By quadrupling its sales, VW would join elite club
O’Neill: Headed Hyundai’s surge
Nothing in Volkswagen's bold bid for global dominance by 2018 is a bigger leap than virtually quadrupling VW brand U.S. sales to 800,000. Has anybody else accomplished what VW says it will do?
Since the 1890s, many brands have had great decades. But let's put this in perspective. First, eliminate those first dozen years in startup mode when comparison volumes are minuscule. After that, how many mass-market brands have multiplied U.S. sales 3.6 times over 10 years?
Only six, starting with Oldsmobile in the 1910s and 1920s. Chrysler, Dodge and Jeep have done it at various times since the 1950s. VW itself did it in the 1990s. Hyundai is the most recent, from 1998 to 2008. Did any do it without a substantial boost from industry sales growth? Only Hyundai, which did so while U.S. volume dropped 15 percent. VW started its decade-long push several years after recovering from a sales low point. Hyundai's run was remarkable, but only possible because its 1998 sales were terrible.
"Even the 90,000 sales for the full year didn't show how bad it was," said Finbarr O'Neill, now president of J.D. Power and Associates, but in 1998 the brand-new CEO of Hyundai Motor America. "In November, we only sold 4,000 units with 450 dealers."
O'Neill took over just as Hyundai launched its radical 10-year/100,000-mile powertrain warranty but before the new models with those warranties arrived.
Chairman Chung Mong-koo "was relentless in pushing everyone on quality, but the biggest challenge was getting our dealers engaged again," he said. "We still had some big charter dealers who remembered the early boom years."
But in a long slump, many dealers had whittled down staffs and added dual and triple franchises. Some even moved Hyundai franchises into smaller stores.
"They were warehousing their Hyundai franchises," O'Neill said.
His response: talk to dealers, emphasizing new models in the pipeline and dealer profitability.
"We didn't complicate things by demanding Taj Mahals," he said, but urged dealers to create the service bays and facilities for higher volume.
As sales improved, O'Neill said Hyundai's biggest challenges became resisting the urge to boost Hyundai prices and to whittle away dealer margins. His prime advice for sustained long-term growth: Keep dealers profitable and motivated.
"Don't focus on the color of the showroom tile, but keeping the dealer engaged," he said. "A franchise deal has to pencil out for the dealer."
You can reach Jesse Snyder at firstname.lastname@example.org.