’t resist asking about investment strategies by the back nine, he says.

Work hard, play hard

Matt Parziale golfed professionally on minor-league tours for several years, but when his dream of making the big time ended, he had to get a regular job. He became a firefighter, like his dad.

A few years later he won one of the biggest amateur tournaments in the country, earning spots in the 2018 Masters and U.S. Open, where he tied for first among non-pros.

The brush with celebrity brought introductions to business types that Parziale, 35 years old, says he wouldn’t have met otherwise. One connection led to a job with a large insurance broker. In 2022 he jumped to Deland, Gibson Insurance Associates in Wellesley, Mass., which recognised his golf game as a tool to help win large accounts.

He rescheduled our interview because he was hosting clients at a private club on Cape Cod, and squeezed me in the next morning, before teeing off with a business group in Newport, R.I.

A short time ago, Parziale couldn’t imagine making a living this way. Now he’s the norm in elite amateur golf circles.

“I look around at the guys at the events I play, and they all have these jobs ,” he says.

His boss, Chief Executive Chip Gibson, says Parziale is good at bringing in business because he puts as much effort into building relationships as honing his game. A golf outing is merely an opportunity to build trust that can eventually lead to a deal, and it’s a misconception that people who golf during work hours don’t work hard, he says.

Barry Allison’s single-digit handicap is an asset in his role as a management consultant at Accenture , where he specialises in travel and hospitality. He splits time between Washington, D.C., and The Villages, Fla., a golf mecca that boasts more than 50 courses.

It can be hard to get to know people in distributed work environments, he says. Go golfing and you’ll learn a lot about someone’s temperament—especially after a bad shot.

“If you see a guy snap a club over his knee, you don’t know what he’s going to snap next,” Allison says.

Special access

On a recent afternoon I was a lunch guest at Brae Burn Country Club, a private enclave outside Boston that was the site of U.S. Golf Association championships won by legends like Walter Hagen and Bobby Jones. I parked in the second lot because the first one was full—on a Wednesday.

My host was Cullen Onstott, managing director of the Onstott Group executive search firm and a former collegiate golfer at Fairfield University. He explained one reason companies prize excellent golfers is they can put well-practiced swings on autopilot and devote most of their attention to chitchat.

It’s hard to talk with potential customers about their needs and interests when you’re hunting for errant shots in the woods. It’s also challenging if you show off.

The first hole at Brae Burn is a 318-yard par 4 that slopes down, enabling big hitters like Onstott to reach the putting green in a single stroke. But to stay close to his playing partners and keep the conversation flowing, he sometimes hits a shorter shot.

Having an “in” at an exclusive club can make you a catch. Bo Burch, an executive recruiter in North Carolina, says clubs in his region tend to attract members according to their business sectors. One might be chock-full of real-estate investors while another has potential buyers of industrial manufacturing equipment.

Burch looks for candidates who are members of clubs that align with his clients’ industries, though he stresses that business acumen comes first when filling positions.

Tami McQueen, a former Division I tennis player and current chief marketing officer at Atlanta investment firm BIP Capital, signed up for private golf lessons this year. She had noticed colleagues were wearing polos with course logos and bringing their clubs to work. She wanted in.

McQueen joined business associates on the golf course for the first time in March at the PGA National Resort in Palm Beach Gardens, Fla. She has lowered her handicap to a respectable 26 and says her new skill lends a professional edge.

“To be able to say, ‘I can play with you and we can have those business meetings on the course’ definitely opens a lot more doors,” she says.

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