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Hyundai makes another shift

Jong Eun Kim will head North American operations as the South Korean automaker's sales in the U.S. stall.

December 25, 2007|Ken Bensinger | Times Staff Writer

Hyundai Motor America named Jong Eun Kim its new head of North American operations Monday -- the latest in a string of executive shifts amid stalling U.S. sales.

Kim, who takes his new post Jan. 1, will replace Ok Suk Koh, who will top Chinese operations for Kia Motors Corp. Hyundai is the largest stakeholder in Kia.

Hyundai spokesman Jim Trainor called the change a "normal rotation, not unusual to the way Hyundai does business."

But the move comes amid expectations that Hyundai will not meet its 2007 North American sales forecast of 512,000 vehicles -- a figure that was pared down from 550,000 in September.

As of Nov. 30, the Fountain Valley division of the South Korea-based manufacturer had sold 420,522 cars and light trucks, up only marginally from the same period last year. For all of 2006, Hyundai sold 455,520 cars in the U.S.

"The Korean management has very little patience," said George Peterson, president of industry consultancy Auto Pacific Inc. "It's an example of a company that sets an objective, and if you don't meet it, there are consequences."

Faced with sales that had leveled off, the North American division this year replaced its heads of sales and marketing and, more recently, its chief operating officer.

Not long ago, Hyundai appeared to be on a fast track -- nearly doubling sales in the first half of the decade even as companies such as Ford Motor Co. saw significant declines. But the company's 2007 forecasts appear to have been too confident, and selling more than 500,000 cars this year, or even in 2008, now appears daunting.

"It's a pretty big stretch," spokesman Trainor said.

Incoming head Kim was most recently atop Hyundai's Middle East and African operations, and previously held positions in sales, parts and operations in South Korea for Hyundai.

Koh, whom Kim is succeeding, was named to the post in January 2006. He got the job after his predecessor, Bob Cosmai, missed the 2005 sales target.

In February of this year, Hyundai replaced sales head Mark Barnes and marketing head Michelle Cervantez with outsiders Dave Zuchowski and Joel Ewanick, respectively.

Then in September, COO Steve Wilhite abruptly departed the company, scarcely a year after he was hired away from Nissan Motor Co. Wilhite had undertaken an aggressive reworking of Hyundai's marketing strategy that had nettled some of its dealers; it was also Wilhite who argued for a reduced 2007 sales goal. That position, according to another Hyundai spokesman, is still open.

A former Hyundai executive who did not want his name used because he still has business relationships with the company said the unit's corporate overseers "set up ridiculously high objectives and if you don't get them, you're gone."

Hyundai faces significant challenges going into 2008 with pricing that some consider aggressive in the face of Japanese competition and very high levels of production from its Montgomery, Ala., plant, where it makes the Sonata sedan and Santa Fe sport utility vehicle.

A significant piece of its strategy will be the introduction of its first luxury sedan, the Genesis. "They know they have to move their products upmarket," said Todd Turner, president of Car Concepts Inc., a car consulting firm. "Hyundai is desperate to build upon their image."

Whether or not the Genesis, and a sports car relative of it known as the Genesis Coupe, sell well, Hyundai may be forced to offer significant price discounts on its remaining fleet to increase sales volume in 2008. Analysts expect total U.S. sales of cars and light trucks to reach about 15.5 million next year, significantly lower than projected 2007 sales of 16 million.

"Hyundai could sell 500,000 cars" next year, said Peterson, "but it's going to have to come out of somebody else's hide. It's going to be tough."

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