Hyundai Motor Replaces U.S. Unit CEO After Sales Growth Lags
Hyundai Motor Co. (005380), South Korea’s largest automaker, named a new chief executive officer for its U.S. unit as it seeks to boost sales after combined deliveries with its affiliate trailed the U.S. market’s sales pace the last 14 months.
David Zuchowski, executive vice president of sales, will replace John Krafcik as president and CEO effective Jan. 1, the Seoul-based company said in a statement on Dec. 27. Hyundai said its contract with Krafcik, 52, expires at the end of this year.
Hyundai and affiliate Kia Motors Corp., which share engines, model platforms and a chairman, have trailed the industrywide U.S. sales pace in each month since September 2012 as the rebounding Detroit Three and Japanese automakers checked their growth in the U.S. market. The Korean affiliates agreed last week to spend as much as $395 million to settle lawsuits related to claims that they overstated the fuel-economy ratings of their vehicles.
“Dave has consistently distinguished himself as a results-oriented and motivational leader in our industry,” Chief Operating Officer Im Tak Uk said of Zuchowski, 55, in the statement. “We are confident that he is the right choice to build on John’s momentum.”
Before its recent slowdown, Hyundai outperformed other automakers in the U.S. market during Krafcik’s tenure. He joined the company in 2004 as vice president of product development and strategic planning and became CEO of the U.S. unit in late 2008.
While Hyundai’s market share this year has slipped by 0.3 percentage point to 4.6 percent through November, the company claimed just 2.5 percent of the market in Krafcik’s first year with the company, according to researcher Autodata Corp.
“John Krafcik has been focused on increasing Hyundai’s brand value in the U.S. market,” Lee Sang Hyun, an analyst at NH Investment & Securities Co. in Seoul, said by phone. “It seems Hyundai as a company decided that next year’s focus should be on boosting sales and that Zuchowski was the right person to do the job.”
The Hyundai Assurance program, a promotion in which the carmaker offered to buy back vehicles from customers who lost their jobs amid the recession in 2009, and redesigns to cars including the Genesis sedan and Elantra compact won over buyers.
Krafcik “oversaw the Korean carmaker’s growth while developing several innovative branding exercises,” Karl Brauer, an analyst for auto researcher Kelley Blue Book, said in an e-mail. “He would be a powerful addition to any automaker’s executive team.”
Chairman Chung Mong Koo has chosen to push for improved quality over substantial additions to Hyundai and Kia’s North American manufacturing capacity the last two years. That has stretched thin the carmakers’ ability to keep pace.
Chris Hosford, a Hyundai spokesman, declined to comment beyond the statement.
Hyundai last month unveiled a revamped all-wheel-drive Genesis premium sedan that will go on sale in the U.S. next year to revive flagging sales in the model’s largest market. The all-new Genesis, which competes with Bayerische Motoren Werke AG’s 5-series and Daimler AG (DAI)’s Mercedes Benz E-Class in the midsized premium sedan market, will also be introduced in Europe next year, its first premium model in the market, the company said Nov. 26.
The new model and the replacement of the head of the U.S. unit come as the Seoul-based carmaker is suffering from an appreciating won.
Third-quarter profit at Hyundai fell 11 percent from the previous three months to 2.14 trillion won ($2 billion), the company said Oct. 24. Net income advanced 5.6 percent from a year earlier.
The won has gained about 22 percent against the yen this year, curbing Hyundai and affiliate Kia’s competitiveness against Japanese automakers in exporting to the U.S. The won strengthened 0.5 percent to 1,054 won per dollar in Seoul on Dec. 27, data compiled by Bloomberg show.
Hyundai’s incentives in the U.S. surged 47 percent in the first nine months of this year, compared with a 2.2 percent decline at Toyota and the market average of a 2.4 percent increase, according to Autodata.
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