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Engineering a turnaround at Hyundai Motor

CEO Finbarr O'Neill's decision to offer a 10-year powertrain warranty helped ease quality concerns.

October 30, 2002|John O'Dell | Times Staff Writer

Finbarr O'Neill, Hyundai Motor America's chief executive, has been named one of the "rising stars" of American business by Fast Company, a management magazine that's been publishing an annual "Who's Fast" list for the last five years.

O'Neill is the only automotive executive on the list this year and made it into the November issue byvirtue of the Hyundai turnaround that he's helped engineer since taking the reins in 1998.

The 50-year-old attorney joined Fountain Valley-based Hyundai Motor America in 1985 when South Korean carmaker Hyundai Motor Inc. decided the time was ripe to move into the U.S. market and set up HMA as its North American arm. O'Neill, formerly of the Toyota Motor Sales USA legal department in Torrance, was hired to be general counsel; he held that post until he was propelled into the CEO's seat in 1998 when a then-suffering Hyundai couldn't recruit an outsider to try to fix the company.

Fast Company cited O'Neill for his decision to use a then-unheard-of 10-year powertrain warranty to relieve car shoppers' anxiety about Hyundai quality. The firm's first cars had proved to be unreliable, and a flood of sales based on low prices in the early years had turned into a sales drought Hyundai's improved cars couldn't overcome.

For The Record
Los Angeles Times Thursday October 31, 2002 Home Edition Main News Part A Page 2 National Desk 13 inches; 494 words Type of Material: Correction
Small cars -- The caption for a photograph of a four-seat Mercedes-Benz A-Class passenger car on the cover of Wednesday's Highway 1 section misidentified the vehicle as a two-seat DaimlerChrysler Smart car.

O'Neill says he figured the only way to persuade customers that things had changed was to put Hyundai's money on the line, promising to fix anything that went wrong for six years and anything that went wrong with the engine and transmission for a full 10 years.

The extensive warranty -- aided by new cars that are winning praise from critics and scoring well on buyer satisfaction surveys conducted by the likes of AutoPacific, J.D. Power & Associates and Strategic Vision -- has helped Hyundai regain momentum. Sales in the last four years have doubled and doubled again, and Hyundai this year seems likely to match Volkswagen's share of the U.S. market with sales of about 370,000 cars and sport utility vehicles.

EPA rates Insight tops

For the fourth consecutive year, Honda Motor Co.'s two-seat Insight hybrid leads the fuel-efficiency pack with a federal rating of 61 miles per gallon in city driving and 68 mpg on the highway, according to the just-released Environmental Protection Agency fuel-efficiency guide for 2003 passenger vehicles.

The rating, for the Insight with a five-speed manual transmission, is unchanged from last year. The Insight is one of three hybrids available in the U.S. market. It uses a small electric motor to augment a small gasoline engine to provide the power of a standard gas engine with fewer emissions and better mileage. The other hybrids, and their EPA ratings: Honda's five-seat Civic Hybrid sedan, 46 mpg city and 51 mpg highway with a manual transmission, 48/47 with an automatic; and Toyota's automatic-only, five-seat Prius sedan, 52 mpg city and 45 mpg highway. The Toyota gets its best mileage in town because of the way its hybrid system works.

At the other end of the spectrum, the new V-12 Enzo Ferrari sports car from Ferrari had the worst rating of the gasoline-fueled cars and trucks, at 8 mpg city and 12 mpg highway.

The EPA tests use laboratory simulations of city and highway driving, and many drivers find that they cannot achieve the same results in real-world situations.

This is the 28th year the EPA has issued ratings, available on the Internet at www.fueleconomy.gov.

Big, beefy engines

It's been 65 years since General Motors Corp. headed down this road, but after watching Italian, British and German companies profit with high-priced, big-engined cars, the world's largest automaker says it is resurrecting the 12-cylinder engine.

The 7.5-liter V-12, capable of 500 horsepower or more, is part of GM's effort to polish its luxe division's image.

Though Cadillac sales are up this year -- a hefty 16% rise through September -- the brand still trails BMW, Lexus and Mercedes-Benz in the luxury category.

The strategy, already seen in vehicles such as the Escalade and the CTS sports coupe, is to make Caddy more visible through edgier design and even costlier offerings. Division general manager Mark LaNeve says Cadillac will offer a car in the $100,000 range in the future.

Automakers go for more cylinders rather than bigger-displacement V-8 engines because V-12s are smoother running and make it easier to have a lot of power while still meeting smog requirements. And there are the bragging rights.

V-12s typically power the cream of the automotive crop -- the most expensive cars in the Mercedes-Benz lineup, for instance, and the new Aston Martin Vanquish, the Lamborghini Murcielago, the Rolls-Royce Park Ward and the Enzo Ferrari. Having a Caddy in that class can't hurt.

GM first showed its prototype V-12 last year at Pebble Beach, the spot to be each August to catch the next big thing in high-end autos.

Itty bitty city cars

At 11.9 feet in length, BMW's Mini Cooper is the smallest passenger car sold in the U.S. these days. But that might not last.

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