Hyundai Boss Blasts Auto Industry, Says It's 'Viewed With Contempt'

Hyundai Boss Blasts Auto Industry, Says It's 'Viewed With Contempt'

By Michelle Krebs February 11, 2009

By Bill Visnic

CHICAGO -- Telling an assembled crowd of media and auto-industry representatives here for the Chicago auto show that although the global economic meltdown certainly helped to destruct the auto industry in the U.S., John Krafcik, acting president and CEO of Hyundai Motor America, said the industry itself is largely to blame because of its past bad behavior.

And now the day of reckoning with consumers (and legislators) has arrived.

Avowing the auto industry is "viewed with contempt" in the U.S., Krafcik dealt out a staccato string of candid and hard-hitting tough-love messages in a speech to open the media days of the show.

There was palpable discomfort in the room as Krafcik criticized his own industry for earning a perception of being "slow, dim-witted" and "typically unresponsive to consumer and environmental needs."

Krafcik took to task the auto industry for fighting environmental progress.

"For the most part, our industry has a history of opposing environmental and safety legislation -- sometimes with the force of science and good sense behind us, such as the early California [electric vehicle] mandate, but other times with a much weaker platform of defense."

He also said dealers and their sales force "have an immense image problem with their consumer base. Thanks in great part to manufacturer programs that put more focus on moving the iron than consistently delighting our customers, we have reached the point where, frankly, Americans would rather go to the dentist than visit a car dealer."

Not exactly the happy and upbeat Chamber of Commerce speech typical for the unofficial kickoff of this historically important and dealer-oriented auto show.

Instead, Krafcik continued his expressive, critical and uncompromising speech by saying the auto industry needs to own up to its shortcomings -- and admit there is truth to most of the negative perceptions of the industry.

Saying turning around the industry "will require some revolutionary thinking," Krafcik said the emphasis needs to continue on quality and proving that "we listen to our customers and respond to their needs."

Not new advice, that -- but he followed up with: "Skimping on quality to hit a cost target is a mistake, in my opinion. We'd all be better off as an industry if every manufacturer missed every cost target on every new-vehicle launch by $100. If we took that money and sunk it into terrific interiors with soft touch points and great vehicle dynamics, I promise you we'd all get that money back through customer satisfaction, loyalty and goodwill."

Krafcik also took the fuel-efficiency bull by the horns, tacitly admitting the industry has resisted genuine advance on that front: "Another revolutionary step we can take is to embrace improved fuel economy as an indisputable social good.

"There's really no point in arguing about the veracity of climate change when you stop to consider the finite supply of oil and the turmoil that our present consumption habit is fueling in the Middle East. It's abundantly clear that improved fuel economy makes sense for our industry and our country."

Krafcik launched another volley, this one about executive compensation.

Calling executive compensation "a hot-button issue," he suggests the auto industry get in front of the matter in a kind of libertarian "opportunity for revolutionary thinking."

How? "What if our industry was the first to exercise a more inclusive form of capitalism that voluntarily restrained executive compensation to a reasonable multiple of average employee salary?"

Krafcik also suggested a uniform code of conduct regarding gifts, meals and business entertainment.

"It's clear that we need to be innovative in our responses to these revolutionary times," Krafcik concluded.

"It will be a different industry than it was in the past -- it has to be. It's time to take notice that the world has changed. And now, right now, is our time to change."

Photo by Hyundai Motor America

1 - John Krafcik

Biography 

John Krafcik was recently named acting president and chief executive officer of Hyundai Motor America. Previously, he served as vice president of Product Development and Strategic Planning. Krafcik joined Hyundai in April 2004. Prior to holding that position he had worked at Ford Motor Company.

Krafcik holds a Bachelor of Science degree in Mechanical Engineering from Stanford University and a Master of Science degree in Management from the MIT Sloan School of Management. At MIT, he participated in writing the legendary book, The Machine That Changed the World. Krafcik began his career in the auto industry at the GM/Toyota joint-venture NUMMI, and later became an industry consultant on lean production.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.